Tata Motors Is Ready For Expansion With Acquisition Of Ford’s Gujarat Plant

Tata Motors agrees to acquire the Ford Motors Co. plant based in Gujarat. According to Tata Motors’ statement, the Indian automaker will pay 7.26 billion rupees ($92 million) for the deal, which includes land, building, and a vehicle manufacturing plant in Sanand, Gujarat and its machinery and equipment. 

“With our manufacturing capacity nearing saturation, this acquisition is timely and a win-win for all stakeholders,” Tata Motors said in the statement. “It will unlock a state-of-the-art manufacturing capacity of 300,000 units per annum which is scalable to 420,000 units per annum”, it added. 

Last year, Ford announced to shut its factories in India, one of its three most important markets. Before the closures, the US automakers’ Indian unit had racked up more than $2 billion in losses during the past decade.

Tata Motors announced on Monday that “Tata Passengers Electric Mobility Limited (TPEML), a subsidiary of Tata Motors Ltd., have assigned a Memorandum of Understanding (MoU) with the Government of Gujrat (GOG) for the potential acquisition of FIPL’s Sanand Vehicle manufacturing facility.”

Ford’s Gujarat plant is a state-of-the-art site. TPEML would invest in new machinery and equipment, which is necessary to commission and make units ready to produce its vehicles. 

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“This MOU for a potential acquisition of this unit is a win-win for all stakeholders and helps Tata Motors enhance its PV/EV manufacturing capacity. This unit is adjacent to the existing manufacturing facility of Tata Motors Passenger Vehicles Ltd at Sanand, which should help in a smooth transition,” Tata Motors added.

How will taking over the Gujarat plant impact Tata Motors, which is targeting to cross half a million annual sales this fiscal year? The company is currently operating at 85-90% capacity and will need new capacity to maintain this momentum. The company manufactures its vehicles in Pune & Ranjangaon in Maharashtra and Sanand in Gujarat. 

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