South Korean subsidiary of Mahindra & Mahindra, Ssangyong Motor Co (SYMC), has missed repayment worth Rs 480 crore to JP Morgan Chase Bank, M&M informed via stock exchanges on Tuesday.
SYMC has outstanding loans aggregating to 100 billion Korean Won (around Rs 680 crore), Mahindra said. It said of this, Rs 408 crore is from JP Morgan Chase Bank and Rs 68 crore from BNP Paribas, Seoul, and Rs 204 crore from Bank of America NS, Seoul.
"Out of the above mentioned total outstanding amount with these banks, SYMC has missed repayments of... loans aggregating an amount of approx. 60 billion KRW (approx Rs 408 crore) which were due and payable on December 14, 2020," the company said.
While the company has committed to cover the above-mentioned loans given by the banks, its final liability will be limited to the extent not recovered from SYMC, it said.
"On payment of the dues by the company to the banks, the company will be subrogated to all the rights of the banks against SYMC and the company will step into the shoes of the banks as the creditor, and will be entitled to all rights which the banks had against SYMC, with respect to these loans," Mahindra said.
The development is significant because in April Mahindra & Mahindra board had rejected a proposal to pump in any fresh equity in SYMC. The SYMC management and its labour unions had sought funding of $406 million from the company over the next three years.
Anand Mahindra-led auto major had acquired nearly 75 per cent stake in SYMC in 2010 but failed to make it profitable despite several attempts. So far, the company has invested $110 million in SYMC.
The Korea automaker slipped into red in 2017 when it reported a net loss of 66 billion wons against 58 billion won net profit in 2016. These losses kept widening and touched 62 billion won and 341 billion won in 2018 and 2019, respectively.
Meanwhile, M&M share was trading at Rs 714.70, up Rs 3 or 0.42%, on the National Stock Exchange during intra-day trade on Tuesday.