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2.3 billion to the account! Official announcement of SAIC Group

2024-05-30 Update From: AutoBeta NAV: AutoBeta > News >


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On April 8, SAIC issued the announcement on the transfer of shares of subsidiaries and the increase of capital and shares. The content of the announcement shows that MG Motor India Pvt.Ltd (hereinafter referred to as "MG"), a holding subsidiary of SAIC, intends to introduce investors such as Indian steel giant JSW Ventures Singapore Pte.Limited (hereinafter referred to as "JSW") through equity transfer and capital increase.

SAIC said it had received 26.5 billion rupees (2.3 billion yuan) in equity transfers following the signing of a strategic cooperation agreement with JSW at the end of last year. By contrast, SAIC paid-in capital of 29.25 billion rupees (about 2.535 billion yuan) when MGI was founded, which also means that SAIC has recovered most of its investment in India. In addition, SAIC will retain 49 per cent of MG India and a higher proportion of voting rights after the premium transfer and capital increase, with JSW holding about 35 per cent and IIF, the Indian investment fund, dealer trusts and employee stock ownership plans owning the remaining 16 per cent.

In June 2023, it was reported that JSW will hold 45-48 per cent of SAIC MG India and 5-8 per cent of dealers and Indian employees, which means SAIC will lose control of MG India and its stake will be less than 50 per cent of MG India will also become a company controlled by Indians. Subsequently, SAIC issued a clarification announcement. SAIC said: "SAIC MG India was forcibly acquired shares at a low price and lost control", which is a serious departure from the facts. " SAIC's international operation strictly abides by the policies and regulations of China and the countries where its overseas business is located, fully respects the laws of the market, and fully grasps the autonomy. The equity transaction of SAIC holding MG India involving MG India needs to be approved by the Chinese government, and we will release official information in due course. "

SAIC issued a clarification designed to emphasize that it had not lost control of MG India, but the industry believed that SAIC had control of MG India at that time, but the deal was not completed, or even after SAIC reached a deal with JSW of India, it still had control.

In November 2023, SAIC and JSW signed a strategic cooperation agreement in London, UK. SAIC will introduce JSW as a strategic investor to further support MG India to expand its market share by increasing capital and shares. SAIC officials said they had received 26.5 billion rupees from JSW for a 26% stake in MG India, recovering most of the investment.

Data show that JSW Group is one of the largest commercial groups in India, headquartered in Mumbai and listed on the Indian Stock Exchange, involving businesses such as steel, energy, cement, infrastructure, and motor vehicle manufacturing such as motorcycles and tricycles. JSW Group is part of O.P.Jindal Group, an iron and steel energy complex enterprise group founded by Indian tycoon Aum Prakash Jindal.

MG was established in February 2017 with a registered capital of 32.75 billion rupees and paid-in capital of 29.25 billion rupees. The first MG model went on sale in June 2019 and sold 16528 vehicles that year. The latest figures show that MGI sales in 2023 were 62010, ranking eighth in the Indian market, of which new energy vehicles ranked second in the market, second only to Indian auto giant Tata Group. But MG India is still losing money. According to the announcement, as of December 31, 2023, MG India had total assets of 60.785 billion rupees and net assets of-7.381 billion rupees, operating income of 88.54 billion rupees and net profit of-4.869 billion rupees in 2023. In other words, seven years after its establishment, MG India is still losing money. SAIC pointed out that after the completion of the conversion and capital increase, the company's net profit is expected to increase by 5 billion-7 billion yuan.

As for why MGI brought in Indian local investors, SAIC explained: "in order to further promote the company's international business strategy, seize the opportunity of the rapid development of the Indian market, continuously increase the share of the MG brand in the Indian market, effectively guard against operational risks, and create more favorable conditions for sustainable and healthy development by giving full play to synergy."

In March, JSW announced a joint venture with SAIC, JSW MG Motor India, which will produce and sell MG-branded electric cars in India. It plans to launch one new product every three to six months, including new energy vehicles, and two new cars this year. The joint venture aims to increase its share of India's new energy vehicle market from 2 per cent to 33 per cent by 2030 and plans to sell 1 million electric passenger cars that year.

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