May 19 (Bloomberg) -- Asian stocks rose, led by finance companies, as U.S. banks applied to repay relief funds to the government and a drop in borrowing costs stoked optimism the financial crisis is easing.
Mitsubishi UFJ Financial Group Ltd. gained 5.6 percent in Tokyo as the London interbank offered rate fell the most in two months. Toyota Motor Corp., which gets a third of its sales in North America, rose 2.8 percent as the yen weakened. PetroChina Co., the nation’s biggest oil producer, surged 6 percent in Hong Kong as Goldman Sachs Group Inc. predicted oil prices will rise. Futures on India’s Nifty Index climbed 5 percent following a surge in American depositary receipts on election results.
“There are indications the banking system in the U.S. and parts of Europe are improving,” said Paul Xiradis, who manages $8 billion as chief executive officer of Ausbil Dexia Ltd. in Sydney. “That means the recovery will occur perhaps sooner than expected a few months ago.”
The MSCI Asia Pacific Index advanced 2.5 percent to 99.24 at 1:16 p.m. in Tokyo, with finance companies accounting for 34 percent of the increase. The gauge has climbed 40 percent from a more than five-year low on March 9.
“When we look back on these times, we’ll see the global economy bottomed out in the April-June period,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co.
Japan’s Nikkei 225 Stock Average climbed 3 percent to 9,306.76. Australia’s S&P/ASX 200 Index added 2.2 percent and Hong Kong’s Hang Seng Index jumped 3.1 percent. Trading in India is due to resume today as a 17 percent surge in the Sensitive Index triggered a suspension yesterday.
‘More Confident’
China Mobile Ltd. climbed 4.6 percent in Hong Kong trading on speculation the company will seek acquisitions. Asahi Glass Co., which makes glass substrates for plasma-display panels, surged 8.9 percent in Tokyo after Daiwa Securities Group Inc. recommended investors buy the stock. Filinvest Land Inc. rose 4.7 percent in Manila on brokerage upgrades.
Futures on the Standard & Poor’s 500 Index were little changed. The gauge climbed 3 percent yesterday, the most in two weeks, as Goldman Sachs, JPMorgan Chase & Co. and Morgan Stanley applied to repay the combined $45 billion they received in October from the government’s Troubled Asset Relief Program, said people familiar with the matter.
“U.S. financial institutions paying back government aid is a good sign that they are becoming more confident,” said Yoji Takeda, who manages $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “Macro economic data have been showing signs of bottoming. We need to see more of this for a sustained rally.”
Borrowing Costs
Mitsubishi UFJ, Japan’s biggest publicly traded bank, advanced 5.6 percent to 625 yen. Westpac Banking Corp., Australia’s biggest lender by market value, added 2.8 percent to A$20.07. HSBC Holdings Plc, Europe’s largest lender, gained 5 percent to HK$67.50 in Hong Kong.
The three-month Libor had its biggest decline since March 19 yesterday, according to British Bankers’ Association data. It has fallen for the past 34 days, as credit markets thawed amid record low interest rates and rising customer deposits.
“We’ve seen credit spreads coming back dramatically and global and Libor rates contracting,” said Ausbil’s Xiradis. “Those are good lead indicators.”
The surge in equities signaled investors are more willing to take risk, making the yen less attractive as a haven. The yen depreciated against the dollar to as low as 96.62 today from 95.03 at the 3 p.m. close of stock trading in Tokyo yesterday.
Overseas Sales
Toyota rose 3.7 percent to 3,690 yen on speculation a weaker yen will boost the value of overseas sales. Canon Inc., which gets 28 percent of sales in the U.S., climbed 4.8 percent to 3,300 yen.
PetroChina jumped 6 percent to HK$8.53. Cnooc Ltd., China’s biggest offshore oil producer, added 4.6 percent to HK$10.40. Inpex Corp., Japan’s largest oil explorer, climbed 4.9 percent to 704,000 yen. in Hong Kong.
