Ford, Mahindra call off joint venture

Mahindra will also cease to be majority stakeholder of SsangYong soon as the Korean company has filed for bankruptcy

Auto giants Mahindra and Mahindra and Ford on Friday announced that their proposed joint venture in India will not go ahead.

Mahindra have also announced that they will not be the majority stakeholder in Korean company SsangYong, which has filed for bankruptcy. The investor is to be announced soon.

“Ford Motor Company and Mahindra and Mahindra have mutually and amicably determined they will not complete a previously announced automotive joint venture between their respective companies. The decision follows the passing of the December 31 'longstop’, or expiration, date of a definitive agreement the organisations entered into in October 2019,” a statement from the two companies said.

The companies said that the outcome was driven by fundamental changes in global economic and business conditions – caused, in part, by the global pandemic – over the past 15 months. Those changes influenced separate decisions by Ford and Mahindra to reassess their respective capital allocation priorities.

Ford said its independent operations in India will continue as is.

“The company is actively evaluating its businesses around the world, including in India, making choices and allocating capital in ways that advance Ford’s plan to achieve an 8 per cent company adjusted EBIT margin and generate consistently strong adjusted free cash flow,” Ford added.

Mahindra added: "This decision will not have any impact on the product plan. It is well positioned in its core true SUV DNA and product platforms with a strong focus on financial performance. In addition, Mahindra is accelerating its efforts to establish leadership in electric SUVs."

On the SsangYong front, in a media briefing, Pawan Goenka, Managing Director, Mahindra and Mahindra, said: “We hope to conclude the term sheet with this investor sometime next week. If the deal goes through, the majority will be with the investor and Mahindra will be the minority investor at around 30 per cent or less.

"SsangYong was not able to meet its obligations and had to apply for court receivership. SsangYong also requested the court for Autonomous Restructuring Support (ARS) and under this, the court gives the company approval to find a solution on their own and gives a time frame. The court has granted time till February 28 to conclude the deal with the investor," he added.

Anish Shah, Deputy Managing Director and Group CFO, Mahindra Group, said: "We have about 980 crore of equity and Rs 950 crore on debt. The value of our equity will depend on what happens post this transaction. We do not have liabilities beyond these numbers.”