After months of dogged lobbying, Tata Group-owned British car maker Jaguar Land Rover (JLR) is now close to clinching a loan of pound 800 million (Rs 5,840 crore) from a syndicate led by Royal Bank of Scotland and Lloyds, according to The Sunday Times.
The paper further reported today that Tata Group has "agreed in principle to invest another pound 100m alongside the refinancing." A JLR spokesperson, however, said the report was speculative.
The report also said the UK government has apparently agreed to guarantee up to 75 per cent of the pound 340 million loan that European Investment Bank (EIB) had approved last week, to develop environmentally-friendlier cars. JLR is expected to place its assets (properties, factories and stocks of cars) as a security for the balance 25 per cent.
If JLR indeed manages to secure this loan, it would come as a major relief for the cash-short firm. Group chairman Ratan Tata had, last month in a television interview, openly said that if flow of money into JLR continues to be an issue, "the damage is going to be quite devastating", with possible job losses and temporary closure of plants.
Despite the economic recession and the falling sales of automobiles here, JLR has been seeing some positive developments lately. Last week saw formal approval of the EIB loan. In February, it got a pound 600 million order for supplying 13,000 cars to Chinese buyers over the next three years.
Despite these positive developments, operations continue to be under stress for want of capital, which a loan of pound 800 million can sufficiently address.
JLR has three major plants in the Midlands -- Castle Bromwich makes the Jaguar XF, XF and XJ, Solihull makes the Land Rover Defender and Discovery 3, the Range Rover Sport and Range Rover; and Halewood makes the Jaguar X-TYPE and Land Rover Freelander 2.
In all, the company employs close to 14,500 people and an estimated 60,000 people are employed by 200 of its parts suppliers.
