Sajjan Jindal, M&M, Hinduja eyeing a slice of MG Motor India?

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JSW Group Chairman Sajjan Jindal is looking at acquiring a sizeable stake in MG Motor India, a subsidiary of the Shanghai-based SAIC Motor Corporation, a report has claimed.

According to a report in the Economic Times, Jindal would own a 45-48 percent stake, MG's Indian dealers and employees would own 5-8 percent, and SAIC would hold the rest. If the deal goes through, the company will cease to be a Chinese entity.

The report claimed the government has approved the deal. A well-placed source told Moneycontrol on condition of anonymity that some talks were on between a privately-owned firm of Jindal and MG Motor’s Indian arm, which could yet turn out to be “inconclusive”.

When contacted by Moneycontrol, a JSW spokesperson said, "We prefer not to provide any comments regarding market speculations." MG Motor India did not comment on the development either.

In another report, Business Standard claimed that the Hinduja group and M&M were also looking to pick up a stake in MG Motor India.

While M&M did not respond to Moneycontrol’s queries, an MG official, on condition of anonymity, denied holding talks with either M&M or the Hindujas. The spokesperson of the Hinduja group replied with an emphatic "This is not true at all.”

Stake dilution plans

It may be recalled that SAIC has invested around Rs 5,000 crore in India and was on course to invest a similar amount. However, its investment plans were scuttled due to rising geopolitical tensions between India and China. As a result, the company was looking at external commercial borrowings (ECB) from the parent company in order to keep its operations afloat.

MG Motor had recently announced its plans to dilute its majority shareholding to Indian firms and eventually go for an initial public offering (IPO). The company is exploring various options to achieve this goal, including raising capital through private equity and selling a portion of the stake to strategic investors.

“Looking at the success of MG Motor in India, it seems to be a good investment opportunity for Indian conglomerates. However, any local partner needs to be cautious about a long-term commitment to additional product lines," said Gaurav Vangaal, Associate Director, S&P Global Mobility.

MG Motor, which currently has a 1 percent market share in India, offers various models such as the Comet EV and ZS electric vehicles, and the Astor, Hector, and Gloster SUVs.

Mohit Yadav, Founder of Altinfo, a business intelligence company, said that the Indian government has stated that electric vehicles (EVs) are the future of the automotive industry, in which China has established a formidable lead, surpassing others in terms of securing crucial raw materials, establishing a robust supply chain, and driving technological innovations.

“In this scenario, MG, with its impressive credentials in these areas, presents an opportunity for any Indian conglomerate aiming to expand its presence in the automobile segment by partnering with them," said Yadav.