Press Report : Tata blames JLR for £41 million quarterly loss

Alison Dayani, Birmingham Post, 1st September, 2009

Indian car giant Tata has blamed Jaguar Land Rover for a £41.2 million quarterly loss.Tata Motors, which pumped in millions to turn around JLR’s fortunes, recorded the loss between April and June saying it had been driven by a 52 per cent drop in sales volumes at JLR and the cost of servicing its debt. During the same period last year, Tata posted a profit of £90.7 million.

“With volumes down so much, it’s really a challenge,” said Vice-President Ravi Kant. “We are doing a lot of cost-reduction measures, but we need support from the market.”

In July, the company reported its stand-alone results. Without the burden of its June 2008 JLR acquisition, which included its plant at Castle Bromwich in Birmingham, India’s largest commercial vehicle maker made a quarterly profit of £64.4 million. The company has worked hard to manage its growing debt burden – now more than 350 billion rupees or £4.35  billion – most of it incurred to buy and operate JLR. Consolidated net sales for the quarter were £2 billion.

The company has also secured funding from a group of 24 banks to roll over £522 million of the loan it took out in 2008. Top lenders include State Bank of India, Citigroup, Standard Chartered, and JP Morgan but, earlier this month, Standard & Poor’s Ratings downgraded Tata Motors ratings because of high debt and the poor performance of Jaguar and Land Rover.

Tata Motors took out a £1.84 billion bridge loan to buy the brand from Ford in June 2008, and has since had to pump in additional funds. Last quarter, it provided £50 million to fund JLR’s operating expenses, and is finalising an additional £100 million in loans from commercial banks, including Standard Chartered, Bank of Baroda, ING, Bank of Ireland subsidiary Burdale, and GE Capital, executives said.

Earlier this month talks collapsed with the British Government about serving as guarantor for a £340 million loan from the European Investment Bank to fund research to develop more environmentally friendly cars at Jaguar Land Rover. Tata Motors said at the time it was securing guarantees from commercial banks instead. Executives declined to name those banks or discuss how much cheaper a government-guaranteed loan might have been.

The company has also secured funding from a group of 24 banks to roll over £522 million of the loan it took out in 2008. Top lenders include State Bank of India, Citigroup, Standard Chartered, and JP Morgan but, earlier this month, Standard & Poor’s Ratings downgraded Tata Motors ratings because of high debt and the poor performance of Jaguar and Land Rover.

[Source: Birmingham Post]

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