Tata Consultancy Services Japan, NTSC and ITF will form a single new entity
Tata Consultancy Services CEO and MD, N. Chandrasekaran (right) along with Rajesh Gopinathan, CFO during the announcement of signing a pact with Japan's Mitsubishi Corp, in Mumbai (Photo: PTI)
New Delhi: India’s largest IT services company Tata Consultancy Services (TCS) said on Monday that it has signed an agreement with Japan’s Mitsubishi Corp to create a Japanese software services provider. The merged entity is expected to have sales of around $ 600 million. TCS Japan, Nippon TCS Solution Center (NTSC) and IT Frontier Corporation (ITF) a 100 per cent IT subsidiary of Mitsubishi will be merged as a single new entity.
TCS will hold 51 per cent in the merged entity and Mitsubishi Corp will hold 49 per cent. The merger is expected to be operational from July 2014. TCS has the option of increasing its stake in the merged firm. “This strategic transaction signifies our serious commitment to the Japan market. TCS will now have the scale, strong local presence and our full range of global capabilities to serve the Japanese corporations effectively and accelerate our growth in the Japan market,” said N. Chandrasekaran, CEO and managing director, TCS. He added, “We deeply value the partnership with Mitsubishi and look forward to leveraging our mutual strengths in the Japan market.”
The new entity is expected to report revenue of $ 300 million over the remaining nine months of the financial year. The merger will create a strong IT services unit with a base of over 2,400 associates in Japan, said TCS. TCS Japan had $100 million in revenue last fiscal. “The transaction will create a new IT services firm of significant scale in the Japanese market. ITF brings its long standing relationships with Japanese corporations, talented workforce and competencies in industries like retail, distribution and trading,” said TCS.
The deal is expected to add $375 million in incremental revenues of India’s largest software services firm, brokerage firm Motilal Oswal Securities said on Monday. “The deal, if closed by June 2014, will add about $375 million incremental revenues in FY15 (three quarter revenues from ITF),” Motilal Oswal securities analyst Ashish Chopra said.
( Source : dc correspondent )
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