Following the 13th consecutive quarter of deficit, Ssangyong Motor, which is facing a liquidity crisis due to the withdrawal of investment from its parent company Mahindra, faced the negative factor of "refusing its audit opinion."
According to a quarterly report released by Ssangyong Motor on May 15, Samjeong KPMG, an auditor of the motor company, rejected the audit opinion. The reason is that questions are raised about its viability as a continuing company.
Samjeong KPMG said, "Ssangyong Motor incurred 98.63 billion won ($80.8 million) in operating losses and 193.537 billion won ($158.6 million) in quarterly net losses as of the end of the reporting period due to worsening financial structure, and its current liabilities exceed 589.864 billion won ($483 million) over current assets."
It added, "This situation raises significant questions about its viability as a continuing company. When it is difficult to survive as a continuing entity, assets and liabilities may not be recovered or withdrawn at their book value through a normal course of business activities."
In response, Ssangyong's side says it does not file an objection to the rejection of the audit opinion. Since it is not immediately delisted because it is a rejection of the audit opinion, it is expected to focus on improving the future management situation rather than filing an objection.
"We are conducting various consultations to raise funds and making efforts to improve liquidity through the sale of non-core assets," a Ssangyong official told a media outlet. "We are not considering objections to the rejection of the audit opinion because there is room for improvement in the management situation from the second quarter."
India's Mahindra Group, a major shareholder, provided only 40 billion won worth of emergency operating funds instead of 230 billion won originally promised.
Ssangyong Motor will have to repay 90 billion won ($73.7 million) in loans to KDB Industrial Bank in July. Ssangyong may face court receivership unless the state-run KDB suspends the maturity.
KDB has currently not revealed whether it will provide additional assistance to Ssangyong Motor. Ssangyong has reportedly yet to ask for a moratorium on loans due in July.