Tata Motors buys Ford’s Sanand plant for Rs 725 crore
- Tata Motors has acquired Ford India’s manufacturing plant at Sanand, Gujarat
- All the eligible employees at the unit will be transferred to Tata Motors
- The acquisition will boost the EV business of Tata Motors
Tata Passenger Electric Mobility Limited (TPEML), a Tata Motors subsidiary, has acquired Ford India’s manufacturing plant at Sanand, Gujarat for Rs 725.7 crore, according to Tata Motors’ late night notification to the stock exchanges.
The Unit Transfer Agreement (UTA) includes the land and buildings, vehicle manufacturing plant along with machinery and equipment, Tata Motors said in a stock exchange notification on Sunday. All the eligible employees at the unit will be transferred to Tata Motors, as per the agreement. The shares of Tata Motors were trading 0.26% high at Rs 466.45 on the BSE.
Ford India Private Limited (FIPL) will continue to run its power-train manufacturing facility by leasing back the land and buildings of the power-train manufacturing plant from TPEML on mutually agreed terms. According to the statement, the Tata Motors EV subsidiary will offer jobs to the eligible employees of the power-train manufacturing plant if Ford India ceases such operations. The plant offers 3,043 direct jobs and 20,000 indirect jobs.
Over the next few months, both Ford India and Tata Passenger Electric Mobility will work together to satisfy all the condition precedents and obtain the required regulatory approvals for the closure of the transaction, Tata Motors said. On May 30, the memorandum of understanding was signed by the government of Gujarat, FIPL, and TPEML to support all relevant approvals for the transaction.
With TPEML’s manufacturing capacity nearing saturation, this acquisition is timely and a win-win for all parties involved. The acquisition will help increase Tata Motors annual capacity at Sanand to 300,000 units, which is further scalable to 420,000 units per annum, taking the company’s total capacity to 900,000 to 1 million units.
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The acquisition will boost the electric vehicle (EV) business of Tata Motors, which plans to invest $2 billion in the sector and create a portfolio of 10 models by 2025.
Tata Motors would make the necessary investments to reconfigure the plant to adapt to its existing and future vehicle platforms. The facility is close to the existing manufacturing unit of Tata Motors Passenger Vehicles Ltd at Sanand, which should help in a smooth transition.
“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,” said Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles Limited and Tata Passenger Electric Mobility Limited.
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“It will accelerate the growth and development of the Indian auto industry by taking a progressive step forward towards building a future-ready Atmanirbhar Bharat,” he added.
In September 2021, the company said that it would stop vehicle production at its two manufacturing units in India as part of a restructuring strategy.