At the end of May 2022, Tata Motors’ subsidiary, Tata Passenger Electric Mobility, and Ford India Private Ltd. signed an MoU with the Government of Gujarat for the potential acquisition of Ford’s manufacturing facility at Sanand.
Along with Ford’s manufacturing facility, the deal would also include – Land & Buildings, the vehicle manufacturing plant, machinery, equipment and transfer of all employees. Back then, this was subject to the signing of definitive agreements and relevant approvals. And now, both the manufacturers have done just that.
Tata Signs Definitive Agreement For The Acquisition Of Ford India’s Sanand Plant – Details
Both the carmakers have signed a Unit Transfer Agreement (UTA) for the acquisition of FIPL’s plant in Sanand, Gujarat. Among other things, this will include – (i) entire land and buildings, (ii) Vehicle manufacturing plant, along with machinery & equipment & also (iii) transfer of all eligible employees of Ford India’s manufacturing operations at Sanand. The total cost for all this, exclusive of taxes, comes down to INR 725.7 crore.
However, Ford India will continue to operate its Powertrain Manufacturing Facility. For this, Ford India will lease back the land and buildings of the plant from Tata on mutually agreed terms. In addition to this, Tata has also agreed to offer employment to the eligible employees of this plant in the event Ford India stops its operations.
The closure of the transaction between the two carmakers will be subject to the receipt of relevant approvals from the government authorities. It will also be subject to fulfilment of customary condition precedents. Tata Motors, Ford and the government of Gujarat already executed a tripartite MoU on 30th May 2022. This was done to support all relevant approvals for the mentioned transaction.
For the next few months, Tata and Ford will work together to satisfy all the condition precedents and also obtain the necessary regulatory approvals for the closure of the transaction.
Tata’s Plans For The Sanand Plant
The brand’s passenger vehicles business has delivered market-beating growth in the last few years and continues to sustain this momentum. Tata has a host of “New Forever” products in the pipeline. The brand is also making proactive investments in the electric vehicle sector. The acquisition of the plant comes at a time when Tata’s current plant in Sanand is nearing saturation. Thus, it is a win-win for all the stakeholders, says Tata.
Tata would make the necessary investments to reconfigure the plant. This will be done to adapt to its current and future vehicle platforms. Ford’s Sanand plant is adjacent to Tata’s plant, which will also help with a smooth transition. Tata says it aims to produce 300,000 units per annum at Ford’s state-of-the-art plant. According to Tata, it will also be scaleable to 420,000 units per annum if required.