Tata in secret loan talks with British government: reportNovember 23rd, 2008 - 4:09 pm ICT by IANS
London, Nov 23 (IANS) Luxury car manufacturer Jaguar Land Rover (JLR) is in secret talks with the British government for a one billion pound loan to help it cope with a sharp slide in demand, a newspaper reported Sunday. The reported move, which comes just nine months after Tata bought JLR for $2.3 billon, could be followed by other Britain-based industrial groups asking the government for financial support.
The Sunday Times quoted an unnamed government official as saying British Prime Minister Gordon Brown is studying the request and an answer could be made in the next fortnight.
Tata is said to have sought a bridging loan to help it over the next 24 months.
“A number of large British-based industrial groups are also considering asking the government for financial support. If help is not given tens of thousands of jobs are at stake,” the newspaper reported.
The Tata Group took out a $3 billion bridging loan to finance its acquisition of JLR earlier this year, after having paid another $11.3 billion for buying Corus, the world’s largest steelmaker nearly two years ago.
However, the sales of new cars have plunged in Britain over the past six months - by as much as 23 percent in October - and the price of metals has collapsed.
Although Jaguar has bucked the trend in the motorcar industry with its new XF sedan model - particularly in America, Land Rover is among a host of British car manufacturers that are facing difficulties in the current climate.
Around the world the market for JLR cars has fallen 25 percent.
But the paper said the group’s chairman Ratan Tata still has confidence in the future of JLR but believes he needs government help to tide it over for the next two years.
JLR Chief Executive David Smith recently urged more action by the British government and Bank of England to help industry tide over the expected difficult years ahead.
“We must ensure that young people are acquiring the skills that they will need for the well-paid, high-quality jobs on which our prosperity will rest,” he said.
Smith believes that with help being given on the Continent and in America to carmakers, Britain has a good case for financial aid, the paper said.
The Society of Motor Manufacturers and Traders, which represents the interests of the wider British industry, is thought to want two to three billion pounds of state aid.