Tata Motors shares jumped more than 2 percent in early trade on Monday as investor sentiment turned positive in the Tata Group auto firm stock as it moves on acquiring Ford India's Sanand plant.
As earlier reported
, the Tata Group auto firm signed a Memorandum of Understanding (MOU) with the Gujarat government for the potential acquisition of Ford India's Sanand vehicle manufacturing facility.
"Tata Passenger Electric Mobility, a subsidiary of Tata Motors, and Ford India, have today signed a MOU with Gujarat for the potential acquisition of Ford India's Sanand vehicle manufacturing facility including land and buildings, vehicle manufacturing plant, machinery and equipment and transfer of all eligible employees, subject to the signing of definitive agreements and receipt of relevant approvals. Ford India will operate its powertrain manufacturing facilities by leasing back the land and buildings of the powertrain unit from Tata Passenger Electric Mobility," Tata Motors
said in an exchange filing.
Ford India's Sanand plant will help Tata Motors augment its production capacity by an additional 2,40,000 units per year, on top of its capacity to produce 4,80,000 units per annum, spread across three of its existing plants.
The capacity addition will be a huge boost to Tata Motors. It can scale up production for its CNG manufacturing plans for its internal combustion (IC) vehicles, especially electric vehicles (EV). The company already has a huge order booking for electric vehicles, and this acquisition will definitely help them in a big way.
Tata Motors' share in the Indian car market stands a little over 14 percent, with the company trailing at the third spot behind South Korean auto major Hyundai's whose share is at 15 percent, as per April 2022 data from SIAM. The race between India's second and third-placed car manufacturers is heating up, particularly in the last few months amid chip shortage and shifting consumer trends.
In April 2022, Tata Motors sales in the domestic and international market stood at 72,468 vehicles, compared to 41,729 units during April 2021, showing a jump of 81 percent on a year-on-year basis.