October
17, 2001
Tata Consultancy Services (TCS), 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 CMC’s
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. CMC’s 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 CMC’s 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
“It’s
a win-win situation for both companies. CMC can
leverage TCS’ business development capabilities
to market its product portfolio in international
markets.
CMC’s 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 other’s 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 Asia’s 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.
