S Kalyana Ramanathan / London October 08, 2009
Tata Group-owned British car maker Jaguar Land Rover today announced it had secured a £175 million (Rs 1,300 crore) from State Bank of India. This comes over and above the $90 million (Rs 420 crore) committed export financing facility with ABC International Bank, the company said.
In a statement to the media, the company said it has been in the process of enhancing its funding facilities and made significant progress. In all, £500 million (Rs 3,700 crore) of new facilities have been completed this year, including the facilities from SBI and ABC, and those secured earlier in the year from Standard Chartered Bank, Bank of Baroda, and Burdale Financial Ltd, a subsidiary of the Bank of Ireland.
JLR’s Chief Financial Officer Kenneth Gregor stated: “We are pleased our funding plans are progressing and appreciate the confidence shown by our banking partners in our business.”
Barely two months earlier, after prolonged negotiation for a guarantee from the UK government for a £340 million loan (Rs 2500 crore) from European Investment Bank, the company decided to pursue other options to raise funds on its own.
Fresh loans from banks in India and other countries that the company has managed to secure should help it tide over what is becoming one of the most challenging times in its history. Due to weakening demand for expensive cars globally, the company in the past year had reported heavy losses. As part of its restructuring, JLR had recently announced it would rationalise some production facilities that could lead to closure of one of its plants in the Midlands. It said this plan, to be implemented by the “middle of next decade”, will not result in any job loss. It further said its new plan will lead to fresh investments in new technologies and products and is likely to add 800 more jobs by the middle of 2010.
Over the past year, production in JLR was reduced by more than 100,000 units; spending and costs were cut; jobs reduced by 2,500; pay frozen and bonuses cancelled. “But this was not enough to offset the full magnitude of the downturn and the company swung from profit in 2007 to significant losses over the past 12 months. This was not a sustainable situation, the company had said.