Decoding JSW Group's automotive play | Deep Drive Podcast Ep. 102 | Autocar India

Hello and welcome back to Deep Drive, your weekly podcast powered by Kotak Mahindra Prime. Now on this week's

Mahindra Prime. Now on this week's episode, we are going to be talking about a company not known for auto but

diving into the auto space. It is JSW.

Now JSW have got big big plans and that's what we're going to be talking about on this episode. I'm HMA Sarabji.

Hi, I'm Ketan Takar. Yes, Hormma's a massive $10 billion commitment from the JSW group in the automotive uh space. It

first started with MG Motor India. Both

of us were there uh and now wanting to go on its own. Uh so really Mr. Jindal Sajjin Jindal is very ambitious about the automotive space. I saw the speech

in 2023 and you know it was quite infectious uh at that point in time. The

passion was very visible. I'd like to get to know from you Hormas um you know you've seen many brands entering the Indian market many brands also eating a humble pie had to exit. Uh for a

infrastructure group like JSW uh you know wanting to get into a highly competitive space uh what's your initial uh assessment? Well, you know, as it

uh assessment? Well, you know, as it start, it starts with the promoters. Uh

I think uh Sajjan Jindal, he's actually passionate about cars. He

he genuinely loves cars and I think uh the little I've met him and what people have met him, they're quite astonished as to how quickly he's understood the car business.

>> Fantastic.

>> Uh very sharp mind, phenomenal with numbers. uh you know I mean uh Jindel

numbers. uh you know I mean uh Jindel Steel is is what it is because of what he has done he's got his son path now also involved so young blood over there but I think really it is uh Sajjan

Jindal himself who's really the driving force behind this and has huge ambition I think what's interesting also is that uh you know uh I think in the

four-wheeler space or the passenger vehicle space this is the first really promoterdriven promoter led let's say company that we are seeing I'm talking about I think we

need to specify what the JSW group is you've got JSWMG and you've got JSW motors both completely sep different different under different verticals >> that's right

>> so but again you know I think the common uh let's say stakeholder here is JSW and promoterdriven um we've seen it does make a difference we've seen it in the two-heer space

>> absolutely >> uh take Hero Baj TVs all absolutely driven Royal Enfield Aisha Royal Enfield and field of course how can we forget uh driven by promoters you know I mean and

led by promoters in the four-wheeler space you've got Mahindra and Tata promoters mainly at the board level not operational run by professionals of course doing very very well but again you know at some point they were all led

by promoters as well but they've reached this stage and evolution uh and you know are more professionally run right now so I think uh that is going to be uh you

know change uh the game a bit because I think uh what's going to come with this is commitment to long-term capital. They

will have patience uh you know let's say continuity of leadership for a long long time. Uh of course there are challenges

time. Uh of course there are challenges as well uh you know you know uh internal descent is you usually doesn't happen right >> uh but I think for me it's quite

refreshing that we've got uh a promoter-led uh organization now in the four-wheeler space. That's absolutely right. I think

space. That's absolutely right. I think

you've often spoken about this fact that you got to pay that entry ticket price.

At least here in this group, you really do not see that as a challenge and whatever little conversation that I've had with the friends in the ecosystem, clearly money is not an issue at all and

they're looking big. Yeah. Ketaman, you

know, really $10 billion as you said, you can see that money is uh not going to be an issue. to deep deep pockets.

But where I think there are might be a slight disconnect is really the steel industry where they're coming from which is their core uh very high scale uh B2B

uh you know very structured in a certain way and uh >> getting into cars a completely different ballgame altogether very very complex

very high-tech so Kal while you know deep pockets uh you know let's say a commitment to spend big we know what they're investing. Uh in terms of

they're investing. Uh in terms of capacity, I hear it's 500,000 going up to a million. That's going to require a lot of capital. But I think the one area where I see a big kind of a difference

between let's say steel where they're used to and and auto uh is with people capital you know and I think uh that is really very very important right now

because clearly you need the top talent and I think compensation benchmarks are very different between steel and auto because I think in auto the benchmarks

are set set by global OEMs so much much higher so I think they need to have this mindset and appetite to pay a little bit more because I think you know