Goldman Sachs upgraded PetroChina to “neutral” from “sell,” according to a report. The brokerage raised Cnooc and Inpex Corp. to “buy” from “neutral.”
Oil prices will average $70 a barrel next year due to a recovery in demand and as supply remains constrained, Goldman Sachs said. Crude oil futures gained 4.8 percent to $59.03 a barrel in New York yesterday, the highest settlement since Nov. 11. Prices were little changed in after-hours trading.
Indian shares trading in the U.S. rallied on speculation Prime Minister Manmohan Singh’s Congress party victory in nationwide elections will speed up economic reforms and lure overseas funds. The Bank of New York Mellon India ADR Index surged 16 percent.
Overseas Acquisitions
American depositary receipts of ICICI Bank Ltd., India’s second-largest lender, climbed 25 percent to the highest in eight months after Morgan Stanley raised its recommendation on the country’s financial stocks.
China Mobile climbed 4.6 percent to HK$75.60. The company’s Chairman Wang Jianzhou said in the city today that there is a “good opportunity” for overseas acquisitions as phone assets are “inexpensive.”
Asahi Glass rallied 8.9 percent to 671 yen, set to close at its highest level since Oct. 15. The shares were boosted to “buy” from “neutral” by Daiwa analyst Yusuke Ando.
Filinvest, the fourth-largest Philippine builder, jumped 4.7 percent to 67 centavos after Credit Suisse Group and JPMorgan Chase & Co. raised their share-price estimates.
Monday, May 18, 2009
Indian Stock Surge Shows Investors Anticipate More Open Economy
May 19 (Bloomberg) -- India’s record stock-market surge after the election triumph of Prime Minister Manmohan Singh’s Congress Party is a sign of just how much investors want the next government to open Asia’s third-biggest economy.
Expectations are soaring as Singh, 76, starts his second term without the need for support from the communist allies who choked his market-opening efforts from 2004. Investors are betting the Oxford-trained economist will remove the last barriers to foreign investments in financial services and re- start asset sales to help trim a widening budget deficit.
“There’s a real sense of urgency in taking this event and translating it into tangible results,” said Nick Chamie, global head of emerging-markets research at RBC Capital Markets in Toronto. “If we don’t see some positive signs on an improving fiscal deficit in relatively short order, we could end up again with a weaker equity market, a weaker rupee and reduced confidence in the government’s ability.”
The benchmark Sensitive Index, or Sensex, jumped 17 percent yesterday, breaching the daily limit and forcing share trading to be halted for the day for the first time. The rupee climbed 3.1 percent against the dollar to 47.92 in Mumbai and the benchmark bond yield fell 12 basis points.
Among the names being speculated by the Indian media to take over the reigns of the finance ministry is Palaniappan Chidambaram, who had the job for more than four years until last November, when he was moved to the home ministry to tackle terrorism after the Mumbai attacks. Chidambaram, 63, presided over a record average growth rate of almost 9 percent since 2004.
Mukherjee, Nath
Other potential candidates for the position include acting finance minister Pranab Mukherjee, Commerce Minister Kamal Nath, 62, Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, 65, and former central bank governor Chakravarthy Rangarajan, the Economic Times reported yesterday.
Congress and its allies won 261 of the 543 elected lower- house seats, with the party getting 206 lawmakers of its own, the most since 1991, when Singh as finance minister abandoned Soviet-style state planning and introduced free-market policies that have helped India’s economy quadruple in size.
The immediate interest among investors is the fiscal stimulus the government can provide to revive an economy growing at its weakest pace since 2003. The finance minister may unveil this year’s budget by July. Singh’s government said before the elections that the economy needs stimulus of at least another 1 percent of gross domestic product.
Six-Month ‘Honeymoon’
“They’ll have a honeymoon of six to eight months,” said John Praveen, chief investment strategist at Pramerica International Investments Advisers, a unit of Prudential Financial Inc. in Newark, New Jersey. “As long as they’re delivering on some of the expectations, the markets will hold the gains. They have to make the right start.”
