IT is six months since we revealed that Tata, the owners of Jaguar Land Rover (JLR), had asked the government to help the struggling British carmaker.
Since then things have moved slowly – so slowly in fact that Tata might have been better off calling the AA.
This week we report that the parties are finally groping towards a conclusion, with a lashed-together refinancing that draws on commercial loans, government guarantees, European money, and some extra cash from Tata itself.
The talks have fallen foul of cultural divides – the gulf of understanding between Britain and India.
Many on our side think Tata is an Indian version of General Electric, a $60 billion (£41 billion) powerhouse with sufficient financial firepower to bail out a trifling subsidiary like JLR.
That misses the point about Tata. It does not fit any conventional model of a western conglomerate. It is a collection of largely autonomous companies, many of which have their own stock-exchange listings and majority-independent ownership, which are bound together by little more than the name.
At the centre is Tata Sons, a group that holds stakes in each of the companies, but which itself is controlled by two charitable trusts.
Ratan Tata, head of Tata Sons, is no Indian billionaire in the style of Vijay Mallya, the freewheeling tycoon behind Kingfisher beer, but a Parsee bachelor who is a company employee.
And Tata has had a difficult few months. It got on the acquisition trail at the wrong time, taking on debt to buy Corus and JLR (and they are just the UK purchases) only months before sales fell off a cliff.
Tata Sons has had to step in to rescue disastrous rights issues by affiliate companies, one of which was from Tata Motors, owner of JLR. Tata Motors even had to raise money by asking the public for deposits, a quirk of India’s business scene that some British companies might wish we had adopted here.
And Tata’s expectations of what is possible in Britain has also shown a lack of understanding. Now that it is one of the UK’s largest industrial employees (35,000 people between JLR and Corus), Tata must have thought the government would bend over backwards to help out.
This is not France, however. Helping out old-economy industries has been something the government is loath to do, although we may see that change as officials and ministers wake up to the fact that the City will not be riding to the economy’s rescue anytime soon.
It looks as if these cultural divides might finally be bridged, and a solution for JLR will be found. It is an outcome greatly to be desired. JLR accounts for about half of all the automotive research and development spending in the UK, investment we sorely need.
Original article here.