TCS explores merger of group firms

The country's leading information technology (IT) services provider, Tata Consultancy Services (TCS), will explore the option of merging some of its group companies.

Speaking at the company's second Annual General Meeting (AGM), Tata Group chairman, Ratan N Tata, said: "It makes sense merging some of the group companies. However, Tata Elxsi is into animation and will be a standalone business." He, however, did not specify any name. IT solutions provider CMC, Elxsi and Tata Technologies are the other IT companies of the group.

The company mangement also announced it has earmarked a capex of Rs 1,400 crore. This is an increase of Rs 235 crore from the Rs 1,165 crore spend during the previous financial year. TCS managing director and chief executive officer, S Ramadorai, said that Rs 300-350 crore would be spent on technology, while the remaining would be set aside for IT infrastructure.

On the rising rupee, Ratan Tata said "It is a matter of concern to us as to anyone who is into exports. But as offshoring is becoming a critical
business strategy among the US, European and Latin American companies there will be some balancing act." Ramadorai added: "We are looking at expansion of our Latin America centre. But this will be through organic growth."

Answering a shareholder's concern on why Indian IT companies cannot be the next Microsoft or Cisco of the world, Tata remarked: "This is something that I have been discussing with Rama (Ramadorai). But I feel that products come from markets that are close to such market places and US provides that market. We might look at creating a product group in US and treat it as a venture capitalist activity by TCS." The Tata group company, he added, is aiming to become one of the top 10 global IT companies by 2010.