Tata Motors will acquire Ford India’s Sanand plant in Gujarat for Rs 725.7 crore as it looks to boost its passenger vehicle business. In May, Tata Passenger Electric Mobility Ltd (TPEML), a Tata Motors subsidiary, and Ford India Pvt Ltd (FIPL) had signed an MoU with the Gujarat government for the “potential acquisition’’ of Ford’s vehicle manufacturing facility.

Tata Motors on Monday announced that TPEML and FIPL have signed a unit transfer agreement (UTA) for the acquisition of FIPL’s Sanand manufacturing plant. The deal includes entire land and buildings, vehicle manufacturing plant along with machinery and equipment and transfer of all eligible employees of FIPL’s vehicle manufacturing operations at Sanand for a total consideration, exclusive of taxes, of Rs 725.7 crore.

Tata Motors added that with its manufacturing capacity nearing saturation, the acquisition is timely and a win-win for all stakeholders.

The Sanand plant has a manufacturing capacity of 3 lakh units annually, which is scalable to 4.2 lakh units. TPEML will now make the investments to reconfigure the plant to adapt to Tata Motors’ existing and future vehicle platforms. Since the unit is adjacent to the existing manufacturing facility of Tata Motors at Sanand, the acquisition would be a smooth one.

“The agreement with FIPL signed today is beneficial to all stakeholders and reflects Tata Motors’ strong aspiration to further strengthen its market position in the passenger vehicles segment and to continue to build on its leadership position in the electric vehicle segment,” Tata Motors passenger vehicles MD Shailesh Chandra noted. Tata Motors said FIPL will continue to operate its powertrain manufacturing facility by leasing back the land and buildings of this unit from TPEML.

The Tatas will induct the Ford employees in the powertrain unit into its rolls if the unit stops production. Situated across 460 acres, Ford’s Sanand factory started operations in 2015 and produced the Ford Aspire and Ford Figo.