April 3 (IANS) Automobile major Mahindra & Mahindra (M&M) has decided not to infuse fresh equity into its South Korea-based subsidiary SsangYong Motor Company (SYMC)in light of the COVID 19 impact.
Accordingly, the decision was taken at a special board meet which was held to review investment in SYMC.
“The request from the management and labour union of SsangYong Motor Company for fresh injection of equity from M&M to help the company fund 500 billion KRW ($406 million) of requirements over the next three years, was considered by the Board,” the company said in a statement.
“After lengthy deliberation given the current and projected cash flows, the M&M Board took a decision that M&M will not be able to inject any fresh equity into SYMC and has urged SYMC to find alternate sources of funding.”
However, the company said with a view to enable SYMC to have continuity of business operations, whilst they explore alternate sources of funding, the board has authorised the M&M management to consider a special one-time infusion of up to 40 billion KRW ($32 million) over the next three months.
According to the statement, the Board noted that large parts of the global economy are under shutdown. “India particularly is under an unprecedented 21-day complete lockdown. Only emergency services are operating while everything else is closed,” the statement said.
“The Board has also initiated several measures to tighten capital allocation norms and ensure that M&M remains strong through the current crisis and beyond.”
In addition, M&M said it will make every effort to support all other non-fund initiatives that are currently in place to help SYMC reduce Capex, save costs and secure funds.