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Draft Red Herring ProspectusDated [ ] (to be dated after filing with the Registrar of Companies)Please read Section 60B of the Companies Act, 1956Red Herring Prospectus will be updated upon ROC filing100% Book Build OfferTATA CONSULTANCY SERVICES LIMITEDRegistered Office: Bombay House, 24 Homi Mody Street, Fort, Mumbai 400001, IndiaTel: (91 22) 5665 8282, Fax: (91 22) 5665 8080 Email: tcs@tata.comCorporate Office: 11th Floor, Air India Building, Nariman Point, Mumbai 400021, IndiaTel: (91 22) 5668 9999, Fax: (91 22) 5668 9661Email:investor.relations@tcs.comWebsite: www.tcs.com(For changes in name and registered office, See “Our History and Main Objects” on Page [ ] of this Draft Red Herring Prospectus)Public Issue of 55,452,600 Equity Shares of Re. 1 each for cash at a price of Rs.[ ] per Equity Share aggregating Rs.[ ] million, consisting ofa Fresh Issue of 22,775,000 Equity Shares of Re. 1 each by Tata Consultancy Services Limited (“TCS Limited” or the “Company” or the“Issuer”) and an Offer for Sale of 32,677,600 Equity Shares by Tata Sons Limited (“Tata Sons”) and certain other shareholders of TCSLimited (together with Tata Sons, the “Selling Shareholders”). The Fresh Issue and the Offer for Sale are jointly referred to herein as the“Offer”. 5,545,260 Equity Shares will be reserved in the Offer for subscription by employees and directors in India of the TCS Division, TCSLimited and Tata Sons (the “Employee Reservation Portion”). There will also be a Green Shoe Option of 8,317,880 Equity Shares of Re. 1each to be offered by Tata Sons for cash at a price of Rs. [ ] per Equity Share aggregating Rs. [ ] million. The Offer and the Green ShoeOption aggregate Rs. [ ] million. The face value of the Equity Shares is Re. 1 and the Offer Price is [ ] times of the face value.The Offer will constitute 11.59% of the fully diluted post Offer paid-up capital of TCS Limited assuming that the Green Shoe Option is notexercised and 13.33% assuming that the Green Shoe Option is exercised in full.The Offer is being made through the 100% Book Building Process wherein at least 60% of the Net Offer will be allocated on a discretionary basisto Qualified Institutional Buyers (“QIBs”). If at least 60% of the Net Offer cannot be allocated to QIBs, then the entire application money will berefunded forthwith. Further, not less than Net 15% of the Net Offer will be available for allocation on a proportionate basis to Non-InstitutionalBidders and the remaining 25% of the Net Offer will be available for allocation on a proportionate basis to Retail Individual Bidders, subject tovalid bids being received at or above the Offer Price.PRICE BAND: Rs. TO Rs. PER EQUITY SHARE OF Re. 1 EACHRisks in Relation to First OfferThis being the first issue of the Equity Shares of TCS Limited, there has been no market for the Equity Shares. The face value of the Equity Sharesis Re. 1 and the Offer Price is [ ] times of the face value. The Offer Price (as determined by TCS Limited and Tata Sons in consultation with theBook Running Lead Managers, on the basis of assessment of market demand for the Equity Shares offered by way of Book Building) should not betaken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an activeand/or sustained trading in the Equity Shares nor regarding the price at which the Equity Shares will be traded after listing.General RiskInvestment in equity and equity related securities involves a degree of risk and investors should not invest any funds in this Offer unless they canafford to take the risk of losing their investment. Investors are advised to read the Risk Factors carefully before taking an investment decision inthis Offer. For taking an investment decision, investors must rely on their own examination of TCS Limited and the Offer including the risksinvolved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India(“SEBI”) nor does SEBI guarantee the accuracy or adequacy of this Draft Red Herring Prospectus. Specific attention of the investors is invited tothe statements on Risk Factors beginning on page number [ ] of this Draft Red Herring Prospectus.Issuer’s Absolute ResponsibilityTCS Limited, having made all reasonable inquiries, accepts responsibility for, and confirms that this Draft Red Herring Prospectus contains allinformation with regard to the Company and the Offer, which is material in the context of the Offer, that the information contained in this DraftRed Herring Prospectus is true and correct in all material respects and is not misleading in any material respect, that the opinions and intentionsexpressed herein are