Mahindra & Mahindra has decided to reduce its stake in SsangYong Motor Company (SYMC) of South Korea to less than 50 per cent. It is also open to the possibility of ceding control over SYMC “in full or in part, at one time or over time”.
According to M&M’s annual report for 2019-20, as on March 31 2020, its investments in SYMC stood at Rs 2,450 crore, while its ownership interest was at 74.65 per cent.
In April this year, the board of M&M had rejected a proposal to inject any fresh equity into the Korean arm.
The management and labour union of SYMC had sought a funding of 500 billion won ($406 million) from the domestic auto major over the next three years.
Mahindra had acquired SsangYong in 2010 but failed to turn it around despite several attempts.
In a regulatory filing to the stock exchanges, M&M said its board on Friday has agreed to take shareholder approval through postal ballot for the reduction its shareholding in SYMC to less than 50 per cent “and/or for cessation/extinguishment/change/modification of control of the company over SYMC, in full or in part at one time or over time”.
M&M added that it wanted the approval so that it can induct potential investors into SYMC or to otherwise meet the funding requirements of SYMC through other sources.
Meanwhile, chairman Anand Mahindra said the Mahindra group will continue to invest in successful businesses and prepare for the future by nurturing and investing in verticals that have a potential of over a billion dollar market cap, while “appropriate action” is being taken on those that do not live up to expectations.
Addressing the company’s shareholders at the annual general meeting, Mahindra said the Covid-19 pandemic had turned lives upside down and the economy faces an uncertain future.
He, however, added that it has given “us an opportunity to reboot our thinking, to reinvent our approach and to recommit ourselves to our financial goals”.
Recollecting how the group navigated what it “appeared to be in the worst of times” in 2002 when the share price of M&M had come down to Rs 56, he said the group took action to turn things around with a ruthless focus on financial returns.
