London, Mar 25: Ratan Tata, head of Tata Motors, which bought Jaguar Land Rover for more than one billion pounds, has said that the JLR may face huge damages unless the British Government stumps up 500 million pounds worth of loan guarantees.
The group is not looking for a cash hand out, but needs government backing to squeeze much-needed working capital out of the UK's frozen banking systems, Sky News quoted Tata, as saying.
Without the guarantees, the company's massive research and development programmes will suffer, with a knock-on effect on its long-term future.
"If the attitude is to see who blinks first, then the damage is going to be quite devastating. What we have asked for is not a bailout. What we have asked for is help from the Government to facilitate commercial loans, because the banking system has come to a halt," Tata said.
The group needs the money to run its day-to-day business, for its 400million pounds-per-year research programme and for the 800million pounds five-year product development plan, The Independent reported.
The company has been asking for help from the Government since before Christmas, but to no avail. The Department for Business said yesterday that it is still in talks with JLR about its long-term plans, but will not get involved in the day-to-day financing of the business.
JLR is one of the major manufacturers looking closely at its eligibility under the scheme. But the funds are only accessible for the research and development of low-carbon vehicles, and cannot be used for simple working capital requirements.