Tata International Limited (TIL), whose funding needs became a flashpoint between the trustees of Tata Trusts a few months ago, is raising as much as Rs 950 crore to repay bonds that are due to mature at the end of December, people aware of the development told Moneycontrol.
The bonds (non-convertible debentures) worth Rs 800 crore, coming up for redemption toward the end of the calendar year were issued by the company in December 2022 to refinance older bonds, company filings seen by Moneycontrol shows.
Tata International held an extraordinary general meeting of its shareholders, on December 1, to approve a resolution to raise Rs 950 crore through non-convertible debentures, through bonds which are perpetual in nature. In its EGM notice the company said that while Rs 800 crore will go towards paying off the existing bond holders, another Rs 150 crore will be used by the company for general corporate purposes.
The bonds have a coupon rate of 9 percent.
Though the existing bonds are perpetual in nature, the company had the sole discretion to call these bonds at the end of three years. This three-year period ends in December 2025. The company has decided to call or redeem these bonds.
Had the company decided not to redeem these bonds in December 2025, on the so-called First Optional Call Option Date as per company filings, then the company would have faced a significant mark up in the interest payments on these bonds, filings show.
The interest rate that Tata International had to pay these bond holders currently stands at 9.1 percent, but in case the company did not redeem these bonds in December, the interest rate would have shot up by 3 percentage points to 12.1 percentage, significantly increasing TIL’s interest outgo, adding further stress to its cashflows and balance sheet.
The significant interest rate markup made the redemption almost mandatory for the company.
Operates in 27 Countries
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 financially in recent years. Noel Tata, chairman of Tata Trusts. has helmed the company since 2010.
Tata International reported a 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.
TIL’s total debt, including the 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.
Tata International declined to comment.
Tata International funding and discord among Tata Trusts
Moneycontrol reported on October 9 that the Rs 1,000-crore capital infusion into TIL had 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.
Trustees such as Pramit Jhaveri, Mehli Mistry, Jehangir H.C. Jehangir and Darius Khambatta questioned the manner in which the funding was approved by Tata Sons in a Tata Trust board meeting on September 11, Moneycontrol reported.
Moneycontrol further reported that the Tata International funding plan had also raised several questions in a Tata Sons board meeting held in August.
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,” minutes of the board meeting showed.
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.
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