Tata on way to get UK backing

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: Tata Motors has a strong chance of getting a guarantee from the UK government for the £340-million loan sanctioned to it by the European Investment Bank in April for JLR. Creon Butler, minister & deputy high commissioner at the British High Commission in New Delhi told FE, the UK government will “look at particular circumstances to ensure that the investment that has taken place has best chance of succeeding in the future.”

He also said the investments made by the Tata group in Corus and JLR were important for the UK economy. “We are pleased that Tatas have made those investments. Our government and Tatas are in discussion on which way we can provide support (to JLR), although I can’t go into details of what they are.” At the same time, he said, the government cannot stand behind each company.

A guarantee from the UK government would enable the European Investment Bank to disburse the loan. Tata Motors paid £1.15 billion to buy Jaguar and Land Rover car brands in April 2008 — just a year after Tata Steel acquired steel firm Corus for £6.7 billion. The cash-strapped Tata Motors need the additional resources to beat the slowdown blues and to develop new and more fuel efficient cars for improving its competitiveness.

An email sent to Tata Motors on Wednesday remained unanswered. While launching the first JLR showroom in India on Sunday, Tata Sons chairman Ratan Tata had said, “We are in discussion with the UK government on loan guarantee. We are hopeful that we will find a solution for it. Our funding plans for JLR will progress further.”

In his interview, Butler said the ‘unprecedented global downturn’ has led to a contraction in global economic growth and trade. However, he said the acquisitions will be fruitful in the long term. India was the second largest investor in the UK in 2008-09, after the US, bagging 108 projects, according to Inward Investment Report 2008-09, of the UK Trade & Investment.

“When companies are making these investments, they don’t just look for the next 2-3 years, they look at the long-term proposition. It may well be that in the next few years these acquisitions may well go as per plans. I think that (despite) the fact that some of the projects were put forward before the downturn, I don’t think this is going to change the company’s view for the long term,” Butler said.