M&M’s subsidiary files for bankruptcy!

M&M’s subsidiary files for bankruptcy!

Last updated: 22 Dec, 2020 | 11:18 am

M&M’s subsidiary files for bankruptcy!

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SsangYong Motor Co files for bankruptcy

  • SsangYong Motor, the South Korean subsidiary of M&M has filed for bankruptcy after it failed to repay loans worth Rs 680 crore.  The lenders are JP Morgan Chase, Bank of America and BNP Paribas. 
  • Ssangyong has applied for an autonomous restructuring support programme, a court-designed process. If the court approves the restructuring, SsangYong will continue to function under the supervision of its board and will negotiate with stakeholders to reach an understanding about a revival package, which may include equity and debt financing and other related action, M&M said. 
  • SsangYong posted its worst production in seven years in 2019, and reported its biggest loss of Rs 3,029 crore in FY20.

M&M decided to give up control

  • In September this year, M&M said that it has decided not to invest any more money into the troubled Korean subsidairy, and is looking to divest its stake to below 50%
  • Given the current situation, it may be difficult for M&M to find a buyer for the loss-making subsidiary.

M&M’s marks down asset

  • M&M had already taken an impairment hit of ₹2,719 crore in Jan-Mar 20 period, due to the Korean subsidiary. This had led to M&M reporting a record loss of ₹530 crore in Jan-Mar 20 period. Hence, this development is unlikely to impact the financial position further.
  • Mahindra has so far invested Rs 2,450 crore in equity in SsangYong, according to its annual report for FY20, and it had last infused Rs 319 crore in FY19.