Chennai unit severance package for over 2,592 staff cost Ford Rs 1,296 cr

Average pay worked out to Rs 44.8 lakh per employee; The company is yet to find buyers for the unit

The shut-down of the Maraimalai Nagar factory might have cost American auto major Ford’s India arm around Rs 1,296 crore in the form of severance package only. Interestingly, Ford India is yet to find buyers for the unit in the outskirts of Chennai.

In a policy note on the labour sector on Wednesday, the state government has said that at least 2,592 workers were benefited out of this severance package. The company was forced to shut its India units due to a dip in volumes and after suffering an accumulated loss of around $2 billion. Interestingly, the company was successful in attracting Tata Motors as a buyer for Sanand Plant in Gujarat. Tata Motors through its subsidiary Tata Passenger Electric Mobility Ltd (TPEML) had completed the acquisition of the Sanand unit in January this year through a Rs 725 crore deal.  

The Tamil Nadu government too had issued an order granting permission to close the Maraimalai Nagar unit on January 31. “A severance settlement was reached between the workers and Ford India Pvt Ltd through which 2,592 workers were benefited to the tune of Rs 1,296 crore,” the policy note by the Labour Welfare and Skill Development Department said on Wednesday.

Under a deal reached between unions and the company, the cumulative severance for each employee ranged from Rs 34.5 lakh to Rs 86.5 lakh. This worked out to an average of Rs 44.8 lakh per employee. “Employees have got an average of about five years salary,” said a source aware of the development, stating that there is no breakthrough on selling the land to another player.

Uncertainty about the package at Maraimalai Nagar started on September 9, 2021, when Ford announced it was phasing out its units in India and leaving the country.