CHENNAI: With Ford struggling to find a suitor for its plant at Maraimalai Nagar near Chennai, questions remain over who will take over the land once the auto major ends all operations in the plant.
The Chennai unit of Ford, spread across an area of 350 acres, had an annual production capacity of around 200,000 vehicles and 340,000 engines. Ford is now caught up in a row over the severance package for employees and the third round of conciliation talks was held between the management and the workers on Monday.
In September 2021, Ford India announced its decision to wind down vehicle assembly in Sanand in Gujarat by the fourth quarter of 2021, and vehicle and engine manufacturing in Chennai by the second quarter of 2022. While Tata Motors is to buy Sanand plant in Gujarat, the Chennai plant has no takers as of now.
The land in Chennai was offered to Ford at a cheaper rate and a sale deed was provided to the automobile major by Chennai Metropolitan Development Authority (CMDA). While officials refuse to provide details on what price Ford got the land, it is learnt that if Ford plans to sell the land to a third party then it has to get a no objection certificate (NOC) from CMDA as per a clause in the sale deed.
“Till now Ford has not reached that stage,” the official said. “There is a clause in the agreement that the land has to be returned back if it is put to use for purposes other than what it was assigned for,” official sources said.
The main purpose for which the land was given to Ford was to put it to industrial use. It should generate jobs and surrounding villages should benefit under the company’s corporate social responsibility (CSR), sources added.
Also, in 2018, Ford India announced that it lost several crucial documents related to the land transaction, including the 1999 CMDA sale deed. Ford also said it lost the Tamil Nadu Housing Board Sale Deed (1997), Deed of Exchange (1998), Government Order (1999) and Transfer through Letter (1998) related to Mahindra Ford India Limited.
Initially, Ford had established a joint venture company with Mahindra & Mahindra (M&M) to assemble and distribute vehicles in India, but the firm was rechristened Ford India in 1999 following a change in equity holding, with Ford buying out a majority stake. To a query on the guideline value of the land, the official said it has yet to be factored in. He added that guideline value of land parcels in and around the Marimalai Nagar plant will be fixed and drones will be used for the purpose.
Ford initially entered into talks with Mahindra which failed due to an offer mismatch. There were also talks with Tata Motors. Meanwhile, land cost has gone up quite drastically when it was assigned to Ford decades ago.