Tata Motors already owns a manufacturing unit in Sanand, from where the Tata Nano had been produced, located opposite the Ford Plant
Tata Passenger Electric Mobility Ltd (TPEML) and Ford Motors Pvt. Ltd (FIPL) had entered into an agreement wherein Tata Motors will acquire Ford Motor’s manufacturing plant in Sanand, Gujarat for a total consideration of $91.5 million (Rs 726 crore). The agreement includes land, vehicle manufacturing plant, machinery and equipment along with all eligible employees.
This acquisition comes at a time when Tata Motors is facing manufacturing capacity constraints in its existing plants leading to long waiting periods for some of its models. This takeover will open up manufacturing capacity of 300,000 units per annum which could be scalable to 420,000 units per annum as Tata Motors continues to build on its leadership position in what is being seen as an ever growing electric vehicle segment in the country.
Tata Motors Acquisition of Ford India Plant
Following the takeover of Ford’s Sanand plant by Tata Motors, FIPL will continue to conduct its powertrain manufacturing processes at the same plant by leasing back the land and buildings from Tata Motors on agreed terms and conditions. The two automakers will work together to satisfy all conditions of the agreement and approvals for closure of the transaction.
Ford India had also announced that none of its eligible employees would suffer on account of its buyout and hence Tata Motor’ EV subsidiary, on their part will take on Ford India’s eligible employees once Ford India decides to stop such operations in the country. The plant offers 3,043 direct and 20,000 indirect employment.
Tata Motors announced today – “Pursuant to the fulfilment of the necessary condition precedents for the transaction, including receipt of relevant government approvals, the Parties have decided to proceed towards completion of the Transaction on 10th January 2023.”
“As part of the transaction, all eligible employees of FIPL’s vehicle manufacturing plant have been offered employment with TPEML on terms, conditions and benefits of service similar to those that are currently availed by them. TPEML would like to take this opportunity to extend a warm welcome to all the eligible FIPL employees who have accepted its offer of employment and who shall become TPEML employees with effect from 10th January 2023.”
Ford India Exit
It may be recalled that Ford India had announced its exit from India in September 2021. The company commanded less than 2 percent of the passenger vehicle segment in the country and had been trying for 2 decades to generate profits. Exit from India was a part of the company’s global restructuring plans.
The last Ford EcoSport unit rolled off production lines from the Tamil Nadu plant earlier this year in July, from where the Endeavour was also produced. From the Sanand, Gujarat plant, Ford India used to produce its smaller models such as Figo, Freestyle and Aspire.
Tata Motors Electric Vehicle Segment
Tata Motors electric vehicle segment is growing from strength to strength and it aims to consolidate its position in this segment. Tata Motors sees an average of 5,500-6,000 bookings each month but is only able to deliver 3,300-3,400 units and this pending backlog has resulted in longer waiting periods which in some cases has touched 8 months. With the acquisition of the Ford India Sanand plant, it should result in quicker and timelier deliveries.