The Indian Panorama

Tag: Tata Consultancy Services (TCS)

  • Tata Steel sacks Cyrus Mistry, names OP Bhatt as chairman

    Tata Steel sacks Cyrus Mistry, names OP Bhatt as chairman

    MUMBAI (TIP): The Tata Steel board on Nov 25 replaced Cyrus Mistry with OP Bhatt, an independent director, as the company’s chairman with a majority of the members voting in favour of the resolution. The 110-year-old metal giant’s decision is a fallout of the parent Tata Sons ousting Mistry as its chairman last month.

    However, Mistry remains a director of Tata Steel. The company said Bhatt, who has been on its board for the last three years, will be the chairman till the outcome of the extraordinary general meeting (EGM) called on December 21 to remove Mistry as director.

    The Mistry camp slammed the latest move as yet “another example of the unprecedented erosion in core Tata values”, which has seriously dented the most respected Indian corporate brand.

    Six directors supported the resolution seeking Mistry’s removal as chairman, while three opposed it. Mallika Srinivasan, Ishaat Hussain, Adrew Robb, Jacob Schraven, D K Mehrotra and Bhatt backed Mistry’s removal. Nusli Wadia, chairman of Britannia and Bombay Dyeing, Subodh Bhargava, chairman emeritus of Eicher Group, and Mistry himself opposed the resolution.

    Srinivasan is chairman of Tractor and Farm Equipment, while Hussain, who is on the board of Tata Sons, recently replaced Mistry as chairman at TCS. Robb is chairman of Tata Steel Europe, Schraven is ex-deputy chairman of Corus and Mehrotra is the former chief of Life Insurance Corporation. Of the six independent directors, four — Srinivasan, Bhatt, Robb and Schraven — backed Mistry’s removal.

    This was the second board meeting of Tata Steel after Mistry was removed as chairman of Tata Sons last month

    Tata Steel is the third listed group company that has replaced Mistry as chairman, after Tata Consultancy Services (TCS) and Tata Global Beverages. At TCS and Tata Global, group veterans Hussain and Harish Bhat were installed as chairman.

    Tata Steel said that the board took note of the leadership changes at Tata Sons and had received a special notice from the principal shareholder to convene an EGM to remove Mistry as its director. “In view of the current situation”, the board, through a

    “circular resolution dated November 25” passed by majority consent, decided to replace Mistry as chairman “with immediate effect”, Tata Steel said in a regulatory filing.

    Tata Steel said that the board appointed Bhatt as chairman keeping in mind principles of good corporate governance and to provide impartial leadership to the company in its preparation and conduct of the EGM.

    Mistry continues to be the chairman of four listed group companies — Tata Chemicals, Tata Motors, Indian Hotels and Tata Power. He is expected to chair the board meeting of Tata Power next week when the members gather to consider the company’s second quarterly earnings.

    Five Tata Group companies have fixed EGM dates to remove Mistry from their boards (see graph). Tata Global Beverages and Tata Power are yet to announce EGM dates.

    Three companies — Tata Steel, Tata Motors and Tata Chemicals — have also proposed the removal of Wadia, a long-time independent director, from their boards for not supporting Tata Sons in its move to oust Mistry from group companies.

  • Mistry avoids face-off, skips two Tata board meetings

    Mistry avoids face-off, skips two Tata board meetings

    Mumbai: Cyrus Mistry on Thursday skipped two crucial board meetings, of Tata Sons and Tata Consultancy Services (TCS), his first such absence since he was ousted as chairman from both companies.

    The board of directors of Tata Sons did not discuss issues linked to Mistry, Tata executives said. However, at the TCS meeting, which was chaired by Ishaat Hussain, it was decided that the company will convene an extraordinary meeting (EGM) on December 13 to remove Mistry as a director from its board. On November 10, Tata Sons had said Hussain will replace Mistry as TCS chairman.

    TCS is the first company from the Tata Group to fix the EGM date. In the next few weeks, boards of Tata Steel, Tata Motors, Indian Hotels and Tata Chemicals will also consider convening similar EGMs. Despite opposition from parent company Tata Sons, Mistry remains chairman in these four group firms. To remove Mistry from boards of listed Tata companies, a majority of shareholders have to agree. In Tata Motors, Indian Hotels and Tata Chemicals, independent directors have supported Mistry’s continuance as chairman while in Tata Steel, the six independent directors were divided for and against him. It remains to be seen how shareholders factor in the views of these directors.

