TCS, Mitsubishi Sign Pact to Form Software Services Firm - The New Indian Express

TCS, Mitsubishi Sign Pact to Form Software Services Firm

Published: 22nd April 2014 06:00 AM

Last Updated: 22nd April 2014 09:15 AM

India’s largest software exporter Tata Consultancy Services (TCS) has signed definitive agreements with Japanese major Mitsubishi Corporation (MC) to merge as a single entity.

“TCS Japan, IT Frontier Corporation (ITF) — Mitsubishi’s 100 per cent IT subsidiary — and Nippon TCS Solution Center (NTSC), to merge as a single new entity,” TCS said in a statement. TCS will hold 51 per cent in the merged entity, MC to hold 49 per cent.

The merged entities to be operational from July 2014, the company said in a statement. The company said that the entity will have revenues of over $600 million per annum.  “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 Japan market,” N Chandrasekaran, MD and CEO of TCS said.

TCS reported a 48.2 per cent increase in consolidated net profits (after tax) at ` 5357.6 crore in the fourth quarter (January-March 2014) when compared to the same period last year when the company posted `3615.64 crore.

The new transaction is expected to close by June 2014, it was reported. “ITF brings its long standing relationships with Japanese corporations, talented workforce and competencies in industries like retail, distribution and trading. This will complement TCS’ deep domain knowledge, technology expertise and strong execution track record,” TCS said and added that this would boost their (TCS) Global Network Delivery Model (GNDM).

Prior to the merger, both TCS Japan and the Mitsubishi arm operated as separate companies with $100 million and $250 million revenue per annum, respectively.

With this transaction, we will have the necessary scale, a strong delivery model, a number of key clients and a financial model that will help us to accelerate our growth,” Chandrasekaran said.

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