Tata Infotech to merge with TCS

MUMBAI: The boards of Tata Consultancy Servcies (TSC) and Tata Infotech Ltd (TIL) approved the merger of TIL with TCS.

The decision to merge the 28-year-old company with the TCS was taken at a meeting of boards of directors of both companies here.

According to the merger scheme, shareholders of TIL will receive one equity share of Re 1 each of TCS for two equity shares of Rs 10 each of TIL, a press release said.

After the merger paid-up share capital of TCS will increase to Rs 48.93 crores from Rs 48.01 crore. The scheme is subject to the approval of the Bombay High Court.

Once approved, the merger will be effective from April 1, 2005.

“The merger would bring two leading IT organisations”, said S Ramadorai, CEO and MD of TCS. “The merger is expected to lead two more efficient operations, particularly in the marketing of services,” he said.

Commenting on the merger, F.K. Kavarana, chairman of TIL said that it is in the best long-term interests of all its stakeholders, given the trend of consolidations in the IT industry. “The move will enable large clients to have a single window for a wide array of services and skills,” he added.

The consolidated income of TCS for the year ended March 31, 2005 was Rs 9824.36 crores with profit after tax of Rs 1976.90 crores. For the same period the consolidated income of TIL was Rs 966.60 crores with profit after tax of Rs 79.78 crores.

Tata Sons Ltd holds 80.64 per cent of the paid up share capital of TCS and holds 74.18 per cent of Tata Infotech. After the merger Tata Sons holding in TCS will increase to 80.52 per cent, the press release said.