JSW Group to own 35% stake in JV with SAIC Motor

The shareholder agreement and share purchase and share subscription agreement were signed by Wang Xiaoqiu, president of China-based SAIC Motor, and JSW Group’s Parth Jindal at the MG Office in London, the companies said in a joint statement released on Thursday.

“According to the agreement signed, JSW will hold 35% in the Indian JV operations. SAIC will continue supporting the JV with advanced technology and products to deliver extraordinary mobility solutions with an unwavering focus on the Indian consumer,” the statement said, without going into the specifics of the remaining ownership.

This partnership will give the JSW Group its much-desired entry into the EV space.

“Our strategic collaboration with SAIC Motor aims to grow and transform the MG Motor operations in India with a focus on green mobility solutions. The JV’s focus on broader localisation initiatives will yield financially accretive synergies… One of the key focus areas of this JV will be to pursue the development of the EV ecosystem and to take a leadership position in this space… We cannot wait to get going,” Parth Jindal was quoted in the statement.

“SAIC Motor and JSW Group will create strategic synergies by bringing together resources in the field of automobiles and new technology. The JV will also undertake multiple new initiatives, including augmenting local sourcing, improving charging infrastructure, expansion of production capacity, and introducing a broader range of vehicles with a focus on green mobility,” the statement added.

It is estimated that India’s EV market, valued at $2 billion in 2023, will more than triple to $7.09 billion by 2025. The number of EVs on the roads is likely to increase to 50 million by 2030 from about 1.4 million as of August 2022, according to industry estimates. By 2030, the Indian EV market is expected to reach 10 million units in annual sales.

Analysts say the deal is big for the JSW Group, which is also in discussions to buy Ford’s Chennai plant to use for assembling electric vehicles, and a big plus for the automobile sector in India. “This JV will ensure growth for India’s EV space in the form of new launches and increase in penetration of EVs,” said Barnik Maitra, managing partner-India and South Asia at Arthur D Little, a consultancy firm. “This will be good for consumers, too, who have accepted products by the MG brand in India.”

Maitra added that this model could also serve as a template for several Chinese firms operating in India. “It would be the respective firms’ decision, but the model could be applied to Chinese investments that have not been able to grow in India.”

For MG Motor, the deal will help it expand in India, which has been stymied due to curbs on investments from China.

For MG Motor, the deal will help it expand in India, which has been stymied due to restrictions on investments from China. Four years after the launch of the company’s first locally made sports utility vehicle, MG Motor India was facing the issue of scouting for a buyer due to its Chinese ownership.

The Indian government then introduced a host of measures against Chinese businesses leading to an adverse climate for investments in the automotive firms as well. In 2022, MG Motor India was also served with a notice for alleged financial irregularities. During this time, another Chinese carmaker, Great Wall Motors, also exited the Indian market due to a lack of foreign direct investments. MG in 2023 then announced that it is willing to sell a majority stake in the company to local investors.

The JV, the statement by the companies said, will optimise SAIC Motor’s automotive experience and technical expertise, and will also leverage the presence of JSW Group across B2B and B2C sectors of the Indian economy to augment local sourcing and establish a robust supply chain.

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Updated: 01 Dec 2023, 06:57 AM IST