Tata Consultancy Services (CS), a division of Tata Sons, today announced its strategic vision and plans for CMC Ltd. post the acquisition of a 51 per cent stake by Tata Sons. The acquisition of CMC Ltd is a key business decision by the Tata Group to consolidate its leadership in the IT services business in India by leveraging CMCs inherent technological and domain expertise.

CMC has wide ranging skills in managing large turnkey projects and their execution, customer support, including facilities management and maintenance, a range of products and services, nationwide sales and support network, large domestic client base and strong R&D focus. These capabilities will synergise with TCS business focus since there is complementarity of service offerings and domain expertise. CMC Ltd will remain an independent entity in the Tata Group managed by TCS.

Tata Sons acquired a 51 per cent stake in the government owned CMC Ltd for Rs 152 crore. Mr Ratan Tata, Chairman, Tata Sons, officially handed over a cheque for the purchase to Honourable Shri Pramod Mahajan, Minister, Information & Technology, Communication and Parliamentary Affairs, Government of India, at a ceremony held in New Delhi yesterday. Tata Sons has also announced an open offer to acquire an additional 16.69 per cent stake at Rs 281.26 per share. The total value of the open offer is Rs 72 crore.

In keeping with the core philosophy of the Tata Group, which has an over 150-year history of commitment to India, TCS invests as much as 30 per cent of resources in India. We believe that the domestic market has tremendous opportunity and CMC already has an established presence with the potential to take the leadership position in providing solutions to the corporate and government sector, said S. Ramadorai, CEO, Tata Consultancy Services.

Indications are that the domestic IT services sector is expected to grow in the medium to long term at the rate of 25 per cent CAGR till 2004. CMCs track record with government, PSU and corporate clients will help us jointly tap the largest user segment in the organised sector, he added.

Commenting on the operations strategy for CMC, Mr Ramadorai maintained that the existing senior management of CMC will continue and the team will be strengthened with key personnel from TCS. The Board of Directors will consist of 10 members: Tata Sons nominee directors (four members), independent directors (four members) and Government of India nominee directors (two members). Mr R Ramanan, who has 20 years of experience at TCS and currently heads TCS operations in Bangalore and is responsible for many key international relationships, has been inducted onto CMCs Board.

TCS to consolidate market leadership through CMC acquisition

We are very pleased with the CMC disinvestment. It represents a very important step in India's privatisation efforts and bodes well for the country's reform process in the long term," said Hemendra Kothari, Chairman, DSP Merrill Lynch Ltd, Advisors to Tata Sons for this transaction.

"We believe that the Tata Group is ideally placed to add value to all of CMC's stakeholders - the government, employees, clients and alliance partners," he added

Its a win-win situation for both companies. CMC can leverage TCS business development capabilities to market its product portfolio in international markets. CMCs range of products, deep technical expertise and sector know-how across select verticals will complement TCS products and services. TCS and CMC capabilities will be used to significantly extend each others offerings across domains, technologies and geographies, said Dr S.S. Ghosh, Managing Director, CMC Ltd.

CMC Ltd was a public sector enterprise in the IT sector and a premier player in third party maintenance. The company has revenues of Rs 657 crore and a CAGR of 27 per cent over the past three years. CMC Ltd has 3,100 employees and is a key player in the systems integration space in India. CMC Ltd has domain expertise in banking and finance, insurance, transportation, power, defence and mining.

About Tata Consultancy Services

Tata Consultancy Services (TCS), a division of Tata Sons Limited, is a global software solutions and consulting services enterprise. It is Asias largest global software and services consulting company with over 18,000 professionals working at 88 branches in 23 countries and five continents and with over 800 global clients. Tata Consultancy Services has 23 Global Development Centres, 13 of which are assessed at SEI-CMM Level 5 the highest number in the world. It is also the only company in the world that has four offices assessed at PCMM Level 4 (Software and People Capability Maturity Model). TCS has established the Tata Research Development and Design Center (TRDDC) in Pune, Maharashtra, dedicated to software research and development and the only one of its kind in Asia.