Is Ambani's Reliance Industries Acquiring MG Motor's Majority Stake in India Auto Business?

According to sources cited by TOI, MG Motor, a Chinese auto company owned by SAIC, is reportedly in advanced negotiations to sell its majority stake in its Indian car business. The equity sale discussions involve a number of potential buyers, including Reliance Industries, Hero Group, Premji Invest, and JSW Group.

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Sources reported on Thursday that MG Motor, a Chinese automotive powerhouse owned by SAIC, is considering the sale of its majority stake in its Indian car business. The company is currently engaged in advanced negotiations for an equity sale, with multiple interested parties, including Reliance Industries, Hero Group, Premji Invest, and JSW Group, expressing their interest in acquiring the stake, as stated by TOI.

“Hectic discussions are on with the Indian companies and MG Motor is looking to close a deal by the end of this year," one of the sources told TOI, adding talks are at an "advanced stage", especially as MG wants funds "almost immediately" to kick off the next phase of expansion. "Negotiations are on and the effort of MG management is to get a credible partner, while managing attractive valuations."

MG Motor India responded to inquiries regarding the discussions with Reliance, Hero Group, Premji Invest, and JSW as "speculative," indicating that the information is not confirmed or officially verified.

Challenges in Investment Approvals Amid Border Tensions 

Due to escalating tensions on the India-China border, companies associated with China have encountered obstacles in obtaining approvals for new investments. Industry sources reveal that the automaker, in particular, has been awaiting government approval to secure funding from its parent company for approximately two years. With limited success thus far, the company has initiated the exploration of alternative avenues to raise the necessary capital.

"Indianising Operation" Strategy: CEO's Vision 

MG Motor India CEO emeritus Rajeev Chaba expressed the intention to "Indianise operation" by selling a portion of the majority stake to financial institutions, partners, and high net-worth individuals within the country. Chaba shared with ET, "We intend to Indianise shareholding, the company's board, management, and supply chain in the next two-four years."

Strategic Plan for Stake Allocation and Capital Generation

In a recent announcement, MG Motor India revealed its strategic plan to allocate a majority stake to domestic partners and investors within the next 2-4 years. The objective behind this move is to secure approximately Rs 5,000 crore in capital, which will facilitate the company's forthcoming phase of expansion in the Indian market.

At present, MG Motor India operates its manufacturing facility in Halol, Gujarat, which was acquired from General Motors. This plant serves as the production hub for the company's lineup of vehicles.

Production Capacity and Expansion Plans

The Halol plant currently has the capacity to manufacture up to 1.2 lakh units per year.

MG Motor's upcoming second plant will also be established in Halol, thereby increasing its overall installed capacity to 3 lakh units per annum.

Focus on Electric Vehicle (EV) Portfolio

With a keen focus on electric vehicles (EVs), MG Motor has ambitious plans to introduce 4-5 new cars in the Indian market.

The company anticipates that its EV portfolio will account for approximately 65-75 percent of its total sales in India.

Exploration of Cell Manufacturing and Fuel-cell Technology

Additionally, MG Motor is actively exploring the establishment of cell manufacturing and hydrogen fuel-cell technology through joint ventures or third-party manufacturing.

As part of its expansion strategy, the automaker aims to achieve a total workforce of 20,000 employees by 2028.