TCS sets its sight on global listing

The software major would seek a global listing some time in near future.

Software major Tata Consultancy Services (TCS) would seek a global listing some time in the future, Tata group Chairman Ratan N Tata said on Wednesday.

Tata Sons, the holding company of the Rs 52,000-crore Tata group, plans to restructure its balance sheet by using the proceeds from the TCS stake sale and the transfer of its software division to TCS.

Kicking off the TCS initial public offer (IPO), Tata said: "We will look at restructuring the balance sheet of Tata Sons. The proceeds will be used for supporting and increasing our holding in various group companies."

Over the last few years, the group has hiked its holdings in core firms through creeping acquisitions to more than 26 per cent. In India, a 26 per cent stake enables the management of a company to stall a special resolution.

The TCS IPO is expected to raise Rs 4,942-5,740 crore and the transfer of Tata Sons' software division to TCS will be for Rs 2,300 crore.

On the sidelines of the press conference, Ishaat Hussain, director (finance) of Tata Sons, said, "Tata Sons will use the money to retire its high-cost debt." The total debt of Tata Sons stands at around Rs 3,500 crore. The subscribed and paid-up equity capital of Tata Sons was Rs 40.41 crore on March 31, 2004.

TCS today made a formal announcement of the initial public offering, slated to open on July 29. The 100 per cent book-built offer will close on August 5.

Priced at Rs 775-900 a share, the issue offers 55.4 million shares of Re 1 each. It consists of a fresh issue of 22.7 million shares by TCS and an offer for sale of 32.6 million shares by Tata Sons.

The offer will constitute 11.59 per cent of the fully diluted post issue paid-up capital of TCS.

If the green shoe option of 8.31 million shares is exercised, the offer will comprise 13.33 per cent of the paid-up share capital.

Tata said one of the reasons for the public float was to establish a corporate identity for TCS. He said: "We came to the conclusion that TCS should act like a corporate entity rather than a division of Tata Sons. A corporate entity has certain connotations in the international market."

S Mahalingam, chief finance officer, TCS, said the company had earmarked capital expenditure of Rs 600 crore this year, compared with last year's Rs 250 crore.

In the first quarter of the current financial year, TCS reported a revenue of Rs 2,134 crore, up 40 per cent over the previous year's Rs 1,526 crore. Net profit, before minority interest, went up 71 per cent to Rs 519 crore.