JSW Group’s Sajjan Jindal and SAIC Motor Corporation have finalised terms of agreement for an alliance involving MG Motor India, the Economic Times reported quoting sources. Morris Garages, is a fully-owned subsidiary of China-based SAIC.
Legal documentation is on and a formal statement is likely around Diwali, the report said. As per negotiations, the new alliance plans to release electric cars under its banner by January 2024. The deal could raise MG Motor India’s valuation near $1 billion, it added.
In the initial phase, Jindal will own 32-35 percent of MG Motor India, SAIC will own 51 percent, employees and dealers will own 6 percent; and an unidentified domestic financial institution will own 6-7 percent, as per the report.
Also Read: JSW-MG Motor deal likely in two months
Accumulated losses will be written off against SAIC’s equity, and a plan for change of control is underway to avail all tax benefits. Once losses are removed, the plan is to go for SAIC to undertake an offer for sale (OFS) to gradually off-load its stock down to 38-40 percent; Jindal will also increase stake to 49-51 percent, and employee-dealers to 8-9 percent.
Mint could not independently verify the ET report.
The valuation of MG Motor India is estimated to be around $1.2-1.5 billion ( ₹9,800-12,300 crore), significantly lower than the initial valuation expectation of $8-10 billion, the sources added.
Also Read: JSW may buy Ford’s Chennai plant
MG Motor has a manufacturing facility in Halol, Gujarat with 120,000 unit capacity. The company has sold about 170,000 vehicles in India. Plans are to expand capacity to 300,000 units by 2028.
MG Motor offers various models such as the Comet and ZS electric vehicles, in addition to the Astor, Hector, and Gloster. Despite being owned by a Chinese company, MG Motor aimed to highlight the British heritage of the MG brand during its launch in 2019, employing actor Benedict Cumberbatch as a brand ambassador.
Jindal’s interest in MG was first reported in June 2023. As per reports, the proposed plan, reportedly approved by the Indian government, aims to ensure that at least 51 percent of the equity is held by Indian entities, with the Chinese side becoming a minority partner holding a maximum of 49 percent.
The new venture is also not expected to not involve JSW Steel and JSW Energy, which are the listed companies of the JSW Group.
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Updated: 05 Oct 2023, 11:07 AM IST