Reliance To Enter Car Industry

Reliance MG Motor
Reliance MG Motor

SAIC-owned MG Motor seeks to sell a majority stake in its Indian car business – Is said to be in advanced negotiations so as to close the deal by the end of this year

MG Motor India, a subsidiary of SIAC Motor of China, with operations in Halol, Gujarat, is seeking to dilute its majority stake in the company to Indian entities. This decision comes at a time when there are rising tensions between India and China.

Many companies with links to China are facing constraints with the Government of India in relation to various factors. This could be in the form of approvals for fresh investments, sourcing of spare parts from China, duties and taxes, etc.

MG Motor has also sought government approval in terms of raising funds from its parent company for added investments into its Indian operations. It has been for 2 years now that this sanction has been put forth but to no success. Hence the company has now decided to raise capital via other means particularly through Indian entities.

MG Motor India Majority Stake Sale

MG Motor had initially stated plans to Indianize its board along with its supply chain and other aspects of operation over the next couple of years. However, this decision may come sooner with the company planning to close the deal by the end of this year.

MG has the capacity to produce 1.2 lakh units from its Halol manufacturing plant in Gujarat, a plant it took over from General Motors. There is also a second plant also likely to come up in Halol, taking installed capacity upto 3 lakh units per annum.

The automaker stated that it plans to raise around Rs 5,000 crores capital over next 2-4 years for this second round of growth in India for which it will offer a majority stake to local partners and investors. As on date, the company sees likely investors in the form of Reliance Industries, Hero Group, Premji Invest and JSW Group.

New Electric Vehicle Launches, Increased Workforce

MG currently offers 6 models in India that include the Hector and Hector Plus, Gloster, ZS EV and Astor along with the recently launched Comet EV. MG Motor India has also announced plans to launch 4-5 new cars in India with special emphasis on electric vehicles. This electric car portfolio will contribute up to 65-75 percent of its total sales in the country.

Along with increasing its product lineup, the company also wishes to set up cell manufacturing and hydrogen fuel-cell technology via joint ventures or through third-party manufacturing. With these plans, MG Motor India also plans to expand its workforce to around 20,000 by 2028.

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