CMC won’t be delisted, says Ramadorai

Our eFE Bureau in Mumbai

Tata Consultancy Services (TCS), the division of Tata Sons which has acquired the public sector Computer Maintenance Corporation (CMC) announced its plans for CMC at a media briefing today. CMC will remain an independant entity within the Tata Group. Managed by TCS, the company will have the mandate to grow at 30 to 35 percent within the next two-year time frame according to Mr S Ramadorai, CEO, TCS. Mr Ramadorai added that TCS was committed to bringing about improvements in margins for CMC and also enhance the return on capital invested.

When asked if CMC was likely to undergo a name change now that it was part of the Tata stable, Mr Ramadorai was noncommital and said, “the Government of India undertaking tag will be out of the name, that is what will change immediately.”

Mr Ramadorai said CMC would continue to remain a listed company. In the event that the open offer (for 16.69 per cent stake) was completely subscribed to, the company may have to dilute 10 percent or make an offer of 10 per cent to retain CMC’s listed status.

The shareholding pattern post-acquisition of TCS is one where Tata Sons controls 51 percent, the Government of India controls 32.31 percent and public/others control 16.69 percent in CMC.

The implied 100 per cent equity value of the transaction stands at Rs 330 crores. Mr Ramadorai said TCS had the option of acquiring the remaining government stake in CMC as well and it was an option TCS would study over the next three years.

Mr Ramadorai said the combined strengths of the two companies would ensure a dominant position in the domestic market in key service areas.

Dwelling on the benefits from the CMC acquisition, Mr Ramadorai in his presentation said that CMC’s expertise in customer support and handling large turnkey projects along with its large domestic client base, research and development focus were some of the key benefits.

CMC is the number one player in third party maintenance and the number four player in systems integration in India.

CMC in turn will benefit from the international markets expertise of TCS said Mr Ramadorai.

The existing senior management of CMC will continue in office, Mr S S Ghosh who currently heads CMC is being inducted as a Tata Sons nominee on the board and Mr R Ramanan who has been with TCS for about 20 years has been inducted into the TCS board.