Ford Motor Company’s Indian manufacturing operation is carried out by its subsidiary Ford India Private Ltd with two manufacturing plants, one at Chennai and Sanand in Gujarat.
The Rs 13,520 crore revenueFord India set up its first plant near Chennai with Tamil Nadu offering tax incentives like sales tax waiver/ deferral. Similarly, the Gujarat government too offered tax incentives to Ford India when it decided to set up a plant in Sanand. On September 9 Ford India announced its decision to wind up its vehicle assembly in Sanand by the Q4 quarter of 2021, and vehicle and engine manufacturing in Chennai by the Q2 of 2022.
Ford India has four plants in the country, vehicle and engine plants in Chennai and Sanand. Ford India has decided to continue operating the engine plant in Sanand while closing down the other three. In its report, credit rating agency India Ratings and Research last month said Ford India’s unguaranteed external debt was largely in the form of a deferred sales tax liability of Rs.602.3 crore.
Queried on payment of the dues to the governments and the timeline following the decision to close down the plants the company said: “We continue to work closely with the relevant governmental agencies in relation to the restructuring and are thankful to Governments in TN and Gujarat, as well as the Centre, for their support and understanding.”
As per India Ratings, Ford India has strong legal linkages with its ultimate parent, Ford Motor Company that has extended corporate guarantees to 85 per cent of the former’s sanctioned working capital facilities at the end of FY21. The credit rating agency said it expects a major portion of Ford India’s future external debt will continue to be backed by a guarantee from Ford Motor Company. It also said Ford Motor Company has infused equity of Rs 8,748 crore in Ford India since its inception.
Ford India’s net debt increased marginally to about Rs 5,163 crore in FY21 from about Rs 5,003 crore in FY20. On the other hand the interest expenses fell to about Rs 459 crore in FY21 from Rs 483 crore in FY20.
The company declined to answer, when asked about Ford India’s total borrowings, its lenders and the timeline to settle the dues. As regards the liquidity, India Ratings said it had strong cash and equivalents balance of around Rs.379.7 cr at end of FY21.