Tata International Faces ₹800 Crore Bond Redemption Over Mounting Financial Pressure

Tata International Limited (TIL), the trading and distribution arm of the Tata Group, faces a major financial test this December as bonds worth around ₹800 crore approach redemption.

If the company fails to redeem them on time, the interest rate on the instruments will jump from 9.1 per cent to 12.1 per cent, significantly increasing its borrowing costs and straining cash flow, as revealed by company filings reviewed by Moneycontrol.

The non-convertible debentures (NCDs), issued in December 2022, were meant to refinance earlier bonds and carry a three-year ‘First Optional Call Date’. Although perpetual in nature, the steep coupon reset effectively makes their redemption compulsory for TIL.

The looming redemption coincides with persistent financial weakness at TIL.

The company reported revenue of ₹28,000 crore in FY24 with an operating margin of just one per cent, while its net debt climbed above ₹4,100 crore as of September 2024.

Despite turnover rising to nearly ₹32,000 crore in FY25, TIL posted a net loss of about ₹477 crore, weighed down by high leverage, foreign exchange losses, and sluggish operations.

With total debt, including perpetual instruments, exceeding ₹5,000 crore, any delay or rollover of these bonds could add approximately ₹24 crore in annual interest expenses, further tightening liquidity.

Emails sent to Tata International and Tata Sons received no response at the time of publication.

Strategic Review and Internal Concerns

The company’s situation has also drawn attention within the Tata Group. During a Tata Sons board meeting in August, director Harish Manwani reportedly urged the need for a long-term strategic direction, cautioning that without one, TIL risked remaining ‘transactional and opportunistic’.

Tata Sons Chairman N Chandrasekaran acknowledged the challenges, stating that while fresh capital infusion might offer temporary relief, TIL’s structural issues demanded deeper reforms.

He estimated that the company could require up to ₹3,000 crore in total support, three times the current plan, and recommended a review by September 2026, with an interim assessment next year.

The issue also underscores growing differences within Tata Trusts.

A group of trustees reportedly clashed with Noel Tata and Venu Srinivasan over governance matters, including the reappointment of Vijay Singh as Tata Sons’ nominee director.

These debates signal an internal divide between factions advocating stricter oversight and those pushing for faster, centralised decision-making across the Tata conglomerate.

Also Read: Navi Mumbai International Airport: India’s New State-Of-The-Art Aviation Hub