Mahindra & Mahindra (M&M), a well known name in the utility vehicle segment of Indian auto industry, has expressed its intentions to invest a massive amount in its Korean subsidiary SsangYong Motor Company (SMC). The proposed deal of 80 billion Korean Won, somewhere around $ 73.73 million, will be invested via subscription of a special allotment system.
The board members of SMC have approved Preferential Offer, which happens to be a third party allotment to M&M in a consideration of 1,45,45,455 equity shares, issued at a price of 5,500 Korean Won per share, which equates close to 80 billion Korean Won. While filing to the BSE, the auto maker said, “...the company (M&M) has decided to subscribe to the aforesaid offer and invest an amount aggregating around 80 billion Korean Won (equivalent to around $ 73.73 million at the current rate of exchange).”
The SMC’s paid up capital because of preferential offer would surge by 11.9 per cent, resulting to an increased stake of M&M in its division company from 69.63 per cent to 72.85 per cent. The increased capital will assist the SMC in improving its financial structure and the proceeds from the issue would be utilised by the auto maker for the development of new products and consolidating its position in the market.
Expressing his views on the new development, M&M’s President of Automotive and Farm Equipment Sectors, Pawan Goenka said, “This paid-in capital increase reflects Mahindra's strong commitment to support SsangYong Motor in its efforts to achieve an early turnaround. By expanding investment in SsangYong and creating tangible synergy in various areas such as sales, product development and sourcing, we will continue to increase our global competitiveness.”
Speaking on the same lines, the Chief Operating Officer of SMC, Lee Yoo-il, said that the increase in paid up capital will facilitate the auto maker to consolidate its financial position and secure the required investment funds. He further added, “Furthermore, as we carry out the investments in new models, including a small CUV, our product development will also gain momentum.”
