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Thursday, Jul 22, 2004

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More offers for TCS, Tata Sons staff post-IPO

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Mr Ratan Tata with Mr Nimesh Kampani (centre), Chairman, JM Morgan Stanley Ltd, and Mr N.A. Soonawala, Vice-Chairman, Tata Sons, at a press conference to announce its IPO in Mumbai on Wednesday. - Paul Noronha

Mumbai , July 21

APART from 10 per cent of TCS' initial public offer (IPO) being reserved for its employees, there are two other offers for employees of TCS and of Tata Sons, which together could amount up to Rs 305 crore in the financial year 2005.

The employee reservation portion in the IPO will not be issued at any discount, said Mr S. Ramadorai, CEO, TCS. This reservation is for employees who are Indian nationals based in India, and who are physically present in the country on date of submission of their bid forms.

The second and third components of employee benefits, which are to be made subsequent to the IPO and the listing of the shares, "would result in a charge to our income statement and will adversely impact our net income," says the `red herring' prospectus of the company.

The second component, called the Employee Share Purchase Scheme (ESPS) will offer select employees of TCS and its subsidiaries and of Tata Sons, equity shares at around 0.5 per cent of the TCS' post-offer paid-up capital. This is now to be expected at Rs 1 per share. For indicative purposes, taking the upper price band of Rs 900 of the IPO, the charge of approximately Rs 215 crore will be reflected in the company's Indian GAAP as well as US GAAP financial statements for fiscal 2005, said the prospectus. The third benefit is in the form of one-time cash grants from Tata Sons aggregating Rs 90 crore. This will be issued to select employees of the company and its subsidiaries, irrespective of where they are located, but who are not part of the ESPS in the fiscal 2005.

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