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New Delhi-based MG Motor India is seeking to pump in approximately ₹4,000 crore for its second manufacturing plant as part of its expansion plan.
To take its plan ahead, the SAIC Motor subsidiary is in talks with several state governments including Gujarat where its first facility is currently located.
MG Motor is looking to take its overall capacity to 3 lakh units a year in the next two years. The company is already in the process to expand the annual production capacity of its Gujarat-based Halol plant to 1.25 lakh units by 2023. Through the second plant, the company intends to add another 1.75 lakh units capacity.
MG Motor India President and Managing Director Rajeev Chaba told PTI that "Beyond 1.25 lakh (at Halol), we need a second plant. It can be at Halol, and we are in touch with the Gujarat government for some additional land. Also, we have been approached by some other states. So, we have started our due diligence now about the location of the second plant. We are meeting some other states as well as the Gujarat government."
Chaba added, "There were some offers for existing brownfield plants. We have not ruled that out. I think by June-end hopefully, we should be able to finalise about the second plant."
The MD expects finalisation for the second plant by June and after that approximately two years for the completion.
In regards to funding the second plant, Chaba stated that the company is considering several routes, including the ECB (External Commercial Borrowing), FDI (Foreign Direct Investment), and other investors. He said, "all the options, we are looking at, wherever we can get a good deal. Our FDI application is still with the government. ECBs we can get it and in fact, we are getting some ECBs."
Last year, MG Motor announced an investment of ₹2,500 crore to increase production capacity in the Halol plant to 1.25 lakh units from the 70,000 units per year. For which, the company has revamped and invested more for the expansion in production capacity to 1.25 lakh from next year.
The company sold 40,000 vehicles last year, and Chaba added saying, "this year, we have a severe shortage of chips, but still we think we will end up doing 70,000 units. So our progression will be 40,000 units last year, 70,000 units this year, and 1.25 lakh units next year."
To reach these production targets at the plant, the MD stated they have introduced a second shift from this month and the plant will produce 1.25 lakh units annually from next year on a three-shift basis.
Also, Chaba stated that the company is going to launch a small electric vehicle priced between ₹10 lakh to ₹15 lakh by March - April next year.
This would be their fifth model. Currently, the company produces four models namely Hector, Gloster, Astor, and ZS EV from the Halol plant.
So, these five products should take care of 1.25 lakh units at the Halol plant, and then the sixth product has to come in at the new plant," Chaba lastly concluded.
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