The Tata Group, which has a large presence in the UK through its automotive and steel units, has sought financial assistance from the government there to help the diversified enterprise recover from the collapse in car and metal sales brought on by the Covid-19 pandemic. While the Tatas have not specified the support package sought, British media reported that the group has requested for a loan in excess of 1.5 billion pounds. Jaguar Land Rover (JLR) is in talks for a temporary state funding of 1 billion pounds, and Tata Steel UK has asked for a support of 500 million pounds.
Reports also said that the financial package for JLR could entail conversion of loans into equity shares of the UK company. The government, through an asset resolution fund, plans to hold equity interests in companies accepting state aid. JLR said that it is in regular discussion with the government on a “whole range of matters” and the content of their private discussions remains confidential. Revenues of JLR and Tata Steel UK have been hit due to the lockdown triggered by the health crisis.
A government spokesperson said that the state department is in regular contact with car manufacturers to assist them through the current crisis. “We recognise the challenges facing the industry as a result of coronavirus and companies can draw upon the unprecedented package of measures, including schemes to raise capital, flexibilities with tax bills, and financial support for employees,” the spokesperson was quoted as saying in the UK media.
Following a reduced demand for its products in the wake of the lockdown, JLR and Tata Steel UK had halted production activities at their plants. JLR, which was acquired by Tata Motors in June 2008, also furloughed half of its workforce of over 36,000 people. It recently restarted production activities at its factories. Tata Steel UK, which was acquired by the Indian conglomerate in 2007, employs more than 8,000 people.
