MG Motor India, the British brand owned by China’s largest car maker Shanghai Automotive plans to divest a majority stake in its operation and it is in talks with potential Indian partners. The deal for the same will be announced in 2023. Eventually, the company is open to listing on stock exchanges as well.
The move is part of MG Motor’s 3.0 plan which will be kicked off between 2025 to 2028 and this will call for an investment of Rs 5,000 crore which will go into setting up a second plant in Halol. This will bring in an incremental capacity of 1.8 lakh units and take up the cumulative capacity to 3 lakh units.
The company will bring in four to five new vehicles which will be largely EVs to be produced out of the second plant in Halol and this move by the company will be able to generate 20,000 direct and indirect jobs.
Autocar Professional had exclusively reported that the company was in talks with JSW Group for dilution of stake on April 24, 2023.
Announcing the new vision statement, Rajeev Chaba, CEO Emeritus of MG Motor India said, “The plan is to Indianise the operation. The first step will be announced in 2023. We plan to dilute our shareholding, the majority to be owned by Indians in 2-4 years. We want to Indianise the board, management, shareholding, and supply chain. The majority stake in the coming years will be owned by an Indian partner.”
As part of Indianising the management, Chaba has recently been redesignated from President and CEO to CEO Emeritus, and the company has elevated Gaurav Gupta as the Deputy MD responsible for revenue and markets and Biju Balendran as Deputy MD, responsible for cost and plant operations.
Emphasising its commitment and contribution to India’s mission to become a major manufacturing hub, MG Motor India will invest in advanced clean technologies, including hydrogen fuel cells and cell manufacturing, as well as bolster local manufacturing of EV parts through JVs or third-party manufacturing, it said in a press release.
Chaba declined to share the names of potential partners.
The company is in talks with multiple entities including corporates, and financial institutions to dilute the stake and the first step will be announced this year.
“The opportunity is there to monetise the operation, how many companies get to do this? We are able to monetise, generate wealth, distribute wealth, localise everything here, bring the technology here and localise it,” said Chaba.
Till then, MG Motor India will be executing its 2.0 plan, which entails the expansion of the current plant capacity from 70,000 units to 1.2 lakh units per annum and then it will be working towards breaking into profits with five products. It has plans of selling 80,000 to 1 lakh units in 2023 and the company hopes to be net income positive at the end of the year.
EV will be at the core of the expansion of MG Motor’s plans in the future. It will start assembly of batteries for its EVs in 2024 and it is also exploring the possibility of cell manufacturing in the country with an alliance partner.
MG Motor India’s decision to sell its stake happens amid struggles to obtain FDI clearance from the government of India for its future investment. It is precisely the same reason why Great Wall Motors, Changan, and Foton, despite spending years in India, decided to exit the market amid geo-political tension.
With the next round of fundraising, MG Motor India will be able to raise upwards of Rs 5,000 crore in the next couple of years.
The SUV specialist has already invested close to Rs 4,000 crore in India and was ready to infuse a similar amount, but the FDI proposal has been stuck with the government of India since 2020, after a number of skirmishes at the India-China border.
MG Motor entered India in September 2017 by acquiring General Motors India’s Halol plant. It has been manufacturing vehicles over the past four to five years, but since the factory is over a decade-and-a-half old, there is a limitation to the extent to which the brand can produce. Hence, it has been actively exploring a second plant in India for over a couple of years now.