According to persons with knowledge of the situation who spoke to Moneycontrol, Tata International Limited (TIL), whose funding requirements were a cause of contention amongst the trustees of Tata Trusts a few months ago, is seeking up to Rs 950 crore to pay back bonds that are scheduled to maturity at the end of December.
Perpetual Bonds Redemption Plan
According to business papers obtained by Moneycontrol, the company issued the Rs 800 crore bonds (non-convertible debentures) in December 2022 to refinance existing obligations. These bonds are due for redemption by the end of the year.
On December 1, Tata International called an extraordinary general meeting of its shareholders to pass a proposal to raise Rs 950 crore through non-convertible debentures, including perpetual bonds. The corporation stated in its EGM notice that it will spend Rs 150 crore for general corporate purposes and Rs 800 crore to pay off the current bond holders.
The corporation has the exclusive right to call the current bonds after three years, even though they are perpetual in nature. December 2025 marks the end of this three-year era. It has made the decision to call or redeem these bonds.
Interest Cost Escalation Risk
According to corporate documents, if the corporation had chosen not to redeem these notes on the so-called First Optional Call Option Date in December 2025, the interest payments on these bonds would have increased significantly.
If Tata International had not redeemed these bonds in December, the interest rate would have increased by 3 percentage points to 12.1 percent, greatly increasing TIL’s interest outgo and placing additional strain on its cash flows and balance sheet. Currently, the interest rate that Tata International is required to pay these bond holders is 9.1 percent.
The redemption was practically required for the business due to the substantial interest rate markup.
operates in 27 nations
With holdings in car distribution, leather exports, agri-trading, and industrial supply chains, TIL operates in 27 countries. Notwithstanding its history, the business has recently had financial difficulties. Since 2010, Noel Tata, chairman of Tata Trusts, has led the business.
In FY2023–2024, Tata International reported sales of over Rs 28,000 crore with an operating profit of barely 1%. By September 2024, net debt had increased to more than Rs 4,100 crore.
The firm reported a net loss of around Rs 477 crore in FY2025 despite an increase in sales to over Rs 32,000 crore. This was due to ongoing pressure from excessive borrowing, foreign losses, and poor operating performance.
The projected overall debt of TIL, including the perpetual bonds, is much above Rs 5,000 crore. Losses from its manufacturing and trade businesses have damaged overall performance, even if its African distribution business is still profitable.
Tata International chose not to respond
Funding from Tata International and conflict between Tata Trusts
On October 9, Moneycontrol revealed that the Rs 1,000 crore capital infusion into TIL has sparked claims of insufficient consultation and possible violation of Article 121A of Tata Sons’ Articles of Association, which requires the Trusts’ prior consent for significant financial commitments.
In a Tata Trust board meeting on September 11, trustees including Pramit Jhaveri, Mehli Mistry, Jehangir H.C. Jehangir, and Darius Khambatta questioned how Tata Sons authorized the financing, according to Moneycontrol.
According to Moneycontrol, a Tata Sons board meeting in August expressed a number of concerns about the Tata International finance proposal.
According to board meeting minutes, Harish Manwani noted that TIL required a more defined long-term goal and business model, cautioning that without it, the firm faced the risk of continuing to be “transactional and opportunistic.”
Although the planned injection would reduce short-term stress, Tata Sons Chairman N. Chandrasekaran pointed out that TIL faced more serious structural issues. Additionally, he suggested a progress review by September 2026 with an interim evaluation in a year, pointing out that the overall investment requirement would be closer to Rs 3,000 crore, or three times the existing estimate.
