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TCS to consider share buyback on October 7

Our Bureau Mumbai | Updated on October 06, 2020 Published on October 05, 2020

At an estimated ₹20,000 cr, buyback seen as a positive for IT sector

The Tata Consultancy Services board will consider a share buyback at a meeting on October 7. The Mumbai-based company had previously made buybacks worth around ₹16,000 crore each in 2017 and 2018.

Though the company did not give out any details, a note from ICICI Direct said the buyback could be worth ₹20,000 crore. Analysts said the TCS move is a positive for the IT sector. TCS is the first technology company to announce a buyback this fiscal. It had cash reserves worth ₹73,993 crore as of March 2020.

Epic legal dispute

Separately, TCS informed the exchanges that in a legal dispute related to Epic Systems Corporation, it will be marking ₹1,218 crore as exceptional item in the financial results for Q3 and H1 ended September 30, 2020, to be announced on October 7.

Epic, a US-based healthcare software company, had accused TCS and Tata America International Corp, in a lawsuit filed in October 2014 in the US District Court in Madison, which was amended in January and December 2015, of “brazenly stealing trade secrets, confidential information, documents and data”.

The company had implemented a healthcare management system for Kaiser Permanente, a healthcare services provider. TCS was hired to test the system implementation, in the course of which its employees had restricted access to Epic’s documents.

Epic alleged that TCS employees used a Kaiser employee’s credentials to steal over 6,000 documents.

On August 20, 2020, the US Court of Appeals, 7th Circuit, Chicago, returned a verdict on the appeal filed by TCS, reducing the damages award. The court held that the punitive damages award of $280 million is constitutionally excessive, and upheld the compensatory damages award of $140 million.

“TCS is legally advised that it has the correct and the strongest possible arguments in its favour and the order and reduced damages are not supported by facts presented during the trial. In September 2020, TCS has filed petition seeking re-hearing on both compensatory and punitive damages,” TCS said in a statement.

Epic has also filed a petition seeking re-hearing on the decision of the appeals court invalidating award of punitive damages exceeding the amount of compensatory damages. The provision in the books for legal claim is being made as a matter of prudence, TCS said.

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Published on October 05, 2020
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