MG Motor India plans to divest a majority stake in its Indian operation and it is in talks with potential Indian partners, the deal for the same will be announced this year, and the company is eventually open to listing on stock exchanges as well.
- MG is looking for investment for second plant at Halol
- 4-5 new cars, mostly EVs, to be introduced between 2025-'28
- Current plant capacity to be expanded to 1.2 lakh units
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 that will go into setting up of 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.
MG to completely Indianise operations
MG Motor India will bring in four to five new vehicles, which will be largely EVs, to be produced out of the Halol plant. The company is aiming for EVs to account for 65-75 percent of its sales by 2028.
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, majority to be owned by Indians in 2-4 years. We want to Indianise the board, management, shareholding and supply chain."
The company is in talks with multiple entities including individuals, corporates and financial institutions. While Chaba declined to share the names of potential partners, we had previously exclusively reported that the company is in talks with JSW Group for dilution of stake.
"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," added Chaba.
MG to expand current plant capacity
MG Motor entered India in September 2017 by acquiring General Motors India’s Halol plant. It has been manufacturing vehicles for 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 carmaker can produce. Hence, it has been actively exploring a second plant in India for over a couple of years now.
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.
EVs will be at the core of MG Motor India’s plans. 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. MG 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.
Hormazd Sorabjee
Anurag Chaturvedi