honestly held and that there are no other facts, the omission of which makes this Draft Red Herring Prospectus as a wholeor any of such information or the expression of any such opinions or intentions misleading in any material respect.Listing ArrangementThe Equity Shares are proposed to be listed on the National Stock Exchange of India Limited (Designated Stock Exchange) and The StockExchange, Mumbai and in-principle approvals for listing will be obtained from these stock exchanges.Book Running Lead Managers (“BRLMs”)JM Morgan Stanley Private Limited141 Maker Chambers IIINariman Point, Mumbai 400 021Tel: (91 22) 5630 3030Fax: (91 22) 5630 1694Email: tcsipo@jmmorganstanley.comJ.P. Morgan India Private LimitedMafatlal Centre, 9th FloorNariman Point, Mumbai 400 021Tel: (91 22) 2285 5666Fax: (91 22) 5639 3091Email:tcs.ipo@jpmorgan.comDSP Merrill Lynch LimitedMafatlal Centre, 10th FloorNariman Point, Mumbai 400 021Tel: (91 22) 5632 8000Fax: (91 22) 2204 8518Email: tcs ipo@ml.comRegistrar to the OfferKarvy Computershare Private LimitedUnit: TCS IPO“Karvy House”, 46, Avenue 4, StreetNo. 1Banjara HillsHyderabad 500 034Tel: (91 40) 2331 2454Fax: (91 40) 2331 1968Email: tcsipo@karvy.comOffer ProgrammeBid/Offer Opens On, 2004Bid/Offer Closes Oni, 2004
TABLE OF CONTENTSPageDefinitions and Abbreviations .Forward Looking Statements .Presentation of Financial and Market Data.Currency of Presentation.Exchange Rates.Risk Factors .Summary.Selected Historical Unconsolidated Financial Information of TCS Division in accordance withIndian GAAP .Selected Historical Consolidated Financial Information of TCS Division in accordance with U.S.GAAP .Unaudited Pro Forma Balance Sheet .The Offer .Green Shoe Option.General Information.Capital Structure .Transfer of Tata Consultancy Services Division .Objects of the Offer .Dividend Policy .Selected Unconsolidated Financial Information in accordance with Indian GAAP .Management’s Discussion and Analysis of Financial Condition and Results of Operations inaccordance with Unconsolidated Indian GAAP .Selected Consolidated Financial Information in accordance with U.S. GAAP .Management’s Discussion and Analysis of Financial Condition and Results of Operations inaccordance with U.S. GAAP .Business .Our History and Main Objects .Our Subsidiaries and Affiliates .Management .The Tata Group.Our Promoter .Outstanding Litigation and Material Developments .Government Approvals.Description of Certain Indebtedness .Basis for Offer Price .Tax Benefits.Other Regulatory Disclosures .Terms of the Offer .Offer Procedure.General Instructions .Restrictions on Foreign Ownership of Indian Securities .Statutory and Other Information .Main Provisions of Articles of Association .Financial Information .Material Contracts and Documents for Inspection.Declaration.ii
DEFINITIONS AND ABBREVIATIONSConventional TermsTermDescription“AFS” . Airline Financial Support Services (I) Limited.“ASDC”. Aviation Software Development Consultancy India Limited.“CMC”. CMC Limited, a company incorporated under the Companies Act.“ConsolidatedThe subsidiaries of Tata Sons whose financial results are consolidated (from theirSubsidiaries” . respective dates of acquisition by Tata Sons) with the results of the TCS Division inthe historical U.S. GAAP consolidated financial statements presented in this DraftRed Herring Prospectus.“European Subsidiaries” . Collectively, Tata Consultancy Services Sverige AB, Tata Consultancy ServicesBelgium S.A, Tata Consultancy Services France S.A, Tata Consultancy ServicesNetherlands S.A and Tata Consultancy Services Deutschland GmbH.“Scheme” . The Scheme of Arrangement under Sections 391 to 394 of the Companies Act, assanctioned by the High Court of Judicature at Bombay by its orders dated May 9,2003 and April 7, 2004, whereby the TCS Division of Tata Sons would betransferred to TCS Limited as a going concern.“Tata Sons” . Tata Sons Limited, an existing company under the Companies Act and thetransferor entity under the Scheme.“TCS America” . Tata America International Corporation, a New York corporation.“TCS Division” . Tata Consultancy Services, the information technology and software developmentservices division of Tata Sons, which will be transferred to TCS Limited pursuant tothe Scheme. As used herein, the term “TCS Division” includes the ConsolidatedSubsidiaries.“TCS Limited” or theTata Consultancy Services Limited, a public limited company incorporated under“Issuer” or the “Company” the Companies Act and the transferee entity under the Scheme.“Transfer” . The transfer of all the assets, rights and liabilities of the TCS Division of Tata Sonsto TCS Limited pursuant to the Scheme.