[avishar]

In one of the most interesting stories in recent times, JSW and MG Motor India are expected to sign a deal in a matter weeks, in which the steel major will buy a 15-20% stake in the automaker.

Why? Because MG's FDI proposals are stuck and it needs money to expand.

My take:

1. JSW has been looking to get into automobiles for a while, particularly EVs. This is an interesting move.
2. JSW has been diversifying into non-cyclical industries like Paints, Ports, Consumer facing (Sports) and Real Estate.
3. JSW might see a future in the massive materials industry when it comes to EVs. It is the materials industry of the future. Nickel, Manganese, Iron, Lithium, Lithium Refining, battery electrolytes, cathodes and anodes production.


Exclusive: MG Motor India in talks with JSW Group for 15-20% stake sale at $2 billion valuation
https://www.autocarpro.in/news-natio...luation-114810

MG Motor India, the British brand owned by China’s largest car maker Shanghai Automotive, is in advanced talks with homegrown steel major JSW Group for a stake sale.


With its foreign direct investment proposal with the government of India stuck, MG India has been relying on external commercial borrowings from the parent company to keep its operation afloat. The carmaker, which has its plant in Halol, Gujarat, has been on the fund-raising route for close to a year now and has explored over a dozen potential investors who could acquire a stake in the company.

Autocar Professional learns that M G Motor is seeking a valuation of a minimum $2 billion to $2.5 billion (Rs 16,494 crore to Rs 20,617 crore) and is in talks with JSW Group for a 15-20% stake dilution. This may lead to a fund infusion of over Rs 2,000 to Rs 3,000 crore in the company, which currently retails five SUVs – Astor, Gloster, Hector 5-seater, Hector Plus and ZS EV – and is set to unveil the two-door compact EV, MG Comet, on April 26.

[GTO]

You can say that again! Indeed, a most interesting development. Basically, MG cannot bring in money from China, so it is looking locally. MG India needs funds to fuel its growth = more crossovers & electrics are the key to increased sales numbers for a company that has done its product planning really well. The Hector has USPs and its owners are generally happy, the ZS EV is the best EV for 30 lakhs & under, the blingy Gloster might not be our cup of tea but it does sell ~200 cars / month. On the other hand, the Astor has bombed selling merely 1000 units / month in a segment where competitors do 5000 - 12000.

As a car company, MG has solid fundamentals (cars, dealers, management, future tech availability). Cash is the need of the hour & it will make for a good investment. This is unlike Nissan India (as an example) which is a completely messed up company today and not worthy of heavy investments.

[amtak]

This is one story I do not like. While I can understand that having some funds from JSW will help company stay afloat for a while, but how long can they keep going like this?

The livelihood of hundreds and thousands are again at stake, if I can say so? I won't say anything political here (public forum + a lot more reasons), but it is the families of Indian nationals who would be getting affected if they do not get the funding and what faith does it give a customer?

One one side we are working with China (BRICS) and on the other side, we are letting our own bear the brunt of red carpet.

[AYP]

Originally Posted by amtak

This is one story I do not like. While I can understand that having some funds from JSW will help company stay afloat for a while, but how long can they keep going like this?

You are right. But I think this shall be beneficial in the long term as well. Being in a JV with an Indian firm might make the government a bit more willing to clear the FDI proposals, thus making it easier for MG to bring in money from China in the future.

[shortbread]

This is a good development. In the unlikely case that the chinese partner has to take flight from it's Indian operations for whatever reason, it's good to have an Indian company that can take over the reins in whatever capacity.

[avishar]

Originally Posted by amtak

This is one story I do not like. While I can understand that having some funds from JSW will help company stay afloat for a while, but how long can they keep going like this?

The livelihood of hundreds and thousands are again at stake, if I can say so? I won't say anything political here (public forum + a lot more reasons), but it is the families of Indian nationals who would be getting affected if they do not get the funding and what faith does it give a customer?

One one side we are working with China (BRICS) and on the other side, we are letting our own bear the brunt of red carpet.

I don't think MG is *that* short of funds, that they have to shut down soon. If they were, they wouldn't be launching the Comet.

I think what the government aims to do is to marry Chinese FDI with Indian companies. They have proposed a similiar arrangement for Chinese electronic component manufacturers where they need to tie-up with an Indian company. Even then, most of China's smartphone manufacturers have fully-owned subsidiaries in India, and they continue to invest.

Afterall, it isn't that wild a demand since the Chinese themselves prefer FDI to come in terms of joint-venture companies. SAIC would know this as better than anyone else.

To me what is more interesting is the entry of JSW. After a long time, the automobile industry is becoming an attractive segment to diversify into, because the sector is going through a deep transformation. The rise of electric vehicles has given an opening for non-auto OEMs to think about competing in this market, since they require a very different supply-chain and knowledge-base.

Companies like Ather and Ola are now reaching volumes which are starting to make a dent into the scooter-sales of smaller 2W companies in India, and they disrupted the market without an auto-manufacturing past. The same is true for the Chinese market, where even the traditional Chinese bigweights like SAIC, BAIC, Changan getting run over by 3-4 year old start-ups in the EV space.

In India we really require some new competition. We have been stuck with basically four major makes to choose from in any segment. Maybe in the EV space we might get some new brands, and even sub-brands.

