Tata Motors to purchase Ford Gujarat plant for Rs 750 crore

is ready to signal a definitive settlement with Ford Motor Co. to amass its plant in Sanand, Gujarat. The announcement may come as early as Monday, mentioned individuals within the know. The homegrown automobile maker pays Rs 700-750 crore for the plant and the workforce, they mentioned. This consists of the engine facility, which can be leased again to the US carmaker to cater to its international powertrain requirement.

Either side had signed a memorandum of understanding (MoU) on a doable deal on the finish of Could.

The takeover of the Gujarat plant will supply much-needed capability for Tata Motors, which has set its sights on crossing half 1,000,000 annual gross sales this monetary 12 months, up from 370,400 in FY22. The corporate is at the moment working at 85-90% capability and to maintain this momentum it can want recent capability. The corporate produces its automobiles at Pune and Ranjangaon in Maharashtra and Sanand in Gujarat.

The acquisition of Ford’s plant will assist elevate Tata Motors annual capability at Sanand to 300,000 models, which is additional scalable to greater than 400,000 models, taking the corporate’s complete to 900,000 to 1 million models.

ET had reported in March about potential sale discussions between Tata and Ford for a deal value $100-150 million.

Tata Motors and Ford India didn’t reply to queries.

The memorandum of understanding had been signed by Tata Motors unit Tata Passenger Electrical Mobility Ltd (TPEML), Ford and the state authorities for the potential buy of land and buildings, Ford’s car manufacturing plant, equipment and tools. It additionally coated the switch of all eligible staff, pegged at 1,400, of Ford’s Sanand car manufacturing operations, and was topic to the signing of definitive agreements and receipt of related approvals.

The acquisition will bolster the electrical car (EV) enterprise of Tata Motors, which plans to speculate $2 billion within the section and have a portfolio of 10 fashions by 2025.

Tata Motors chairman N Chandrasekaran mentioned in July that the corporate is trying to promote half 1,000,000 automobiles, together with 50,000 electrical autos (EVs), within the present fiscal 12 months, with EV gross sales more likely to double to 100,000 models by the following monetary 12 months. It offered 19,000 EVs in FY22.

The corporate had raised about Rs 7,500 crore from TPG Rise and ADQ via a convertible instrument final October for its EV enterprise. The primary tranche of Rs 3,750 crore got here in FY22 and the second is predicted within the third quarter of FY23. Upon full conversion, the traders are anticipated to get a stake of 11-15% within the EV arm, the enterprise plans of that are forward of targets to date.

Chandrasekaran had instructed shareholders the corporate is ramping up capability and the acquisition of the Ford manufacturing facility in Sanand will supply vital “capability addition” to cater to excessive demand. “The market share for passenger autos has gone up, we’re at 14%, and we have now larger targets sooner or later,” he had mentioned.

Tata Motors reported market share enchancment within the passenger car (PV) section within the June quarter. Passenger car income was almost half that of market chief

, despite the fact that quantity was simply one-fourth in the course of the June quarter. Whereas city demand remained robust, an excellent monsoon will add to demand progress over the close to time period, in response to the Tata Motors administration. The lately launched Nexon EV Max has been effectively obtained and has a ready interval of about six months, the corporate has mentioned.

Electrical autos accounted for 7% of passenger car quantity within the June quarter whereas these powered by petrol, diesel and CNG have been at 64%, 18%, and 11%, respectively. Tata Motors elevated its market share within the home PV market from 12.1% in FY22 to 14.3% within the June quarter. It continued to steer the electrical PV market with 88% market share within the fiscal first quarter.

“It’s a win-win for each side,” mentioned an individual with information of the matter. “Tatas get a readymade, state-of-the-art plant set for plug-and-play whereas Ford additionally retains a component for export. Will probably be owned by Tata however collectively operated with Ford.”

Ford, which exited the home market final 12 months, continues to be on the lookout for a purchaser for its Chennai plant.