No need for UK guarantee for JLR loan: Tata Motors

Tata Motors (TATAMOTORS.BO : 634.85 -8.85) on Tuesday said it expects the long-term loan of 340 million from the European Investment Bank (EIB) sanctioned to Jaguar Land Rover (JLR) without necessitating guarantees from the United Kingdom s government, for which discussions have been going on for some time now.

This loan sanctioned by the bank can also be successfully secured in the coming weeks through appropriate commercial arrangements, the company said in a statement.

\"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,\" it said.

Tata Motors and Jaguar Land Rover have been in discussions with commercial banks for JLR funding facilities, many of which have been successfully concluded in the last few months and the balance is expected to be completed in the coming weeks.

A UK government spokesman said earlier on Tuesday the company had secured a 175 million private sector loan for JLR and, hence, no longer needs financial support from Britain.

Tata Motors last month revealed that the company engaged the services of consultancy firms KPMG and Roland Berger to suggest ways to revive Jaguar Land Rover (JLR), the division that makes the premium brands it acquired from Ford Motor Co in March 2008.

The two consultancies will advice on reducing the losses of the company and look at improving its cash flow. JLR had incurred a loss of $383 million (around Rs 1,761 crore) between January and June last year. JLR is expected to announce its latest financial numbers this month.

JLR posted a combined loss of 673.4 million ($1.1billion) in 2008, compared with a profit of 641.5million in 2007. Tata Motors bought JLR for $ 2.3 billion from Ford Motors, with a total consideration of $2.5 billion including the post paid adjustments of the Jaguar. Since the acquisition, Tata Motors has infused funds worth $1 billion into JLR for its operations. The company had earlier posted a consolidated net loss of Rs 2,505.25 crore in FY08-09 mainly on account of costs associated with JLR.

Tata Motor\'s shares on the BSE (^BSESN : 16632.01 -222.92) closed at Rs 428.25 on Tuesday, up 6.81%.