TCS announces Rs 16,000 crore buyback plan

Tata Consultancy Services (TCS) on Wednesday announced a mega-Rs 16,000 crore buyback plan at Rs 3,000 per equity share.

In 2017 and 2018 too, TCS had undertaken buyback offers of similar sizes.

"...the Board of Directors of the company at its meeting held today has approved a proposal to buyback up to 5,33,33,333 equity shares of the company for an aggregate amount not exceeding Rs 16,000 crore, being 1.42 per cent of the total paid-up equity share capital at Rs 3,000 per equity share," TCS said in a regulatory filing on Wednesday.

The buyback will be conducted via a tender offer route using the stock exchange mechanism, it added.

The buyback offer is subject to the approval of the members by means of a special resolution through a postal ballot, the filing said.

A public announcement setting out the process, timelines and other requisite details will be released in due course following the buyback regulations, it added.

Meanwhile, smaller rival Wipro has also announced that its Board will consider a buyback plan on October 13.

However, no other details were provided.

The TCS' offer price of Rs 3,000 per equity share is 9.6 per cent higher than the stock's closing at Rs 2,737.40 on BSE on Wednesday.

This is the first buyback by a large Indian IT services firm this fiscal.

The TCS' cash reserves stood at Rs 58,500 crore as of September 2020.

Asked about the buyback plan, TCS CEO and managing director Rajesh Gopinathan said the company is focused on its policy to return capital to shareholders.

He added that last year, the company had offered a special dividend, and this time, it is undertaking a buyback.

The choice of the instrument balances the needs and demands of various shareholders, he said.

In October last year, the TCS' Board had declared a special dividend of Rs 40 per equity share.

In 2018, TCS had undertaken a share buyback plan worth up to Rs 16,000 crore, offering Rs 2,100 per equity share and entailing up to 7.61 crore shares.

In 2017, TCS had conducted a similar share purchase exercise.

The company had said its buyback offer was part of its long-term capital allocation policy of returning excess cash to shareholders.

In a separate filing, TCS said its chief financial officer V Ramakrishnan would be retiring from the company on April 30, 2021.

Based on the recommendations of the Nomination and Remuneration Committee, the Board has appointed Samir Seksaria as chief financial officer designate.

He would take over from Ramakrishnan as CFO, effective May 1, 2021, the filing said.

Seksaria, vice-president, finance, has been with TCS since 1999 and has held various positions in business consulting and finance.

Besides, TCS - which has reported almost 5 per cent rise in net profit for the September 2020 quarter - also said its board has declared a second interim dividend of Rs 12 per equity share.

The said dividend will be paid on November 3 and the company has set a record date of October 15 for the purpose.

Also, the company will roll out salary hikes effective October 1.

TCS' consolidated headcount stood at 453,540 as of September 30, 2020.

"We want to thank all TCSers for the incredible resilience they have shown during these trying times.

“We are happy to announce that we will be rolling out salary increases, effective October 1st," TCS global head, human resources, Milind Lakkad said.

He added that the company has begun on-boarding freshers, and increased its recruitment globally in the September quarter in anticipation of the growth trajectory it sees ahead.

Photograph: Courtesy, TCS