Auto major Mahindra & Mahindra on Tuesday said it expects to gain full management control of SsangYong Motor Co (SMC) by March and will launch two sports utility vehicles from the stable of the South Korean firm in India by the end of this year.
“Next Monday (February 7) we will be completing payment of the remaining 90 per cent amount for the acquisition, after which fresh shares will be issued to us and we will have 70 per cent stake in SMC,” Mahindra & Mahindra President (Auto and Farm Sectors) Mr Pawan Goenka told reporters here.
In November last year, M&M had signed a definitive agreement with SMC to acquire 70 per cent stake in the latter for $ 463 million (about Rs 2,105 crore).
Out of the total cost of acquisition, $ 378 million will be in new stocks and $ 85 million in corporate bonds.
At the time of signing the agreement, the firm had paid 10 per cent of the bid amount, he said, adding M&M has funded the acquisition through internal accruals.
“By March we will have the complete management control but we will continue with the Korean senior management and the CEO of SMC will be a Korean,” he said.
Mr Goenka, however, said seven senior executives from M&M will be joining SMC in top three layers of the management of the South Korean company.
Asked about the Board composition, he said: “It is being finalised now and would be premature to comment on the structure right now.”
On plans to launch sports utility vehicles (SUVs) from SMC portfolio in India, Mr Goenka said: “There will be two models, Korando and Rexton by the end of this calendar year.”
These will be imported as completely knocked down units and assembled here in India, he said but added the branding strategy for these models for the Indian market has not been finalised yet.
Exuding confidence on the future of SMC, which has increased its sales considerably, he said: “It had sold 81,800 units in 2010 compared to 35,300 units in 2009.”
Mr Goenka also asserted that SMC would remain an independent company although there could be leveraging of synergies specially in technology and platforms but the R&D operations remain separate.
“There will be no common R&D between SMC and M&M but it does not mean that we will not leverage on each others platform and technology,” he said.
Mr Goenka also said there will not be any downsizing of SMC, which has about 4,000 employees at present.
“There is no question of downsizing. We have an agreement not to downsize,” he said.