Jaguar Land Rover, the UK subsidiary of Tata Motors reported a loss of £673 million (Rs5,325 crore) for 2008 as the recession kept battering the UK car industry and the UK government's much-publicised but still elusive auto-bailout package of £2.5 billion announced in January (See: Britain unveils £2.3-billion loan for car industry) remaining to reach its recipients.

Filing its accounts at the Companies House in the UK last week, the carmaker said that Jaguar and Land Rover's combined pre-tax loss was £673.4 million  in 2008, compared to a combined pre-tax profit of £660.5 million in 2007, according to the Financial Times.

Tata Motors has hired consultants from KPMG and Roland Berger Strategy Consultants to help JLR cost cutting and to manage its cash flow more effectively.

The global recession, taking a hard toll on luxury cars, led to Jaguar's turnover plunging to £2,104.9 million compared to £1,149 million in 2007, while Land Rover turnover dropped to £4,557.1 million, against £5,460.6 million in 2007.

The combined "total recognised losses," which including actuarial and losses in pension schemes was nearly £1.2 billion last year. It included the sale of its shares in Aston Martin to investors from Kuwait for £308.7 million. Tata Motors received the shares of Aston Martin from Ford Motors as part of its acquisition of JLR in March 2008 for $2.3 billion. (See: Tata Motors confirms Jaguar, Land Rover deal with Ford for $2.3 billion)

The report that it filed was only for its UK operations and did not cover its parent company, Tata Motors, JLR said in its filing.

According to the filing, between January and May, Land Rover had set up borrowing facilities of £100 million and $486 million, of which, $300 million was from banks and the rest with the Tata Group companies, while a Tata Group company has given a letter of intent, running to the next year for an additional £100 million.

Tata Motors has so far pumped more than £1 billion into JLR since the beginning of the global financial crisis, which has created unprecedented losses amid plunging sales to UK carmakers, whose survival has been threatened by banks in the UK shying away from lending money for its day-to-day operations, despite the UK government having pumped billions of pounds into almost all major banks.

Unlike Honda and other Britain-based car manufacturers, JLR  has not tried to save money by resorting to extended plant closures or get rid of stocks, but had asked its workers to work for shorter hours, take longer breaks from work and sought voluntary redundancies.

Although JLR was sanctioned £340 million by the European Investment Bank in April, (See: Tata's JLR receives £340 million from EIB) the loan is still awaiting the rubber stamp approval of guarantee from the UK government.

After months of negotiations, the UK government finally approved £175 million for just six months against the original approval of £340 million for 12 months.

If this approval does come through, it would be about after Tata Motors rejected humiliating conditions put by the UK government to approve the EIB loan in May. (See: Tata Motors rejects Jaguar Land Rover loan guarantee terms)

Lord Mandelson plays games with Tata Motors
Last week, UK business secretary Lord Mandelson blamed Tata Motors the delays in receiving the proposed loan after being criticised by the UK Parliament's Business and Enterprise committee for not having concluded the negotiations with JLR. The parliamentary rap on the knuckles was  based on a House of Commons select committee report on government help for the automobile industry. (See: Mandelson's brinkmanship with Tatas hurts JLR loan guarantees)

Although the UK government had blamed Tata Motors in the past for not keeping the talks confidential and leaking information to the press, which the company denied, Lord Mandelson chose to deliberately leak a 16 July 2009 letter to the Coventry Telegraph last week. The letter was written by him to Ravi Kant, Tata Motors' vice chairman on the lack of pace from Tata Motors regarding the loan proposal.

However, Howard Wheeldon, senior strategist at BGC Partners, the UK government-appointed brokerage firm involved in the underwriting negotiations for the ECB loan to JLR, wrote in the Birmingham Post on 28 July, that he was indebted to the paper for exposing the leaked letter by Lord Mandelson, in which the UK government tried to shift the blame in the delay of the EIB loan sanction on to Tata Motors.

Wheeldon says that the deliberate leak of the letter, which pointed the blame on Tata Motors was aimed at JLR workers and the Labour government's Midlands-vote bank, hoping to convince them that the government was doing its best, but the company was dragging its feet on the issue.

The leak also came a day after JLR announced on 15 July that it was constrained to shed 300 workers at its Merseyside plant, stop production of its Jaguar X-Type and introducing a three-week shutdown at its plants in the UK. (See: Jaguar axes 300 jobs, stop X-Type production) 

The letter was written by Lord Mandelson on 16 July and leaked by him to the Coventry Telegraph the same day.