MG Motor India is investing ₹4,000 crore in a second manufacturing facility


MG Motor India plans to invest around £4,000 million in a second production unit, for which it is in talks with several state governments including Gujarat, where its first plant is based, according to a senior company official.

The company, which is expanding the annual production capacity of its current Halol plant in Gujarat to 1.25 lakh units by 2023, intends to expand the capacity of the second plant by a further 1.75 lakh units and its total capacity to 3 lakh units per year to increase the next two years.

“Beyond 1.25 lakh (in Halol) we need a second facility. It may be in halol and we are in contact with Gujarat government for additional land. We have also been approached by a number of other states. We have now started our due diligence on the location of the second plant. We are meeting some other states as well as the Gujarat government,” Rajeev Chaba, President and Managing Director of MG Motor India, told PTI.

He continued: “There have been some bids for existing brownfield assets. We haven’t ruled that out. I think by the end of June we should hopefully be able to complete the second facility.”

When asked about the investment and production capacity for the second plant, he said: “We are looking at almost £4,000m for the second plant.” On the expected timeline for the completion of the new unit, Mr Chaba said: “We are talking about to get this done by June and once we get it done it will take us about two years.”

Regarding funding for the second plant, Mr. Chaba said the company is considering several avenues including ECB (external commercial borrowing) and FDI (foreign direct investment).

“We are looking at all possible options to raise the funds, including foreign direct investment, the ECB and other investors. We look at all options wherever we can get a good deal. Our FDI application is pending with the government. ECB we can get it and indeed we are getting some ECBs,” he added.

Last year MG Motor India announced an investment of ₹2,500 crore to increase production capacity at its Halol plant.

“The halol plant itself we have modernized and invested more to increase capacity from 70,000 lakh per year to 1.25 lakh per year from next year,” Mr Chaba said.

In 2021, the company sold 40,000 vehicles, he said, adding: “This year we have a serious shortage of chips, but we still believe that we will end up making 70,000 units. So our progress will be 40,000 units last year, 70,000 units this year and 1.25 lakh units next year.”

In order to meet these production targets at the plant, he said: “We introduced the second shift from this month and the plant will produce 1.25 lakh units annually in three shifts from next year.” The company currently produces four models – Hector, Gloster, Astor and ZS EV from the Halol plant. With capacity expansion, deliveries of these vehicles will increase, he said.

“The fifth that we will launch by March-April next year is a small electric vehicle priced between 10 lakh and 15 lakh. So those five products should supply 1.25 lakh units at the Halol plant and then the sixth product has to come in at the new plant,” Mr Chaba said.

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