JSW Group seeks to be in driver's seat at GM Talegaon plant

MUMBAI: The JSW Group is in advanced negotiations with General Motors India to buy its Talegaon plant as part of the steel maker’s ambition to venture into electric vehicles, said people with knowledge of the matter.

Under the plan, among several that are said to have been examined by GM India, JSW Energy will take over the plant and become a contract manufacturer for the Beat and Essentia compact cars, which are being made for Mexico and other overseas markets. This will mean GM India fully exiting vehicle manufacturing in the country by the end of 2019, having already stopped local sales in mid-2017.

JSW Energy could also use the Beat architecture to develop its own electric vehicles for the Indian market by 2021-2022, said the people cited above. It has committed Rs 3,500-4,000 crore for its electric vehicle venture, they said.

HIRING FOR KEY ROLES
It’s putting together a team to develop an electric vehicle portfolio that will include a hatchback, sedan and SUV for the Indian market, they said. It has hired Sergio Rocha, former head of GM in South Korea, as chief operating officer for the division. That makes him familiar with the M300 platform on which the Beat small car is built. A top Hyundai Motor India executive has been hired to steer the sales and marketing function.

After the sale of its Halol plant to Shanghai Automotive, GM India had been looking to sell its remaining facility and hired consultants including McKinsey & Co. to find suitors. “It is a strategic fit — JSW might use the same products for the domestic market, even as GM sources it for their global requirement,” said one of the people cited above. “JSW right now is the only company in race and the deal is only stuck over value.”

JSW didn’t respond to queries. GM India said it continues to explore options and wouldn’t comment on speculation.

“As we have said consistently, we continue to explore strategic options to improve utilisation of the plant. We do not propose to discuss options publicly and we do not comment on speculation,” the spokesperson said. “The Chevrolet Beat produced at Talegaon remains an important product for GM export markets. Strategic options for the Talegaon plant are unrelated to GMTC-I Bangalore. Our commitment to existing Chevrolet customers in India is unchanged.”

If the deal takes place, JSW may take on a significant proportion of GM India’s workforce. The Beat is one of the biggest selling cars for GM in Mexico and India is its sole manufacturing base. GM is committed to sourcing about 80,000 to 85,000 cars from the plant in 2019, with plans to ship a similar number in the following years until 2022. That is likely to stay in place, said the person.