Tcs Joins Race For Tata Steel Software Unit

Tata Consultancy Services (TCS), the software arm of the Tata group, has joined the fray along with the US-based giant IBM for buying out the software division of Tata Steel, the group flagship.

Though Tata Steel had set a deadline of March 31, 2000, for concluding the sale of the division, the deadline has now been extended so as to get the "best value from the new arrangement".

It is learnt that the steel major is open to the idea of a complete sellout or even a lease-back arrangement.

It is understood that though IBM's initial offer was higher than that of TCS, the company was still in negotiations with both for working out the best possible deal.

 

Sources in Tata Steel say a final decision on the eventual buyer would hinge on the price at which Tata Steel would be able to outsource its IT requirements.

Tata Steel's software division has around 300 employees, and an internal valuation has put the division's worth at around Rs 200 crore.

Despite a selloff, Tata Steel will have to maintain a close association with the hived-off division which is used to supply the steel major with its IT requirement.

The Tatas, on the other hand, have had a long-standing association with IBM through a joint venture from which the group exited last year as part of an ongoing group-wide restructuring.

The Tatas again renewed the association with IBM when the software division of Tata Engineering forged a strategic alliance with IBM.