Sat, 08 Oct 2022

Tata Motors has taken over the Ford India manufacturing unit in Sanand, Gujarat following the US automakers exit from India in September 2021

Tata Motors has stated that none of the workers who were working with Ford India would be laid off and will be retaining all these employees. Ford India had given direct or indirect employment to around 23,000 persons. Tata Motors also owns a manufacturing unit in Sanand from where it had produced the Tata Nano that is located just opposite the Ford Plant.

Following the decision to take over the Ford Plant, Tata Motors sought concessions from the State Government in terms of land transfer rate which the automaker proposed at 20 percent of Jantri rate which translates to Rs 66 crores. The company also asked for balance eligible incentives as had been extended to Ford India till 2030. The State Government has approved both these concessions.

Ford India Gujarat Plant Distress Sale

Ford had invested about USD 1 Billion (approx Rs 8,000 crores) to set up the Sanand plant in 2011. However, Ford had accumulated operating losses to the extent of $2 billion over the past decade. As a part of their global restructuring process, they decided to exit India and hence, this distress sale of epic proportion. Ford India Gujarat plant has installed capacity of 3 lakh units per annum, which is scalable up to 4.2 lakh units per annum. Tata Motors has taken control of the Ford India Sanand Plant for Rs 725.7 crores, exclusive of taxes.

As per the media release, "Tata Passenger Electric Mobility Limited (TPEML), a subsidiary of Tata Motors Ltd, and Ford India Private Limited (FIPL), have today 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 Cr (Seven Hundred Twenty Five Crores and Seventy Lakhs)."

"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."

Tata Motors EV Push

Demand for Tata Motors electric vehicles have been increasing by leaps and bounds. The company states that out of average bookings of 5,500-6,000 units each month, it is only able to supply 3,300-3,400 units. This has caused a huge backlog and long waiting periods. In select cases, waiting for Tata electric cars has touched 8 months. With Tata Motors planning to launch multiple new electric cars by 2025, the takeover of the Ford India plant in Sanand will play a crucial role.

Announcing this, Mr. 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. 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."

"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," said Steve Armstrong, Transformation Officer of Ford Motor Company.

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