Tata Elxsi begins internal process for merger

Tata Elxsi, the 28-year old product engineering and design (E&D) firm with a market capitalisation of Rs 5,203 crore, started the internal process to merge with  Tata Consultancy Services (TCS).

According to the  sources familiar with the development, it is almost one month that these process began at the organisational level. "The company is reviewing the clients and how it will impact post merger," said the source to DH.  

DH had reported  Tata Elxsi proposed merger with TCS soon in July 25 citing sources. Tata Elxsi is surviving as a standalone entity because of the influence of its Chief Executive Officer Madhukar Dev within the Tata Group. "He already got three extensions and will retire next year and after that the merger will happen," a source said.

Tata Sons Chairman Natarajan Chandrasekaran already had mentioned the in New York said the Tata Group is already a $100 billion group and to get to the next level it needs scale.

"We can't do it with multiple small companies. We need top companies. I am not saying specifically that all companies need to be No 1 or 2 in their sectors, but we need to have top companies," Chandrasekaran said.

In a related development, TCS is also mulling to purchase Tata Motors owned Tata Technologies. The move comes when the process of selling  Tata Motors and two other group entities agreed to sell a 43% stake in Tata Technologies to an affiliate of US-based PE firm Warburg Pincus for $360 million.

Even though almost seven months after signing the agreement for the transaction, the process is yet to be wounded up.  When DH contacted Tata Son's officials on the deals, they said these are market speculation.    

Since taking the mantle of Tata Son's in February, Chandrasekaran has been trying hard to reduce the debt of the conglomerate via divestment and amalgamations.  Tata Teleservices Ltd, another Tata Group company, is already in the block.