Tata Motors is ceasing its operations in the Spanish unit of its wholly owned subsidiary Tata Hispano Motors Carrocera SA and is looking for a buyer, Livemint states. The decision to sell the plant situated in Zaragoza comes in the wake of slowdown across Europe resulting in mounting losses and falling demand.
Earlier BL had reported that the company, formerly Hispano Carrocera, has also received an offer from Benseny Group for the purchase.
Tata Motors which had acquired 21% stake in the Spanish co. in 2005 for R70 Cr had completely bought out the company in 2009 for an undisclosed amount. The acquisition was made by exercising the call option through mutual agreement with the other shareholder, Investelia SA Spain.
Post the buyout on 1st of March 2010, erstwhile Hispano Carrocera S.A. was re-christened as Tata Hispano Motors Carrocera S.A. and was fully and directly managed by Tata Motors deputed board and management.
A wholly-owned subsidiary of Tata Motors, Hispano Carrocera produces bus and coach bodywork in Spain and Morocco, with sales in several other countries of Europe.
The company designs, develops, manufactures and sells bus and coach bodywork on chassis from all the major original equipment manufacturers (OEMs) of Europe.
It is currently present in various segments, including city bus and intercity coaches. The company employs over 400 employees at its manufacturing facility in Spain and over 200 workers at the Morocco plant.
The company has no plan to close its Morocco Hispano, however as a part of the Spain Hispano closure, Tata Motors would buy the Moroccan company from the Spanish company.
The company was also in the process of offering “golden handshakes” or “separation salaries” to Tata Hispano employees in Spain.
As Europe was reeling under an economic slowdown, automakers in the region were suffering subdued sales. According to Tata Motor's annual report for 2012-13, the company had provided R245 Cr for the loan given to Hispano Carrocera SA.
The impact of the 2008 global economic crisis and the resultant fall in demand caused huge losses that accumulated to more than €60 million over the past five years. Tata Hispano ended 2012 with a loss of more than €14 million.
Global sales of commercial vehicles of Tata Motors, Tata Daewoo and Tata Hispano Carrocera brands during September 2013 stood at 38,049 units as against 54,761 units sold in September 2012.
Earlier Ashok Leyland Ltd, a Hinduja Group company, had also decided to stop production at its Czech Republic subsidiary Avia’s plant in Prague, blaming the decision on the global economic slowdown.
Recently in this space, Hindustan Motors was planning to divest the forge and foundry units at its Uttarpara plant in West Bengal; Hero MotoCorp was likely to form a JV with Magneti Marelli SpA to enhance its position as a good mileage provider; Amtek Auto had acquired 51.27% stake in JMT Auto for R110 Cr; M&M was planning to pick up 13.5% stake in Spain's auto component maker CIE Automotive for R740 Cr.