The Reserve Bank of India estimates the fiscal and monetary steps announced so far are worth more than $85 billion, or almost 7 percent of GDP.
The tax cuts and increased spending since December widened the federal budget deficit to 6 percent of GDP in the year ended March 31, from a target of 2.5 percent.
The prospect of an increased budget shortfall prompted Standard & Poor’s to say in February that India’s spending plans were “not sustainable” and the nation’s credit rating may be cut to junk if finances worsen. S&P has a BBB- long term credit rating on India, the lowest investment-grade level.
Window of Opportunity
S&P and Moody’s Investors Service, which places India two steps below investment grade, yesterday indicated the South Asian nation has a chance to improve its fiscal situation after the resounding election victory.
The poll result gives the government more “political space” to sell stakes in state-run companies and improve revenue, Moody’s senior analyst Aninda Mitra told Bloomberg News.
S&P’s director of sovereign ratings Takahira Ogawa said “there is a possibility for the government to implement various measures to reform for further expansion of the economy and for the fiscal consolidation.”
Singh had to depend on the communist parties to gain a majority in parliament in his first term. The communists were opposed to his plans to raise funds by selling stakes in National Hydroelectric Power Corp., Oil India Ltd., Bharat Heavy Electricals Ltd. and National Aluminium Co.
“Among the key reforms will be disinvestment now - the new government will focus on fiscal responsibility,” said Rajeev Malik, an economist at Macquarie Group Ltd. in Singapore. “The key issue will be for the government to balance the need for additional fiscal stimulus with a credible plan for fiscal consolidation.”
Communist Impact
Communists also stalled a bill to raise the foreign- investment ceiling for Prudential Plc and other insurers to 49 percent from 26 percent, and resisted legislation aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. They also blocked entry of global retailers such as Wal-Mart Stores Inc. into India.
“Now the Congress party can rule with a minimum number of coalition partners and with a mandate for reform,” said Rory Medcalf, an India specialist at the Lowy Institute for International Policy in Sydney. “This is exceptionally good news for India.”
Expectations are soaring as Singh, 76, starts his second term without the need for support from the communist allies who choked his market-opening efforts from 2004. Investors are betting the Oxford-trained economist will remove the last barriers to foreign investments in financial services and re- start asset sales to help trim a widening budget deficit.
“There’s a real sense of urgency in taking this event and translating it into tangible results,” said Nick Chamie, global head of emerging-markets research at RBC Capital Markets in Toronto. “If we don’t see some positive signs on an improving fiscal deficit in relatively short order, we could end up again with a weaker equity market, a weaker rupee and reduced confidence in the government’s ability.”
The benchmark Sensitive Index, or Sensex, jumped 17 percent yesterday, breaching the daily limit and forcing share trading to be halted for the day for the first time. The rupee climbed 3.1 percent against the dollar to 47.92 in Mumbai and the benchmark bond yield fell 12 basis points.
Among the names being speculated by the Indian media to take over the reigns of the finance ministry is Palaniappan Chidambaram, who had the job for more than four years until last November, when he was moved to the home ministry to tackle terrorism after the Mumbai attacks. Chidambaram, 63, presided over a record average growth rate of almost 9 percent since 2004.
Mukherjee, Nath
Other potential candidates for the position include acting finance minister Pranab Mukherjee, Commerce Minister Kamal Nath, 62, Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia, 65, and former central bank governor Chakravarthy Rangarajan, the Economic Times reported yesterday.
Congress and its allies won 261 of the 543 elected lower- house seats, with the party getting 206 lawmakers of its own, the most since 1991, when Singh as finance minister abandoned Soviet-style state planning and introduced free-market policies that have helped India’s economy quadruple in size.
