MG Motor may dilute shareholding in India
- New Delhi: MG Motor plans to dilute shareholding in its fully owned business in India as the company looks to tap the capital market or raise funds through a financial or strategic investor. It plans to begin work for a second factory beyond its current plant at Halol in Gujarat, company MD & CEO Rajeev Chaba has said.
- MG, a British brand owned by China's SAIC, has been looking to raise funds for supporting expansion after facing delays in approval due to the higher government scrutiny on companies that have ownership in countries that share border with India.
- The norm had come into force after the massive diplomatic tensions between India and China following border skirmishes and had seen Chinese Maker Great Wall go for an IPO." call off India plans over delays in investment approval.
- Chaba said MG-which faced I-T raids in November last year wants to drive strong localization across its operations. "Our theme is to Indianize more and more in terms of everything that we do. This includes localization of management, localization of products, higher local production, and even supporting and nurturing skilling," he said.
- To support long-term expansion, the company needs a credible financing option. "Beyond two years, we would need money for a second plant. For this, we will look to find a strategic partner or investor and may be go for an IPO."
- MG started selling cars in India in 2019, and has models such as the Hector, Gloster and Astor SUVs, apart from the ZS electric. MG plans to drive in a new electric car in the market later this year in which would be the Rs 10-15 lakh price bracket.
- However, investments are the main priority for the company. "We are hopeful to become profitable and generate cash from this year onwards. To meet our short-term expansion and support new product launches, we will manage through working capital, external commercial borrowings (ECB), and internal cash generation."
- The company sold about 48,000 units in 2022, and Chaba said that sales are expected at 80,000 units this year.