Sajjan Jindal’s JSW Group’s entry in MG Motor to boost EV maker's expansion plans

The ongoing talks between Sajjan Jindal-led JSW Group and Chinese EV major MG Motor, if comes to fruition, holds the key to the automaker’s future in the country. MG Motor India - the local subsidiary of the Chinese state-owned auto major SAIC Motor from Shanghai - is currently scouting for Indian investors to sell the majority stake in the company to secure a sustained future in the fifth largest auto market in the world.

As per sources, the multinational JSW Group that is into the production of steel, cement and energy, is in advanced levels of talks with MG Motor India to pick up 48-49 per cent stake in the company. MG Motor India, meanwhile, is looking to raise at least Rs 5,000 crore against a majority stake sale (at least 51 per cent) in the company. Apart from turning the company into an entity held by Indians, it believes the move will also help fuel its growth plans.

According to Rajeev Chaba, CEO Emeritus of MG Motor India, the plan is to invest the money raised through the stake sale into a second manufacturing plant in Gujarat’s Halol, where its first plant is located. While the current plant has a capacity of 120,000 units a year, addition of a second plant could take that number to 300,000 units per year. “We plan to dilute our shareholding, with the majority to be owned by Indians. The second phase involves expanding our capacity with a new plant. While we have a capacity of 120,000 units a year at our existing plant in Halol (Gujarat), it will [be] exhausted soon. Thus, we plan to set up a second plant at the same location with an additional capacity of 180,000 units a year,” Chaba had said earlier.

Given the extent of growth MG has recorded, the expansion is a necessity, he feels. In FY23, the company sold 48,866 passenger cars—21 per cent more than the 40,369 units sold the previous year and more than double the 21,954 units it sold in FY20, the first full year of operations. Chaba estimates that it will clock sales of over 70,000 units in FY24.

Additionally, proceeds from the stake sale will be used in localising the component ecosystem. According to him, apart from bringing in local investors/owners, localising the company will also involve localising its tech. From 2024, it plans to assemble the batteries - crucial for an electric vehicle - at its Halol plant. Other key components like cells that the local industry currently imports, will be made in India through joint ventures.

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