The immediate interest among investors is the fiscal stimulus the government can provide to revive an economy growing at its weakest pace since 2003. The finance minister may unveil this year’s budget by July. Singh’s government said before the elections that the economy needs stimulus of at least another 1 percent of gross domestic product.
Six-Month ‘Honeymoon’
“They’ll have a honeymoon of six to eight months,” said John Praveen, chief investment strategist at Pramerica International Investments Advisers, a unit of Prudential Financial Inc. in Newark, New Jersey. “As long as they’re delivering on some of the expectations, the markets will hold the gains. They have to make the right start.”
The Reserve Bank of India estimates the fiscal and monetary steps announced so far are worth more than $85 billion, or almost 7 percent of GDP.
The tax cuts and increased spending since December widened the federal budget deficit to 6 percent of GDP in the year ended March 31, from a target of 2.5 percent.
The prospect of an increased budget shortfall prompted Standard & Poor’s to say in February that India’s spending plans were “not sustainable” and the nation’s credit rating may be cut to junk if finances worsen. S&P has a BBB- long term credit rating on India, the lowest investment-grade level.
Window of Opportunity
S&P and Moody’s Investors Service, which places India two steps below investment grade, yesterday indicated the South Asian nation has a chance to improve its fiscal situation after the resounding election victory.
The poll result gives the government more “political space” to sell stakes in state-run companies and improve revenue, Moody’s senior analyst Aninda Mitra told Bloomberg News.
S&P’s director of sovereign ratings Takahira Ogawa said “there is a possibility for the government to implement various measures to reform for further expansion of the economy and for the fiscal consolidation.”
Singh had to depend on the communist parties to gain a majority in parliament in his first term. The communists were opposed to his plans to raise funds by selling stakes in National Hydroelectric Power Corp., Oil India Ltd., Bharat Heavy Electricals Ltd. and National Aluminium Co.
“Among the key reforms will be disinvestment now - the new government will focus on fiscal responsibility,” said Rajeev Malik, an economist at Macquarie Group Ltd. in Singapore. “The key issue will be for the government to balance the need for additional fiscal stimulus with a credible plan for fiscal consolidation.”
Communist Impact
Communists also stalled a bill to raise the foreign- investment ceiling for Prudential Plc and other insurers to 49 percent from 26 percent, and resisted legislation aimed at removing a 10 percent cap on the voting rights of foreign investors in non-state banks. They also blocked entry of global retailers such as Wal-Mart Stores Inc. into India.
“Now the Congress party can rule with a minimum number of coalition partners and with a mandate for reform,” said Rory Medcalf, an India specialist at the Lowy Institute for International Policy in Sydney. “This is exceptionally good news for India.”
Sunday, May 17, 2009
Bulls Get A New Rallying Point Markets set to surge up to 20% this week
Mumbai: After 10 Janpath, the partying may shift to PJ Towers, Dalal Street.
Unlike 2004, there is no fear of any Left-sponsored Common Minimum Programme (CMP) on Dalal Street this time around. So the bulls are waiting for the maximum: To take the sensex up by a circuit-hitting 10% within minutes of opening on Monday. Most Street players expect 15-20% rally during the week.
“The market was not expecting this (a thumping win for UPA) and was preparing for a fractured mandate. The election outcome is like a dreamcome-true and we are in for a massive gap-up opening on Monday,’’ said Nishid Shah, president & chief investment officer, IDFC Mutual Fund. So no one is ready to sit on the sidelines and miss the party. “FIIs, domestic institutions and investors will invest big time over next several months. Local investors, who were left out of the last two months’ rally, will also jump in,’’ Shah added.
Other than retail investors, speculators and mutual funds could also jump in. Over the last two months, MFs stayed in cash. But now they are expected to join the celebrations, broking house officials said. “Anticipating a fractured election mandate, domestic institutions did not participate in the rally. But now DIIs have to start investing as the event risk is over,’’ said Amitabh Chakraborty, president-equities, Religare Capital Markets.
