Mahindra & Mahindra Ltd. (M&M) Board of Directors held a special meeting to review investment in SsangYong Motor Company (SYMC) and at the same time to discuss the approach to capital allocation in light of the COVID 19 impact.
The request from the management and labor union of SsangYong Motor Company (SYMC) for a fresh injection of equity from M&M to help the company fund 500 billion KRW (USD 406M) of requirements over the next three years, was considered by the Board.
The Board noted that large parts of the global economy are under the shutdown. India particularly is under an unprecedented 21-day complete lockdown. Only emergency services are operating while everything else is closed.
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. 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, with a view to enabling SYMC to have continuity of business operations, whilst they are exploring alternate sources of funding, the board has authorized the M&M management to consider a special one-time infusion of up to 40 billion KRW (USD 32M) over the next three months