Tata Consultancy Services is planning to move the Securities and Exchange Board of India seeking an exemption from offering a 25 per cent shareholding to the public, as mandated by the revised initial public offer norms.
TCS had offloaded 15.16 per cent of its equity to the public through its IPO. To meet the Sebi requirements, the company will have to divest an additional 9.84 per cent stake for the public within the next two years. If it does not get an exemption from Sebi, the company may hasten its plans to approach the US market for an American depository receipts (ADS) issue.
The Tata group company was listed on August 25 last year under Clause 19(b) of Sebi regulations. In 2001, the Sebi had permitted software, telecommunication and media companies to offer only 10 per cent of their total equity stake to the public.
The regulator's order on Friday, which revised the book-building norms by removing the discretionary allotment for qualified institutional buyers (QIBs), has made it mandatory for firms to offload a minimum of 25 per cent to public shareholders.
Even though TCS is expected to get an automatic exemption from this norm, the company is not taking any chances. "We will make a representation to Sebi," said a company source.
On June 30, 2005, Tata Sons held 84.4 per cent in TCS, Jamshedji Tata Trust 1.99 per cent, Navajbai Ratan Tata Trust 1.44 per cent and others, including Tata Chemicals, Tata Tea and IFCL, held 1.07 per cent stake.
Mutual funds and UTI held 1.31 per cent, banks and financial institutions held 1.18 per cent, foreign institutional investors held 6.11 per cent and others held 6.56 per cent of the total public stake of 15.16 per cent. Others include private corporate bodies, the Indian public, non-resident Indians and overseas corporate bodies.
The initial lock-in period on diluting the promoters' holding in TCS is over with the company's public float being one year old now. The promoters can dilute as much as 64.4 per cent now as there is a three-year lock-in period on 20 per cent promoters' stake.
According to analysts, the new rules are not likely to have any impact on TCS' overseas listing, the date of which was yet to be finalised. The lock-in period of one year after the listing had also expired, permitting the company to use 10 per cent of the equity for operational or expansion programmes.
