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Tata debt crisis adds to woes for Land Rover
Bill Condie12 Jan 2009
Tata Motors faces a debt crunch with a $3 billion (£1.98 billion) loan due that will add new intensity to its bid for a UK taxpayer injection for its Jaguar-Land Rover division.
The Indian carmaker needs to raise cash by June to repay a bridge loan taken to fund last year's purchase of the British marques from Ford, leading one Indian analyst to raise the drastic possibility of selling off the British marques it has owned for less than a year.
Tata paid $2.3 billion for Jaguar and Land Rover but the timing of the deal was disastrous, just before the credit crunch roiled global markets and caused credit to evaporate.
It is caught with both collapsing sales at Jaguar and Land Rover in the US and Europe and plummeting demand for cars and trucks in India.
Tata admitted it calculations on the Jag deal had changed. “In view of the significantly changed business environment, Jaguar Land Rover's requirements have increased beyond the original plan,” spokesman Debasis Ray said.
“Urgent action is required to support the UK car industry,” Mahantesh Sabarad, an analyst at Centrum Broking in Mumbai. He said the crisis could lead Tata to look for a buyer for Jaguar and Land Rover.
Tata has told the government it needs help of about £1 billion.
Reader views (4)
I am unfortunately an IT professional outsourced to this company 8 months ago. Now they are making significant redundancies to meet their TOM (Target Operating Model) which mandates that 70% of the work must be done in India - so another 100+ skilled UK jobs being lost. To rub salt into the wound, 80 India ex-pats will be joining those not made redundant.
- Rob, Kingswood, 24/01/2009 15:00
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What is the point in injecting a further huge amount of taxpayers money into Tata to safeguard jobs, when by safeguarding these jobs yet more cars will be produced, none of which will sell.
We already have fields galore full of unsold vehicles, why make more?. When this recession is eventually over and car sales resume, if they do for gasguzlers,they still have thousands of vehicles to dispose of before production should resume.
Car workers have to accept the fact that their output has to be seriously reduced, or they all face redundancy.
- Anthony Calladine, WESTON SUPERMARE ENGLAND, 13/01/2009 14:19
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Well this government has taxed luxury cars to the hilt through penal levels of fuel, road, congestion and now forecourt tax. Brown's now now got what it wanted - nobody is buying the Jaguar / Landrover dinosaurs so don't waste money bailing them out!
- Zady, london, 12/01/2009 19:24
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So Jaguar and Land Rover have effectively been stitched up twice:
- By the Broken British government, with its relentless assault on gas guzzler vehicles;
- By Indian billionaire Tata, by using debt to finance the purchase of the two companies.
Let Tata use some of his own fortune to pay down his own debt. Under no account should any public funds be used. If Tata is forced to sell the companies at a rock bottom price - well it is unfortunate, but he knew the risks in taking on such assets and loading them with debt, in the face of a hostile and unthinking government.
The struggling taxpayers of Broken Britain have enough to contend with as it is - don't load them with further debt simply to save the sorry skin of Ratan Tata.
Lesson learned: carry out Due Diligence on the financing arrangements for such takeovers - and enact legislation to forbid debt finance.
- Ex-Pat David, Cape Town, South Africa, 12/01/2009 11:56
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