With Tata Group’s talks with the British government on a financial rescue package failing, the conglomerate has to look for a strategic partner for Jaguar Land Rover (JLR) and sell its UK steel plant lock, stock, and barrel. A former director of Tata Steel and Tata Motors said with the European operations of both companies bleeding the finances of their parent companies, the group would have to come up with a solution soon.
“I will not rule out a stake sale in JLR and selling the UK steel operations. Talks with ThyssenKrupp on the merger of Tata Steel’s European operations are taking a lot of time, which is bad news,” he said.
A Tata Motors spokesman said JLR was in regular discussion with the British government on many matters.
“At this stage, there is not a programme considered appropriate for JLR. We recently announced our results for the first quarter and have indicated we are maintaining solid liquidity despite the pandemic.
Our business remains strong as we transition to electrified, autonomous, and connected technologies to support our Destination Zero ambition,” said the spokesman.
A Tata Steel spokesperson said the firm was in ongoing and constructive talks with the UK government on areas of potential support. “Since these discussions have not reached a conclusion, it would be premature to comment on any options that may or may not be under consideration,” he said.
In July, Liberty House, a company promoted by Sanjeev Gupta, had evinced an interest on collaborating with Tata Steel for its Port Talbot (UK) plant.
The condition of JLR is alarming as the British subsidiary has lost £1 billion in the first six months of 2020. The pandemic has resulted in lower sales across the world. Tata Group had initiated talks on a possible stake sale even before the pandemic, but no decision was taken.
JLR employs 30,000 in the UK, while Tata Steel has 8,000 on its rolls. The group had sought a financial package from the British government as part of the latter’s efforts to help local companies. The talks, however, failed on the government’s stiff conditions, including asking JLR to produce more electric vehicles than diesel vehicles.
Just before the pandemic struck, global brokerage Bernstein had said that JLR could fetch a valuation of £9 billion. This was after news reports surfaced in foreign media that BMW was interested in buying a stake in JLR.
Source: Business-Standard