“we”, “us”, “our” andUnless otherwise specified, where discussed in a pre-Transfer context, including“TCS” . with respect to the historical consolidated financial statements presented herein,these references mean the TCS Division. Where discussed in a post-Transfercontext, these references mean TCS Limited and its consolidated subsidiaries aftergiving effect to the Transfer.“WTI” . WTI Advanced Technology Limited.Offer Related TermsTermDescriptionAllotment.Issue or transfer, as the context requires, of Equity Shares pursuant to the Offer tothe successful Bidders as the context requires.Allottee . The successful Bidder to whom the Equity Shares are being/have been issued ortransferred.Appointed Date. April 1, 2004, being the date on which the Transfer is deemed to be effective underthe Scheme.Articles . The Articles of Association of TCS Limited.Auditors . The statutory auditors of TCS Limited under Indian GAAP, in this case being M/sS. B. Billimoria & Co., Chartered Accountants.Bankers to the Offer . [ ]iii
TermDescriptionBid .An offer made during the Bidding Period by a prospective investor to subscribe toEquity Shares at a price within the Price Band, including all revisions andmodifications thereto.Bid Amount . The highest value of the optional Bids indicated in the Bid cum Application Formand payable by the Bidder on submission of the Bid in the Offer.Bid Closing Date / . The date after which the members of the Syndicate will not accept any Bids for theOffer Closing DateOffer, which shall be notified in a widely circulated English national newspaper,Hindi national newspaper and Marathi newspaper.Bid cum ApplicationThe form in terms of which the Bidder shall make an offer to subscribe to EquityForm . Shares and which will be considered as the application for allotment/transfer of theEquity Shares in terms of this Draft Red Herring Prospectus.Bid Opening Date /The date on which the members of the Syndicate shall start accepting Bids for theOffer Opening Date . Offer, which shall be the date notified in a widely circulated English nationalnewspaper, Hindi national newspaper and Marathi newspaper.Bidder . Any prospective investor who makes a Bid pursuant to the terms of this Draft RedHerring Prospectus.Bidding Period / OfferThe period between the Bid/Offer Opening Date and the Bid/Offer Closing DatePeriod . inclusive of both days and during which prospective Bidders can submit their Bids.Board of Directors/The Board of Directors of TCS Limited or a committee thereof.Board. .Book Building Process . Book building route as provided in Chapter XI of the DIP Guidelines, in terms ofwhich this Offer is made.BSE. The Stock Exchange, Mumbai.BRLMs . Book Running Lead Managers to the Offer, in this case being JM Morgan StanleyPrivate Limited, DSP Merrill Lynch Limited and J.P. Morgan India Private LimitedCAN/ Confirmation ofMeans the note or advice or intimation of allocation of Equity Shares sent to theAllotment Note . Bidders who have been allocated Equity Shares in the Book Building Process.Cap Price . The high end of the Price Band, above which the Offer Price will not be finalisedand above which no Bids will be accepted.Companies Act /the Act . The Companies Act, 1956, as amended from time to time.Cut-off Price . Any price within the Price Band. A Bid submitted at the Cut-off Price by a RetailIndividual Bidder is a valid Bid at all price levels within the Price Band.Depository . A depository registered with SEBI under the SEBI (Depositories and Participants)Regulations, 1996, as amended from time to time.Depositories Act . The Depositories Act, 1996, as amended.Depository Participant . A depository participant as defined under the Depositories Act.Designated Date. The date on which funds are transferred from the Escrow Account to the PublicIssue Account after the Prospectus is filed with the RoC, following which the Boardof Directors shall allot and/or transfer Equity Shares to successful Bidders.Designated StockExchange . National Stock Exchange of India Limited.Directors . Directors of TCS Limited from time to time, unless otherwise specified.Employee ReservationThe portion of the Offer being a maximum of 5,545,260 Equity Shares (plusPortion . additional Equity Shares that may be allocated pursuant to the Green Shoe Option)available for allocation to permanent employees and directors of TCS Division,TCS Limited and Tata Sons in India during the period commencing from the date offiling the Red Herring Prospectus with RoC and the Offer Closing Date.Equity Shares. Equity shares of the Company of Re. 1 each unless otherwise specified in thecontext thereof.Escrow Account . