Tatas to inject funds into Jaguar Land Rover

22 December 2008

With the need for funds getting more dire, it is the deep pockets of the Tatas that seems to have come to the rescue of Tata-owned Jaguar Land Rover, as the the British government has been hesitating even though the company has asked for funds (See: UK government weighs bailout package for Jaguar Land Rover)
 
According to a report in the london-based business daily, Financial Times, Tatas have agreed to inject ''tens of millions'' of pounds into the British car company to prevent an immediate cash flow crisis, while the UK government continues to consider the case for a taxpayer-funded bail-out for the iconic brands Jaguar and Land Rover, which Tata Motors acquired earlier in the year (See: Tata Motors confirms Jaguar, Land Rover deal with Ford for $2.3 billion). 

The cash injection from Tata has bought the UK government breathing space to respond to demands for multi-billion-pound loan guarantees from the car sector. Chancellor Alistair Darling is understood to be concerned that any state support does not set too generous a precedent for other sectors.

Lord Mandelson, business secretary, is considering whether Jaguar Land Rover still needs government backing to get through the recession or whether Tata can be called on for further cash support.

''We are looking at the sector as a whole," he said last week. "I have had discussions with the owners and management of Jaguar Land Rover in particular, because they argue that they are under particular strain.''

Lord Mandelson is understood to be sympathetic to the argument that Jaguar Land Rover could be an exception to his ''no open cheque-book'' rule for distressed companies, not least because of its heavy research and development investment in the UK.

The Tata Group is understood to be adamant that its support for its UK car subsidiary does not negate its argument that the government should provide bridging loans and credit guarantees to the company and the British car sector as a whole.