According to The Economic Times, SAIC Motor, which is headquartered in Shanghai, may sell a stake in MG Motor India to billionaire businessman and chairman of JSW Group Sajjan Jindal.
Details on Sajjan Jindal, a billionaire, might buy up to 48% of MG Motor India
According to the article, which cited sources familiar with the development, the deal will not affect the group’s listed companies, JSW Steel and JSW Energy. Jindal would instead invest in MG Motor India through a privately held business of his.
According to numerous sources cited in the paper, Sajjan Jindal, 63, is likely to acquire up to 48% of MG Motor India, with dealers and Indian staff owning 5-8% and SAIC holding the remaining shares.
If the acquisition goes through, the Chinese company will become a minority partner with a 49% stake, with at least 51% of the equity remaining in Indian hands.
According to a senior government official, MG Motor India would eventually become an Indian corporation rather than a Chinese one, with an India listing taking place over the next few years. Indians will make up a larger portion of the company’s board of directors and top management.
The news should be noticed in light of a recent ET story that said Chinese mobile phone makers had been requested to bring in Indian equity partners and top management for operations in the nation.
Recently, Sajjan Jindan and his son travelled to China to meet with senior SAIC Motor management and talk about the purchase strategy. Although the negotiations have been ongoing for a while, they suddenly seem to have picked up steam when both parties reached an understanding over the deal’s framework.
According to sources cited in the paper, MG Motor India is currently valued at $1.2-1.5 billion, which is significantly less than the $8–10 billion that was first requested.
Additionally, it has been revealed that legal agreements have already been started, with the intention of having a formal, binding package in the next three to four months. A new brand identity that will represent the business identities of both partners is also part of the overall strategy.
Due to the rising tension between India and China, China’s SAIC has already invested close to Rs 5,000 crore in India and had plans to add an additional equivalent amount.
MG Motor relies on external commercial borrowings from the parent business to finance operations in India in order to address the cash shortfall.
Due to MG Motor India’s failure to increase sales and installed capacity in accordance with demand during the previous two years, the company has struggled.
Even though the company’s car models received a positive reception, its annual sales have stabilised at around 50,000 units. It sold 48,866 units in FY23, a 21% increase from FY22. In terms of sales volume in May, SAIC’s fastest-growing region was India (51%).
The company’s market share in India’s passenger car market was 1.26 percent in FY23, and between the beginning of operations in 2019 and the end of March 2023, it sold a total of 1,46,000 vehicles there.
If the acquisition transaction is approved, MG Motor India will benefit greatly since it will be able to increase capacity and satisfy demand. It would be an agreement that enables Sajjan Jindal to compete in the Indian market for EV passenger cars, which is now controlled by Tata Motors.
According to the article, the strategic investment will likely enable MG Motor India to increase its production capacity by 1,80,000 units annually, bringing it to 3,00,000 units.
The study did point out that because important aspects of technology transfer are still being worked out, the negotiations with JSW Group could yet end in failure.
