It’s 2022. A year since Ford left India in September 2021. However, Ford had built a state-of-the-art manufacturing plant in Sanand, Gujarat. And it seems, that Tata acquired Ford’s plant, and the procedure for it will get completed by 10th January, 2023.
Tata-Ford Agreement
To be precise, Tata Passenger Electric Mobility Ltd (TPEML) and Ford Motors Pvt. Ltd (FIPL) had entered into an agreement wherein Tata Motors will acquire Ford Motor’s manufacturing plant in Sanand, Gujarat for a total consideration of $91.5 million (Rs 726 crore). The agreement includes land, a vehicle manufacturing plant, machinery, and equipment along with all eligible employees. This acquisition comes at a time when Tata Motors is facing manufacturing capacity constraints in its existing plants leading to long waiting periods for some of its models, so they really need the additional manufacturing capacity. This takeover will open up a manufacturing capacity of 300,000 units per annum which could be scalable to 420,000 units per annum as Tata Motors continues to build on its leadership position in what is being seen as an ever-growing electric vehicle segment in the country.
So, what will happen to Ford India? There is nothing to worry about, as Tata has come up with a win-win solution. Following the takeover of Ford’s Sanand plant by Tata Motors, FIPL will continue to conduct its powertrain manufacturing processes at the same plant by leasing back the land and buildings from Tata Motors on agreed terms and conditions. The two automakers will work together to satisfy all conditions of the agreement and approvals for the closure of the transaction. Ford India had also announced that none of its eligible employees would suffer on account of its buyout and hence Tata Motor’s EV subsidiary, on their part will take on Ford India’s eligible employees once Ford India decides to stop such operations in the country.
Existing Employees
So, what did Tata Motors announce? As follows- “Pursuant to the fulfillment of the necessary condition precedents for the transaction, including receipt of relevant government approvals, the Parties have decided to proceed towards completion of the Transaction on 10th January 2023.” “As part of the transaction, all eligible employees of FIPL’s vehicle manufacturing plant have been offered employment with TPEML on terms, conditions and benefits of service similar to those that are currently availed by them. TPEML would like to take this opportunity to extend a warm welcome to all the eligible FIPL employees who have accepted its offer of employment and who shall become TPEML employees with effect from 10th January 2023.” The plant offers 3,043 direct and 20,000 indirect employees. Now, that’s a good thing.