M&M’s subsidiary files for bankruptcy!
Last updated: 22 Dec, 2020 | 11:18 am
Recommended action: As of now, there is no action to be taken from your side. We are keeping a close eye on the situation and shall alert you in case of any action.
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.