Tata Group faces $14 billion in auto debt, drop in China

Not more than a week after Tata Group gave a satisfying statement regarding its automobiles business that it was well financed, the Indian conglomerate, at present, is facing an auto debt of around Rs 98,000 crore ($14 billion) and a large slowdown in China.

The JLR (Jaguar Land Rover) unit of Tata Group has shown signs of a turnaround which may not be enough to cope with the challenges encountered by India’s premier and most-storied business empire.

It was in the year 2008 when Tata Group bought the UK-based luxury carmaker for $2.3 billion and it has lately become a liability to the Indian conglomerate with the increasing losses through three quarters in December. Albeit, as per the present week’s net income, Jaguar holds almost $151 million, Tata Group has come down to the auto debt of $14 billion, facing an acute slowdown in the world’s largest auto market (China).

The double-trouble has become the biggest challenge for the 151-year-old group that have proceeded overseas with acquisitions more than a decade ago.

As per the records, the Group, in its previous briefing, stated, “automotive business has a net debt of Rs 28,000 crore. Out of this, JLR is Rs 6,500 crore and Tata Motors domestic business is Rs 15,500 crore.”

Indeed, the matter would not have been worse and a revamp would have picked up the pace of the sprawling Tata Group if a massive steel deal in Europe would have been a hit that perhaps have eased the Group’s big burden.

Further, a day ago, the development came in light from the principal investment holding company of Tata Group, Tata Sons that it had plans to take financial aid worth Rs 14,000 crores ($2 billion) from overseas market.

“Tata will have to take harsh decisions to mitigate the risk of debt in the long term for the conglomerate,” said Arun Kejriwal, a director at KRIS, a Mumbai-based investment advisory firm. “For now, Tata Motors and Tata Steel are trouble spots.”

As per the data released by the Tata Group, the Tata Motors and Tata Steel Ltd. had a combined debt of about $27 billion, accounting for more than half of the total dues owed by the group’s top 18 units.

This excludes debt of $9 billion till March 2018 for Tata Steel Bsl Ltd. and Tata Teleservices Maharashtra Ltd, which are in the process of restructuring.