Other than the expected euphoric buying, some short coverings could further aid the rally. Markets have put built-up around 3,300-3,200 (nifty) level and those positions could prompt some short covering, Chakraborty said. Technically, the nifty could rally for another 600-650 points before it faces any major hurdle, chartists said. On sensex, this could translate to a rally of about 2,000 points and that could happen in the next 10 sessions, a derivatives analyst with a local brokerage said.
Moving beyond the immediates, the global markets, the budget and emerging economic conditions will again play on sentiments and impact the market, participants said.
Unlike 2004, there is no fear of any Left-sponsored Common Minimum Programme (CMP) on Dalal Street this time around. So the bulls are waiting for the maximum: To take the sensex up by a circuit-hitting 10% within minutes of opening on Monday. Most Street players expect 15-20% rally during the week.
“The market was not expecting this (a thumping win for UPA) and was preparing for a fractured mandate. The election outcome is like a dreamcome-true and we are in for a massive gap-up opening on Monday,’’ said Nishid Shah, president & chief investment officer, IDFC Mutual Fund. So no one is ready to sit on the sidelines and miss the party. “FIIs, domestic institutions and investors will invest big time over next several months. Local investors, who were left out of the last two months’ rally, will also jump in,’’ Shah added.
Other than retail investors, speculators and mutual funds could also jump in. Over the last two months, MFs stayed in cash. But now they are expected to join the celebrations, broking house officials said. “Anticipating a fractured election mandate, domestic institutions did not participate in the rally. But now DIIs have to start investing as the event risk is over,’’ said Amitabh Chakraborty, president-equities, Religare Capital Markets.
Other than the expected euphoric buying, some short coverings could further aid the rally. Markets have put built-up around 3,300-3,200 (nifty) level and those positions could prompt some short covering, Chakraborty said. Technically, the nifty could rally for another 600-650 points before it faces any major hurdle, chartists said. On sensex, this could translate to a rally of about 2,000 points and that could happen in the next 10 sessions, a derivatives analyst with a local brokerage said.
Moving beyond the immediates, the global markets, the budget and emerging economic conditions will again play on sentiments and impact the market, participants said.
Retail sector may open up for FDI
Mumbai: One sector that can hope to get some clarity from the new government on the foreign direct investment (FDI) front perhaps immediately is retail.
With the opponents of organised retail, i.e. the Left and BJP, biting the dust, players in retail are looking forward to furthering their interests through expansions and foreign investments.
In 2006, the UPA had encouraged organised retail by opening up FDI in single brand outlets up to 51%. The same is not permitted for multi brand outlets. The previous government, heavily dependent on the Left parties, was, however, forced to go slow on this front. All this might change now.
The sector could witness some policy decisions by the Congress-led UPA regime, including higher FDI, feel industry observers.
Future Group CEO Kishore Biyani said: “The government has been talking of a calibrated approach towards FDI. The time has come. The boost to the economy, expected after the Congress sweep, will generate further consumption. They could be announcing some more measures to generate growth in the retail sector.’’
With the opponents of organised retail, i.e. the Left and BJP, biting the dust, players in retail are looking forward to furthering their interests through expansions and foreign investments.
In 2006, the UPA had encouraged organised retail by opening up FDI in single brand outlets up to 51%. The same is not permitted for multi brand outlets. The previous government, heavily dependent on the Left parties, was, however, forced to go slow on this front. All this might change now.
The sector could witness some policy decisions by the Congress-led UPA regime, including higher FDI, feel industry observers.
Future Group CEO Kishore Biyani said: “The government has been talking of a calibrated approach towards FDI. The time has come. The boost to the economy, expected after the Congress sweep, will generate further consumption. They could be announcing some more measures to generate growth in the retail sector.’’
Auto cos want new govt to rationalise excise structure
New Delhi: The Indian automobile ind u s t r y wants the new government to c o n t i nu e promoting the sector as a key economic driver and has asked for removal of differential excise structure for different size of vehicles.
