Mahindra Asks Gov't for More Loans for Ssangyong
18 January, 2020
Mahindra managing director Pawan Goenka arrives at Korea Development Bank headquarters in Seoul on Thursday. /Yonhap
A senior executive from India's Mahindra, which owns SUV-maker Ssangyong, met the head of the state-run Korea Development Bank on Thursday to ask for more soft loans for the ailing automaker.
KDB already bailed out Ssangyong to the tune of a W100 billion loan last year, but that failed to turn the company's fortunes around (US$1=W1,160).
Mahindra managing director Pawan Goenka spent an hour with KDB chief Lee Dong-gull at the bank's Seoul headquarters. Industry watchers say the Indian automaker is seeking more loans because the Korean government intervened to reinstate assembly-line workers who had been laid off.
President Moon Jae-in met with Mahindra chairman Anand Gopal Mahindra during his visit to India in 2018 and talked about the reinstatement of 119 workers who had been protesting for about 10 years since their layoff back in 2009.
Ssangyong agreed to take them back gradually even though it could not afford because the government promised to aid the carmaker.
This has raised fears that Mahindra will turn to the Korean government for financial support every time Ssangyong runs into difficulties.
Lee Hang-koo at the Korea Institute for Industrial Economics and Trade said, "There is a risk of the government pouring money into a bottomless pit."
Ssangyong has failed to make any profits since 2007 except in 2016. Last year, it posted an estimated loss of W400 billion amid a lack of new models resulting from delays in investment that had been pledged by Mahindra.
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