Indian carmaker Mahindra & Mahindra Ltd. is in the process of selling its South Korean unit SsangYong Motor Co. by picking a lead manager for a potential exit from the loss-making affiliate, industry sources said Friday.

In 2011, Mahindra acquired a 70 percent stake in SsangYong Motor for 523 billion won ($438 million). Mahindra currently owns a 74.65 percent stake in the SUV-focused carmaker. 

Mahindra and SsangYong didn't confirm whether they have named an unidentified adviser for the stake sale. 

The SsangYong Motor stake held by Mahindra is valued at about 330 billion won based on Friday's closing price of 2,970 won.

Mahindra hinted at the possibility of giving up control of SsangYong Motor last week, as its Managing Director Pawan Goenka said that SsangYong needs a new investor and that Mahindra is working with the company for that purpose.

Mahindra's Deputy Managing Director Anish Shah reportedly said the Indian company will not remain the biggest shareholder if an investor purchases a controlling stake in SsangYong.

SsangYong Motor has struggled with declining sales due to a lack of new models and Mahindra's recent decision not to inject fresh capital into the Korean unit. Its lineup consists of the flagship G4 Rexton, as well as the Tivoli, Korando and Rexton Sports sport utility vehicles.

Mahindra said early this year it will inject 230 billion won into SsangYong for the next three years after obtaining approval from its board. But its board voted against the investment plan in April, as the COVID-19 pandemic continues to affect vehicle sales in global markets.

Instead of the proposed 230 billion won, Mahindra said it would consider a "special one-time infusion" of up to 40 billion won over the next three months to help SsangYong continue operations.

The one-time cash injection falls far short of the 500 billion won Goenka had said is needed to turn SsangYong around by 2022.

SsangYong continued to report net losses in the past 13 quarters through the first quarter of this year. 

In the first quarter, its net losses deepened to 193.54 billion won from 26 billion won a year earlier. Its sales from January to May fell 32 percent to 39,206 vehicles from 58,030 a year ago. (Yonhap)