MG Motor India, a subsidiary of China’s SAIC Motor, is looking at diluting its majority stake in the company to Indian entities to fund its expansion plans in the country over the next five years.
It plans to invest Rs 5,000 crore, which will be utilised, among others, to establish a second manufacturing facility in Gujarat. The new unit will more than double the company’s installed capacity to 300,000 units from 120,000 units.
MG Motor India CEO Emeritus Rajeev Chaba said the intention is to “Indianise operation” by diluting majority stake to financial institutions, partners and high net-worth individuals in the country. “We intend to Indianise shareholding, the company’s board, management, supply chain in the next two four years,” he told ET.
The first step of the process is likely to be finalised in this financial year, he said.
Chaba said while talks are on with multiple potential partners, identification of a possible partner is only likely to happen later this year.
His comments come amid media reports of MG Motor India being engaged in talks with Sajjan Jindal-led JSW for stake sales. JSW Holdings had clarified in a notice to the National Stock Exchange dated April 25 that no such proposal had been placed for discussion before its board or any of its committees.
MG Motor India company had a good start with the launch of its first product, sport utility vehicle Hector, in 2019. However, plans to expand footprint in the country hit a roadblock with the government holding onto approvals on investments from China amid geopolitical tensions. As per industry executives, the automaker has been waiting for government approvals for nearly two years and has now started exploring alternative options to capitalise its expansion plans.
The automobile manufacturer, which has on offer five vehicles in the local market, is targeting doubling its product portfolio by 2028. “We plan to launch four-five new cars, mostly EV (electric vehicle) models, and achieve 65-75% of sales from the EV portfolio by 2028,” said Chaba.
This year, the company is looking to expand sales to 80,000-100,000 units, from 48,000 in 2022. About a third of the sales are expected to come from EVs – ZS EV and Comet EV. Bookings for the company’s most affordable car will open on May 15.
To keep prices competitive and support the widespread adoption of EVs, the company said it plans to deepen local manufacturing of components and establish a battery assembly unit in Gujarat. Plans are also being considered to explore possibilities for hydrogen fuel cell technology vehicles, which Chaba said he expects to become more affordable in the next three-four years.
With its expansion plans in place, MG Motor India expects to have a total workforce of 20,000 people in Gujarat by 2028.
Chaba said the company broke even in March and wants to strike a balance between volume and profitability to sustain operations. “We are working on ways to balance volumes and profitability. We expect to be net cash flow positive this year,” he said.