Alright guys... here is the update (drum roll time!!):
Firstly, thanks to everyone for providing very useful inputs and honest opinions. I test drove the MG ZS EV LR again this morning and specifically spend good bit of time checking audio system and playing with various settings.
So initially the sound was lacking any depth, punch, bass but after tweaking the settings, enable loudness, virtual sound and specially EQ settings (using similar to rock settings with higher base and treble levels), the overall sound was much improved and more than acceptable. Also tried playing couple of music videos (whilst stationary in park mode) and again they play just fine with decent audio using same settings so great result overall.
And I am happy to report, I now officially declare this as "adequate" for my needs

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Couple of questions/observations though:
1. When playing audio using USB, I could not find a way of browsing songs via folders. The system was just showing a long list of all songs on the usb stick together on left hand side scroll mini window when in music menu. I do like structuring my songs in different folders for ease of use etc and all my previous cars have managed to show folder structure and enabled me to choose which folder to play etc. Maybe this is hidden somewhere in the settings I couldn't find or maybe MG needs to improve this via a software update. Does anyone know if there is a way to look at folder structure for USB songs?
2) Not related to audio system, but on the test drive vehicle there was a annoying slight ticking sound/noise coming when the air circulation system was on (even on lowest fan setting). The noise went away as soon as air system was switched off so definitely related to it. It is only noticeable if stationary and in a very quiet area. Has anyone else got this problem or is it just the test drive vehicle having an teething issue (sounded like maybe a wire or something is touching fan blades making that noise)?