mergers and acquisitions of mahindra and ssanyong

MERGERS AND ACQUISITIONS

A Presentation By:Ashutosh Athavale Rushal Mangalvedekar

Yash Thakkar Mokshit Salian

MERGER

ACQUISITION

Mahindra & Mahindra Ltd.

One of the largest vehicle manufacturers by production in India.

The company was founded in 1945 by K.C. Mahindra, J.C. Mahindra and Malik Ghulam Mohammed.

The company changed its name to Mahindra & Mahindra in 1948.

It is ranked 21 in the list of top companies.

SsangYong Motor Company or SsangYong Motor was the fourth largest South Korea-based automobile manufacturer.

Founded in 1954, it has been manufacturing automobiles for more than five decades.

A 70% share of SsangYong was acquired by Mahindra & Mahindra Limited, in February 2011.

SSANGYONG MOTOR CO. LTD.

Why the Acquisitions?

Outbreak of Labor crisis in South Korea.

SsangYong- A loss making Unit.

Sound background of M&M.

An opportunity for SsangYong to grow in global markets.

An opportunity for M&M to launch a new portfolio of SUVs in India.

Terms of the acquisition

SYMC will continue to function as an independent entity with primarily a Korean management.

The acquisition will offer financial stability to SYMC

The two companies will work to further strengthen SsangYong’s product portfolio across the globe.

The labor union of SYMC, M&M have also signed a Tripartite Agreement which contains provisions for employment protection, long-term investment and commitment for no labor dispute.

Deal in Monetary Terms.

Total cost of acquisition of US$ 463 million with US$ 378 million in new stocks and US$ 85 million in corporate bonds

Exchange Rate Used: US $ I = KRW 1129

Mahindra will acquire 70% stake

Deal expected to be concluded by March 2011

Mahindra And Mahindra Balance Sheet

Mahindra And Mahindra Balance Sheet(Continued)

SSANGYONG MOTORs Balance Sheet

Currency in Millions of South Korean Wons.As of:

Dec 31,2009

Dec 31,2010

Dec 31,2011

Dec 31,2012

ASSETSCash and Equivalents 13,305.4 85,157.7 208,521.6 203,666.5

Total Cash and short term Investments 13,305.4 85,157.7 208,521.6 203,666.5

Accounts Receivable 77,371.7 156,607.2 135,575.4 187,457.0

Other Receivables 21,803.0 19,294.1 28,582.0 20,586.0

Notes Receivable 2322.8 - - -

Inventory 216,903.0 220,360.6 262,699.0 269,034.1

Prepaid Expenses 2,752.4 3,034.1 2,765.8 2,622.9

Other Current Assets 59,215.0 81,047.6 13,099.6 27,906.4

Total Current Assets 393,673.3 565,501.3 651,243.4 711,272.8

Net property plant and equipment 803,813.2 1,030,655.4 1,038,957.0 1,051,401.8Long-Term Investments 34,639.5 560.0 560.0 566.0

Other Intangibles 3,160.5 5,127.7 5,726.7 8,618.7

Other Long-Term Assets 27,660.2 38,851.2 38,182.6 30,539.2

TOTAL ASSETS 1,379,434.2 1,724,739.0 1,793,567.0 1,850,490.4

SSANGYONG MOTORs Balance Sheet (Continued)

LIABILITIES AND EQUITY

Accounts Payable 65,993.7 364,034.7 382,731.6 380,259.5

Accrued Expenses 29,180.6 71,648.1 16,599.6 33,222.0

Short-Term Borrowings 80,030.5 - 40,567.7 30,000.0

Current Portion Of Long-Term Debt/Capital Lease - 356,920.8 - -

Other Current Liabilities 156,850.4 116,571.8 74,746.4 238,168.4

TOTAL CURRENT LIABILITIES 332,055.1 909,175.4 518,733.1 688,821.3

Long-Term Debt 403,847.6 - 95,404.8 95,404.8

Other Liabilities, Total 349,800.2 203,814.9 273,366.5 265,601.6

TOTAL LIABILITIES 1,085,702.9 1,112,990.3 887,504.4 1,049,827.7

Common Stock 542,052.2 182,688.0 609,809.2 613,373.2

Additional Paid In Capital 473,604.8 34,654.2 5,145.4 122,585.0

Retained Earnings -729,517.8 -411,720.4 169,663.3 44,842.3

Comprehensive Income And Other 7,592.2 806,126.8 121,444.7 19,862.2

TOTAL COMMON EQUITY 293,731.4 611,748.7 906,062.6 800,662.7

TOTAL EQUITY 293,731.4 611,748.7 906,062.6 800,662.7

TOTAL LIABILITIES AND EQUITY 1,379,434.2 1,724,739.0 1,793,567.0 1,850,490.4

RATIOS OF SSANGYONG MOTORS CO. LTD. 

Ratios 2012 2011 2010

Valuation Ratios:

P/E Ratios(TTM) - 13.80 15.32

P/E High- Last 5 Years - 22.98 32.70

P/E Low- Last 5 Years. - 6.99 9.11

Financial Ratios:

Quick Ratio 0.74 1.12 1.41

Current Ratio 1.06 1.34 1.74

LT Debt To Equity 11.52 45.76 34.96

Total Debt To Equity 19.80 85.98 65.20

Interest Coverage - 0.85 12.70

Effectiveness Ratios:

Return On Asset - 8.99 9.87

Return On Asset- 5 Year Avg. -14.95 10.44 9.49

Return On Investment - 15.12 15.27

Return On Investment- 5 Year Avg. -24.40 17.78 15.42

Return On Equity - 20.58 18.68

Return On Equity- 5 Year Avg. -44.28 22.46 18.50

RATIOS OF MAHINDRA & MAHINDRA LTD. 

Ratios 2012 2011 2010 2009

Financial Ratios:

Current Ratio 0.95 0.86 1.11 0.90

Quick Ratio 0.66 0.61 0.86 0.83

Debt- Equity Ratio 0.26 0.23 0.37 0.77

LT Debt Equity Ratio 0.26 0.32 0.46 0.83

Efficiency Ratios:

Inventory Turnover Ratio 14.99 15.64 17.91 14.56

Debtors Turnover Ratio 19.05 17.97 16.09 12.77

Investment Turnover Ratio 14.99 15.64 17.91 14.56

Fixed Assets Turnover Ratio 4.32 4.08 3.85 2.84

Total Assets Turnover Ratio 2.19 1.86 1.74 1.42

Asset Turnover Ratio 2.27 2.00 1.85 1.61

Acknowledgement

We would like to thank Bhagyeshree Maam to give us this wonderful opportunity to expose our minds to the vast knowledge of the real workings of the world