UK lifeline for battling Brit

BRITAIN is reported to be set to throw a government lifeline to Jaguar Land Rover after the struggling prestige car-maker lost 673 million ($A1.33b) in its first full financial year under Indian rule.

London’s Financial Times says the UK government is now prepared to guarantee a 175 million ($A348m) short-term bridging loan offered by the European Development Bank.

The bank gave the green light for 340 million ($A676m) in loans for the company two months ago, but the deal was forced into limbo by UK government reluctance to agree to repay the loan if JLR went under.

Since then, the company and the UK government have been locked in talks about conditions for the aid.

The fortunes of JLR in Britain are in stark contrast with those of its owner, Tata Motors, in India where Tata reversed last financial year's loss to surge 58 per cent to a five billion rupee ($A126m) profit in the first quarter of its financial year, which starts on April 1.

Tata's turn-around in its home market was sparked by forward-orders worth hundreds of millions of dollars for its new Nano city car, which it only started delivering this month.

This has helped to ease Tata’s debt levels, although Indian analysts say these levels – caused by Tata’s rapid expansion, including the purchase of JLR from Ford last year – remain alarmingly high.

This financial state has been made worse by JLR’s slide from a 641 million ($A1.27b) profit under Ford in 2007 to this year’s loss.

Tata has reacted by calling in financial consultants – including KPMG – to advise JLR on ways to cut costs with the goal of breaking even.

JLR’s 14,500 workers in its three UK factories are already working a four-day week, and newspaper reports suggest the annual summer factory shut-down might be extended. About 2000 workers have also been laid off after a 30 per cent fall in worldwide sales.

However, the company has been buoyed by buyer reaction to the new Jaguar XF sedan launched last year – and a revised version just launched in Australia – and the forthcoming Jaguar XJ limo.

The XJ was unveiled at a glamorous event in London this month, with American TV personality Jay Leno and Australian model Elle Macpherson hired to host the event.

Long and short-wheelbase versions of the XJ will be available when the ‘big cat’ goes on sale in Australia next March.