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Jaguar Land Rover on the brink
British government puts roadblocks in place to foil Tata’s JLR rescue package
11 May 2009
JAGUAR Land Rover remains under threat after reports that the British government has imposed seemingly unacceptable conditions in return for a refinancing deal to get the Indian-owned car-maker through the recession.
As new owner Ratan Tata has admitted, he could not have bought JLR at a worse time and that the Tata group is now short of cash.
Reports out of the UK suggest the government conditions include a state-appointed chairman for JLR, a right to veto management decisions and an undertaking not to cut jobs.
The Economic Times quotes a government insider as saying the package has been deliberately set-up with conditions that Tata would reject, “to avoid being seen as giving 800 million to an Indian-owned company”.
However, Mr Tata said he was not seeking a bail-out, simply commercial credit to cover his 1.15 billion ($A2.28bn) purchase of JLR from Ford in April 2008, most of which is due to be repaid to financiers in June, as well as payments due to suppliers and general running costs.
“It’s not a bailout,” the company head told The Sunday Times.
“I would like to see the British government playing only one role. It controls the banks, and all I seek is the facilitation to provide access to credit on commercial terms.
“We’re responsible for the fortunes of the company, but this is a bone-dry situation in terms of access to credit. Nobody can operate on that basis unless you have large cash balances, which we don’t.
“My concern is that the government doesn’t appear to care about manufacturing.”
Despite being frustrated by the government, Mr Tata did not criticise British PM Gordon Brown, describing him as sincere and supportive.
Tata is also fighting on an even bigger front, having also bought British steel giant Corus for 6.7bn ($A13.3bn) in 2007 – just before the global downturn decimated the steel industry.
Asked if Tata had expanded too far too fast, the 71-year-old group chairman said: “If one had known there was going to be a meltdown, then yes, but nobody knew.
“Both the acquisitions were made, I would say, at an inopportune time in the sense that they were near the top of the market in terms of price.”
JLR had been expected to receive government support in return for developing more efficient fuel-saving technology, but those programs – along with new models such as an E-Type revival – are now under threat, along with the company’s 15,000 workers.
However, one program already too advanced to be threatened is the long-awaited new XJ saloon, which was largely developed under Ford and will be revealed in July before going on sale at the end of this year.
Read more:Britain backs new Land Rover
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