Post exit, Ford India makes Rs 505 crore profits in FY23 by selling engines and exports
Co. sold 17,219 cars and 177,864 engines during FY23 as compared to 69,223 cars and 82,067 engines in the prior financial year, a decrease of 75% toward vehicles and an increase of 117% towards engines.
Having exited the domestic Indian car market in FY22, the US auto major Ford India broke into profits of Rs 505 crore in FY23, led by exports of vehicles and engines before it finally shuttered the vehicle making operations in the country.
During the financial year 2022-23, the revenues of the company from the operations stood at Rs 7,079 crore, a 31% fall versus FY22 revenues. The total expenses for the fiscal were reported as Rs 9,607 crore, stated the directors' report sourced from business analytics firm Tofler.
In its 28th annual report, Ford India’s director report noted that the financial performance for FY23 was largely impacted by the restructuring decision announced in September 2021. The decision resulted in an exit from vehicle and engine manufacturing operations at Chennai and vehicle manufacturing operations at Sanand.
“The total revenue from operations included domestic sales of Rs 980 crore and export sales of Rs 6,099 crore, which was 59% and 22% lower than the prior year of Rs 2,399 crore and 7,802 crore,” stated the directors' note.
In terms of volume, Ford India sold 17,219 cars and 177,864 engines during the financial year under review, as compared to 69,223 cars and 82,067 engines in the prior financial year, a decrease of 75% toward vehicles and an increase of 117% towards engines.
“The net profit during the financial year under review, the Company made a Profit after Tax including exceptional items of Rs 505 crore as against previous year's net loss of Rs (4,226) crore primarily driven by a decrease on account of restructuring expenses and higher engine volume sales,” added the Directors' note.
Sale of Sanand plant to Tata Motors concluded in FY23
In order to deliver sustainable operations globally, during FY23, Tata Passenger Electric Mobility Limited (TPEML), a subsidiary of Tata Motors Ltd (TML), completed the acquisition of FIPL's (Ford India Private Limited) vehicle manufacturing plant situated in Sanand, Gujarat on January 10, 2023.
“As a key feature of the transaction, both companies sought to ensure continued employment for all vehicle manufacturing plant workmen by allowing them the opportunity to accept the transfer of employment with TPEML with continuity of service,” said the report in its review.
Ford India continues to operate the Sanand Powertrain Manufacturing Facility by leasing back the land and buildings of the Powertrain Manufacturing Plant from TPEML on mutually agreed terms.
The company continues to woo multiple potential suitors for its Maraimalai Nagar plant. People in the know say that the company has recently engaged with Vietnamese car maker VinFast and JSW Group for a potential sale.
Given that the company has been able to make profits, it may be keeping the door open for its re-entry at the top end of EVs in the coming years, given the global markets continue to struggle with a fall in volumes.
In September 2021, Ford India announced it would stop production in India due to growing losses and no visibility of the path to profitability.
While in February 2022, the company stated it was exploring production with its EVs, in May 2022 plans were eventually dropped.
Ford finally stopped producing vehicles in July 2022 when the last EcoSport SUV rolled off its Chennai production line, meant for export markets.
After Ford's Chennai plant was closed, the workers' union and Ford India negotiated for a severance package in September 2022, paving the way for an easier exit, as against the challenges-ridden path adopted by its rival General Motors in the country.
The initial phase of this expansion plans will begin from the north and south regions.
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