>> it's very expensive whether you get designers top uh designers the best designers the world cost a lot you know people who know about software software

defined vehicles uh product planners you know all this is very very expensive so I think this is going to be key that uh you know other than investing in capital

I think uh JSW has to be prepared to invest big uh in the people as well >> you know your performance performance is as good as the team that you have isn't it Hermas and we've seen it often in the automotive space that good talent is

actually what drives the sales out in the market >> absolutely I mean for me the best example right now is Mahindra and Mahindra we've seen it I think it's you know just the leadership there is probably the best uh there is in in any auto company right now and we are seeing

the results >> absolutely and the other aspects of uh entering into the automotive space is tech something that you know uh you keep

speaking very often about how critical tech is for one to establish oneself and then grow from that. Uh and second is building the brand. It's not easy. I

mean we've had some of the biggest global brands in India but it has taken them decades to kind of find that resonance with the Indian buyer. So two

two critical aspects here hormas brand building for a B2B brand to carve out a space for themsel in the consumer space and second is the technology and the technology depth. While the first step

technology depth. While the first step was taken with MG Motor by acquiring stake there. Uh the second one is going

stake there. Uh the second one is going to be on their own but uh with the technology borrowed from China the big China factor here. How do you see that uh playing out?

>> Well look on the brand obviously JW not an own brand but I think for me uh that's really not a big issue because we've seen that uh to me it's more product drives the brand than brand

driving the product.

>> True that. uh so I think uh you know coming then to the product and the technology absolutely important because really it's a technology and the product is the core of the organization absolutely and we've seen that you know

you need control of that I think uh obviously a very smart move to go to where the future of mobility is new energy vehicles China is leading the way uh and I think clearly what we've seen

which we'll get into the products uh I mean the first play was to take a big stake in uh MG Motor India And then of course to set up its own subsidiary 100%

subsidiary again talking to Cherry and others as well I believe J as well conversations are going on uh you know even commercial vehicles they're looking at

>> that's right you know so I think um but again let's talk about you know going with a company like Cherry um fantastic portfolio of products even MG through

sic fantastic portfolio of products so I think makes a lot of sense um but you know a challenge I deal with uh you know going down the China route. It's

actually a bit of a double-edged sword is because you know there are geopolitical issues and China of late in a way has weaponized its resources and

technology in the sense it's not letting go of it so easily >> and what I understand even with um you

know cherry the um the license agreement uh I think it's took time to come and I think right now the only thing they've kind of let's say licensed out is the

body on white for vehicles like the Jetour T2. Uh I think other components

Jetour T2. Uh I think other components or the critical components like uh the software, the infotainment system, I don't think uh they've got the data for

that as yet. So those bits will have to be imported. So I think it's a a

be imported. So I think it's a a challenge of you know maybe from it's not necessarily the Chinese OEM but it might be policy from China that you know

they want to control the amount of tech that's going out. Uh don't forget you know for decades they got all the tech in from a lot of the western companies for their joint ventures. Now they are

absolutely masters of it. So this could be a bit of a challenge. Uh but I think clearly you know the tech Chinese brands offer right now is the way of the future. Now it's a very critical factor.

future. Now it's a very critical factor.

I think that the mobility has shifted to east from west and uh everyone talks about China speed right now. Uh uh it's one thing to bring in Chinese products

and at speed uh but it's another to kind of establish them in the Indian market.

Sometimes we've seen people taking ages to establish a brand in the marketplace.

While you know to me I think they're trying to do way too many things together. Uh sometimes it's too good to

together. Uh sometimes it's too good to be true to believe that you know they want to do trucks, they want to do cars, they want to do actually house of brands wherein they can have multiple platform,

multiple brands. Uh in fact at the at

multiple brands. Uh in fact at the at the unveil in 2023 2024 uh you know there was a vision put out of selling 1 million electrified vehicle by the end

of the decade. Three years have gone and we've seen what has happened. MG motor

is still at about 50,000 units. So you

know the the fear is while the aspiration is to kind of you know go at speed and have big ambitions uh but it is a very very difficult market hormma

uh and uh you got to you got to along with the tech you also need to spend time and you got to have that stomach and be patient uh to establish a product and a brand to to find that uh resonance

with the Indian buyer. What do you think? I mean do you think the time

think? I mean do you think the time while you know it is shrinking world over uh that it's going to be a difficult uh pace for them to operate it?

