The COVID-19 pandemic has severely impacted Tata steel and Jaguar Land Rover, the Tata Group companies with considerable exposure in the United Kingdom. The UK is the worst-affected country in Europe with more than 38,000 people succumbing to the deadly virus.

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Tata Group is in talks with the UK government for financial assistance for Tata Steel or Jaguar Land Rover, however, it is unwilling to do so at the expense of equity stake in either of its companies, people aware of the development told CNBC-TV18.

“The talks with UK government for financial assistance are in initial stages at this point,” said a source aware of the development. “The group is definitely hopeful of some form of financial assistance but it will not accept any loan in return for equity stake in Tata Steel or JLR.”

This clarification is critical as several reports have suggested that the UK government is working on asset resolution for companies hit by the COVID-19 pandemic but is looking at holding equity interest in companies that are accepting financial aid. Sources add that the companies are seeking loans payable to the government over a period of time.

How much aid does JLR, Tata Steel need from the UK government

CNBC-TV18 spoke to a few members of the UK parliament aware of the discussions between the two parties. They indicate that Tata Group has sought 1 billion pounds for Jaguar Land Rover and 500 million pounds for Tata Steel.

Currently, the UK government has set a cap of 50 million pounds on loans given to large companies that have been hit by the COVID-19 pandemic under its CLBILS (Coronavirus Large Business Interruption Loan Scheme). Both companies have reportedly sought an extension on that cap.

“While the government is looking at extending support it has to do so in accordance with what can be best worked out for all companies in these sectors. Both steel and auto have been hit hard by the COVID-19 pandemic and there has to be a fair value that can be given to the large companies,” said a source aware of the developments.

But looking at aiding the companies is a priority. MP from Port Talbot, the Welsh town which employs half of the Tata Steel employees in the UK, has been pushing for a financial package for Tata Steel as well.

When contacted JLR said: “We continue to talk to the UK government. We however cannot disclose details of what is being discussed.”

Tata Sons, the Tata Group holding company, did not comment on the story. Tata Steel is yet to respond to a CNBC-TV18 query.

First Published:Jun 1, 2020 7:18 PM IST