Tata Motors likely frontrunner to take over Ford's Chennai unit

Group Chairman Chandrasekaran, Tata Motors top-level delegation meet Stalin in a span of 2 weeks

Speculation is rife in Tamil Nadu about a possible takeover of Ford India unit at Maraimalai Nagar in Chennai, after Tata Group conducted two rounds of high-level talks with Tamil Nadu (TN) Chief Minister (CM) M K Stalin within a span of two weeks.

On Wednesday, Tata Sons Chairman N Chandrasekaran met Stalin and state Industries Minister Thangam Thennarasu. Although details of the meeting were not divulged, this is the second time in a span of two weeks that company officials are meeting the CM.

On September 27, a top-level delegation of Tata Motors, led by its Executive Director Girish Wagh, too, had a round of discussion with Stalin. Earlier, companies like MG Motor, too, had evinced an interest in Ford India assets at Sanand and Chennai. Ford India had also conducted several rounds of talks with players like Ola and Mahindra & Mahindra (M&M). 

“The chairman did have a meeting with the TN CM, but that was a courtesy call. What you are hearing and reading is pure speculation,” said a Tata Motors executive, adding, “He is group chairman of the Tatas and has several companies under his belt. Our executive director, too, met him as part of a courtesy visit.”

The two rounds of meeting are leading to speculation that Tata Motors is likely to be a front runner in talks for takeover of the Ford India unit in Chennai, while the state was also reportedly in talks with other players like MG Motor. A senior government official said no decision regarding Ford India unit can be expected immediately.

Last week, Thennarasu had told Business Standard that talks on Ford India unit were being spearheaded by the CM and a decision likely to come from him only. However, if an industry major is likely to show the intent to take over the unit, the state is likely to see it as a fresh investment rolling out all possible sops.

According to industry experts, the TN unit may gel well with the ambitious electric vehicle (EV) plans by Tata Motors. In Tata Motors’s annual general meeting this year, Chandrasekaran had said that EVs may contribute to around 25 per cent of the company’s total passenger vehicles (PVs) in the medium to long term, up from 2 per cent.

The company has plans to launch 10 more EV models before 2025 and is considering setting up a battery plant. During the July-September quarter in 2021-22, the company sold 2,704 PV EV units, posting 193 per cent growth, compared to the same time last financial year. The Chennai Ford India unit had an annual production capacity of around 200,000 vehicles and 340,000 engines.

There were also reports that MG Motor India was also in talks with the governments of TN and Gujarat for acquiring the US auto major’s manufacturing facilities at Sanand (Gujarat) and Chennai.

When asked about, Gaurav Gupta, chief commercial officer of MG Motor India, had refused to comment on this in a recent interaction with Business Standard. Before the closure announcement last month, the American automobile major was in talks with companies like Ola for contract manufacturing and M&M for cross-badging and a new product alliance.

Soon after the announcement of closure of the unit on September 9, the state government came out in public, stating it would ensure the smooth handover of land to another automobile player. If the state government finds a major player like Tata Motors to take over the unit, it may be a relief for over 2,600 employees and workers of the ancillary units at Maraimalai Nagar.

“Neither the CM nor Tata Motors has confirmed the talks on Ford India unit. Unless the confirmation comes, we will be under stress,” said a senior leader from the employees union at the Ford unit. He said that even after a month, the unions have not allowed Ford India to talk about a settlement plan with them, even though several rounds of talks have happened with the management. The management had informed employees that the decision for closure was decided after talks with several players like Ola and M&M failed to materialise.