“First and foremost (there should be) no reversal of financial stimulus packages announced over the last six months,’’ Mahindra & Mahindra president, automotive sector, Pawan Goenka said.
He said the government must also “review and amend large differences in excise duty on different sizes of vehicles’’.
At present, passenger vehicles above 1,500cc engine size attract additional excise duty of Rs 15,000-20,000 over and above the 20% excise they attract. Maruti Suzuki India MD Shinzo Nakanishi, who had already stated the government should not hike excise duty, said: “Backed with this verdict I am sure the new government will re-enforce its initiatives to promote the automobile industry as a key economic driver.’’
Congratulating the UPA on its decisive victory, Hero Honda Motors MD and CEO Pawan Munjal said: “This mandate will strengthen the hand of the central government to unlock long awaited reforms in multiple sectors for the feel good factor to return to the economy.’’
Goenka also said the government should focus on demand generation via a series of initiatives suggested by the industry at various times.
SIAM had said that had it not been for the stimulus packages, passenger vehicle sales would have been down 3% or no growth, while commercial vehicles would have had a decline of 30-40%. AGENCIES
“First and foremost (there should be) no reversal of financial stimulus packages announced over the last six months,’’ Mahindra & Mahindra president, automotive sector, Pawan Goenka said.
He said the government must also “review and amend large differences in excise duty on different sizes of vehicles’’.
At present, passenger vehicles above 1,500cc engine size attract additional excise duty of Rs 15,000-20,000 over and above the 20% excise they attract. Maruti Suzuki India MD Shinzo Nakanishi, who had already stated the government should not hike excise duty, said: “Backed with this verdict I am sure the new government will re-enforce its initiatives to promote the automobile industry as a key economic driver.’’
Congratulating the UPA on its decisive victory, Hero Honda Motors MD and CEO Pawan Munjal said: “This mandate will strengthen the hand of the central government to unlock long awaited reforms in multiple sectors for the feel good factor to return to the economy.’’
Goenka also said the government should focus on demand generation via a series of initiatives suggested by the industry at various times.
SIAM had said that had it not been for the stimulus packages, passenger vehicle sales would have been down 3% or no growth, while commercial vehicles would have had a decline of 30-40%. AGENCIES
Tech cos say govt’s IT thrust to reboot sector
Mumbai/Bangalore: The new dispensation at the Centre has come as a ray of hope for the Indian IT sector, which expects a renewed thrust towards the field by a stronger, reform-oriented government. This comes at a time when the Obama administration plans tax clampdown that could hurt Indian players.
The software services and outsourcing industry expects the UPA government to increase spending on IT initiatives, education and infrastructure, fuelling growth, which lost steam because of the global financial crisis. The meltdown has forced many US, Europe and Japanese companies to pare their IT budgets, hitting Indian firms.
From TCS, Wipro, Infosys to HCL, Patni and Cognizant, companies are now scrambling to raise their share in the domestic software and IT services pie, valued at Rs 58,000 crore. Their earnings from the domestic market has been less than 10%. Additionally, government contracts have become more important because of their sheer size and long tenure besides being credible and financially stable.
Tata Consultancy Services MD S Ramadorai says, “Given the proven benefits of technology usage in programs like NREGA to speed up development and enable efficient public administration as well as deliver government services to the citizens’ doorsteps, the new government should embark on a $5-10 billion investment programme in e-governance initiatives.’’
National Rural Employment Guarantee Act, the flagship job guarantee programme, had been one of the major initiatives that worked in favour of UPA.
The industry hopes the government should leverage its capabilities to catalyse development programmes in education, healthcare as well as implementing unique identity card for each citizen.
The knowledge incentive industry, which generates the highest number of jobs, expects the Centre to increase its budgets to improve job skills and education in the country.
Avinash Vashistha, CEO of Tholons, an offshoring advisory firm, says, “Drawing examples from China, the new government should invest significantly in education and training. SMEs are going to drive the next-gen growth of the country, therefore the government should give them better growth incentives.’’
