According to Tata Motors, the Spanish subsidiary, which produces chassis for buses and coaches, has accumulated operating losses to over 60 million euros in the past five years.
"All market evaluations do not predict any positive change in the near future, with the growing accumulation of operating losses making the plant production unviable," Tata Motors said in a statement.
"Production activity is expected to stop in October 2013 after fulfilling the commitments to deliver current orders."
The company further said that it was in discussion with workers' representatives to agree on a social plan for the 287 employees working in the factory today.
"Company has expressed its willingness to reach an agreement. The Company continues to have a tremendous respect for the workers," the statement said.
The company also announced that it has received an offer from the Benseny Group.
"This proposal, which is not a purchase offer, is being pursued to explore the possibility of achieving continuity of Zaragoza factory."
In 2005, Tata Motors invested 21 percent stake in the Spanish company and followed this up by buying the remaining stakes in 2009.
--IANS (Posted on 24-09-2013)