Tata Motors, India’s leading automaker, has announced a major manufacturing investment in Tamil Nadu. The Mumbai-headquartered company has planned to build a new greenfield factory in the western part of Tamil Nadu at an outlay of ₹9,000 crore over a 5-year period.

The company signed an agreement with the Tamil Nadu government on Wednesday for the proposed investment.

The new factory, which will be the company’s second manufacturing plant in the south, is expected to come up on a 500-acre site in the Ranipet District and can potentially create up to 5,000 jobs (both direct and indirect). However, the exact location in Ranipet District is yet to be finalised.

This announcement appears to put an end to the speculation about the possible takeover of the Ford factory near Chennai, which stopped production two years ago, by Tata Motors.

While Tata Passenger Electric Mobility (a subsidiary of Tata Motors) acquired Ford’s manufacturing facility in Sanand, there was no taker for Ford’s 250-acre Chennai factory, which sits on a 99-year lease.

Tata Motors didn’t disclose details about the vehicles to be produced — electric vehicles or ICE vehicles — or the initial capacity of the greenfield unit. However, the factory can be used to serve the export markets due to its proximity to ports in Chennai.

Currently, Tata Motors operates factories across six locations in India: Pune (Maharashtra), Lucknow (Uttar Pradesh), Jamshedpur (Jharkhand), Pantnagar (Uttaranchal), Dharwad (Karnataka), and Sanand (Gujarat).

It is gathered that the company has been producing its passenger vehicles at Sanand in Gujarat and Pimpri, Chinchwad, and Ranjangaon in Pune, with a total annual capacity of 6 lakh units. In FY23, the company produced about 5.5 lakh units. Given its growth plans and favourable market outlook, the company would require expanding its PV capacity.

While Tata Motors’ Pune factory has been making electric cars and SUVs, the Sanand facility has a flexible production line to produce both electric cars and ICE models.

Tata Motor’s new manufacturing investment plans come following the demerger announcement about 10 days ago. It has proposed to demerger its business verticals into two separate listed companies: one for the commercial vehicle (CV) business and its related investments in one entity, and the passenger vehicle (PV) business, including PVs, EVs, JLR, and related investments in another entity.

(With inputs from T E Raja Simhan)