Rajeev Chaba, the CEO Emeritus, MG Motor India, talks about the localisation plans of the new joint venture, the breakup of the equity structure, expansion plans, and more.
11 Apr 2024 | 4349 Views | By Prerna Lidhoo
This joint venture has 35% from the JSW Group. Indian financial institutions will hold 8%, dealers 3% and employees 5%. This will happen over a period of time because employees have to access this (ESOPs) over ...
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This joint venture has 35% from the JSW Group. Indian financial institutions will hold 8%, dealers 3% and employees 5%. This will happen over a period of time because employees have to access this (ESOPs) over the next four to five years. That’s the shareholding. In terms of governance, the current MG Motor India management will run the day-to-day operations. We’ll try to get the best talent across the globe to work with us because we’re going to expand fast and are very ambitious, so we need to add to the leadership team over time. The board will oversee the company governance and will have proportional representation to the shareholding. The chairman will be from JSW, and there will also be a steering committee comprising members from both sides to guide and strategise.
In this phase, there will be a Rs 5,000 crore plus investment, which will primarily be utilised to expand the capacity from 1,00,000 to 3,00,000 units. That’s why we now have a second plant in Gujarat. It will also help us introduce more products in the next few years. Part of this money will go into localisation and vendor tooling. But when we talk about Sajjan Jindal’s vision for the next 10 years, the investment is going to be much higher, including capital integration.
The whole idea is to ensure that our products are cost-competitive, and we’re successful in reducing the cost. That will happen, thanks to the synergies among our various group companies, be it steel, cement, ports or logistics. Even on the marketing side, I feel there could be synergies because JSW, again, is big in sports. I’m looking forward to lots of synergies and cost advantages that will give us a competitive edge. Hopefully, we will pass on the benefits to the consumer as well.
To become a big player, a national-level player, we have to make sure we’re present across segments. That’s what our endeavour is. It won’t happen tomorrow and will take some time. Our aim is to be visible across segments, across price points, across categories as we go forward. But we will take it one step at a time. It’s not going to be easy. It will take a few years.
We haven’t yet identified any export markets, but we know that if we are cost competitive and if our quality is good, we have a case to export; to start with the right-hand-drive markets and then move to the left-hand drive markets. Conceptually, we want to do that, but detailing remains to be done. Our industry is competitive with a lot of moving parts. The journey is going to be interesting but not easy.
We’re not going to import and sell here. Every car is going to be manufactured in the country. Depending on the volumes and price points, localisation percentage will vary from product to product. In the case of our premium product strategy, it’s going to be slightly lesser than the mainstream vehicles. We’re going to target more mainstream ones going forward, so that means there will be more localisation. In EVs, for example, over a period of time, thanks to backward integration of the JSW Group, I look forward to 80% to 90% localisation in the next four to five years.
This interview was first published in Autocar Professional's April 1, 2024 issue.