Indian automobile manufacturer Mahindra & Mahindra (M&M) is planning to invest about KRW80bn ($74m) in its South Korean subsidiary SsangYong Motor (SMC) to secure investment funds.
SsangYong Motor has approved a third party allotment to Mahindra & Mahindra of 14,545,455 equity shares, raising its paid-in capital by 11.9% to KRW686.1bn ($631m).
The funding from the capital increase would facilitate enhancement of SMC's financial structure as well as for the development of new products including small crossover utility vehicle (CUV) models.
Ssangyong Motor CEO Lee Yoo-il said that the decision on paid-in capital increase will allow the company to secure the necessary investment funds and at the same time, strengthen the financial soundness of the company.
"Furthermore, as we carry out the investments in new models including a small CUV, our product development will also gain momentum," Yoo-il said.
M&M Automotive and Farm Equipment Sectors president, SMC board chairman Pawan Goenka said: "By expanding investment in Ssangyong and creating tangible synergy in various areas such as sales, product development and sourcing, we will continue to increase our global competitiveness."
In March 2011, M&M had invested about KRW522.5bn ($480m) to acquire 70% of the equity in SMC, while in February 2012 it approved a KRW295.8bn ($272m) investment plan for the development of new engines and a small CUV project.
