Home
>
Articles
>
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!

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.
We are a SEBI registered investement advisor