    Mistry’s dismissal as Tata Sons chairman and attempts to remove him from other group companies has raised questions about governance practices at the Tata Group.

    “It’s (the TCS EGM) the most regrettable step by the Tatas and murder of corporate governance as till date they have not spelt out why Cyrus was replaced as chairman,” said Anil Singhvi, chairman, ICan Advisors. Singhvi wondered how directors who had come on board recently and were yet to acquaint themselves with the group’s businesses, had agreed to go along with the decision to replace Mistry. Singhvi’s reference was to Venu Srinivasan, Ajay Piramal and Amit Chandra who had joined Tata Sons months before Mistry’s removal.

    Barring Mistry, Thursday’s board meeting, which was Hussain’s first as chairman of TCS, was attended by all the directors with Ron Sommer and Clayton Christensen joining in via videoconference.

    After the TCS board meeting, Hussain and the company’s MD & CEO N Chandrasekaran attended the Tata Sons board meet chaired by Ratan Tata that lasted for nearly two hours. This was Chandrasekaran’s first board meet as a Tata Sons director. Source: TOI

  • TCS, Infosys, Wipro, HCL profits confirm IT sector turnaround

    TCS, Infosys, Wipro, HCL profits confirm IT sector turnaround

    NEW DELHI (TIP): If the first quarter of 2013-14 had set the pace, the second quarter results from July to September brought back confidence for Indian IT majors as the big four — Tata Consultancy Services (TCS), Infosys, Wipro and HCL Tech exceeded market expectations with their quarterly incomes. Analysts tracking the sector believe that the revenue stream will remain healthy as discretionary IT spends is back for US-based companies in the banking, financial services and insurance sectors. The discretionary IT spends offer a good barometre for a client firm’s IT spends pattern such that it ultimately translates into more number of outsourcing deals. This is important as US-based banking, financial services and insurance firms still account for more than half of revenues for Indian IT firms. “Apart from the US, the demand environment (for IT outsourcing deals) is looking positive in Europe as well,” said Ankita Somani, IT analyst at brokerage firm Angel Broking. An increase in discretionary IT spends augurs well for Indian IT firms, Somani added.

    Wipro chairman Azim Premji said there are positive indicators on the global economy that coupled with the client confidence is reflecting on the company’s performance. “We see the discretionary spend getting better every day. The market looks good and demand is robust and we feel that we have good opportunity,” said N. Chandrasekaran, CEO, TCS. Anant Gupta, chief executive officer, HCL Tech, said deals from both the US and Europe are very strong and well balanced. “We see good momentum across financial and manufacturing sectors in the US and Europe… and this continues to reflect in our portfolio.” Even Wipro and Infosys that had been struggling offlate managed to beat market expectations, wherein Wirpo reported its best profit growth in the last seven quarters and Infosys raised its revenue outlook by a notch. India’s largest software exporter, TCS, proved once again that fast growth is possible with a huge base as well. At `4,702 crore, the company’s net income rose 34% during the July-September quarter. And this high growth is expected to reflect on the hiring front as well. TCS has already announced that it would hire 5,000 more than its original plan. Infosys, Wipro and HCL Tech did not give specific numbers but said that hiring will be in sync with the demand environment.

  • TCS Outshines Infosys Again

    TCS Outshines Infosys Again

    BANGALORE (TIP): Bangalore based IT services firm Infosys may have set the tone for the better story for the IT industry, but thes country’s largest IT services firm Tata Consultancy Services (TCS) have taken the growth story to another level. TCS not only continued its strong run, but also belied consensus estimates on earnings as well as revenue growth for the quarter ended June 30, 2013.

    Strong volume growth of 6.10% surprised the street which was building in about 4% sequential volume growth (versus 4.1% for Infosys) for the quarter. This led the revenue growth of 9.5% sequentially to Rs 17,987 crore. The higher volume growth is commendable given the subdued macro environment for the sector. TCS’ net profit growth too came in at a robust 6% as against a marginal slip in Infosys’ profit.

    While Infosys had managed to beat the already muted expectations when it announced its results last week, TCS performance is much superior than Infosys on all fronts. They key difference between both the companies lies in the management tone. While Infosys management remains cautious about the future outlook (despite some signs of pick up in discretionary spending), TCS management appears full of confidence. TCS has been delivering a broad-based all round growth consistently thanks to its welldiversified business model.

