Mahindra & Mahindra has made initial announcment regarding the ailing South Korean Automaker Ssang Yong Motor Company to buy a majority stake in the company. Elaborating on the deal, M&M now confirms that it has not made any commitments post take over, implying no commitments in terms of retaining Ssang Yong Motor’s workforce or its volume growth.
Mahindra & Mahindra’s automotive and farm equipment division president Pawan Goenka says, “M&M’s MoU with SsangYong honors the current wage agreement that the company has with the unions. We will hope to grow employment as the volume grows though we have no specific commitments.”
Due to continuous strikes at the company, the company’s production and profit was poor last year. As a result, the company has cut down one-third of manpower of its 7000 workers.
A Delhi-based analyst says, “Labor is always a critical component of a big deal like this... In Ssang Yong’s case it’s even more critical given its track record and any flexibility on this front will help M&M,”
Analysts from auto industry believe that the flexibility of Mahindra & Mahindra on this deal will play great role in company’s growth. Mahindra & Mahindra has already become preferred bidder and deposited 5% payment of the deal amount. However, the confirmation will commence on Monday. This deal process will last for five to six weeks and it is expected that it will come to fruition by November.