>> No that's a very interesting point you brought Ketan because you know let's talk about speed. I think the one thing that frustrates uh Mr. Jindal and you know again being a

bit of an outsider you get a fresh thinking is that the auto industry is too linear. it doesn't move fast enough

too linear. it doesn't move fast enough and uh but and you know so I think one of the reasons also he is looking for

talent outside the uh auto industry is to try and bring this kind of nonlinear thinking but to be honest it's easier

said than done because the auto industry by nature it's been engineered to avoid failure rather than promote

experimentation and and and move faster you know so it's a very very challenging industry don't forget that you know it's hugely safety related it's hugely

regulation related and all these factors naturally slow it down because the validation life cycles are tremendous >> absolutely >> so you know there's a limit to how fast you can go of course I'm sure you can go

a bit faster >> but you know I think there are some really good examples of speed versus quality I think you've got to balance

the two because they do come uh at a cost you know if you trade one off on the other so to me we have great examples already in the Indian market >> on one side is Ola

>> you've got to hand it for him phenomenal speed uh you know got into the market really fast set up his factory in super quick time >> and we've seen what's happened to

absolute disaster >> not assembly he had actually contempt for quality >> Babish Aarwal literally didn't care for his customer. You know, the kind of

his customer. You know, the kind of contempt he had for quality or validation processes, just trying to ram it out in the market as quickly as possible. On the other extreme, you have

possible. On the other extreme, you have a company like Marauti Suzuki >> taken a lot of time with the E >> Vitara.

>> But you know that when Mahuti takes its time, it's to perfect the product.

>> Absolutely. uh you know somewhere a notch down you've got companies like Tata and Mahindra which got their EVs out much faster but they had those original glitches >> that's something which companies like

Marauti Suzuki Toyota of course they're both together with the same product >> uh you know they've come quite late >> we know even Maruti there were delays 6 month delays

>> but finally when it's out in the market uh you know whether product's good or bad that's a separate thing but one thing I think I can be assured of without even people buying saying it is that uh you know I have the confidence

that their products will be uh absolutely safe. So I think you know

absolutely safe. So I think you know you've got to balance all these factors out. It's great wanting to be fast,

out. It's great wanting to be fast, great wanting to be nonlinear, but far easier said than done.

>> Right. Right. I'm I'm sorry I segueed into the the time part of it, the technology part and the China part. Uh

you know at Autocar we've broken some stories about the products that are going to come out. you have some insight into uh the future at JSW Motor uh you know uh I mean the sense initial sense

that I get is they're going to be playing above 15 20 lakh and in that wide space where options are limited 20 to 50 lakh space we have some models uh

in sight what is it that uh uh we have for our viewers to understand >> well so I think uh I I think you know JSW is in a unique position two

companies uh you know and it's not unique elsewhere in the world. You've

got these mega groups which you know have different brands under different umbrellas, different you know entities altogether and I think uh so that's what JSW is uh you know hoping to do. So

let's start actually with JSWMG uh which is the existing uh joint venture right now. Uh it's been around for a while.

now. Uh it's been around for a while.

Again, it's got a huge, let's say, lineup of products. Uh doing very well with the Windsor uh you know, which has been the bestselling EV for a while. Uh

of course, that's getting competition and they know that. So, I think uh there going to be launching an all new uh 7seater

plug-in uh hybrid and which also has EV capability, >> full EV. So, I think it's called the Starlite.

>> Yes, that's what it is called in the Chinese market. F150 is a platform.

Chinese market. F150 is a platform.

>> That's right. Yeah. So, might get a different name over here. So, a

sevenseater bigger than the Hector SUV being planned. Then I think we've got uh

being planned. Then I think we've got uh the IM6.

>> Yeah.

>> Uh which again >> is u an SUV for uh the Select brand, right?

>> Uh again maybe under 60 lakhs. That

again MG Select actually doing quite well.

