Signage for Tata Consultancy Services Ltd. (TCS) is displayed atop of a building in the Synergy Park campus in Hyderabad, India. (Photographer: Namas Bhojani/Bloomberg)

Promoters Will Participate In TCS’ Rs 16,000-Crore Buyback

Tata Consultancy Services Ltd. today said its promoters intend to participate in the buyback Rs 16,000 crore buyback offer that was recently announced by the software outsourcer.

“In terms of the SEBI Buyback Regulations, under tender offer route, the promoters have the option to participate in the buyback,” TCS said in a stock exchange filing today. “We would like to inform you that the promoter and promoter group of the company have communicated their intention to participate in the proposed buyback.”

Earlier this month, the board of India’s largest information technology services company had approved a proposal to buyback up to 7.61 crore shares, or 1.99 percent of the total paid-up equity share capital at Rs 2,100 apiece. TCS had undertaken a buyback offer of a similar size last year as well.

The buyback is subject to approval of the members by means of a special resolution through a postal ballot. TCS said a public announcement setting out the process, timelines and other details will be released in due course in line with the Securities and Exchange Board of India norms.

Capital allocation is of paramount importance to the outsourcer, managing director and chief executive Rajesh Gopinathan had said at the company’s 50th annual general meeting in June. “We’ve always believed in rewarding the shareholders. We’ve steadily increased our payout to shareholders and now we are at the upper end of the band of 80 to 100 percent band,” he had said.

He added that since its listing in 2004, TCS has returned 60 percent of the total cash flows, about Rs 98,192 crore, to the shareholders either through dividend payouts or buybacks. Only 4 percent has been used for acquisitions.

During the buyback last year, Tata Sons -- the holding company of salt-to-software Tata Group -- had made over Rs 10,278 crore by tendering over 3.6 crore shares at Rs 2,850 per equity share. These shares accounted for 64.2 percent of the total shares bought back by TCS in 2017. Other large investors who had participated that time included Government of Singapore, Copthall Mauritius Investments Ltd and EuroPacific Growth Fund.