India's Tata Motors yesterday said it had secured private funding for its Jaguar Land Rover marques, ending state aid talks with the UK government. Shares in India's biggest vehicles maker jumped 6.81 per cent on the Bombay Stock Exchange following the news, in a clear sign that investors feel that the worst is over for the carmaker. However, analysts say Tata Motors still faces big challenges to boost JLR's falling sales. "With the positive trend in the external environment in financial markets and improvement in general liquidity, these arrangements have been and are expected to be concluded without necessitating guarantees from the UK government," Tata said. The group also said it expected to receive a long-term loan from the European Investment Bank of £340m ($
561m), after it had secured fresh funding. Tata Motors did not specify which banks were backing the company. Industry experts welcomed the news but said securing new cash would be only the first step to turn round JLR, which has suffered from the global collapse of luxury car sales since Tata Motors acquired it from Ford for $2.3bn in June 2008. "This is the best news in a long time for Tata Motors but they have a lot of hard work and risks ahead of them," said Vaishali Jajoo, automobile analyst in Mumbai. Mohit Arora, senior director at JD Power, the car consultancy, said: "Seeing the present liquidity situation of the company, this round of funding would certainly help them bring back projects that it had put on hold. But the question is will it be enough. Eventually, the product needs to be sold. Lifelines would be of no help until the product is selling." Tata Motors still has an outstanding debt of $850m, from the original $3bn bridge loan it took to acquire JLR last year. In June, Tata Motors reported a consolidated net loss of Rs25.05bn ($523m) in the year to March, primarily because of JLR's poor performance. Sales of Land Rover vehicles fell 40 per cent to 120,000 cars during June 2008-March 2009, while Jaguar sales declined 4 per cent to 47,000. Rating agency Standard & Poor's last week cut Tata Motors' long-term corporate credit rating from "B+" to "B". Tata Motors has been able to offset some of the losses thanks to its domestic market, which has seen Indian car sales rise 31 per cent in July compared with a year earlier.
561m), after it had secured fresh funding. Tata Motors did not specify which banks were backing the company. Industry experts welcomed the news but said securing new cash would be only the first step to turn round JLR, which has suffered from the global collapse of luxury car sales since Tata Motors acquired it from Ford for $2.3bn in June 2008. "This is the best news in a long time for Tata Motors but they have a lot of hard work and risks ahead of them," said Vaishali Jajoo, automobile analyst in Mumbai. Mohit Arora, senior director at JD Power, the car consultancy, said: "Seeing the present liquidity situation of the company, this round of funding would certainly help them bring back projects that it had put on hold. But the question is will it be enough. Eventually, the product needs to be sold. Lifelines would be of no help until the product is selling." Tata Motors still has an outstanding debt of $850m, from the original $3bn bridge loan it took to acquire JLR last year. In June, Tata Motors reported a consolidated net loss of Rs25.05bn ($523m) in the year to March, primarily because of JLR's poor performance. Sales of Land Rover vehicles fell 40 per cent to 120,000 cars during June 2008-March 2009, while Jaguar sales declined 4 per cent to 47,000. Rating agency Standard & Poor's last week cut Tata Motors' long-term corporate credit rating from "B+" to "B". Tata Motors has been able to offset some of the losses thanks to its domestic market, which has seen Indian car sales rise 31 per cent in July compared with a year earlier.Source : http://www.ft.com/cms/s/0/1928164c-86d7-11de-9e8e-00144feabdc0.html