>> All small numbers but really doing well in their segments. I mean, Cyber Steer numbers are great for a sports car. The

M9 also doing really well.

>> And I think going forward might even be looking at a new platform to replace some of the products that not have worked like MG Aster clearly didn't work.

>> Absolutely.

>> Classic example of bringing a product designed for Europe >> into India. Too expensive. Uh, you know, just didn't resonate with Indian customers. But I think there's going to

customers. But I think there's going to be an all new platform from which I understand it'll be futurep proofed for let's say um ICE EV hybrids as well. I mean Aster we had the

ZSE which came off that >> but again I think uh you know these products have lived beyond their life cycles now I think new I think the new platform coming isn't it?

>> Yes. Yes. I think I mean Sigma is the architectures name uh potentially you know that is one of the alternatives for the B and B+ segment that they have and it is multiffuel uh that's the the

direction that the group has taken new energy so it's got to have uh the hybrid capability as well as pure EV uh so clearly I mean Creta rival was what they were banking on with Aster but

unfortunately did not take off they want to get it right this time around it's a new gen architecture and future proof for different powertrain. So it appears that next time around uh they're going

to come out a lot more stronger. It was

the first vehicle with the SDV capability in the Indian market and they're going to further take the tech element into that platform. So Sigma is the is the architecture Hormas that is going to be one of the biggest uh bet

from MG Motor before they actually go in for an IPO which was a thought process when GSW motor actually picked up the stake in the company. So yeah, I mean they've just got the Majesta, the D segment, then the Starlite, the C

segment, then they address the B segment and plus the existing Windsor and comet are doing fairly good numbers. This year

they're talking about 99,000 units kind of a production volume.

>> So so absolutely just with MGSW I think uh you know a lot of potential there.

They've got decent scale you know definitely company to watch for watch out for.

>> Uh again I think u there's one little complication there that's a VW angle.

Yes, >> which Psych and VW have a good equation.

So that has not been resolved there. But

I wouldn't be surprised if you just saw some let's say badge engineered products uh as a quick fix uh to get uh you know the companies associated in that way.

There's no equity involvement. It's a

very clean business deal uh you know which which could be done.

>> It's going to be critical. I mean for a cafe eventually companies are going to need some part of an EV as well.

>> Exactly. So for me, I don't think it I don't know whether it would happen, but I mean if if Volkswagen, you know, needs an EV desperately, why don't you just badge engineer a Windsor, for example?

>> Why not? Yeah.

>> You know, that could be one way out of it.

>> Absolutely.

>> Uh so I think uh you know, because they desperately need to meet the cafe numbers, Volkswagen, they're relying a lot on something happening with uh MG and um SIC. Nothing's happened yet. I

think it's very complicated to put a big joint venture association or partnership. I think a much easier way

partnership. I think a much easier way would be is to kind of pay uh MG to kind of >> and source vehicles >> and source vehicles from there. Whether

Volkswagen would uh let that happen, whether consumers would accept that, you know, it's literally almost blasphemous.

But don't forget there's a strong equation in any case. I mean, you know, you've got Volkswagen China developing a lot of products uh in conjunction with their partners over there. So I think uh

you know it's not totally impossible at all.

>> Right. Right.

>> But uh yeah I think so really MG uh JSWMG I think you know on a pretty strong footing as far as u you know let's say uh you know products are concerned and of course you know you've

got people there you've got Anurag who's an old veteran I think Rajiv Meta from Mindra is there as well. So I think uh you know all old guys uh so from Ford has been there.

>> Yeah Vinnina from Ford is also there. So

I think they're pretty sorted in that way. I think um you know honestly um

way. I think um you know honestly um I'll be frank what Rajiv Chaba had achieved and you know the level it was at you know it's dropped in between now

I think it's time to you know pick up uh with these products I think they have the opportunity to really kind of you know go past uh their last the volumes that they're currently doing. There a

different sense of energy there when you meet them now. There's different kind of confidence. Winds are doing 50,000 units

confidence. Winds are doing 50,000 units peranom. Uh the magister they've kind of

peranom. Uh the magister they've kind of made it bigger and better and there's a a cadence of portfolio lined up now. So

there's a lot more for uh JWMG to do.

