Exclusive: Maharashtra Government approves GM India’s Talegaon plant closure application

Amid numerous unfinished legal cases, US carmaker General Motors India has received approval for the closure application of its Talegaon plant from the Maharashtra State Government, paving the way for the transfer of the factory to the South Korean car maker Hyundai Motor.

The first critical hurdle has been crossed and both parties may move towards initiating the process of signing the commercial agreement.

According to people in the know, the US carmaker was keen to conclude the transaction and seek all the approvals within a month's time.

The South Korean carmaker had signed a binding term sheet with General Motors in March 2023, for the potential acquisition of identified assets related to General Motors India, Talegaon Plant, Maharashtra.

The term sheet covered the proposed acquisition of land and buildings and certain machinery and equipment for manufacturing, situated at the Talegaon Plant.

However, the proposed acquisition is subject to the signing of the ‘definitive asset purchase agreement’ and fulfilment of conditions precedent and receipt of regulatory approvals from relevant government authorities and all the stakeholders related to the acquisition.

In an official response, a General Motors India spokesperson confirmed and acknowledged the decision to approve the closure application for the Talegaon site, and said it is grateful for the support of the Government of Maharashtra for GM’s operations at the site over a number of years.

“We note that the approval includes the provision of a settlement package to impacted employees of 110 days of wages per year of service. Impacted employees have already received statutory benefits, and we encourage them to come forward to accept the balance of the separation package. Employees can contact the plant HR team to initiate the final settlement process,” added the spokesperson.  

An email sent to Hyundai Motor India is yet to elicit any response.

What is unclear is the verdict of the first closure application, which was being contested in the Pune Industrial Court.

Autocar Professional learns that the second application for closure was submitted to the government on June 27, 2023, and the approval was received a few days ago.

When contacted Sandeep Bhegade, General Motors Employees’ Union told Autocar Professional, "There are multiple technical loopholes in this clearance, we are trying to get a legal opinion before commenting anything."

The workers were seeking job continuity post the sale of assets.

Given that the closure application entails a settlement package for impacted employees, the government may urge Hyundai Motor India to absorb a little over 950 protesting workers.

Over the last six months, close to 100 workers did take up VRS offered by GM India, bringing down the number of protesting workers from 1,086 to around 950 to 970 workers, who are still awaiting a positive verdict on job continuity under new owners. 

This means General Motors India has been able to secure a potential new buyer within five quarters, after its agreement with Chinese carmaker Great Wall Motor collapsed in June 2022, leading to the exit of China’s largest SUV maker.

Production came to a halt in early 2020 at the Talegaon plant, which has a manufacturing capacity of 130,000 vehicles and 160,000 engines per annum and was set up in 2008.

In its presence of over two-and-a-half decades in India, General Motors had invested US$ 1.4 billion in the country and had already taken a significant charge on its books for the winding-down process.

While it exited the domestic market in 2017, General Motors 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, but the stalemate continues.