Apr 17, 2004
|
Informal Guidance
April 16, 2004
Ms. Neelam Bhardwaj
Deputy General Manager
Securities and Exchange Board of India
Mittal Court, Nariman Point
Mumbai 400 021
Dear Madam,
Re: Tata Consultancy Services Limited – Proposed Initial Public Offering – Request for ‘No-action letter’ under the Securities and Exchange Board of India (Informal guidance) Scheme 2003
This is a request being made under the SEBI (Informal guidance) Scheme 2003 for issuing an interpretive/no action letter based on the facts and circumstances mentioned below.
We write in our capacity as a Book Running Lead Manager for the proposed Initial Public Offering by Tata Consultancy Services Limited (TCS Ltd). TCS Limited is a subsidiary company of Tata sons Limited. Tata Consultancy Services Limited (the ‘division’) which is a division of Tata Sons Limited is proposed to be transferred to TCS Ltd together with the corporate entities which are integral part of the business of the division. Such transfer will be effected concurrent with and subject to signing of an underwriting agreement for the initial public offering proposed by TCS Limited. The transfer of business as above is proposed to be made primarily through a court approved scheme for which the initial order from the Bombay High Court has already been received.
The IPO would consist of fresh issue of equity shares by TCS and Offer for Sale by the existing shareholders TCS. The total offer size is likely to be 10% of the Post Offer Capital excluding greenshoe option if any.
The existing shareholding pattern of TCS is as under:
| Shareholder Category |
| Number |
Percent
|
|
Promoter – Tata Sons Limited
|
409,950,025
|
90.00%
|
|
Other Companies of the Promoter Group:
|
|
|
|
Jamsetji Tata Trust
|
19,062,500
|
4.18%
|
|
Navajbai Ratan Tata Trust
|
10,937,500
|
2.40%
|
|
Sheba Properties Limited
|
1,394,750
|
0.31%
|
|
Kalimati Investment Co. Limited
|
1,394,750
|
|
|
Tata Chemicals Limited
|
1,153,775
|
0.25%
|
|
Af-taab Investment Co. Limited
|
751,988
|
0.17%
|
|
The Indian Hotels Company Limited
|
507,188
|
0.11%
|
|
Other Tata companies
|
455,338
|
0.10%
|
|
Total Promoter Group
|
445,607,814
|
97.9%
|
|
Other Shareholders
|
9,892,215
|
2.1%
|
|
Total
|
455,500,029
|
100.0%
|
The IPO would consist of Fresh Issue of 5% of the Post issue capital and offer for sale of 5% of the post issue capital by the exiting shareholders .
The Company wishes to provide an opportunity to all its existing shareholders to participate in the Offer for Sale and is in discussions with the shareholders. As some of these shareholders are public charitable trusts and listed companies, they have to obtain the approval of their board of directors/Trustees for selling their holding in the Offer for Sale. In respect of listed Companies there may be concern on their share prices and trading activity on account of impact of the announcement of their decision to sell TCS shares.
We intend to file the draft offer document with SEBI by the end of this month. In this time frame the Company may not have received authorizations from some of the existing shareholders on account of the reasons described above.
Hence, the Company proposes that at the time of filing the draft Offer Document with SEBI, it would indicate the total number of shares to be sold under fresh issue and offer for sale. However, the exact number of shares to be sold by each shareholder under offer for sale would be disclosed prior to filing the Red Herring with the Registrar of Companies. Further Tata Sons Limited, the largest shareholder and the promoter, would give an undertaking that in case the total number of the shares offered by other exiting shareholders is less than 5% of the post issue capital, then it would sell such number of equity shares so that the offer for sale component aggregates to 5% of the post issue capital. Hence, there would be no change in the capital structure of the company. There would be some consequential changes only in the notes to the capital structure viz. shareholding pattern, top ten shareholders etc.
Prior to filing of the Red Herring Prospectus with RoC, the list of selling shareholders alongwith exact number of shares to be sold to them would be incorporated in the Red Herring Prospectus. We request you to give your approval for filing the draft Red Herring Prospectus with SEBI on the above lines.
We request you to treat the contents of this letter as confidential as the proposed public offering by TCS has not been made public, and we would request confidentiality till such time as the Draft Red Herring Prospectus is filed with Securities and Exchange Board of India to avoid breach of any international or local advertising restrictions.
In compliance with the SEBI (Informal Guidance) Scheme, 2003, please find enclosed demand draft No. 302146 dated 16th April, 2004 for Rs.25,000/- being the fees for the requested guidance.
In case you need any further information/clarification, kindly get in touch with the undersigned on 5630 3355 or Sudhir Bassi on 5630 3172.
Thanking you,
Yours faithfully,
Dipti Neelakantan
Executive Director
Encl.: as above