Tata Motors Eyes to Procure Ford's Tamil Nadu, Gujarat Divisions

Tata Motors is in discussion with Ford to acquire the latter’s units in Tamil Nadu and Gujarat, according to sources. If the transaction materialises, it would be Tata Motors’ second asset procurement from the US major. In March 2008, the Indian major bought Jaguar Land Rover from Ford for $2.3 billion.

Presently, Tata Motors has three passenger vehicle making plants in the country (one is a joint venture with Fiat Chrysler). The Ford India contract, which is at a budding stage, comes after Tata Motors separated its domestic passenger vehicle business, valued at about INR 9,420 crore, into a standalone entity.

Ford would get to shed its money-losing India unit and escalate investments in electric and automated vehicles, the future of mobility. Tata Motors’ interest in Ford’s local unit gained momentum after its leadership, that include chairman N Chandrasekaran and executive director Girish Wagh, met Tamil Nadu government officials.

While Tata Motors has no manufacturing facility in Tamil Nadu, it has a plant in Gujarat, which is next to Ford’s production unit. Tamil Nadu is too keen to find an owner for Ford’s facility in the state so that it can protect jobs as the US major has decided to stop making cars in India. Ford took the step after accumulated losses of its India unit crossed $2 billion over the last 10 years and the road to profitability continues to remain hazy.

Deliberations are continuing and Tata Motors could decide not to proceed with the deal. A Tata Motors spokesperson said that Chandrasekaran had a “courtesy meeting” with TN chief minister M K Stalin but declined to share details of the discussions.

A Ford India spokesman states, “We continue to explore possible alternatives for our manufacturing facilities and have nothing further to comment on the ongoing speculation.”

Motilal Oswal Financial Services head (research) Siddhartha Khemka say that the Ford India contract would be a benefit for Tata Motors as it would be a distress sale topped with certain benefits expected from the government of Tamil Nadu.

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