The TCS issue : Better late then never

The employees of Tata Consultancy Services (TCS) must have watched with quiet despair the windfall fortune that came to the employees of Infosys and Wipro who became millionaires after their companies went public in the early nineties. TCS, the first Indian IT company to enter the $1billion league, did not go public at that time.

However, TCS has filed a draft prospectus on May 10, 2004, seeking SEBI's approval for going public.

The great Indian IT story kickstarted in 1968 with the formation of a four-man outfit named Tata Consultancy Services, better known in IT circles by its acronym, which represented a division of Tata Sons, the holding company of the Tata group of industries. TCS went about quietly growing from strength to strength but not much about its success was known to the public at large as Tata Sons is a closely-held company, and closely-held companies need not disclose their financials to the public.

Perhaps, the only figure that has been disclosed about TCS is the fact that it crossed the billion -dollar mark in terms of revenues last year, while Infosys and Wipro joined the billion-dollar club only in March 2004 — and haven't stopped celebrating, yet.

We also know that the Tata stake in Tata Sons is a meagre 14 per cent. The biggest stake-holder in Tata Sons is the construction magnate Shapoorji Pallonji who holds about 19 per cent and the balance of the majority stake is held by various trusts and charitable institutions.

The interests of business entities like the Tata group of companies and that of trusts and charitable institutions, though noble, are different. This has been a stumbling block for Tata Sons pursuing its goals as a purely business entity. And that is perhaps why it took so long for TCS to go public.