PUNE: Hyundai, India’s second biggest car maker, on Monday said it has signed a term sheet agreement with General Motors (GM) to explore the likelihood of acquiring GM's India plant in Talegaon, near 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.
The South Korean automaker has committed Rs 4,000 crore investment till 2028 to launch six all new electric vehicles, including a complete range of electric cars in India, the world’s third largest automobile market.
Talegaon factory has a capacity to make 1.3 lakh vehicles and 1.6 lakh engines annually.
The final sale agreement may be signed only after Hyundai receives legal clearances from various authorities, including settlement with the retrenched Talegaon plant workers.
“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,” Hyundai said in a statement.
GM stopped manufacturing 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.
At present Hyundai’s factory in Sriperumbudur, on the outskirts of Chennai, is operating at almost full capacity. The company would need additional manufacturing capacity to cater to the rising domestic and international demand.
Also, with rival Tata Motors nudging it to take over its number 2 rank in sales Hyundai has been aggressively protecting its own turf and was on the look for expansion.
After Tata Motor bought over Ford India's Sanand plant in Gujarat for Rs 725.7 crore, the homegrown automaker has an installed capacity to produce one million vehicles.