The capacity is going to be increased from 100,000 to 300,000. So I think that part of MG motor for the JSW group is sorted. The triparted part little

sorted. The triparted part little complicated as you mentioned Orbas may get sorted out if not uh JV then probably some kind of a product sharing agreement then there is a big one which

I'm very curious to know about from your end the JSW motors own endeavor with Sherry that that as I said is a big bet we talked about it earlier very very ambitious uh one thing you got to hand

it to uh you know the genders they're not short on ambition they are thinking very big which of course I think you know the promoters can do and that's one advantage of you know these companies being promoterled or this one being promoterled.

>> So I think here we've talked about the products we we broke the story first that uh the first one out is going to be the from Cherry the Jet T2. Yeah. uh a

big let's say SUV you know it's like a lot of people call it you know let's say a Chinese defender uh and but clearly I think what >> road presence

>> super road presence phenomenal power 370 horsepower >> insane >> you know which is going to be insane uh you know plug-in hybrid uh so I think super spec uh you see them all over Dubai >> yeah uh

>> you know and they're just all over the place so I think uh has a lot of potential pricing ing will be key. I

think that's going to be quite expensive in the 40 lakh range. So, I think clearly a good strategy to come in at the top, you know, kind of uh establish the brand with a pretty high-tech

product, a premium product. So, that

makes a lot of sense. And then I think going down they'll have something called the uh iicar, the V23. Again, we broken that story on autocar. So, a kind of a

electric jimny so to speak, right? So I

think that's also going to be uh in the mix and they've got a Creta fighter >> wow which is again a cherry based uh JCO uh J5

>> uh so that's where you know so I think a whole host of products there as well and it it's not stopping at Cherry they are going to be talking to J and others so literally you know shopping around uh

but of course I think uh everything right now from from China which uh makes a lot of sense and obviously they've established Yeah, >> let's say relationships with the Chinese

uh OEMs, with the Chinese ecosystem.

>> Uh but as I said, there always risk to that just given the whole geopolitical uh situation right now. But clearly I think >> it's uh you know going there is the

thing to do because that's where uh the tech is for future mobility.

>> Absolutely. In fact, we've already seen Tatas and Mahindraas actually uh taking inspiration from east rather than west and their life cycles are changing and naturally for a newbie like JSW motor

that's the place to be. U and then it's going to be interesting. I think the price bracket should be what 20 to 50 lakh in your assessment the JSW brand.

>> Yeah. Yeah. I think 50 is on the higher side. I think they'll they'll play

side. I think they'll they'll play between 20 and 40 lakhs somewhere over there. Interesting space to be.

there. Interesting space to be.

>> Yeah. Interesting space to be.

Absolutely. So options. Yeah. Correct.

But a lot of challenges Kan for one you need a really really strong uh team for this because you're really building everything from scratch from the engineering uh you know product

development retail uh service network all that you know it's a very very complex game.

>> Yeah. Uh so I think that's going to be absolutely uh key and you know from what I understand um not there's really not too many people from the auto uh business in this but that's more by

design actually because as I said you know the thinking in JSW is that auto is too linear but uh you know I think uh uh you can't rush things uh the way uh you

want to. It's just

want to. It's just a slow paces.

>> One of them being uh quality above everything.

>> Absolutely.

>> So, but I think the ambition is there and the thought process is there. A very

fresh thought process. So, I I think uh it's going to be quite uh interesting to see how this plans out. I think even the products chosen are really very very very promising.

>> Absolutely. In fact, Anurag in a recent interview was mentioning, you know, there's uh uh deluge of alternatives available uh from what we can pick from

from the Chinese market. But uh uh you know the picking the right product is critical and saying no to things is very critical and hence bringing in products that resonates with the Indian audience is very very critical. You mentioned

about Aster as to how it was designed for Europe but brought into India. I

think that's going to be another critical element from uh uh from JS blue motor side. Ever since they've announced

motor side. Ever since they've announced their plans, I've been wanting to understand as to how are they going to go about localizing it. So the first announcement of setting up a massive factory in Aangabad that showed that you

know there's commitment coming. Uh now I understand you know there are a lot of people being hired on the R&D front while the initial phase there may be a lot of assembly that will happen but uh it I mean it appears that they're going

to be hiring a lot of local talent.

almost 100 odd engineers have already been hired. They want to take it up to

been hired. They want to take it up to 1,500 to 2,000 people. Uh like capital is not a constraint. So probably there may be a tech center coming up in Pune.

