Farm equipment and utility vehicle maker Mahindra and Mahindra has decided to pull out from the race for the South Korean sports utility vehicle-maker Ssangyong Motors, which came up for sale this month.
Mahindra, which had a team in South Korea studying the Ssangyong facilities and the local market decided against bidding for the company. "It didn't fit in with our overall plans for the international markets," said a senior executive with Mahindra and Mahindra.
The $584 million Ssangyong Motors has been managed by its creditors since 1999 when its holding company Daewoo went belly-up. The company's creditors had put their 54 per cent stake in Ssangyong up for sale last month.
Ssangyong has been plagued by debts and low profitability for some time now, the company reported an 11 per cent drop in turnover in the third quarter of 2003. Ssangyong's assets include 220,000 vehicles per year plant and a separate engine facility.
Though initial reports put it at eight, the exact number of bidders for Ssangyong is not available. Chinese auto majors Shanghai Automotive Industry have been tipped as the frontrunner for the bid.
Industry observers said the company was perhaps not serious about picking up a stake in Ssangyong and it participated in the initial proceedings to the Ssangyong sale only for a better chance to study the South Korean local market.
The Mahindra-Ssangyong association dates back to earlier this year when M&M was talking to the South Korean company for the possible import of its star product, the Rexton sports utility vehicles.
M&M did not pursue that line of discussion any further when it realised that Ssangyong would soon have new owners. But once the deal comes through, M&M will rethink its plans for the Rexton.
