Mahindra & Mahindra on Tuesday said its loss-making Korean arm SsangYong Motor Company has missed repayments of loans aggregating to 60 billion KRW (around Rs 408 crore).
In a regulatory filing, Mahindra & Mahindra (M&M) said the South-Korea listed SsangYong Motor Company (SYMC) has outstanding loans aggregating to 100 billion Korean Won (approximately Rs 680 crores).
SYMC has outstanding loans of 60 billion KRW (around Rs 408 crore) from JP Morgan Chase Bank, 10 billion KRW (around Rs 68 crore) from BNP Paribas and 30 billion KRW (around Rs 204 crore) from Bank of America, the filing said.
"Out of the above mentioned total outstanding amount with these banks, SYMC has missed repayments of... loans aggregating an amount of approx. 60 billion KRW (approx Rs 408 crore) which were due and payable on December 14, 2020," it added.
M&M said "whilst the company has made a commitment to cover the above-mentioned loans given by the Banks, its final liability will be limited to the extent not recovered from SYMC." It further added that "on payment of the dues by the company to the banks, the company will be subrogated to all the rights of the banks against SYMC and the company will step into the shoes of the banks as creditor, and will be entitled to all rights which the banks had against SYMC, with respect to these loans." In April this year, M&M said its board had rejected a proposal to inject any fresh equity into SYMC.
The management and labour union of SYMC had sought a funding of 500 billion KRW (USD 406 million) from the Mumbai-based auto major over the next three years.
Mahindra had acquired the loss-making SYMC in 2010, but failed to turn it around since then despite several attempts.
M&M holds nearly 75 per cent in the Korean company now and has since invested over USD 110 million.
SsangYong has been struggling with deteriorating earnings since 2017, when it slipped into the red with a net loss of 66 billion wons as against a net profit of 58 billion wons in 2016.
In 2018, its net loss rose to 62 billion wons and then ballooned to 341 billion wons in 2019.
Shares of M&M were trading 0.12 per cent higher at Rs 711.95 apiece on BSE.