Tata Passenger Electric Mobility Ltd (TPEML), a subsidiary of Tata Motors Ltd, on Sunday signed an agreement to acquire the manufacturing plant of Ford India Private Limited (FIPL) at Sanand in Gujarat for a total consideration of ₹725 crore (excluding taxes), an official statement said.
The deal includes land, buildings, a vehicle manufacturing facility and machinery and transfer of eligible employees of FIPL Sanand’s operations.
As part of the deal, FIPL will continue to operate its powertrain manufacturing facility at Sanand by leasing back the land and buildings from TPEML on mutually agreed terms. TPEML has agreed to offer employment to eligible employees of the powertrain plant in the event of FIPL’s cessation of such operations, the company said.
The closure of the transaction will be subject to the receipt of relevant approvals from government authorities and fulfilment of customary condition precedents. The government of Gujarat, TPEML and FIPL executed a tripartite MoU on May 30, 2022 to support all relevant approvals for the transaction.
The US carmaker’s Sanand facility provides direct employment to 3,043 and an estimated 20,000 indirectly, according to a Gujarat government official.
TPEML will make 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 Ltd at Sanand.
“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. 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,” Shailesh Chandra, managing director of Tata Motors Passenger Vehicles Ltd and TPEML, said.
In September 2021, Ford in India announced it will restructure its operations, with plans to significantly expand its Chennai-based Ford Business Solutions team and bring to market some of the company’s iconic global vehicles and electrified SUVs, while ceasing vehicle manufacturing in India.
Ford Motors had acquired 460 acres of land at Sanand for an estimated investment of ₹4,000 crore, which included a vehicle assembly plant (350 acres) and an engine manufacturing factory (110 acres).
Ford’s Sanand plant has a capacity to produce 300,000 units of passenger vehicles annually, while its engine manufacturing factory has a capacity of 270,000 units annually.
“[This] 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,” Steve Armstrong, transformation officer of Ford Motor Company, said in a statement.