Tata International Ltd will invest $100 million to form two joint ventures with the Japanese conglomerate Mitsubishi Corp. and the Switzerland-based commodities trader Mercuria, as the $3.6 billion privately held trading business of Tata Sons seeks to scale up global operations.
Last Friday, the board of Tata Sons approved its trading subsidiary to form a joint venture with Mitsubishi Corp. Mobility Group for a multi-brand distribution business in Africa, an executive privy to the development said. Tata will invest $51 million to acquire a 51% stake, while Mitsubishi will invest $49 million in the new entity, the name of which will be formalized in the coming months.
Tata International also agreed to form a partnership with Mercuria, the trading house with $110 billion in revenue. Mercuria and Tata will form a 51:49 joint venture company, which will engage in physical and derivatives trading of energy, metals, freight and agricultural commodities. The two partners will jointly infuse $100 million into Meta, a holding company, in proportion to their equity stake.
The Tata International-Mitsubishi JV will distribute commercial vehicles, as well as construction and agricultural equipment.
“The JV will leverage TIL’s familiarity with African markets with Mitsubishi’s access to original equipment manufacturers and strong processes/systems,” said an executive privy to the development, on the condition of anonymity.
Tata International will control the board composition and management of its JV with Mitsubishi.
Tata Trusts chair Noel Tata also serves as the chair of the seven-member board of Tata International, which includes managing director Rajeev Singhal, Tata Steel chief executive officer (CEO) T.V. Narendran, and Tata Chemicals CEO R. Mukundan. Noel also serves as chair of Trent Ltd, Voltas Ltd and Tata Investment Corp. Ltd.
By partnering with the world’s two leading trading houses, Tata International’s plan underscores its strategy to gain scale and transform itself into a trading house, along with the accompanying benefits and risks involved in the global commodities market, according to a second executive. With this, it takes a leaf out of the book of Japanese conglomerates, referred to by the Japanese as Sogo Shosha, which typically trade commodities worldwide. So far, Tata International has hardly made a dent in the global scene, having dealt primarily in shoe leathers, automobiles, engineering equipment and other small items, but it is now seen as changing its pace.
“Tata International remains committed to building future-fit and resilient businesses across trading and distribution, with a clear focus on growth and sustainability,” said a spokesperson for the company. “As a matter of policy, we do not comment on speculation.”
An email sent to Mercuria went unanswered. Mitsubishi Corp. Mobility Group could not be reached for a comment.
The first executive stated that despite Tata International doubling its revenue over the last five years, profitability remained a challenge, and the company would need to “repair both on the balance sheet and on the operating side”.
Tata International closed FY25 with a revenue of ₹31,868 crore and loss of ₹477 crore. It generated 84% or ₹26,251 crore through trading, while distribution and manufacturing accounted for 9% and 7% of its revenue, respectively.
For now, even as Tata International’s revenue has doubled since FY20, its profitability and net worth remain a challenge, the first person acknowledged. India accounted for 37% of its total business, while the rest of Asia brought 48% of revenue last year, according to Tata International’s annual report. Africa accounted for 7%, while the rest of the world accounted for the remaining 7% of its business. The second executive stated that as Tata International was in the buy-and-sell business, it should not incur losses. Additionally, the flagship group companies have internal divisions that specialise in exports.
Last year, parent Tata Sons increased its stake by 13.33% in Tata International Ltd to 66.85%. Other Tata Group companies own the remaining third of shares.
