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The Tata Group will have to look for other funding options for Tata Steel in the United Kingdom, including offloading its stake in Jaguar Land Rover, as its discussions with the UK government have fallen through, according to reports.
Tata Group had asked the UK government for a bailout package for Tata Steel UK after a major setback owing to the Covid-19 pandemic.
The company had approached the government to inject the funding in return for an equity stake of up to 50 per cent to UK taxpayers, a SkyNews report in April claimed.
SkyNews had reported that Tata Steel had approached the UK and Welsh governments seeking a £500 million bailout to support the industry, which is facing a major slump as a result of the pandemic.
JLR had also approached the UK government seeking £1 billion in government aid, the British media had reported earlier.
The Financial Times reported over the weekend that the discussions had been broken off after the British Treasury concluded that the Tata Group did not qualify for funding under its Project Birch.
The parent companies will now have to look for alternatives. Business Standard reported that the Tata Group may consider offloading its stake in JLR, quoting a former director of Tata Steel and Tata Motors.
“I will not rule out a stake sale in JLR and a complete sale of the UK steel operations,” the report quoted him as saying. He further said that even the talks with the ThyssenKrupp for the possible merger of Tata Steel’s European operations was taking a lot of time, which was “bad news” for Tata Steel.
However, the Tata Group has denied the report stating that it does not intend to offload its stake in JLR.
"Tata Motors categorically denies and dismisses any such intent. Jaguar Land Rover is and remains a key pillar of Tata Motors and the wider Tata Group. We recently announced our results for Q1 and have indicated that we are maintaining solid liquidity despite the Covid-19 pandemic and expect to be cash positive from Q2 onwards.
Jaguar Land Rover business remains strong as it transitions to new electrified, autonomous and connected technologies to support its Destination Zero ambition," the company said in an official statement.
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