So there I mean yes uh time to market is critical and they you know a hurry to bring in the brand into the Indian market but there appears to be a plan to localize it. Uh and there's a certain

localize it. Uh and there's a certain template that MG motor has also defined with the Windsor. It came with circuits eventually localized now the localization level has tripled. It is

adding to the bottom line. So a similar template for actually JW motor to follow and in this market where wherein very few brands have succeeded they actually have a uh you know a proof point of MG

motor or new brand can actually succeed in the Indian market. So I think I think the localization is going to be a critical element and and designing the product for the Indian market as well is going to be critical isn't it?

>> Absolutely it is and I think that is their ambition. I think the absolute

their ambition. I think the absolute ambition was to get the platform and even design their own top hat.

>> Wow. Okay. that's what they wanted to do but I think you know there have been constraints in how much data they've been able to get right uh from you know their Chinese partners uh so I think

that kind of you know can be a little restrictive but I'm sure they'll get around that there'll be you know ways to work out so I think it'll be a stepby-step way I think initially will be just CKD >> uh right now just assembly and you know

put the products out there seed the market well one assumes they will be successful because you know I think they've been well chosen products

and then slowly localize and build. So I

think you know as uh a kind of a let's say on paper strategy it's it's brilliant but you know to execute this as I said you know the key is going to be the people to be able to execute this

uh you know in a way that uh uh you know this market demands because it's a very brutal market very unforgiving >> and uh we've seen that you know four players dominate about 80% of it but

they will have a few cards up their sleeve like let's say a lot more vertical integration >> you know another interesting element of that vertical integration is also the battery localization and that's something that Parindel had mentioned

when the JSW partnership was announced.

So clearly that's going to be another interesting area wherein we don't have tech yet and even today people are relying a lot on Chinese cells. Uh so

it'll be very interesting to see as to how the group goes about localizing cells because powertrain is going to be critical. Uh yes you can rely on imports

critical. Uh yes you can rely on imports to begin with but eventually the cell is going to be the critical aspect. I think

as a group what I see hormma is that there's you know we've often seen many brands falling in the Indian market because of the scale challenge what they are trying to do is adopt a very unique

approach have MG motor as one brand have JSW brand as another they want to do trucks they're talking to multiple uh companies like you mentioned J and others probably have a house of brand

and have that vertical integration at the back with the steel with paint uh with uh this JSW energy as well so from a for from a power supply perspective.

Uh so I think u on the paper it appears very very promising.

>> Yeah, it looks all great on paper Kathan but of course you know huge challenges.

This is a business where you need deep deep experience and expertise uh and you know you talked on vertical integration of the batteries but uh you know if you

see I think uh again you know to get the kind of um let's say tech transfer on battery manufacturing to set up a battery manufacturing plant you'll

require a lot of knowhow from China and that I think is hard to come by I mean if you look at it uh you know at the end manufacturing down to the cell levelization down to the cell level is

is the you know the critical and the final step but no one's done it as yet.

>> Absolutely. So I think you know there's um obviously u you know these are not kind of let's say easy kind of uh things

to do you know highly highly complex and again uh I keep coming back you know dependency on Chinese always is something to uh you know worry about >> absolutely absolutely

>> but I think what's clear is that uh you know it's a phenomenal rush of fresh air into this segment with JSW coming in a completely new player Yeah, >> again promoterled which has its own

dynamics and makes it very interesting and I think you know if things work out you know they should be a formidable force.

>> I agree. I think uh a new path by a new Indian entrepreneur is what I'm looking forward to.

>> Absolutely. And with that we'll call it quits on this edition of deep drive.

Hope you did enjoy watching it. Uh, you

can tune in to us every Saturday at 11:00 a.m. as always, and you can also

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