Mahindra looks to exit loss-making businesses, willing to give up ownership in SsangYong

NEW DELHI: After incurring a substantial loss in the March quarter due to losses at foreign subsidiaries, Mahindra and Mahindra said that it will exit several money-losing businesses, starting with US-based electric bike company GenZe. The company will also stop further investments in its Korean subsidiary SsangYong and is willing to give up control in the loss-making venture.
The farm equipment and SUV maker reported a loss of Rs 2,510 crore for the March quarter due to one-time provision of Rs 2,781 crore made due to impact of the Covid-19 pandemic and write-off on several investments. About 80% of the write-off was on account of SsangYong and GenZe.

“We have taken some hard calls such as not investing (more) in SsangYong and we have also decided to exit the electric scooter business in USA (GenZe) and carefully examine other loss-making businesses,” said Pawan Goenka, managing director, M&M.

Mahindra has been looking for investors in SsanYong after it failed to turn the company profitable. Goenka said the international expansion delivered less than what the company had expected. “We thought we will be able to break even in two years - which did not happen.”

On the way ahead for SsangYong, Goenka said, “We have been able to reduce their expenses and manage their cash flows. We are looking at potential investors and we are willing to give up ownership control in the company.”

Not just SsangYong and GenZe, the company has promised to relook all its money-losing ventures and may exit several to reduce expenses.

The company said that it will segregate its loss-making businesses into three categories going forward – ones which have a clear path towards profitability in the mid-term, ones with an unclear or delayed path to profitability but having strategic importance, and lastly the businesses with no clear path to profitability or strategic importance. The company will exit businesses falling in the final category.