MG Motor India Says Will Sell Majority Stake To Indians In 2-4 Years

MG Motor India, which is owned by Chinese company SAIC Motor, plans to sell a majority stake to Indian investors to raise more than Rs 5,000 crore in 2-4 years.

MG Motor India will use these funds to build a second plant in Halol, Gujarat, and boost its annual capacity to about 300,000 units by 2028, said its CEO Emeritus Rajeev Chaba on Wednesday. The second facility is projected to have an annual capacity of 180,000 units, while the current Halol plant has a capacity of 120,000 units per year.

The company, which has invested about Rs 4,000 crore in India till 2022, is trying to bring foreign direct investment from its Chinese parent for the last few years. However, it has not been able to get the necessary approvals from the Indian government to do so. The relationship between India and China has been frosty since border clashes between their troops in 2020.

"We are going to Indianize the operations. We plan to dilute our shareholding, and the majority will be owned by Indians in 2-4 years," Chaba told reporters at a press conference in Delhi.

"We are in talks with multiple partners, and all of them are Indians. We are in talks with Indian financial institutions, Indian private companies, some high net worth individuals (HNIs), etc. We are also encouraging our dealer partners, making it a one-of-a-kind stake sale. We have not finalized anything as of now," he said. The company also plans to sell shares to its employees.

Chaba said that the company hopes to complete the first step—identifying the investors—in this financial year itself. "Listing the company on the stock exchange is also part of the plan, but it would happen close to 2028," he said.

The domestic sales of MG Motor India jumped by 21 per cent in 2022-23 to 48,886 units, according to SIAM data. The company plans to sell approximately 100,000 units in 2023-24.

"Through plant number 2, we will introduce 4-5 new cars, and most of them will be EVs (electric vehicles). So, out of 300,000 units annual capacity, about 65-75 per cent capacity would be for EVs," said Chaba.

The company currently sells just two EVs, ZS EV and Comet, in India. In FY23, EVs accounted for just 11.6 per cent of its total sales.

Chaba said that "Indianizing the operations" means Indianizing not just the shareholding but also the board, the management, the supply chain, and the technologies.

"We are going to assemble the battery ourselves in Halol from next year. Then, we are going to explore cell manufacturing and production of EV parts through a joint venture or a third party in India," he said.

Not only this, MG Motor India feels that hydrogen fuel cells will also become a viable option in 3-4 years' time. "Right now, it may not be a viable option because of the cost. Can we localize that hydrogen fuel cell in India at Indian rates, with the help of a joint venture, and then supply them to OEMs (original equipment manufacturers) in India? If we have this technology, can we bring it to India? This is what we are seriously thinking," Chaba noted.

MG Motor India's Halol plant in Gujarat employs about 4,000 people directly and indirectly at present. By 2028, the company plans to employ 20,000 people directly and indirectly through both plants in Halol, he mentioned. Chaba said the front end of the company would continue to be managed by him and his team.

He said that the investment "will be much more than Rs 5,000 crore" for the second plant, but right now, "we are being prudent in saying the investment will be 'Rs 5,000 crore upwards' by 2028".

MG Motor entered the Indian market in 2019 when it launched its first car, Hector, in June that year. The company sells five models—Hector, Gloster, Astor, ZS EV, and Comet—in India.