Mahindra and Mahindra completes acquisition of Korean automaker
Ssangyong Motor Co. will invest 240 billion won ($212 million) in developing new products and building its brand, new CEO Lee Yoo-il said at the press conference announcing the completion of Mahindra and Mahindra Ltd. on Tuesday.
The Indian company was chosen as the preferred bidder for Ssangyong in August 2010, about 18 months after the Korean firm entered court receivership, and acquired 70 percent of Ssangyong at about 520 billion won.
Ssangyong exited bankruptcy protection on Monday.
“Product development will see a 200 billion won investment, and 40 billion won will be invested into strengthening Ssangyong’s brand in Korea this year,” Lee said.
During Ssangyong’s court-receivership Lee served as one of the two court-appointed managers along with Park Young-tae.
He added that the 200 billion won will be used to develop facelift versions of the luxury sedans Chairman H and Chairman W, and the new sport utility truck that will be launched later in the year.
Lee also said that a new model is also in development and that the vehicle will be introduced in 2013.
While Mahindra and Mahindra has taken control of the SUV specialist, this year’s investment budget will have to be raised by Ssangyong.
“Cash flow was restricted under court receivership, but having paid off all debts with the 500 billion won from Mahindra, we will be able to manage 200 billion won,” Lee said.
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Ssangyong Motor Co. CEO Lee Yoo-il (right) and Mahindra and Mahindra CFO Bharat Doshi (center) and the Indian firm’s president for automotive and farm sector Pawan Goenka attend the press conference in Seoul on Tuesday. (Park Hyun-koo/The Korea Herald) |
As for the brand-strengthening plans, Lee said that the 40 billion won budget includes expenses for improving after-sales services and advertising.
The company is also hoping to raise domestic sales this year and enter the Indian market with the aid of its new parent firm.
“Last year about 81,000 units were sold, but this year we are targeting 121,000 units, and there are plans to expand the domestic dealer network from 130 to 150,” Lee said.
On the subject of the Indian market, Lee said that plans for launching the new compact SUV Korando C and the Rexton are in the works, and that there are no plans at present to introduce Indian automobiles to the Korean market.
Concerning executive posts that remain unfilled, the company said that a board of directors meeting will be held Wednesday to finalize related issues. Along with Lee’s appointment as the CEO, Mahindra and Mahindra’s Dilip Sundaram was given the post of chief finance officer. Along with Sundaram, six other Mahindra and Mahindra officials were appointed to various positions within Ssangyong.
Park Young-tae is rumored to be up for a labor-management related post.
Regarding those still remaining on unpaid leave, Lee said that they will be reinstated once production output grows sufficient for a two-shift system, but that related issues remain unclear as Ssangyong’s three assembly lines are yet to operate at full capacity.
By Choi He-suk (
cheesuk@heraldcorp.com)
