A private company owned by Sajjan Jindal, chairman of JSW Group, aims to buy into MG Motor India, a wholly owned arm of Shanghai-headquartered SAIC Motor, said people with knowledge of the matter. The group’s listed companies — JSW Steel and JSW Energy — will not have any exposure to the venture, they said.
A JSW Group spokesperson said it has no comment to offer on market speculation. MG Motor India didn’t respond to queries.
According to the broad contours agreed upon so far, Jindal is likely to own 45-48% of MG Motor India, with dealers and Indian employees owning 5-8%. SAIC will hold the rest, said multiple sources aware of ongoing discussions. The plan, said to have been blessed by the Indian government, will lead to a minimum 51% of the equity being in Indian hands, with the Chinese becoming a minority partner with a maximum 49%.
Aiming for binding pact in three-four months
It will “become an Indian entity, instead of a Chinese one, with an eventual India listing in the next few years,” said a senior government official.
The top management and board will have a larger share of Indians.
Chinese mobile phone manufacturers have similarly been asked to induct Indian equity partners and senior management for their operations here, ET reported on June 13.
Jindal and his son Parth were in China recently to meet the SAIC leadership and discuss the alliance. The talks, ongoing for several months, have gathered steam with both sides agreeing on the deal structure.
The valuation of MG Motor India is pegged at USD 1.2-1.5 billion (INR 9,800-12,300 crore), a far cry from the original ask of $8-10 billion, said the people mentioned above.
Legal agreements have been initiated with an aim to have a formal binding pact in place in the next three to four months. The plan is to have a new brand identity that will represent the corporate identities of both partners.
SAIC has invested close to Rs 5,000 crore in India and was ready to infuse a similar amount more, but the proposal has been stuck since 2020 amid border tensions that have soured ties between the two countries. MG Motor has been relying on external commercial borrowings from the parent company to support operations in India.
MG’s models include the Comet and ZS electric vehicles, besides the Astor, Hector and Gloster. The Chinese-owned company sought to emphasise the British origin of the MG marque, using actor Benedict Cumberbatch as brand ambassador at the time of its 2019 launch.
In the past two years, MG Motor India’s volumes and installed capacity haven’t been raised in line with demand. Annual sales have plateaued at about 50,000 units, even though it received an encouraging response for its models. It sold 48,866 units in FY23, up 21% from FY22. In May, India was the fastest growth region for SAIC in terms of sales volume at 51%, according to the Chinese company.
MG had 1.26% market share in the passenger vehicle segment in India in FY23. Between the start of operations in 2019 and the end of March, the company has sold a total 146,000 units in India.
According to MG Motor’s annual filing with the ministry of corporate affairs, the company posted revenue of INR 4,529 crore in FY21, up 80% from the year before. After posting a net loss of INR 715 crore for FY21, its cumulative loss since FY18 was around Rs 1,720 crore. The company has not filed its FY22 financials with the ministry so far.
India road map
MG Motor India is expecting an investment of around Rs 5,000 crore from an Indian partner this year, its CEO emeritus Rajeev Chaba told reporters in May.
“We plan to dilute our shareholding. The majority, more than 50% share, will be owned by Indians in the next two-three years,” he had said. “We will Indianise the shareholding, the board, management and supply chain — everything. We need to look at our own team to start with. We have been strengthening our team over the last six to seven months.”
The local management has seen changes in recent months. Chaba was redesignated CEO Emeritus, from president and CEO of MG Motor India. Gaurav Gupta, formerly chief commercial officer, has been promoted to deputy managing director in charge of revenue and markets. Biju Balendran, formerly with Renault Nissan, has been appointed deputy managing director of cost and plant operations in place of Wensheng Tang, SAIC’s key representative in India.
Chaba had said MG plans to introduce four to five products between 2026 and 2028 and focus on deriving the vast majority of its sales from electric vehicles (EVs).
Sajjan Jindal has been harbouring plans for years to enter the EV passenger car space, currently dominated by Tata Motors. The JSW Group had set up an EV company six years ago, shutting operations within 18 months.
“This is a great opportunity to partner with one of the largest automakers in the world to create a massive platform. There are few such options available in the market currently,” said a long time JSW Group watcher on condition of anonymity. JSW had been in advanced discussions to buy GM India’s Talegaon plant in 2019, but dropped its plans at the last minute over differences in valuation.
Autocar Professional was the first to report on the JSW-MG Motor discussions for a 15-20% stake sale on April 24. But the contours of the transaction have changed significantly since then.
The strategic investment will help MG Motor India expand its capacity by 180,000 units annually, taking its total manufacturing capacity to 300,000 units. The carmaker had expanded capacity at its plant to 120,000 units from 70,000 earlier.
SAIC has only three overseas manufacturing plants—in Thailand, Indonesia and India.
MG Motor, which has its plant in Halol, Gujarat, has been trying to raise funds for close to a year and has explored over a dozen potential investors who could buy into the company, including private equity player Warburg Pincus. But those talks did not fructify, said sources.
Talks with JSW Group may still fail, warned officials, as key issues over technology transfer are being fine-tuned.
SAIC has joint ventures with Volkswagen and General Motors, in which it holds 50% each. SAIC-VW and SAIC-GM accounted for 46% of SAIC’s total volume 2022, according to the company’s sales release.
