Future takeovers seen tough to manage

TCS PUBLIC OFFER

Tata Consultancy Services (TCS), which had gone in for strategic acquisitions in the recent past, feels that it may find it difficult to manage such takeovers in the future.

In the draft prospectus filed with the Securities and Exchange Board of India, the company said, "We may undertake strategic acquisitions, which may prove to be difficult to integrate and manage or may not be successful."

The company had in the recent past pursued acquisitions and strategic partnerships as part of its growth strategy, the company added in the prospectus.

In October 2001 it had acquired a 51 per cent stake in CMC from the government. In January 2004, it picked up 75 per cent in AFS from Swiss Airlines, and in March 2004 it acquired a 51 per cent stake in ASDC from Singapore Airlines and 20 per cent from Tata Industries.

Recently TCS had entered into an agreement to acquire a 20.67 per cent stake in WTI from the International Finance Corporation of the US.

With this acquisition, WTI would become a subsidiary of TCS. TCS has also invested in certain companies as a technology partner in specialised IT services and consulting market.

"We may make further acquisitions or investments to expand our access to large clients, acquire new services or enhance our technical or research capabilities," the company said in its draft prospectus.

"Our acquisitions may not contribute to our profitability and we may be required to incur or assume debt or assume contingent liabilities, as part of any acquisition.. we could have difficulty in assimilating the personnel, operations, technology and software assets of the company acquired," it added.