Tata Motors acquires Ford India’s Sanand plant for Rs 725 crore

This acquisition for Tata Motors will unlock a state-of-the-art manufacturing capacity of 300,000 units per annum which is scalable to 420,000 units per annum. 

Published: 08th August 2022 01:01 AM  |   Last Updated: 08th August 2022 01:01 AM   |  A+A-

Tata Motors

Image used for representational purpose only. (File Photo | Reuters)

Express News Service

Tata Passenger Electric Mobility Limited (TPEML), a subsidiary of Tata Motors, and Ford India Private Limited (FIPL), on Sunday signed a Unit Transfer Agreement (UTA) for the acquisition of FIPL’s manufacturing plant situated at Sanand, Gujarat, which inter-alia includes: (i) entire land & buildings; (ii) Vehicle Manufacturing Plant along with machinery and equipment situated therein; and (iii) transfer of all eligible employees of FIPL’s vehicle manufacturing operations at Sanand, for a total consideration, exclusive of taxes, of Rs 725.7 crore. 

This acquisition for Tata Motors will unlock a state-of-the-art manufacturing capacity of 300,000 units per annum which is scalable to 420,000 units per annum. 

FIPL will continue to operate its Powertrain Manufacturing Facility by leasing back the land and buildings of the Powertrain Manufacturing Plant from TPEML on mutually agreed terms. TPEML has agreed to offer employment to the eligible employees of FIPL’s Powertrain Manufacturing Plant in the event of FIPL’s cessation of such operations.

The closure of the transaction will be subject to the receipt of relevant approvals from the government authorities and fulfilment of customary condition precedents. The government of Gujarat, TPEML and FIPL have already executed a tripartite MoU on 30th May 2022 to support all relevant approvals for the above transaction.

"With our manufacturing capacity nearing saturation, this acquisition is timely and a win-win for all stakeholders," said Tata Motors in a statement. At present, Tata Motor’s peak production capacity is pegged at 50,000 units per month and given the aggressive expansion plan it has to launch as many as 10 battery powered vehicles by March 2026, the new facility is expected to play an important role for the automaker.

TPEML said it would make the necessary investments to reconfigure the plant to adapt to Tata Motors' existing and future vehicle platforms. The unit is adjacent to the existing manufacturing facility of Tata Motors Passenger Vehicles Limited at Sanand, which should help in a smooth transition, it added. 

Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Limited and Tata Passenger Electric Mobility Limited, said, “The agreement with FIPL signed today is beneficial to all stakeholders and reflects Tata Motors strong aspiration to further strengthen its market position in the Passenger Vehicles segment and to continue to build on its leadership position in the Electric Vehicle segment."
 
Steve Armstrong, Transformation Officer of Ford Motor Company, said, "Today’s announcement marks an important step forward in Ford’s ongoing business restructuring in India, which is part of our Ford+ plan for strategic transformation. With the transfer of employment for eligible vehicle manufacturing employees included in the agreement, this milestone also highlights our best effort in caring for those impacted by the restructuring.”

Ford, the iconic American car brand whose founder Henry Ford revolutionized the automotive industry in the early 20th Century, last year announced it will stop manufacturing vehicles in India due to accumulating losses. According to industry estimates, there are currently over 3,000 direct jobs and about 20,000 indirect jobs being provided at the plant in Sanand. 

Meanwhile, Ford's Chennai plant rolled out its last unit of sports utility vehicle EcoSport late July before winding up its operations by July 31. As of now, the carmaker has said it would continue to retain ownership of the land and machinery.



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