As per the agreement reached between the two companies, JSW Group will acquire 35% stake in SAIC’s Indian subsidiary MG Motor India for an undisclosed amount. The Chinese auto major will continue supporting the joint venture with advanced technology and products to deliver mobility solutions to the Indian consumer.
The acquisition comes amid increased scrutiny by the Indian government on investments made by China amid heightening geopolitical tensions. The stake sale to JSW Group will enable the maker of Hector and Astor to expand operations in the local market, and also give a foothold to the Indian conglomerate in the fast-evolving electric vehicle segment in India.
The shareholder agreement and the share purchase and subscription agreement were signed between SAIC President Wang Xiaoqiu and JSW Group’s Parth Jindal at MG Motor’s office in London on Thursday.
Wang Xiaoqiu, President, SAIC Motor, said, “In the growing Indian automotive market, both partners shall work closely to bring in the best of innovation, in creating greener and smarter mobility products and services for our consumers, seizing market opportunities, continuously expanding the brand influence and market share of our products, and achieving greater success for MG in India.”
Parth Jindal, “Our strategic collaboration with SAIC Motor aims to grow & transform the MG Motor operations in India with a focus on green mobility solutions. The joint venture paves the way for bringing world-class technology-enabled futuristics suite of automobile products including the new generation of intelligent connected NEVs and ICE vehicles. The JV’s focus on broader localisation initiatives will yield financially accretive synergies through economies of scale while providing the highest level of customer service to the Indian consumer.” One of the key focus areas of the joint venture, the duo said, will be to pursue the development of the electric vehicle ecosystem and to take a leadership position in this space. SAIC Motor and JSW Group said they aim to create strategic synergies by bringing together resources in the field of automobiles and new technology. The joint venture also plans to undertake multiple new initiatives including augmenting local sourcing, improving charging infrastructure, expansion of production capacity, and introducing a broader range of vehicles with a focus on green mobility. Earlier in May this year, MG Motor India had said it is looking at diluting majority stake in the company to Indian entities to fund its expansion plans in the country over the next five years. As part of its growth plan, MG Motor India plans to invest Rs 5000 crore, which will be utilised, among others, to establish a second manufacturing facility in Gujarat. The new unit is intended more than double the company’s installed capacity to a total of 300,000 units, from the current 120,000 units.
MG Motor India CEO Emeritus Rajeev Chaba had told ET the intent is to “Indianise operation” by diluting majority stake to Indian financial institutions, Indian partners, Indian High Net-worth Individuals (HNIs) in the next 2-4 years. “We intend to Indianise shareholding, the company’s board, management, supply chain in the next 2-4 years”, Chaba had said, adding, the first step of the process is likely to be finalised in the ongoing financial year.
MG Motor India is a British brand owned by China’s SAIC. The company had a good start with the launch of its first product SUV 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 sources, the automakers has been waiting for government approvals for nearly two years and had to eventually explore alternate options to capitalise its expansion plans.
MG Motor India – which has on offer five vehicles in the local market currently – is targeting doubling its product portfolio by 2028. The company plans to launch 4-5 new cars, mostly EV models, and achieve 65-75% of its sales from the EV portfolio by 2028. More immediately, MG Motor India is looking at profitably growing sales to 80,000-100,000 units this calendar year, from 48,000 in 2022. About a third of these volumes will come in from electric vehicles – ZS EV and Comet EV.