Chinese-owned MG Motor India to sell majority stake; invest Rs 5,000 crore by 2028
Amid Indian govt’s restrictions on Chinese investments, MG Motor India lays a 5-year roadmap to ‘Indianise’ business; to set up 2nd plant in Halol (Gujarat) and boost production to 300,000 units a year
Updated May 10, 2023, 9:08 PM IST
MG Motor India, the local subsidiary of the Chinese-owned passenger vehicle major, has come up with an ambitious plan to transform its business by 2028 amid Indian government’s onslaught on investments from the neighbouring country. After securing one per cent share of India’s passenger four-wheeler market in 2023, the company is now planning to bring in local owners in its bid to ‘Indianise’ the business.
The foreign owners of the company are now planing to divest its majority stake to Indian partners within 2-4 years. For the same, it has already started scouting for buyers among Indian investors, including institutions, its local business partners and HNIs. “We will finalise the new investors-cum-owners of MG Motor India, who together would own more than 50 per cent of the company within FY24,” Rajeev Chaba, CEO Emeritus, MG Motor India told the media today. The aim is to ‘Indianise’ the company that will, in turn, help it raise funds for the next phase of expansion through expansion in its production capacity.
The move comes at time, when the Indian government is increasing its scrutiny on investments from Chinese entities and their operations in India. As per sources, last year the Ministry of Corporate Affairs (MCA) had sent a notice to MG Motor India on certain alleged irregularities in its books. It had asked the company’s directors and its auditor Deloitte to explain certain alleged audit deficiencies that had been discovered during the course of the probe.
Since then, MG has been in talks to several Indian investors like Sajjan Jindal-led JSW Group to sell close to a 15 per cent stake. MG Motor is owned by SAIC Motor Corporation (formerly Shanghai Automotive Industry Corporation) – a Chinese state-owned automobile manufacturer headquartered in Anting, Shanghai.
As per the plan, said Chaba, the auto maker aims to raise at least Rs 5,000 crore over the next few years against its stake sale to the Indian investors and utilise the proceeds in the form of capital investment. While the company currently has a production capacity of 70,000 units a year at its Halol plant in Gujarat, in the next phase it plans to set up a second unit at the same location, which will ramp up its capacity to 3,00,000 units a year by 2028.
In the first phase of the five year plan, MG has set a few crucial targets. First, to finalise the Indian investors, who will pick up stake in the company – over 50 per cent its total shares – by March, 2024. Second, it will ramp up capacity at its existing Halol manufacturing plant to 120,000 units a year by 2025. Third, MG Motor India that sold some 48,000 cars in 2022, aims to increase its sales to 80,000-100,000 units a year within next two years.
According to Chaba, the company is now focusing on profitability and broke even at cash level in March 2023. The company has also set another target of having 65-70 per cent of its portfolio comprising of electric vehicles by the end of five years, when its second plant will be operational.
Published on: May 10, 2023, 9:08 PM IST