TCS merges subsidiary CMC; swaps shares

Indian IT bellwether Tata Consulting Services (TCS) Thursday announced merger of its subsidiary CMC Ltd to consolidate their operations into a single entity with a rationalised structure.

"CMC shareholders will get 79 equity shares of TCS with a face value of Re.1 for 100 equity shares of CMC with a face value of Rs.10 under a swap ratio of 79:100 based on the valuation report of audit firm BSR & Associates LLP," the global software major said in a statement here.

Post-merger, TCS paid-up capital will increase marginally to Rs.197.04 crore from Rs.195.87 crore after regulatory approvals.

"The merger will enable us to consolidate CMC's operations in a single company with rationalised structure and greater financial strength to achieve economies of scale and enhanced productivity," the company asserted.

CMC, in which TCS has 51.12 percent equity stake, is engaged in design, development and implementation of software technologies and applications, providing professional services in India and overseas.

TCS reported consolidated revenue of Rs.23,816 crore for second quarter (July-Sep) of this fiscal (2014-15) with net profit of Rs.5,288 crore under the Indian financial reporting standard.

CMS posted Rs.617 crore revenue and Rs.76 crore net profit for the quarter (Q2) under review.

TCS' shares declined Rs.45.15 to Rs.2,678.85 from an opening of Rs.2,724 and by Rs.20.85 from Wednesday's closing price of Rs.2,699.70 on the Bombay Stock Exchange (BSE) before the results were declared.

CMC's shares, however, gained Rs.41.20 to close at Rs.2,187.65 from Wednesday's price of Rs.2,146.75 and opening of Rs.2,180 on the BSE.