The software services and outsourcing industry expects the UPA government to increase spending on IT initiatives, education and infrastructure, fuelling growth, which lost steam because of the global financial crisis. The meltdown has forced many US, Europe and Japanese companies to pare their IT budgets, hitting Indian firms.
From TCS, Wipro, Infosys to HCL, Patni and Cognizant, companies are now scrambling to raise their share in the domestic software and IT services pie, valued at Rs 58,000 crore. Their earnings from the domestic market has been less than 10%. Additionally, government contracts have become more important because of their sheer size and long tenure besides being credible and financially stable.
Tata Consultancy Services MD S Ramadorai says, “Given the proven benefits of technology usage in programs like NREGA to speed up development and enable efficient public administration as well as deliver government services to the citizens’ doorsteps, the new government should embark on a $5-10 billion investment programme in e-governance initiatives.’’
National Rural Employment Guarantee Act, the flagship job guarantee programme, had been one of the major initiatives that worked in favour of UPA.
The industry hopes the government should leverage its capabilities to catalyse development programmes in education, healthcare as well as implementing unique identity card for each citizen.
The knowledge incentive industry, which generates the highest number of jobs, expects the Centre to increase its budgets to improve job skills and education in the country.
Avinash Vashistha, CEO of Tholons, an offshoring advisory firm, says, “Drawing examples from China, the new government should invest significantly in education and training. SMEs are going to drive the next-gen growth of the country, therefore the government should give them better growth incentives.’’
UK govt ready to guarantee loans for cash-strapped JLR
London: The British government has said it is ready to guarantee loans to Indian conglomerate Tata group-owned Jaguar Land Rover, for which it is talking with European banks on the behalf of the cashstrapped carmaker.
While making it clear that the primary financial responsibility of JLR rests with the Tatas, the UK continues to hold “confidential discussions’’ over both short and long-term financing and business plans, an official at the British government’s department of business, enterprise and regulatory reform (BEFR) said. JLR, acquired by the Tatas in April last year for £1.15 billion from US auto giant Ford, has faced financial trouble due to the global economic slowdown, and the company had sought assistance from the government.
Earlier in a media interview, Tata Sons chairman Ratan Tata had said he only wanted the UK government to facilitate access to credit and not a bailout for JLR. Besides, some other media reports have said recently that talks between the Tatas and the UK government have hit an impasse.
“The government wants to see JLR safely through difficult trading times and provide stability for the company and its employees. We regard JLR as a visible company with good long-term prospects,’’ the BERR spokesperson said. “That is why the government is having confidential discussions with JLR and its parent company over both short and long-term financing and business plans. These negotiations are continuing,’’ BERR said. It further said the government has actively encouraging Tatas “for the last six months to put together a long-term funding package’’. AGENCIES
While making it clear that the primary financial responsibility of JLR rests with the Tatas, the UK continues to hold “confidential discussions’’ over both short and long-term financing and business plans, an official at the British government’s department of business, enterprise and regulatory reform (BEFR) said. JLR, acquired by the Tatas in April last year for £1.15 billion from US auto giant Ford, has faced financial trouble due to the global economic slowdown, and the company had sought assistance from the government.
Earlier in a media interview, Tata Sons chairman Ratan Tata had said he only wanted the UK government to facilitate access to credit and not a bailout for JLR. Besides, some other media reports have said recently that talks between the Tatas and the UK government have hit an impasse.
“The government wants to see JLR safely through difficult trading times and provide stability for the company and its employees. We regard JLR as a visible company with good long-term prospects,’’ the BERR spokesperson said. “That is why the government is having confidential discussions with JLR and its parent company over both short and long-term financing and business plans. These negotiations are continuing,’’ BERR said. It further said the government has actively encouraging Tatas “for the last six months to put together a long-term funding package’’. AGENCIES
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