Mahindra & Mahindra, Hinduja join race to buy MG Motor India stake

SAIC Motor-owned firm seeks EoIs, but no binding offers yet

Automobile major Mahindra & Mahindra (M&M) and the Hinduja group, promoter of Ashok Leyland, have joined the race to acquire a significant stake in MG Motor India, a wholly owned arm of Shanghai-headquartered SAIC Motor, investment banking sources told Business Standard on Wednesday.

The Sajjan Jindal-led JSW group has already evinced interest to take up to 48 per cent stake in MG Motor India. The company's valuation is pegged at over Rs 8,000 crore, the sources said.

MG Motor India, which has about 1 per cent share in the domestic passenger vehicle market, has sought expressions of interest from Indian firms, but no binding offers have been made so far, according to the sources.

SAIC Motor would continue to hold a minority stake in the Indian arm after a possible deal, they said, adding that a stake up to 5 per cent might be offered to the Indian employees. An email sent to the Mahindra group did not elicit any response till the time of going to press, while the Hinduja group and MG Motor India did not comment on the issue. 

While both M&M and Ashok Leyland’s auto business have synergies with MG Motor’s existing business, the JSW group will be foraying into the sector if it wins the race. The private entities of Sajjan Jindal’s JSW group are planning to make an offer, but the listed entities will not participate in the race.

A month ago, MG Motor had said it planned to transform its India business by 2028 amid the Indian government’s increasing scrutiny of investments from China. SAIC Motor will use the proceeds to build a second plant in Halol, Gujarat, and boost its annual capacity to about 300,000 units by 2028.

In exit mode

• MG Motor India is owned by Chinese auto major SAIC Motor
• SAIC may continue to hold a minority stake in the Indian company after a deal
• Up to 5% stake may be offered to employees
• JSW has evinced interest in picking up 48% in MG Motor India
• Domestic sales of MG Motor India jumped 21% in FY23 to 48,886 units; EVs accounted for 11.6%

Rajeev Chaba, CEO emeritus of MG Motor India, had earlier told the media that they would finalise in FY24 the company’s new investors-cum-owners who would hold more than 50 per cent stake, “Indianising” not just the shareholding but also the board, management, supply chains, and technologies.

The company aims to assemble batteries for electric vehicles in Halol from next year. It will also explore cell manufacturing and production of EV parts through a joint venture or a third party in India.

The company, which has invested about Rs 4,000 crore in India so far, has been trying to bring foreign direct investment from its Chinese parent, but it failed as the Indian government didn’t give the required approval. It has also been in talks with Indian financial institutions, private companies, and some high networth individuals for some time.

The domestic sales of MG Motor India jumped 21 per cent in 2022-23 to 48,886 units, with EVs accounting for 11.6 per cent of the total sales.

The company plans to sell approximately 100,000 units in 2023-24. It plans to introduce 4-5 new cars, mostly EVs, in the coming years. Of its potential 300,000 units annual capacity, about 65-75 per cent would be for EVs. At present, it sells just two EVs -- ZS EV and Comet -- in India.