Mahindra & Mahindra, the largest Utility Vehicle (UV) maker in the country
, has stated that it aims to acquire the South Korean Ssangyong Motors almost debt free. According to a statement given by Rajesh Jejurikar, chief of operations (automotive sector) at M&M, to a leading Indian news daily, the company wants Ssangyong to come into M&M fold with a clean slate. He added that as per company's estimates, it hopes to bring the Korean company into its fold by December this year or latest by January 2011.
It is to be mentioned here that M&M has recently been selected as the 'preferred bidder' in the biding process of Ssangyon Motors. The acquisition process is expected to be completed by the end of this year. According to industry sources M&M will possibly inject as much as $400 million to acquire a controlling stake in this bankrupted Korean firm and a large part of this fund will be used in repaying the long-term debts of the firm at around $320 million.
Meanwhile, the Indian auto giant has said that it hasn't made any commitment on retaining the existing workers of Ssangyong in the ongoing deal with this firm. It has been widely reported in the industry that the memorandum of understanding (MoU) of this acquisition only has a condition of honoring the current wage agreements of Ssangyong with its unions. The Indian auto giant has to give a significant consideration to the labor related issues as Ssangyong has been struggling with a series of labor problems in the past.
Moreover, in its domestic market the company is struggling with supply shortfall of some of its popular SUV's such as Mahindra Scorpio and Bolero, as there has been a considerable increase in the demand for SUV's in the Indian market.