MG Motor India to become Indian-owned with Sajjan Jindal's investment
MG Motor India is likely to become an Indian company. As per The Economic Times, a private firm owned by Sajjan Jindal, the chairperson of JSW Group, wants to buy a stake in the Indian arm of China-based SAIC Group. To note, JSW Energy and JSW Steel (stock market-listed companies of JSW Group) will not be a part of the agreement.
How will MG Motor India transition to an Indian firm?
As per ET, Jindal's move has the Centre's blessing and if successful, a minimum 51% stake in the company will belong to Indians, while the Chinese will be restricted to a maximum of 49%. The billionaire may get hold of a 45-48% share, while Indian employees and dealers might bag around 5-8%. A binding agreement should be signed in three to four months.
Talks have been going on for some time
Jindal's talks with SAIC, regarding a share in MG Motor India have been going on for months. Reportedly, the carmaker was earlier valued at around $8-10 billion but has now gone down to $1.2-1.5 billion. All concerned parties have reportedly agreed to the deal structure and a formal announcement may be on the way in the coming days.
MG's Indian arm will get a makeover
MG Motor India will reportedly get a "new brand identity" that will represent the "corporate identities of both parties" (Jindal and SAIC) and a board with more Indians. Its share market listing should also be done in "the next few years."
Why is SAIC lowering its stake?
Strained relations between India and China because of border tensions, have proved to be a hurdle for SAIC. The firm invested roughly Rs. 5,000 crore here and was planning to invest a similar sum again. However, it has failed to do so since 2020. This has forced MG to borrow money from its parent company to sustain local operations, thereby making things difficult.
Chinese phone makers ordered to raise Indian participation too
On a related note, the Centre has ordered Chinese smartphone brands operating in the country, to appoint local officials in key positions. The list of desired roles includes chief operating officer (COO), chief financial officer (CFO), chief technical officer (CTO), and chief executive officer (CEO). The firms have also been asked to guarantee legal compliance, boost local manufacturing, and increase exports from here.
