Press Report : Tata seeks cash help from Indian public to pay for JLR
Jon Griffin, Birmingham Post, 2nd December, 2008
Tata Motors is appealing for investment from the Indian public to help meet the costs of its purchase of Jaguar and Land Rover. The scale of the financial problems facing the Asian group was highlighted as it emerged it had resorted to taking out an advertisement in an Indian newspaper seeking cash help from the public.
The advertisement said: “Tata Motors invites deposits from the public.” It said it would pay “additional interest for senior citizens, shareholders and employees” for subscribers to the scheme. The company is offering to pay as much as 11 per cent annual interest to members of the public who enter into a fixed deposit scheme with the group.
The company has been forced to turn to the public for investment as the global downturn caused by the credit crunch restricts cash from the banking sector. Indian companies are permitted to take fixed-term deposits from the public, but it is the first time in 13 years that Tata has turned to such a method of attempting to raise funds.
This is not unusual in India but it is unusual for Tata to do this. Hitherto, they have been able to raise money through share issues. Effectively, they are selling bonds – they are saying ‘deposit with us’
The scheme was revealed days after Jaguar Land Rover announced it was cutting 850 agency staff before Christmas as the group fights against the impact of the worst sales environment across the automotive sector for many years. Contract workers, working mainly in engineering and IT, will disappear across the group’s West Midland sites, including Solihull, Castle Bromwich, Gaydon and Whitley. JLR is already seeking a total of 600 voluntary job losses in two separate redundancy programmes, while production cutbacks have also been announced.
Tata Motors have not made an official comment on the advertisement but an insider said: “This is not unusual in India but it is unusual for Tata to do this. Hitherto, they have been able to raise money through share issues. Effectively, they are selling bonds – they are saying ‘deposit with us.’”
[Source: Birmingham Post]
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