As Tata group failed to secure a bailout package from the UK government, the Indian multinational business group may look for a strategic partner for Jaguar Land Rover (JLR) and sell its British steel operations.
Since the European operations of Tata Motor’s JLR and Tata Steel’s plant have been making losses, the parent companies will have to come up with a solution soon, Business Standard quoted a former director of Tata Steel and Tata Motors as saying.
“I will not rule out a stake sale in JLR and a complete sale of the UK steel operations. The talks with ThyssenKrupp for the merger of Tata Steel’s European operations are also taking a lot of time – which can be very bad news,” he said.
Britain’s largest automotive manufacturer JLR employs 30,000 people in the UK, while Tata Steel Europe has an employee strength of 8,000. Both companies had sought a financial package from the British government but the deal failed due to the tough conditions imposed on lending. The failure to secure a bailout deal with the government has left the companies with no option but to rely on private financing to overcome the economic downturn.
The deal between the UK’s Treasury and the Tata Group companies fell apart after the government concluded that the Indian firms were sufficiently financed and didn’t qualify for taxpayer support, as per Bloomberg’s report. The news report also added that stringent conditions imposed on lending, including decarbonisation requirements pushing electric vehicles, made the deal infeasible for the companies owned by Indian conglomerate Tata Group.
As per the report, Tata Steel had proposed the UK government to invest over 900 million pounds or $1.2 billion in the company as part of the talks between the two sides. The proposal also involved the company writing off a similar amount owed by the UK business. The company and the UK government were engaged in talks to secure the future of Port Talbot steelworks. The company employs 8,000 people in the UK, half of whom are in Port Talbot.