By Aditi Shah
NEW DELHI (Reuters) - Mahindra & Mahindra (NS:MAHM) plans to give up control of struggling South Korean unit SsangYong Motor (KS:003620), the Indian automaker's managing director said on Friday, as it looks to exit loss-making ventures amid the coronavirus pandemic.
"SsangYong needs a new investor. We are working with the company to see if we can secure investment," Pawan Goenka told reporters.
Mahindra earlier reported a consolidated net loss of 19.55 billion rupees ($258 million), compared with a net profit a year ago, as it booked a writedown on its investment in SsangYong and other international units.
Mahindra, which owns a 75% stake in SsangYong, rescued the sport-utility vehicle (SUV) maker from near-insolvency in 2010 but has struggled to revive its fortunes. The company said in April it would not invest further in SsangYong.
"If a new investor comes on board, that automatically takes our stake down, or they may even buy our stake," Mahindra's deputy managing director, Anish Shah said.
As part of a wider restructuring effort by the company to cut costs and prioritise capital expenditure as it rides out the coronavirus pandemic, Mahindra would review all its loss-making businesses over the next 12 months, Shah said.
Where there is no clear path to profitability it would look for a partnership or close down those businesses, but in those that can clearly generate equity returns of 18% or those that are of strategic importance, Mahindra would continue to invest, Shah said.
Mahindra, which entered into a joint venture with U.S. automaker Ford Motor (N:F) last year, said the pandemic had delayed the completion of merger formalities between the two companies but they continued to work together under the new alliance.