Tata Passenger Electric Mobility Limited (TPEML), a subsidiary of Tata Motors Limited, and Ford India Private Limited (FIPL), will complete the Sanand plant deal on January 10, 2023, the carmaker said on Friday. TPEML had signed a unit transfer agreement on August 7, 2022, to purchase Ford's manufacturing facility in Sanand, Gujarat.
With this, Tata Motors will take control of the entire land and buildings, vehicle manufacturing plant along with machinery and equipment situated therein and the transfer of all eligible employees of Ford’s vehicle manufacturing operations at Sanand for a total amount of Rs 725.7 crore.
“As per Tata Motors, this acquisition will unlock an additional state-of-the-art manufacturing capacity of 300,000 units per annum which is scalable to 420,000 units per annum as the company’s existing capacities near saturation,” the carmaker said in a stock exchange filing.
As part of the transaction, TPEML has extended an employment offer to all qualified Ford India Private Limited employees on terms, conditions, and benefits of service that are comparable to those that they currently enjoy.
Ford India stated that it would "take a hit of about $2 billion as it does not see a path to profitability in India" in September of last year.
Ford spent years trying to become profitable in India, where Maruti and Hyundai dominated the auto industry.
The US auto major announced its exit for a number of reasons, including weak demand, competitors' low-cost vehicles, and a failed joint venture (JV) with Mahindra.
“The decision was reinforced by years of accumulated losses, persistent industry overcapacity, and lack of expected growth in India’s car market," said the Managing Director of Ford India.
The mid-1990s saw the entry of Ford and Hyundai into India. But the fate of the two businesses is entirely different. Ford shut down its manufacturing operations as Hyundai rose to become the second-largest player in the nation.