Millionaire row to get longer

After Infosys, TCS is set to add to the number of millionaires in the country. Select employees of TCS, its subsidiaries and Tata Sons will get TCS shares at the face value of Re 1 per after the issue is listed.

The company has reserved 2.39 million shares, 0.5 per cent of the post-offer paid-up equity capital, under an employee share purchase scheme.

Assuming that the company issues shares representing 0.5 per cent of its post-offer paid-up capital, the value would be approximately Rs 2,150 million. Thus, theoretically TCS can produce 2,150 millionaires.

However, there may not be as many. TCS proposes to make this offer to only select executives.

"Seniority will be one of the criteria for allotment. There could be a lock-in period of two to three years," said a source familiar with the IPO.

The prospectus said the employees would be selected on criteria "determined by Tata Sons together with the TCS management".

Employees who do not qualify for the scheme "" onsite employees, who constitute about 40 per cent of the workforce, for instance, are barred from bidding by laws in the US and other countries "" will be eligible to receive a one-time cash grant in 2005.

The total payment resulting from the grant is expected to add up to Rs 90 crore.

The allocation of shares under the employee share purchase scheme and the cash grant would result in a charge on the company and would adversely impact its income, the prospectus said.

Based on the upper limit of the price band, Rs 900, the charge could be around Rs 215 crore.