TATA taking over FORD Sanand Facility in January
HIGHLIGHTS:
- TATA Motors taking over Ford facility in January.
- TATA invested in this deal over 700 crore.
- TATA Motors will manage this deal through TPEML
- This deal will increase the TATAs EV production capacity to 420 lacs units per annum.
- TPEML signed a tripartite pact with GoG for smooth transaction.
TATA taking over FORD Sanand Facility in January, 2023
On December 30, 2022, Tata Passenger Electric Mobility Limited (TPEML) confirmed the acquisition deal of Ford India’s, Sananad Manufacturing Facility. The company announced that the manufacturing facility deal would be completed by January 10, 2023. After this deal, the TPEML will take control over the building, land, manufacturing plant, and workforce of the FIPL’s Sananad Plant.
TATA Passenger Electric Mobility Limited (TPEML) is a wholly owned subsidiary of TATA Motor. Earlier, in August 2022, TPEML signed a unit transfer agreement (UTA) to purchase Ford’s vehicle manufacturing facility in Sananad, Gujarat.
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Tata Motors completes its acquisition of Ford India’s manufacturing plant in Sanand through its subsidiary for a total of over 700 crores, becoming the owner of the land, buildings, and vehicle manufacturing unit, as well as equipment and machinery. The company will also transfer the eligible Ford employees stationed at the Sananad plant through a selection process after January 10, 2023.
On confirming this deal, Tata Motors said, “With the present saturation capacity, this acquisition will unlock an additional state-of-the-art manufacturing capacity of 3,00,000 units per year, which is expandable to 4,20,000 units per year.”
In the Indian auto industry market, which is dominated by Maruti and Hyundai, Ford has spent years trying to be more profitable but has failed. The company has decided to close its vehicle manufacturing facility in India. Ford does not see a path to increased vehicle sales and profitability in India, which will cost the company approximately $2 billion, as stated by the company last year.
With the over 700 crore investment, Tata Motors formed a subsidiary company, Tata Passenger Electric Mobility Limited (TPEML), with Ford India Private Limited (FIPL) last year. Later in August, the company signed a Unit Transfer Agreement (UTA) for the acquisition of FIPL’s manufacturing plant located at Sanand, Gujarat, which inter-alia includes:
(a) Whole land and buildings
(b) Vehicle manufacturing unit, including machinery and equipment.
(c) Transfer of FIPL’s employees of vehicle manufacturing operations at Sanand unit.
In 2022, for the potential acquisition of FIPL’s Sananad plant, Tata Passenger Electric Mobility Limited (TPEML), a subsidiary of Tata Motors Ltd., and Ford India Private Limited (FIPL) signed a Memorandum of Understanding (MOU) with the Government of Gujarat (GoG) which is mandatory to fulfill the acquisition process guidelines and authenticate government approvals for the acquisition.
Subjecting the definitive agreements to the receipt of relevant approvals. Ford India Private Limited will operate its powertrain manufacturing facilities by leasing back the land and buildings of the powertrain unit from TPEML until the complete transfer of the unit and business.
In last two years, Tata Motor’s Passenger and Electric Vehicles have delivered market-beating growth with its “New Forever” range of products which is caping a good share in vehicle market, espacilly in EV.
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Tata Motors is looking forward to this growth momentum continuing in future with a strong pipeline of future-ready products and proactive investments in electric vehicles. With increasing capacity utilization, sustaining this growth will require augmenting TML’s PV/EV manufacturing capacity in the coming years.
On completion of this deal and taking over the FIPL Sanand facility, TPEML will establish an installed capacity of 300,000 units per year, which would be expandable to 420,000 units per year. The company anticipates this to take a few months.
The Sananad unit of FIPL is located next to Tata Motors Passenger Vehicles Ltd’s existing manufacturing facility in Sanand, which should aid in the transition to TPEML.
To support all relevant approvals for the TPEML transaction, the government of Gujarat, TPEML, and FIPL have already executed a tripartite MoU on 30th May 2022
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