Ssangyong close to first annual profit as M&M subsidiary

Written by Rachit Vats | Mumbai | Updated: Feb 17 2014, 06:38am hrs
SsangyongSales of Korando Turismo, in particular, increased 637% over the year-ago period. Reuters
After posting profits in the last two quarters of FY13, South Korean automaker Ssangyong Motor Company, which is due to announce its earnings for the 2013 fiscal later this week, is set to deliver its first full-year profit since it was acquired by Mahindra & Mahindra (M&M) for Rs 2,105 crore in 2010. Ssangyong Motor follows the calendar year as its financial year.

Strong domestic operations in the Korean market on the back of higher sales and launches of refreshed models helped the company deliver sales of 145,649 vehicles in 2013, a surge of 20.7% from the year-ago period. It saw record exports of 80,000 vehicles during the year, an 11.9% surge year on year, mainly on the back of increased sales in key markets like Russia and China. The previous record was 74,350 units in 2011.

In the domestic market, Saangyong posted its highest sales since 2005 at 75,532 vehicles in 2013, a surge of 34.1%. By brand, the Korando family, including the New Korando C, had highest sales of 107,706 vehicles, 23% higher than in 2012.

Korando comprised 73.9% of total sales in 2013. Sales of Korando Turismo, in particular, increased 637% over the year-ago period.

Ssangyongs net profit for the April-June 2013 period and the July-September 2013 period stood at Rs 37.7 crore and Rs 2.8 crore, respectively, compared with a loss of R98 crore and Rs 65.3 crore in the same periods last year. The company registered revenues to the tune of Rs 4,510 crore in the April-June quarter, a jump of 34.9% year on year. The figure for the July-September quarter was Rs 4,674 crore, a jump of 37.9%.

After M&M took over the company, Ssangyong trimmed its workforce by 40%, which helped it rationalise costs.

Ssangyong Motor currently accounts for 22% of M&Ms total topline and is looking at expanding business further in domestic as well as overseas markets. In the pipeline are plans to increase export volumes to Russia and India, and to enter new markets like South America, Africa and the rest of Asia, say company insiders. The company aims to double volumes by 2016.

M&M and Ssangyong are known to be sharing synergies and working on new models, say sources.

Over the next decade, Ssangyong will be in a growth phase and is likely to invest significantly in product development. So, the cash-flow generation is likely to remain limited only sufficient to cover Ssangyongs requirements at best.

Ssangyong received R450-crore capital infusion from parent M&M in FY13.