    Thus, the valuation gap between the two is likely to sustain going forward. “TCS has reported yet another solid quarter. The sector scorecard is so far 2/2 on revenue performance with both Infosys and TCS delivering good numbers. TCS’ start to the year (already at 16%YY) as well as commentary suggests much greater confidence on growth going ahead. A weak currency is also providing solid buffer to margins and overall on the core operating front, TCS looks well placed,” said Nimish Joshi of CLSA in his note.

    Notably, the TCS stock has made new highs in each of the past two trading sessions and hence analysts believe significant upsides in the scrip remain capped. The TCS scrip trades at 19.2 times FY14 estimated earnings while the metric stands at 16.3 times for Infosys. Despite attractive valuations, analysts believe Infosys needs to deliver consistent performance over the next few quarters to warrant a strong rerating. Ankita Somani, IT analyst at Angel Broking says, “Strong show by TCS indicated that its premium valuations over Infosys are justified and here to stay.

    Contrary to its peers, the TCS management does not sound cautious at all. Even after being the largest company, they are still growing better than their peers.” After today’s strong show, analysts could revise their FY14 estimates for TCS marginally. On the macro front though, stricter visa norms by US and other countries could spoil TCS’ party. It would hit the IT companies revenues as well as profitability significantly.

    Infosys may look at buying out a US- based company to reduce the impact of stricter visa norms. TCS’ strategy on this front will be keenly watched. However, analyst were also confident that the company would be able to handle the immigration bill impact well. “TCS’ management remains ‘very positive’ in its outlook for the rest of the year and maintains that FY14 revenue growth will pick up over FY13. US immigration overhang remains the key concern for the company, but the management expects that it will be able to handle any changes to immigration rules without resorting to extreme measures,” said Divya Nagarajan of UBS Securities Asia in her note.

  • Singapore Favourable Investment Destination For Indian Companies

    Singapore Favourable Investment Destination For Indian Companies

    NEW DELHI (TIP): Singapore is increasingly popular becoming a popular destination among Indian companies keen on globalising their businesses. “Singapore is seen (by Indian companies) as home away from home for their business growth on the international front because Asia is booming,” according to Lee Eng Keat, International Director at Singapore’s Economic Development Board (EDB). So far, Indian companies have invested US$ 14.11 billion during 2008-09 and 2011-12 in Singapore, said Keat. Several IT companies will accompany the other Indian enterprises already operating out of the city state. In addition, an Indian pharmaceutical major plans to set up its regional office in Singapore this year. “This year we will be garnering more Indian IT investments into Singapore as well as potentially a pharmaceutical project as well,” said Keat.

    However, the name of pharma company was not disclosed. Keat was confident that more and more bio-pharmaceutical and pharmaceutical companies would be locating their regional offices in Singapore. The advance levels of medical, diseases and drug researches undertaken by Singapore-based institutes would support Indian pharma companies’ global market plans.

    Singapore was inviting international corporations in the field of pharmaceuticals to set up operations and business here, Mr Keat added. “We do feel that there are groups of companies in India that are looking into innovative drug developments and formulation capabilities and delivery mechanism,” said Mr Keat. More than 4,500 Indian companies have set up operations in Singapore to globalise their businesses or trades, making it the largest business community in corporate Singapore, ahead of the Chinese, Malaysians and Indonesians. Indian companies are looking at advantages of Singapore’s free trade agreements with China, Australia and Southeast Asia.

    These treaties will enable them to lower the tariff for their exports of goods into these markets. Singapore offers basic financing need to these companies. Keat observed India was looking to increase its trade with China, and pointed out that Singapore offered one of the most competitive foreign exchange options, including Renminbi/Yuan (RMB). Singapore has recently been acknowledged asthe second clearing centre for RMB. China appointed the Industrial and Commercial Bank of China Singapore branch as the clearing bank for RMB in Singapore in February 2013. Keat highlighted options of Singapore’s other financial capabilities including convertible bonds, currency hedging and participation in the equity markets.

    The top Indian companies operating out of Singapore, includes Tata Consultancy Services (TCS) and HCL Technologies as well as infrastructure group Punj Lloyd, highlighted Keat. “These companies see Singapore as a home for innovation. They are actually creating new solutions for their global clients,” he added. These companies have also built their skilled manpower from the cosmopolitan workforce in Singapore and international operations, said Keat. TCS had recruited its top management from Singapore for setting up operations in China, he added.