Business mergers and Acquisition, TCS - Current Affairs Questions and Answers

ANSWER: market cap

Explanation:
Tata Consultancy Services (TCS), which is the country’s largest listed company in terms of market capitalisation, has announced India’s biggest buyback offer till now.

The software major plans to buy back up to 5.61 crore equity shares at INR2,850 per share.

Assuming that 5.61 crore shares - equivalent to 2.85% of the company’s equity - are bought back, the offer size would be pegged at INR 16,000 crore, surpassing Reliance Industries Ltd.’s 2012 share buyback offer of INR 10,400 crore.

The buyback is being made through the tender offer route.

This means the existing shareholders can tender their shares through the stock exchange.

The buyback offer price of INR 2,850 represents a 13.7% premium to INR 2,506.50, the closing price on February 20 when the announcement was made.

Since the buyback announcement, the stock has lost nearly 1% to close at INR 2,481.65 on Thursday (the stock market was shut on Friday on account of Mahasivaratri).

The buyback offer price is at a premium of almost 15% over the current market price.

TCS has a cash pile of more than INR 38,000 crore as on December 31, 2016.

Given the tax rules of India, a buy back is a comparatively better way of rewarding shareholders than doling out hefty dividends.

While there is no additional tax in buyback, dividends come at a cost to the company and the shareholders.

There is a dividend distribution tax of more than 20% on the companies while individuals have to pay 10% tax if dividend received is more than INR 10 lakh.

Buy Backs in IT Space: Know More

• The mega buyback offer and the response to it could lead to more such offers, mostly from the IT space.
• Infosys is seeking shareholder approval for amending its Articles of Association to include the provision of buybacks - as mandated by the new Companies Act.
• Wipro, Tech Mahindra and HCL Technologies might be still some time away from such offers because of the lower levels of cash and a historical trend of inorganic growth.
• The board of NASDAQ-listed Cognizant has also approved a plan to return $3.4 billion to its shareholders over two years through buybacks and dividend.
• The NYSE-listed Accenture Plc has a history of returning all its profits to its shareholders in the form of buybacks and dividend payouts.

ANSWER: Natarajan Chandrasekaran

Explanation:
Tata Sons Chairman-designate Natarajan Chandrasekaran will also hold the chairmanship of the group's crown jewel Tata Consultancy Services from 21^st Feb 2017.

The country's largest software services provider has also named V Ramakrishnan as its Chief Financial Officer to succeed Rajesh Gopinathan, who will take over as the CEO and MD of the Tata Group company.

The nomination was duly noted by the directors at its meeting held on February 20, 2017.

Chandrasekaran, currently Chief Executive and Managing Director of TCS, will take charge as the Non-Executive Chairman of the board of directors of TCS with effect from tomorrow.

In a separate filing, TCS said its board of directors appointed V Ramakrishnan as the Chief Financial Officer with effect from February 21.

Ramakrishnan, or Ramki as he is popularly known, joined TCS Finance in 1999, and served as the Finance Head of TCS North America for seven years.

Earlier in the day, TCS also announced a Rs 16,000 crore buyback, the largest till date in the Indian corporate history.

Tata Sons had earlier appointed Ishaat Hussain as TCS Chairman on November 11.

TCS had said Hussain would hold office as the Chairman until a new Chairman is appointed in his place.

TCS: Know More

• CEO: Rajesh Gopinathan (21 Feb 2017)
• Revenue: 16.54 billion USD (2016)
• Headquarters: Mumbai
• Founders: J. R. D. Tata, F. C. Kohli

ANSWER: Ishaat Hussain

Explanation:
TATA Sons Ltd on 9th Nov 2016 announced the appointment of Ishaat Hussain as Chairman of IT giant, TCS with immediate effect.

• He will hold the position till the name of the new chairman is announced.
• Announcement was delivered to the company TCS through the letter dated 9th Nov 2016 from TATA Sons Ltd.
• Hussain succeeds Cyrus Mistry who was ousted from the position on 23rd Oct 2016 by the board of TATA Sons Ltd.
• Ratan Tata has been chosen as the Interim Chairman of the group till another suitable candidate was chosen.
• He is a member of the board of Tata Sons and director of several TATA Companies such as TATA Industries, TATA Steel and Voltas.
• He is also a member of the SEBI committees on insider trading and primary capital markets.
• He is also a member of the CII Finance Committee.
• Prior to TATA Sons, Hussain has served as the senior Vice President and Executive Director of finance at TATA Steel for 10 years.
• He joined the board of the Indian Tube Company (a TATA Steel Associate company) in 1981 and moved to TATA Steel in 1983 after the merger of both companies.

