Hyundai, vendors set to line up Rs 10,000 crore for Talegaon plant

Tata Motors and Ford India signed deal for the latter's Sanand unit for Rs 725 cr in 2022

Hyundai Motor India (HMIL) is likely to invest Rs 5,000 crore in General Motors India’s (GMI’s) Talegaon plant in Maharashtra, and its vendors are also lining up investments worth Rs 5,000 crore near the site, according to sources close to the development.

Once the labour-GMI management tussle is sorted out, HMIL and its associates are expected to invest Rs 10,000 crore in the automotive plant, which has the capacity to produce 130,000 units a year.
 

In August, HMIL signed an agreement to acquire the “land, buildings, certain machinery, and manufacturing equipment” of GMI’s Talegaon plant. HMIL plans to commence production at this facility by 2025.

“The completion of the acquisition and assignment of the Talegaon plant is subject to the fulfilment of certain conditions precedent and the receipt of regulatory approvals from relevant government authorities and relevant stakeholders,” HMIL stated in August.

Once the automotive plant and the vendors’ facilities begin operations, around 4,500 direct and indirect jobs are expected to be created, sources have revealed.
 

A senior government official involved in the discussions between GMI, HMIL, and workers stated that the South Korean automotive major is expected to invest Rs 5,000 crore, and its vendors and associates will invest another Rs 5,000 crore.

“This investment, however, is expected to occur in phases, with the bulk of it planned by 2028. 

This has the potential to create jobs for the local youth, and the government is working to resolve the differences between former GMI workers and the company," said the official.
 

Puneet Anand, associate vice-president and vertical head, corporate affairs, HMIL, told Business Standard, “HMIL has signed an asset purchase agreement for the acquisition and assignment of identified assets related to GMI’s Talegaon plant. The plant currently has an annual production capacity of 130,000 units. Upon completion of the agreement, HMIL plans to expand the annual production capacity to achieve its strategic goals in the market.”

He further added, “As we reinforce our commitment to an Atmanirbhar Bharat, we intend to create an advanced manufacturing centre for cars made in India in Talegaon. Our manufacturing operations are scheduled to begin in Talegaon in 2025. HMIL intends to make phased investments to upgrade the existing infrastructure and manufacturing equipment at the Talegaon plant.”
 

Anand explained that these investments aim to bring the plant up to Hyundai Global Operating and Manufacturing Standards, ensuring the production of automobiles that exemplify manufacturing excellence.

The South Korean carmaker has not disclosed the amount it will pay the American firm to purchase the plant.

GMI ceased selling cars in the domestic market in 2017 as part of a global restructuring plan after more than two decades of operations in India. GMI workers have been actively protesting against non-absorption by the future buyer.

In early October, the General Motors Employees’ Union organised a chain hunger strike and criticised the Shiv Sena-Bharatiya Janata Party government, led by Eknath Shinde, for not taking the unemployment issue of thousands of automotive firm workers seriously.

Last week, the Maharashtra government stated that it stands “firmly” with the workers of the now-closed GMI plant in Talegaon, near Pune. Chief Minister (CM) Eknath Shinde emphasised the commitment to ongoing efforts in a meeting held at his official residence, Varsha Bungalow, in Malabar Hills last Tuesday. Apart from senior bureaucrats, the meeting also included senior executives from GMI, representatives from trade unions, workers, and other stakeholders.

At the meeting, the government discussed the importance of GMI providing fair compensation to its workers and the possibility of some of them finding employment with HMIL.

Of the 1,578 workers from the GMI Talegaon plant, 696 have already left their positions after accepting compensation from the company. The remaining 882 are seeking increased compensation and potential employment opportunities with HMIL.

“Hyundai will start this project in 2025. Full support at the government level will be given to start this project. This project will provide huge employment opportunities. Therefore, the CM also assured that necessary follow-up and efforts will be made to ensure that workers who did not accept compensation and skilled and semi-skilled workers should be taken into service on a priority basis,” a government statement last week said.

HMIL, the second-largest carmaker in India after Maruti Suzuki India, had previously signed a term sheet with GMI for the potential acquisition of the assets at the Talegaon plant.

HMIL has already enhanced its production capacity (at the Sriperumbudur plant in Tamil Nadu) from 750,000 units to 820,000 units in the first half of this year. This acquisition will enable HMIL to increase it further to 1 million units per year.