Tata Motors to acquire Ford's Sanand plant; no change in status of Chennai plant

To create more capacity to cater to the growing demand for its vehicles, automotive manufacturer Tata Motors has signed an MoU with the Gujarat government to acquire Ford India’s Sanand plant. This announcement was made by the Tata group firm, Tata Passenger Electric Mobility Ltd (TPEML), in an exchange filing.

“A subsidiary of Tata Motors Ltd, and Ford India Pvt Ltd (FIPL), have today signed a Memorandum of Understanding (MoU) with the Government of Gujarat (GoG) for the potential acquisition of FIPL’s Sanand vehicle manufacturing facility,” the Tata Group firm informed in an exchange filing.

Greater capacity

According to reports in business dailies, the acquisition will help Tata Motors create more capacity to cater to the fast-growing demand for its vehicles. The Gujarat government has supported this deal and is willing to extend tax benefits, meant for Ford, to Tata Motors for manufacturing of cars, the reports added.

TPEML is expected to invest in new machinery and equipment, which is necessary to commission and make the Sanand unit ready to produce its vehicles. The site would then have an installed capacity of 300,000 units per annum, which would be scalable to more than 400,000 units. The MoU will be followed by signing of the definitive transaction agreements between TPEML and FIPL over the next few weeks.

Also read: Ford drops India EV plans; to exit Chennai and Sanand facilities

According to a news report in Economic Times, Tata Motors is likely to pay $100-150 million for the acquisition of the facility. The deal is for the vehicle manufacturing facility alone in Sanand and not the engine plant, which Ford uses for the exports market.

In the current year, Tata Motors is tentatively expected to produce around 550,000 units and hence would require additional production capacity to cater to the incremental volume in the coming two years.

Meanwhile, a statement issued by the Gujarat government on Monday (May 30) on the agreement said that TPMEL will also absorb all Ford workers.

Chennai plant in limbo

The fate of Ford Motor’s Maraimalainagar plant near Chennai, meanwhile, hangs in limbo. Last year, the US car major had said it was exploring the possibility of using the plant as an export base for EV manufacturing.

However, earlier this month, Ford announced its decision to call off the EV plan. The Chennai plant is said to employ around 2,700 permanent workers and 600 non-permanent staffers. At the Sanand plant, the total headcount is estimated at 2,000.