Tata Motors planning to raise working capital for Jaguar and Land Rover

Article by Christian Andrei, on August 26, 2010

Working on the belief that only a revival of the market for luxury cars could turn around the business, Tata Motors announced that it is planning to raise at least £100 million of working capital for Jaguar and Land Rover. 

Ravi Kant, the Indian carmaker's vice-president, confirmed that Tata Motors was finalizing the £100 million of loans from commercial banks including Standard Chartered, Bank of Baroda, ING, GE Capital, and Bank of Ireland subsidiary Burdale.

Tata has been heeding cost-cutting advice from outside consultants but is seeking the loan to revive its luxury cars segment. 

Tata Motors reported a net loss of £41 million for the quarter to end-June, compared with a £80 million profit a year ago. Of this, Jaguar and Land Rover lost £110 million before tax in the quarter.

Analysts are saying however that the loans Tata is aiming for won´t be enough and that it would take much more than £100 million to turn around JLR.

Ashvin Chotai, director of consultancy Intelligence Automotive Asia, said that while the luxury market has bottomed out, the road to recovery would be slow. Chotai expects that JLR will continue to be a drain on Tata's financial resources for a while.

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