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- 31 May 2022
- ICICIdirect Research
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TATA MOTORS SIGNS MOU TO ACQUIRE FORD MOTORS PLANT IN GUJARAT
TATAMOTORS - 817 Change: 24.25 (3.06 %)News: In a regulatory exchange filing, Tata Motors informed exchanges about MoU signed by Tata Passenger Electric Mobility (TPEML), a subsidiary of Tata Motors, and Ford India Pvt Ltd (FIPL), with the Government of Gujarat (GoG) for the potential acquisition of FIPL’s Sanand vehicle manufacturing facility including (i) Land & Buildings (ii) Vehicle Manufacturing Plant, Machinery and Equipment and (iii) transfer of all eligible employees of FIPL Sanand’ s vehicle manufacturing operations. FIPL will operate its Powertrain manufacturing facilities by leasing back the land and buildings of the Powertrain unit from TPEML. This MOU will be followed by signing of the definitive transaction agreements between TPEML and FIPL over the next few weeks
Views: This news comes as positive development for the company as it is operating at ~90+% utilisation levels at its passenger vehicle segment amid strong customer response to its new forever series of product profile in the PV segment as well as pole position in the electric PV segment domestically. TPEML would be required to invest some quantum into new machinery and equipment, which is necessary to commission and make the unit ready to produce its vehicles. With the proposed investments, it would establish an installed capacity of 300,000 units per annum, which would be scalable to more than 400,000 units. This unit is adjacent to the existing manufacturing facility of Tata Motors Passenger Vehicles Ltd at Sanand, and hence it likely to witness a smooth transition and is a strategic fit in nature
Impact: Positive