Mumbai: The maker of Jaguar cars and Land Rover sport-utility vehicles, Tata Motors Ltd, must repay a $3 billion loan and aims to introduce the world’s cheapest car this year. It is struggling with both.
The Indian car maker needs to raise cash by June to repay a bridge loan taken to fund last year’s purchase of Jaguar and Land Rover from Ford Motor Co. The $2,500 Nano car, already delayed, is crucial to revive falling demand in the car maker’s home market.
The global credit crunch has forced chairman Ratan Tata to reconsider a plan to raise $600 million from investors abroad. Instead, the company is offering small investors up to 11% interest for three-year deposits after raising Rs41 billion ($840 million) through a rights offer in October.
Collapsing sales at Jaguar and Land Rover in the US and Europe are echoed by plummeting demand for cars and trucks in India.
“They are now fighting on three fronts: Their core business is collapsing, the small car project will have to prove itself and the global credit availability is a problem,” said Rashesh Shah, chairman of Edelweiss Capital Ltd. “Companies don’t open multiple flanks and go after every attractive opportunity. That is ambition, and that has affected them.”
Tata Motors’ sales, not including Jaguar and Land Rover, fell 47% in December, the most in at least four years, after declining 30% in November. Earnings in the quarter ended September dropped 34%.