Tata Motors Ltd. said it no longer needed a bailout from the UK government, as it has completed the funding arrangements with commercial lenders and the European Investment Bank or EIB. Tata Motors and Jaguar Land Rover have been in discussions with commercial banks for Jaguar Land Rover funding facilities for quite some time.
Tata added that EIB sanctioned a long-term loan of 340 million pounds or $566 million to Jaguar Land Rover and the loan could be secured in the coming weeks through appropriate commercial arrangements.
India's biggest truck maker had been seeking EIB funds together with £500 million in UK government guarantees after buying Birmingham, England-based JLR from Ford Motor Co. in March last year for $2.3 billion or Rs.9,223 crore. While most of the loans it took for the acquisition have been refinanced, it is believed that around 200 million pounds or $333 million is still due next July.
With the positive trend in the external environment in financial markets and an improvement in general liquidity, these arrangements are expected to be concluded without necessitating guarantees from the UK Government,Tata Motors said.
Sales of the unit's upscale autos and sport utility vehicles (SUVs) have fallen faster in the recession than those of smaller, less costly models. Sales of Jaguar-brand cars fell 20% between October and March, with purchases of Land Rover SUVs tumbling 51%, Tata Motors said in its annual report on 29 July. The Indian manufacturer has invested £1.2 billion in the UK unit, spokesman Andrew Lorenz reportedly said.
In a separate move, JLR said it had also secured a 75 million pound, 3-year, loan facility from Burdale Financial Ltd, a member of the Bank of Ireland Group, for technology up-gradation.
David Smith, Chief Executive Officer Jaguar Land Rover, said: "We are hopeful of soon being able to access the approved 340 million pounds European Investment Bank loan in support of our future product and environmental technology development, also through commercial means. This has always been our desired route and it clearly demonstrates recognition of the inherent strength in our business and faith in our future business plans."
At the BSE, Tata Motors share are currently trading at Rs.419.00, down by Rs.9.25 or 2.16% on a volume of 5.01 lakh shares. The scrip touched an intraday high of Rs.427.40 and a low of Rs.415.00.
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