ANSWER: None of the above

Explanation:
NYSE listed technology firm Synnex Corporation has acquired Bengaluru based BPO firm Minacs for USD 420 million in a deal underlining consolidation in the business process management space.

• Buyout also showcases the efforts in the BPM sector to gravitate towards higher end services and capabilities like analytics
• PE firms CX Partners and Capital Square Partners which purchased Minaca from the Aditya Birla Group are exiting the firm.
• This acquisition is Synnex’s second biggest in India.
• In 2013, it had acquired BPO firm IBM Daksh for USD 505 million.

ANSWER: TCS

Explanation:
Country’s largest IT services firm Tata Consultancy Services on 9th July 2016 indicated Non Executive Director Phiroz Vandrevala resigned from the company.

• He relinquished the office of Non-Executive Director of the company on account of personal reasons with effect from July 8, 2016
• He has been a director on the TCS board since September 2007.
• He will continue as Vice Chairman and MD of Diligent, a TCS subsidiary where he is responsible for driving business strategy and operations of the organisation globally.
• He has over 25 years of consulting and leadership experience with TCS

ANSWER: Forever 21

Explanation:
Kumar Mangalam Birla led Aditya Birla Fashion and Retail has acquired Indian business of international clothing brand “Forever 21” from Diana Retail Pvt Ltd, the US based company’s local franchise partner for over INR 175 crore or USD 26 million.

• Transaction involved acquisition of the Forever 21 Undertaking of Diana Retail from July 1 through business transfer agreement and not share transfer.
• Consideration for acquisition is USD 26 million
• Forever 21 will form part of the Madura Fashion & Lifestyle division
• Forever 21 is among the fastest growing fashion retailers in the world with a network of more than 700 stores worldwide.

ANSWER: HelloTech

Explanation:
Los Angeles-based startup HelloTech and rival in-home tech support company Geekatoo said that they had merged, in a sign of consolidation in the hotly competitive on-demand sector.

• HelloTech will combine its network of about 150 college students who provide on-demand tech repair to Southern California consumers with Geekatoo's US network of about 5,000 technicians, the companies said in a joint statement.
• The merger connects HelloTech with Geekatoo's national market and provides Geekatoo with more access to venture capital funding, HelloTech co-founder Richard Wolpert said in an interview.
• HelloTech, which launched about a year ago, has raised $17 million from investors, while 5-year-old Geekatoo has raised close to $3 million.

ANSWER: Knowlarity Communications

Explanation:
Cloud telephony company Knowlarity Communications on May 9th 2016 acquired Delhi based Smartwards, a customer engagement platform that simplifies loyalty for local businesses and their consumers

• As per the statement, Shantanu Mathur and Dhanraj Singh Bisht- co founders of Smartwards will lead the Indian operations for Knowlarity
• Smartwards started operation in 2013

ANSWER: S. Mahalingam

Explanation:
S. Mahalingam, former chief financial officer (CFO) and executive director of Tata Consultancy Services (TCS), is set to become the non-executive chairman of City Union Bank.

• Mr. Mahalingam is currently an Independent Director on the board of the bank.
• The board’s decision comes in the wake of S. Balasubramanian vacating the office of part-time Non-Executive Chairman of the bank at the close of business hours on Tuesday upon his superannuation.
• Board also co opted M. Narayanan as Additional Director of the Bank.

ANSWER: Volob Technologies

Explanation:
GirnarSoft, the parent company of auto classifieds portal CarDekho.com, has acquired virtual reality startup Volob Technologies in an all-cash deal, the company announced on May 3rd.

• This is the eight such transaction entered into by GirnarSoft, which has emerged as one of the most active players in the Indian startup M&A leaderboard over the past 18 months, and comes less than a week after it announced its acquisition of SaaS startup Connecto.
• Founded in 2010 by Tarun Kumar and Shweta Jain, Volob Technologies provides 3D visualisation solutions to various industries, primarily automotive, according to a company-issued statement.