MC EXCLUSIVE How a decision over Tata International funding deepened the rift among Tata Trusts trustees

TIL operates across 27 countries with interests in auto distribution, leather exports, agri-trading and industrial supply chains

A decision over a proposed funding plan for loss-making Tata International Ltd (TIL) has emerged as a key flashpoint in the widening rift among trustees of the Tata Trusts. The Rs 1,000-crore capital infusion into TIL — chaired by Noel Tata — has triggered allegations of inadequate consultation and potential breach of Article 121A of Tata Sons’ Articles of Association, which mandates prior approval from the Trusts for major financial commitments.

Noel Tata, who has helmed TIL since 2010 and been associated with the company for over two decades, has long viewed it as a vital bridge between the Tata Group’s domestic and overseas businesses. TIL operates across 27 countries with interests in auto distribution, leather exports, agri-trading and industrial supply chains. Despite its legacy, the company has been struggling with high leverage, forex losses and a weak growth model.

According to people familiar with the matter, trustees Pramit Jhaveri, Mehli Mistry, Jehangir H.C. Jehangir and Darius Khambatta have questioned the manner in which the funding was pushed through in Tata Trust board meeting on September 11. “The issue is not whether TIL needed funds, but how the decision was made,” said one person aware of the discussions. “The trustees believe such a major capital commitment should have been debated thoroughly and circulated well in advance.

The dissenting trustees have also drawn attention to   Tata Motors’ recent acquisition of Iveco Group’s non-defence commercial vehicle business for about €3.8 billion (Rs 38,000 crore) in July, saying they were informed only at a late stage in that transaction as well.

Tata Sons Board meeting

Minutes of the Tata Sons board meeting, held on August 8, reviewed by Moneycontrol, show that TIL Managing Director Rajeev Singhal presented the capital infusion proposal to stabilise the company’s finances and support restructuring. Despite a doubling of turnover since FY2020, TIL remains weighed down by operational inefficiencies and a strained balance sheet.Tata International Ltd (TIL) reported revenue of about Rs 28,000 crore in FY2023–24 with an operating margin of just 1 percent, while net debt rose to over Rs 4,100 crore by September 2024. Despite a jump in turnover to roughly Rs 32,000 crore in FY2025, the company posted a net loss of around Rs 477 crore, reflecting continued pressure from high leverage, forex losses, and weak operating performance.

The company is pursuing joint ventures with Mitsubishi Corporation Mobility Group for its African distribution arm and with Mercuria Group for its global trading business as part of a turnaround plan.

During the board meeting, Singhal outlined TIL’s weak financial position, debt burden and liquidity concerns. Noel Tata, according to the minutes, acknowledged the challenges, citing legacy issues and external shocks — including the cancellation of an exploration licence in Madagascar, restructuring costs in the footwear division, and forex losses across multiple markets.

Several board members reportedly questioned the strategic rationale for continued support. Harish Manwani observed that TIL needed a clearer business model and long-term purpose, warning that without it, the company risked remaining “transactional and opportunistic.” Tata Sons Chairman N. Chandrasekaran noted that while the proposed infusion would ease near-term stress, TIL faced deeper structural problems. He also flagged that the total funding need could be closer to Rs 3,000 crore — triple the current plan — and recommended a progress review by September 2026, with an interim assessment in a year.

The funding was ultimately approved through a board resolution under Article 121A, authorising Chandrasekaran and Group Corporate Secretary Suprakash Mukhopadhyay to finalise the structure, timing and documentation of the investment. The resolution also recorded that an additional ₹2,000 crore might be required if TIL’s monetisation and strategic partnership plans did not materialise.

Sources told Moneycontrol that the dissenting trustees maintain that their objections stem from governance rather than commercial concerns. “Article 121A was created to ensure collective oversight on large capital deployments,” one person said. “If decisions are presented as faits accomplis, it undermines the transparency the Trusts are meant to uphold.”

TIL’s total debt, including perpetual bonds, is estimated at over Rs 5,000 crore. While its African distribution business remains profitable, losses from its trading and manufacturing operations have eroded overall performance.

The TIL funding issue according to sources has exacerbated an already growing divide within the Tata Trusts, which collectively hold about 66 percent of Tata Sons. The same group of trustees had earlier clashed with Noel Tata and Venu Srinivasan over reappointment of Vijay Singh on the Tata Sons board as a nominee director of the trusts at a meeting on September 11. Vijay Singh, a former Defence Secretary resigned as Tata Sons' director last month. The reappointment was necessitated as a key resolution passed last year after Noel Tata's appointment as chairman that required nominee directors to be reappointed every year once they turn 75 years of age

People close to the matter said both episodes highlight a fundamental split within the Trusts — between one faction pressing for stricter adherence to governance norms and another advocating faster, centralised decision-making.

Emails sent to Tata Sons, Tata International and Tata Trusts remained unanswered till the time of publication.