20 September, 2020

How The Cash Will Flow

A couple of months from now, TCS goes public. But what will it use the money for?

How The Cash Will Flow
It's official now. TCS, the largest software company in India, is finally going public. Obviously, the stockmarkets are excited about how the IPO (initial public offer) may boost the sagging sentiments by wooing both retail and institutional investors. But the one question on everyone's mind is: how will the company utilise the Rs 5,000-6,500 crore it expects to raise from the market? And that's the one question that the Tata group is not willing to answer, at least for the moment.

When Outlook called up Tata Sons, the company said it was in the "silent phase" until it receives the requisite clearances from the regulator, the Securities and Exchange Board of India (SEBI). Investment banking firms, who are part of the proposed issue, were also unwilling to talk to media. But the same day, Tata Sons' director, J.J. Irani, hinted that the proceeds of the issue will be used by the Tata group to expand in areas such as biotech, life sciences and financial services, including insurance.

That sounded like a red herring. Before we proceed on that front, it needs to be...


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