Petrol Stop - Indian car makers yet to take call on Ssangyong Motor

Indian car makers yet to take call on Ssangyong Motor

Friday, 06 August 2010

06 August 2010;business-standard.com: Indian automakers bidding for Ssangyong Motor, the troubled South Korean company, have kept the automobile industry guessing. While Kolkata-based Ruia Group today said it would take another three days to take a call on this issue, Mahindra & Mahindra (M&M) said it had time till August 10 to decide on the bid. M&M also denied media reports that the company’s board was meeting today to decide on this issue. The six shortlisted contenders, including Renault-Nissan and other local companies, have to submit their bids by August 10. “I have visited South Korea and seen the plant, but we are yet to make a decision. We will need another three days,” Ruia Group Chairman Pawan K Ruia said here. He explained that four specific issues were being looked into: future cash flows of Ssangyong, profitability of the carmaker, stand-alone manufacturing capacity of the plant, and the territories where the company had a presence and the possible expansion of these markets. “We have started talks for funding, and have found positive indications for this.” Although Ruia was unwilling to talk about the possible valuation of Ssangyong, he said media reports on the same were based on the market capitalisation of the company, which currently stood at $400 million. He had earlier told Business Standard that the acquisition, if undertaken, would be a leveraged buyout. “We are excited by some of the facilities. I have no doubts on the quality of the product(s),” Ruia said. Ssangyong Motor has been under court-led bankruptcy protection since early 2009 after suffering cash exhaustion. The company is the fourth-largest car maker in South Korea, although its market share is just 2 per cent. It manufactures sport utility vehicles (SUVs), recreational vehicles and sedans. Pawan Goenka, president, automotive and farm equipment sector, M&M, said, “We still have time to decide whether we should put in a bid for Ssangyong or not. We have not finalised on what should be the extent to which we should bid for it. Although the company has great synergies for us, but we are yet to finalise its financial viability.” A spokesperson at M&M said there was no board meeting due on Thursday to decide on its bid for Ssangyong. “The board had asked for more information before making a decision. I would think a decision will be made closer to the deadline,” the spokesperson said. Ruia Group buys German company The Rs 3,000-crore Ruia Group on Thursday announced the acquisition of its third overseas company, Germany’s Gumasol-Werke, for an undisclosed sum. The company manufactures solid tyres, rubber components and rubber-to-metal components. “This is our second acquisition in less than two years. Gumasol has several patents and high-tech products. We will concentrate on putting things in order and move operations to India,” Ruia Group Chairman Pawan K Ruia said. The group had been able to acquire Gumasol in an “asset deal”, Ruia said, after the company filed for an insolvency last December.