Sajjan Jindal to Acquire Significant Stake in MG Motor India

JSW Group’s chairman, Sajjan Jindal, plans to purchase a portion of MG Motor India, a subsidiary of Shanghai-based SAIC Motor, through his privately-owned company.

It has been clarified that the venture will not include JSW Steel and JSW Energy, both of which are publicly listed companies under the JSW Group.

Based on the prevailing understanding, it is expected that Jindal will have an ownership stake of around 45-48% in MG Motor India, while dealers and Indian employees are projected to hold 5-8%. Multiple sources familiar with the ongoing negotiations indicate that the remaining shares will be held by SAIC. The proposed plan, which has reportedly received approval from the Indian government, seeks to ensure that Indian entities hold a minimum of 51% of the equity, with the Chinese side becoming a minority partner holding a maximum of 49%.

A senior government official has stated that a Chinese entity will transform into an Indian entity in the coming years, with plans for an eventual listing in India. The transition will involve increasing the representation of Indians in the top management and board of the company. Additionally, Chinese mobile phone manufacturers have been encouraged to include Indian equity partners and senior management in their Indian operations.

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Sajjan Jindal and his son Parth recently visited China to engage in discussions with SAIC leadership regarding their partnership. Following extensive negotiations, an agreement has been reached on the deal structure. The estimated valuation of MG Motor India is now anticipated to be between $1.2-1.5 billion, which is considerably lower than the initial projection of $8-10 billion. Legal procedures have been initiated to establish a formal and binding agreement, and the completion is expected within the next three to four months. The objective is to establish a fresh brand identity that reflects the collaboration between both parties.

SAIC has invested approximately ₹5,000 crore in India and was ready to invest a similar amount. However, the proposal has faced delays since 2020 due to strained relations between India and China stemming from border tensions. Consequently, MG Motor has relied on external commercial borrowings from its parent company to sustain its operations in India.

MG Motor offers a range of models including the Comet and ZS electric vehicles, as well as the Astor, Hector, and Gloster. Despite being owned by a Chinese company, MG Motor emphasized the British heritage of the MG brand during its launch in 2019 and enlisted actor Benedict Cumberbatch as a brand ambassador.

MG Motor India has faced challenges in meeting the demand for its models despite receiving a positive response. Over the past two years, the company has not increased its volumes and installed capacity to match the market demand. Annual sales have reached a plateau of around 50,000 units, with 48,866 units sold in FY23, marking a 21% increase compared to FY22. In May, India was reported as the fastest-growing region for SAIC, the Chinese parent company of MG Motor, with a growth rate of 51% in terms of sales volume.