Mahindra expects global business losses to shrink with SsangYong exit

Monday, 8 February 2021 00:00 - - {{hitsCtrl.values.hits}}

NEW DELHI (Reuters): Indian automaker Mahindra & Mahindra Ltd. expects losses from international subsidiaries to plunge by 90% with the disposal of SsangYong Motor as a year-long business review nears conclusion, a company executive said.

Mahindra reported a slump in quarterly profit earlier on Friday, booking a one-time loss of 12.1 billion INR ($ 166 million) related to South Korean unit SsangYong, which filed for a pre-packaged rehabilitation bankruptcy plan in December.

“SsangYong will now become a discontinued operation as it filed for bankruptcy,” said Mahindra’s deputy managing director Anish Shah, who will take over as managing director from April.

As part of a wider review to retain only those businesses with the potential to make money, Mahindra has been in talks to sell its stake in SsangYong. It also ended its joint venture with Ford Motor Co and cut more than half of its North American workforce.

Losses from the international subsidiaries are expected to shrink to about $ 41 million in the fiscal year starting 1 April from an expected loss of $ 411 million in the current year.

“Our capital allocation actions are almost complete ... We’re now really starting to focus on how can we drive significant growth,” said Shah, adding the company plans to invest in electric vehicles and strengthening its portfolio of sport-utility vehicles (SUVs) in the domestic market.

Third-quarter profit after tax on a standalone basis slumped 90% to 309.3 million INR for the Oct-Dec period, compared with 3.07 billion INR a year earlier, Mahindra said, even as revenues rose 15%.

However, the results in combination with those of its manufacturing unit translate to a profit after tax of 5.31 billion INR for the third quarter, a 40% jump from the same quarter a year earlier. The combined operating profit margin for the quarter was 17% versus 14.8% a year ago.