Hyundai has signed a term sheet agreement with General Motors (GM) to explore the likelihood of buying GM's India plant in Talegaon, Pune.
A term sheet is an agreement that details the terms and conditions of a proposed investment and is a precursor to a more detailed, legally-binding pact usually used for corporate mergers and acquisitions.
- Hyundai has committed a Rs 4,000 crore investment for EVs in India
- Talegaon plant has capacity of 1.3 lakh vehicles annually
According to industry sources, the term sheet is likely to be valid for a stipulated time frame as the final sale agreement may be signed only after Hyundai has received legal clearances from various authorities, including settlement with the retrenched Talegaon plant workers.
The company stated, "The Term Sheet covers the proposed acquisition of land and buildings and certain machinery and equipment for manufacturing situated at General Motors India's Talegaon Plant. The proposed acquisition is subject to the signing of the ‘Definitive Asset Purchase Agreement’ and fulfillment of conditions precedent and receipt of regulatory approvals from relevant government authorities and all the stakeholders related to the acquisition.”
In November 2022, our sister publication Autocar Professional reported that Hyundai was leading the race to acquire GM India’s Talegaon plant, with Mahindra and Tata Motors too in the fray. Production came to a halt in early 2020 at the Talegaon plant, which was set up in 2008 and has a manufacturing capacity of 1,30,000 vehicles and 1,60,000 engines per annum.
Hyundai likely to use Talegaon plant for exports
People in the know said that Hyundai has already investigated the location and its proximity to the port. It is learnt that the South Korean carmaker intends to manufacture the Venue compact SUV at the Talegaon plant, and may use it as a base for made-in-India vehicle exports.
“The preliminary study is done. Hyundai wants to acquire the factory and they are keenly waiting for workers' issues to settle. The company wants to diversify its manufacturing footprint and this plant is right in the hub of the automotive cluster. It is close to the port as well, which satisfies their requirement to purchase the factory. The final signing will be subject to legal clearances only,” added a source.
In its presence of over two-and-a-half decades in India, General Motors had invested $1.4 billion (roughly Rs 11,441 crore) in the country and had already incurred losses for the winding-down process.
Talegaon plant: legal battles
While it exited the domestic market in 2017, GM stopped producing cars at its Talegaon plant in December 2020. Since then, it has been engaged in multiple legal cases with the employees union across various courts – the Pune Industrial Court, Bombay High Court and even the Supreme Court. However, the stalemate continues.
With the recent talks between GM India and the Talegaon Plant Workers Union failing – and the Supreme Court’s mandate to resolve the impasse at the earliest – Hyundai would be hoping the tide turns its way.
Hyundai's future plans
The South Korean carmaker has committed an investment of Rs 4,000 crore till 2028 to further its plans of launching six electric vehicles (EVs) in the country. The company’s MD in a recent interview told Autocar India that it plans to offer a complete range of EVs.
With its plant in Sriperumbudur, on the outskirts of Chennai, operating at almost full capacity, Hyundai Motor India would need additional manufacturing capacity to cater to the rising domestic and international demand.
With Tata Motors breathing down its neck for the No. 2 position with almost a million units in capacity – having acquired Ford India's Sanand plant – Hyundai too wants to be ready to protect its own turf.
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