To be used for doubling production capacity, introduce new products, says company
MG Motor India is hoping to reach an agreement with potential investors to raise ₹5,000 crore before December this year to fund its expansion drive, as it aims to record profits for the first time ever next year.
A senior company official told BusinessLine that the funds would be used to more than double the company’s production capacity to 3,00,000 units as well as to introduce a range of new products, including electric vehicles and next level of autonomous car features.
Rajeev Chaba, President and Managing Director, MG Motor India, said, “We are committed towards launching the fifth car and increasing production capacity to 1,30,000 units a year, and funds have been organised. For phase 2, we are depending on the new funds which can come through FDI, ECB or investors. We are a loss-making company (now) and hopefully, we will start making profits next year.”
MG clocked sales of 40,000 units in 2021 and plans are afoot to produce 65,000-70,000 units this year followed by 1,30,000 next year. The company portfolio consists of Gloster, Hector, Astor and the ZS EV models.
“In the next few months, we should be able to have clarity on funds and size of the plant and portfolio. My expectation would be that in the 3-6 months, we should be able to finalise this. We are exploring all options and talking to various stakeholders and based on the mixture of funds, we will decide soon about the plant location and portfolio,” Chaba added.
MG’s electric vehicle ZS EV is the second largest selling model in the EV space in India. In 2023, the company will bring in its second EV priced much below the ZS EV with a smaller drive range. The ZS EV is priced at ₹22 lakh. “The new EV will be priced between ₹10-15 lakh. We have to decide on the range but it will be lower than the ZS EV,” Chaba added.
Chaba further clarified that there are no plans to place EVs under a separate unit and dilute stake in it like the way Tata Motors has done. He also ruled out getting into the sub-₹10 lakh segment with an EV due to price constraints.
MG wants to keep the lead on offering new technologies to the Indian buyer. The company was the first to offer autonomous driving level 1 (advanced driver assistance system) in India when it launched Gloster SUV. With the launch of the Astor, MG offered level 2 with features like lane assist, collision avoidance, adaptive cruise control.
“While driverless tech is level 5, there are two levels in between. So, depending on the segment and product, we will launch levels 3 and 4. The idea is not to make cars driverless but to make them safer for car owners and pedestrians,” Chaba added.