MG Motor is in “advanced negotiations” with potential buyers, including Reliance Industries, JSW Group, Premji Invest and Hero Group, to sell its majority stake in India car business. It is looking at closing a deal by the end of this year.
MG Motor wants regulatory ease in India as it faces difficulties in getting approvals for fresh investments from its parent, Chinese auto giant SAIC, due to restrictions following India – China tensions. It wants to embark on its next phase of growth, for which it needs Rs 5,000 crore worth of investment to set up a factory in Gujarat and bring in new cars – mainly electric.
Sources revealed that MG Motor is in talks, now at an advanced stage, with Indian companies and is very much likely to seal a deal by the end of this year. The carmaker needs the funds “almost immediately” to initiate the next phase of expansions. The MG management is looking for a credible partner.
Rajeev Chaba, the CEO of Emeritus of MG Motor India, said the company has defined its long-term plan till 2028. MG Motor is in process of Indianizing itself, as part of its 2.0 and 3.0 strategy, across various aspect including ownership, broad structure, manufacturing footprint and localizing of supply chain. Chaba said the company wants to Indianize its operations. “The first step will be announced in 2023. We plan to dilute our shareholding in two to four years. We want to Indianize the board, management, shareholding and supply chain. The majority stake in the coming years will be owned by an Indian partner.”
He said MG Motor has the opportunity to monetize, generate wealth, distribute wealth, localize everything and bring the technology. The executive outlined that the 2.0 plan is for the period of 2023 to 2025. It entails expansion of capacity from 70,000 units per annum to 1.2 lakh units.
MG Motor wants to increase its volume from 80,000 units to 1 lakh units, break into profit for a decent valuation. Sources said the carmaker will use the funds from the divestment for expansion of plant capacity from 1.2 lakh units to three lakh units, with Rs 5,000 crore to be injected into the second plant.