Mumbai : Tata Motors, India's biggest auto maker by revenue, on Feb 26 announced the completion of a œ340-million (about Rs 2,415-crore) loan from the European Investment Bank (EIB) to UK-based luxury brands Jaguar Land Rover (JLR).

The facility is an eight-year amortising loan to finance development of micro and full hybrid vehicles and research into more energy-efficient car bodies for the premium car segment, which will contribute to lower CO2 emissions. The loan was granted under the European Clean Transport Facility.

The loan is structured with guarantee support from banks and Credit Suisse, the global financial services group working in the lead, with Jaguar Land Rover and Tata Motors in arranging the structure. State Bank of India, India's biggest bank, provided the guarantee for the loan, along with Bank of Baroda. Credit Suisse, Standard Chartered Bank, Deutsche Bank and JPMorgan are providing additional guarantees to meet EIB credit requirements. Tata Motors Vice-Chairman Ravi Kant said: "This (loan) will support the progress of turnaround in Jaguar Land Rover's business in challenging market conditions, alongside cost-cutting measures, increase of volumes and the improved margins strategy currently being implemented by Jaguar Land Rover. We view Jaguar Land Rover as a key part of Tata Motors and we feel confident about its outlook for the future."

Early last year, the Indian auto company had approached the UK government, asking for the mandatory guarantee to be provided for securing the loan from EIB. However, talks were stalled by May 2009, when the government laid down tough conditions in exchange for provision of the guarantee support. Tata Motors declined to accept the conditions, one of which was for securing a seat on the board of JLR. The company then decided to approach other banks, including some Indian banks, for securing the guarantee.

The EIB loan completes the last major element of the funding plan for Jaguar Land Rover, an important part of Tata Motors' efforts to strengthen the two brands over the past year. In 2009, the company secured over œ500 million (Rs 3,551 crore) of funding for Jaguar Land Rover, including facilities from State Bank of India, Standard Chartered Bank, Bank of Baroda, ABC International bank, GE Capital, and Burdale Financial Limited, a subsidiary of the Bank of Ireland.