Mahindra Mahindra acquired Ssangyong

Topics: Automotive industry, Balance sheet, Asset Pages: 14 (3589 words) Published: February 24, 2015

M&M and Ssangyong Motor Company: A Marriage of Convenience?

In March 2011 India Auto major Mahindra & Mahindra appointed Mr.(Dr.) Pawan Goenka its president for Automotive & Farm equipments sectors, M&M Ltd. as the chairman of the newly acquired Ssangyong Motor Company (SYMC). This marked closure to the final seal on the completion of the acquisition of majority stake in Ssangyong Motor Company and further removal of SYMC from Court receivership in Korea. Dr. P Goenka was quite optimistic of the newly acquired responsibility in the from of SYMC. As he sat in his office looking at the horizon from his office window at the sky he wondered about the pint where the sky would merge with the land. His thought was quickly broken by the phone call he received from SYMC’s newly appointed CEO Yoo il Lee and as he ended the conversation he looked at the automobile industry forecast after 2008 financial crisis lying on his table. He wondered how the new arrangement would sail through the future. The 2008 financial crisis had just begin to fade away but for SYMC the uncertainties and rough weather and financial uncertainties had stayed for long. He thought about the new challenge that he faced in merging the not so well SYMC with the strong M&M and turning around SYMC from red to sea of wealth and productivity. But he was confident that his new team comparing of the new CEO of SYMC and Dilip sundram the new CFO of SYMC would leave no stone unturned to create the much awaited benefits of the combination. M&M would be able to leverage upon the synergies expected to be created in the deal. He looked at his table and the papers and understood the challenging task of leadership role he had to play to take M&M and SYMC to new heights and glory in the fiercely competitive market.

Industry overview

The automobile sector in india accounts for 22% of the country’s manufacturing GDP. The sector can be segmented into passenger cars, two-wheelers, three-wheelers and commercial vehicles. The indian automobile sector is seventh-largest in the world in terms of production volume ( 17.5 million vehicles, of which 2.3 million are exported). According to Ministry of Heavy Industry and Public Enterprises, the total turnover of the Indian automobile industry was estimated at USD 73 billion and exports were estimated to be USD 11 billion in the year 2010–11. The announced cumulative investments in this sector were USD 30 billion during this period. According to the Department of Industrial Policy and Promotion (DIPP), the auto sector accounts for 4% of total foreign direct investment (FDI) inflow into India. As per the DIPP’s FDI figures for May 2012, FDI inflow into the auto sector for the period April 2011 to March 2012 totaled USD 923 million; cumulative FDI into the sector for the period April 2000 to May 2012 stood at USD 6,853 million. The DIPP is part of the Government of India’s Ministry of Commerce and Industry; it is responsible for formulating and implementing the country’s FDI policy. The Indian government encourages foreign investment in the automobile sector and allows 100% FDI under the automatic route. It is a fully delicensed industry and free imports of automotive components are allowed. Moreover, the government has not laid down any minimum investment criteria for the automobile industry1.

The main Indian automotive companies are Chinkara motors, Beachster, Hammer, Roadster 1.8S, , Rockster, jeepster, Sailster, Force motors, Hibndustan motors , ICML, Mahindra, Premier automobiles limited, san motors, Maruti Suzuki(subsidiary of Japanese auto), tata motors. Foreign automotive companies in India are Hyundai, Suzuki, BMW, Audi, Mercedes Benz, Ford, Fiat, Honda, Chevrolet(of General Motors), Toyota, Lamborghini, Jaguar, Eicher, TAFE, are the foreign automotive companies that manufacture and market their products in India...

References: http://www.smotor.com/en/ir/cor_info/governance/board/index.html
http://www.smotor.com/en/ir/fin_info/statements/__icsFiles/afieldfile/2012/05/24/2011_Consolidated_Audit_Report_SYMC.pdf
http://www.smotor.com/en/ir/st_info/RTQ/index.html
http://www.smotor.com/en/ir/fin_info/statements/__icsFiles/afieldfile/2013/05/30/2012_Consolidated_Financial_Statements.pdf
http://en.wikipedia.org/wiki/SsangYong_Motor_Company
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