[SmartCat]

JSW Group has been in the news for their EV manufacturing plans for many years now. This move is a near-perfect fit because of MG Motors' focus on EVs

JSW Energy to foray into electric vehicles (2017 article)
https://www.thehindu.com/business/js...le19476038.ece

JSW Energy calls off electric vehicle plans (2019 article)
https://www.thehindubusinessline.com...le26679672.ece

JSW Group may revive plans to manufacture electric cars (2023 article)
https://www.moneycontrol.com/news/te...t-9688821.html

[rsidd]

Originally Posted by GTO

the ZS EV is the best EV for 30 lakhs & under

That's a strong statement given that the BYD E6 is under 30L (ex-showroom) with much more room and range. Also, the Astor, as you say, has bombed and it's basically a petrol version of the ZS EV. Also, "best" does depend on the price (bang for buck); ZS EV may be better than E6 for many buyers because it is cheaper, and Nexon EV or Tiago EV may be better for other buyers.

MG Comet could be a game-changer depending on its price but if (as per some reports) it costs > ₹10L it would bomb worse than the Astor.

That leaves the Hector which indeed is doing well.

I hope the JSW deal leads to more "make in India" and therefore lower prices for the EVs.

[BigB]

The livelihood of hundreds and thousands are again at stake, if I can say so? I won't say anything political here (public forum + a lot more reasons), but it is the families of Indian nationals who would be getting affected if they do not get the funding and what faith does it give a customer?

Surprising to read this para.

Make no mistake. National Security is SUPREME and there is (should not be?) nothing political about it. If for the sake of National Security some people loose their jobs, so be it. We shall also be concerned about the family of those 20 brave hearts their lives in Galwan in May 2020.

The fact that India is still allowing Chinese companies to operate in India itself is a shocker.

[volkman10]

JSW refutes report on buying stakes in MG Motor and BYD India.



Link

[qaqa]

I think the Modi Government is taking a leaf out of China's book.

First, they arbitrarily and without advance notice, blocked further inflow of capital from China; every project whether greenfield or brownfield needed specific approval for further inflow of capital which of-course was never forthcoming. I think this strategy was aimed at forcing these companies to enter into alliances with Indian partners.

Second, the Modi Government has been working hard at developing Indian champions - JSW, Adani, Dilip BuildCon etc. These "champions" are being given first dibs for new opportunities. Little wonder then that JSW is the front-runner for tying up with MG and BYD.

There's nothing wrong with this approach except that you need to hold your nose and ignore the slight hint of crony capitalism. The Chinese are getting the same treatment that they mete out to foreign investors in China. No one's going to be crying for them.

As regards JSW's "denial", I think there's more to it than meets the eye. The press release is very carefully worded to say that no proposal has reached the Board. It doesn't mean that negotiations are not underway. We should wait and see.

Overall, I don't know if wholesale blocking of Chinese investment makes sense. It will only breed complacency amongst Indian manufacturers since they don't have to compete with the cut-throat super-efficient Chinese mega-corps. We can't keep up this policy forever, and Indian manufacturing will need to grow up and face the world eventually.

[chennai-indian]

Originally Posted by amtak

One one side we are working with China (BRICS) and on the other side, we are letting our own bear the brunt of red carpet.

Nope. All that BRICS is just rhetoric. We are NOT working with China.

[ABHI_1512]

Originally Posted by avishar

To me what is more interesting is the entry of JSW. After a long time, the automobile industry is becoming an attractive segment to diversify into, because the sector is going through a deep transformation. The rise of electric vehicles has given an opening for non-auto OEMs to think about competing in this market, since they require a very different supply-chain and knowledge-base.

Agree completely, JSW has been trying to enter the EV space and it would be a nice opening for them to get a foothold into the automotive space and which in turn will help MG India to keep developing and improve their portfolio further. This government hurdle over the Chinese investments is somewhat paradoxical when the imports from them is at an all time high !!

Originally Posted by BigB

Make no mistake. National Security is SUPREME and there is (should not be?) nothing political about it. If for the sake of National Security some people loose their jobs, so be it. We shall also be concerned about the family of those 20 brave hearts their lives in Galwan in May 2020.

The fact that India is still allowing Chinese companies to operate in India itself is a shocker.

First of all, I would request the moderators to delete the above quoted comment since it adds nothing to the thread.

Secondly, since the comment is here, I would like the member to know that India is doing every business with China and the imports are at an all time high. And it grew despite the Galwan Clash. Glad to share an interesting article here:

https://m.economictimes.com/news/eco...w/96969775.cms

The trade between the two countries continued to boom despite border tensions following the military standoff in eastern Ladakh in May 2020.

So let’s not fool ourselves with this security thing here.

Moderators are free to delete the comment since this is off topic but some facts needed to be stated here.

[ajmat]

It looks like India is treating the Chinese similar to how the Chinese treat over manufacturers. No one has their own venture, all car manufacturers were forced to collaborate with a partner be it -SAIC, Changan, Donfeng, Beijing Auto, Chery, the list goes on.

However, it should be a level playing field for all and the ham fisted approach to the Great Wall Motors has cost in investment and jobs. I could understand if it was in the area of critical infrastructure.

[amtak]

Originally Posted by BigB

The livelihood of hundreds and thousands are again at stake, if I can say so? I won't say anything political here (public forum + a lot more reasons), but it is the families of Indian nationals who would be getting affected if they do not get the funding and what faith does it give a customer?

Surprising to read this para.

Make no mistake. National Security is SUPREME and there is (should not be?) nothing political about it. If for the sake of National Security some people loose their jobs, so be it. We shall also be concerned about the family of those 20 brave hearts their lives in Galwan in May 2020.

The fact that India is still allowing Chinese companies to operate in India itself is a shocker.

Indeed. National security is at top. Always. Point is, keep a tight leash on Chinese companies; Make life difficult for them but ensure that they invest heavily into India. Get their funds here. That's the point I was trying to make here and not otherwise.

Peace out.