London: The fate of Indian conglomerate Tata group-owned Jaguar Land Rover is uncertain as talks with the UK government over a financial support package have virtually failed, media reports say.
"The future of Jaguar Land Rover, the largest UK-based car maker, is under threat as talks with the Government about a financial support package were on the brink of collapse on Wednesday night," according to the Telegraph.
Meanwhile, another daily the Financial Times said, "The government was on Wednesday night accused of trying covertly to nationalise Jaguar Land Rover after it emerged that ministers had demanded the right to choose a chairman and veto redundancies at the troubled carmaker during bail-out negotiations."
Financial Times further said that "the demands, which were part of a deal under which Jaguar would have received 175 million pound in government loan guarantees, were rejected by the group's Indian owner, Tata".
Quoting an analyst at BGC Partners, Howard Wheeldon, Financial Times said the proposals were "backdoor nationalisation", while the Telegraph carried Wheeldon as saying: "This latest Government failure to support the future of the UK economy is an absolute disgrace tantamount to throwing the best of the highly valuable British luxury car industry and export potential into a den of wolves."
Quoting government insiders Financial Times said their dealings with Tata had been "extremely challenging" and it would be irresponsible to simply "hand the money over".
Meanwhile, the Telegraph citing sources close to the negotiations said, JLR and Tata were left reeling on Friday by what they believe are unacceptable final terms set by the Government for underwriting the European Investment Bank's (EIB's) loan.
The final terms set by the government include the government demanding a veto over all decisions taken by the company, the ability to choose the chairman, a permanent seat on the board, extra investment into JLR of 300 million pound by Tata, and guarantees of no further job cuts among the 15,000 UK employees, the Telegraph said.
If JLR is unable to access the EIB loan then it would face serious questions about its ability to finance a 800 million pound future development programme, with plants and jobs threatened.
Jaguar has reportedly said that it is still in discussions with the Government over accessing elements of the 2.3 billion pound government automotive assistance programme.
Meanwhile, a spokesman for the Department for Business said the primary responsibility for JLR lies with Tata. "Any Government financial assistance must protect taxpayers' money. But on this basis we are prepared to help although not on any terms," they added. "We regard JLR as a viable company with good long-term prospects."