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Tata Motors dropped a bombshell of a news on Sunday by announcing its intention to buy Ford India's manufacturing facility in Sanand, Gujarat. In fact, Tata Motors has said that it has already signed a pact to acquire Ford's Sanand manufacturing facility.
Now that being said, Tata Motors now seems to have developed a habit of buying Ford's failed ventures and turning them into a successful investments. The last major investment made by Tata Motors on a failed Ford venture was the Jaguar-Land Rover (JLR) in 2008.
Now, Ford is again going through a rough patch (at least in terms of its business in India) and it was rumoured that Ford India will be selling one of its manufacturing plants in the country.
Now with the latest announcement from Tata Motors, it is confirmed that Tata Motors has yet again boarded the ship to 'rescue' Ford from yet another "failed" business venture.
This time, Tata Motors is buying Ford India's manufacturing facility in Sanand for Rs 725 Crores. For this, Tata Passenger Electric Mobility Ltd (TPEML), a subsidiary of Tata Motors and Ford India Pvt Ltd (FIPL), signed a Unit Transfer Agreement (UTA) for the acquisition of Ford India's Sanand manufacturing facility.
Through this multi-crore deal, Tata Motors will get the entire land and infrastructure facility including the machinery and equipments in Ford India's Sanand manufacturing plant.
At present, the Sanand manufacturing facility has a capacity to produce around 3 lakh units per annoum. However, this can be scaled up to 4.2 lakh units per annum with minor changes. This will be very useful for Tata Motors to increase production as it is in a race with Hyundai Motors to become the second-biggest passenger car maker in India.
While, if you are wondering how Ford acquired Jaguar and Land Rover, Ford had initially acquired Jaguar in 1989, and later acquired Land Rover from BMW in 2000. Also, around a year before the cash-rich Ford acquired the BMW, Tata Motors was planning to sell the Tata passenger cars division as well, however, the Tata officials were in turn "humiliated" by Ford - 'you do not know anything, why did you start the passenger car division at all'.
Approximately 9 years after this "humiliation", changing trends and the global recession have now forced Ford to sell both Jaguar and Land Rover. That being said, Tata Motors jumped on the opportunity to create a perfect plot for a corporate 'Revenge' story by acquiring both Jaguar and Land Rover for a whopping USD 2.3 billion.
In fact, after this acquisition, Bill Ford himself thanked Ratan Tata by saying 'you are doing us a big favour by buying JLR'.
Thoughts About Tata Motors Acquiring Ford India's Sanand Manufacturing Facility
Looking beyond the perfect plot for a movie, the acquisition of Ford India's manufacturing facility in Sanand will help Tata Motors further increase its production in India. This is very much necessary as the demand for Tata passenger cars is growing.
Also, the race with Hyundai Motors to become the second-biggest passenger car maker in India demands massive investments as well.