London: Luxury car maker Jaguar and Land Rover (JLR) won’t need a bailout from the UK government as it completes funding arrangements with commercial lenders and the European Investment Bank (EIB), owner Tata Motors Ltd said.
Talks with some banks have been successfully concluded in the past few months and terms of a £340 million (Rs2,686 crore) loan from EIB will be settled in the coming weeks, Mumbai-based Tata Motors said on Tuesday in a statement.
Bailout avoided: A file photo of a Jaguar XJ saloon car on display at the Salon Privé luxury supercar show in London. Tata Motors said in its annual report that sales of Jaguar fell 20% between October and March. Paul Hackett / Bloomberg
India’s biggest truck maker had been seeking EIB funds together with £500 million in UK government guarantees after buying Birmingham, England-based JLR from Ford Motor Co. in March 2008 for $2.3 billion (Rs9,223 crore).
Sales of the unit’s upscale autos and sport utility vehicles (SUVs) have fallen faster in the recession than demand for smaller, less costly models.
With the positive trend in the external environment in financial markets and improvement in general liquidity, these arrangements are expected to be concluded without necessitating help from the UK government, Tata Motors said.
Sales of Jaguar-brand cars fell 20% between October and March, with purchases of Land Rover SUVs tumbling 51%, Tata Motors said in its annual report on 29 July. The Indian manufacturer has invested £1.2 billion in the UK unit, spokesman Andrew Lorenz said.
“Tata made some very big demands on the taxpayer at the beginning of the negotiations,” UK business secretary Peter Mandelson said in comments televised by the British Broadcasting Corp. “If we’d started handing over money we would have been doing so prematurely and, in the event, unnecessarily.” The Luxembourg-based EIB said in a statement that a loan was approved in April and will be signed once appropriate security is in place. JLR said on Monday it had secured a three-year financing facility of as much as £75 million from Burdale Financial Ltd, a member of the Bank of Ireland Group.