6 Key Takeaways From SAIC-JSW JV
Key Takeaways from SAIC-JSW JV
JV to undertake multiple new initiatives
JV to focus on Green Mobility
JV to augment Local Sourcing
JV to improve Charging Infrastructure
JV to help Expand Capacity
JV to introduce broader range of vehicles
MG Motor in India is on an accelerated growth path now. The shareholder agreement and share purchase and share subscription agreement were signed by the President of SAIC Wang Xiaoqiu and JSW Group’s Parth Jindal at the MG Office in London with the objective of accelerating the transformation and growth of MG Motor in India, the company said in a statement.
In an interaction with BW Businessworld in May this year, MG Motor India had shared that it had laid down the roadmap for expansion and indigenisation of its Indian operations over the next 4-5 years.
The first step towards indigenisation has happened. On 30 November, SAIC Motor and the JSW Group entered into a strategic Joint Venture (JV). According to the agreement, signed JSW will hold 35 per cent in the Indian JV operations. SAIC will continue supporting the joint venture with advanced technology and products to deliver extraordinary mobility solutions with an unwavering focus on the Indian consumer.
Terming it as MG 3.0, Rajeev Chaba, MG Motor India CEO Emeritus when asked about the option to list the company on Indian stock exchange had told BW Businessworld in May, "Listing the company is also part of the plan but that may happen more towards 2028 in a step-wise manner. First step is to get Indian shareholders on board as majority shareholders, it could be HNI's, domestic financial institutions, dealer network and employees. Next step will be listing." And that may very well happen in coming times.
Commenting on the JV, Parth Jindal of JSW Group said, “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."
What MG Motors had said in May
As is known, MG Motor India has a current production capacity of 120,000 cars per annum at its Gujarat plant in Halol. In the fiscal ended on March 31, 2023, it could sell 48,000 units. "In the second phase called MG 2.0 (2023-2025) a lot of work is required to scale up and reach the current capacity of 1.2 lakh units. If we achieve that quickly, that alone will be a sustainable business model by itself. How many car makers in India are selling 1.2 lakh units in a year?" asked Chaba.
The target for current and next fiscal year, Chaba had said in May, was to reach sales figures of 80,000 units to 100,000 units by 2025.
The automaker had said then that it aimed to launch 4-5 new cars in the country, with focus on EVs. This JV is certainly going to accelerate the plans. MG Motors India expects its EV portfolio to contribute up to 65-75 per cent of total sales in India and is doing everything to build an ecosystem for EV so that more components could be sourced locally.
On the plans to raise Rs 5,000 crore as part of MG 3.0, Chaba said that will come in different stages and that will be part of the dilution of stake in favour of Indian majority ownership. This process is now rolling with JSW Group picking up 35 per cent stake in the JV. In the third-phase, MG Motor India intends to expand its existing manufacturing facility at Halol, Gujarat by adding the second plant with an annual capacity of 1.8 lakh units. Together, that will take the combined annual capacity of MG Motor India to 3 lakh units.
In the first-phase called the 'investment phase' starting 2017-2022, MG Motors India established its base, launched half-dozen cars like Hector, Astor, Gloster and ZS EV and Comet, invested over Rs 4,000 crore in India including in buying and expanding the Halol Plan in Gujarat (earlier owned by GM Motors India)
MG Motor India has made significant progress in the country with a year-on-year growth rate of 25 per cent. Since its inception in 2019, MG Motor India has invested Rs 7,000 crore and sold close to 200,000 vehicles in the country. MG Motor India has a strong portfolio of five segment-defining products in India including its most popular SUV, MG Hector. Additionally, MG Motor India has been one of the front runners in bringing EV technology to India with the ZS EV and Comet models and was also one of the first brands to set up a robust EV infrastructure in India.
