Mahindra & Mahindra (M&M) opened today morning on the BSE with an upward gap of over 3.5% at Rs.291.05 and rose over 13% to hit an  intraday high at Rs.317.80.

On 3rd April, the company’s Board of Directors held a special meeting to review investment in SsangYong Motor Company (SYMC) and at the same time to discuss the approach to capital allocation in light of the COVID 19 impact.

The request from the management and labour union of SYMC for fresh injection of equity from M&M to help the company fund $406 million of requirements over the next three years, was considered by the Board.

After lengthy deliberation given the current and projected cash flows, the M&M Board took a decision that M&M will not be able to inject any fresh equity into SYMC and has urged SYMC to find alternate sources of funding.

However, with a view to enable SYMC to have continuity of business operations, whilst they are exploring alternate sources of funding, the board has authorised the M&M management to consider a special one-time infusion of up to $32 million over the next three months.

Moreover, M&M would make every effort to continue to support to all other non-fund initiatives that are currently in place to help SYMC reduce Capex, save costs and secure funds. Examples of such support are: 1. Capex-free access to Mahindra’s new platforms such as W601.

2. Support technology programs which would help reduce SYMC’s capex

3. Support the material cost reduction program that is currently underway 4. Support SYMC management to find new investors

The market is happy that the company is being pragmatic and using funds judiciously in these troubled times.