Tatas-owned Jaguar Land Rover (JLR) is in secret talks with the British government for a one billion pound loan, just nine months after the Indian conglomerate bought the luxury car marque, a leading British daily reported today.
Quoting an unnamed government official familiar with the development, 'The Sunday Times' said British Prime Minister Gordon Brown is studying the request and an answer could be made in the next fortnight.
According to the report, JLR Chief Executive David Smith has made a direct plea to the government for cash. He believes that with help being given to car makers in the continent and in America, Britain has a good case for financial aid.
At the same time, the Society of Motor Manufacturers and Traders, which is representing the interests of the wider British industry, is seeking a state aid of 2-3 billion pounds.
Tatas are looking to the government for a bridging loan to help tide over the next 24 months, a period where the industry will come under further financial pressure and during this time it will be difficult to access funding markets, the report said.
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The component suppliers to the automotive industry are also in difficulties, many of them already facing issues with credit insurance.
Tatas paid $2.3 billion for JLR and financed the acquisition with a $3 billion (2 billion pounds) bridging loan.
Since then sales of new cars have plunged which has caused big problems with the cash flow needed to service debt payments.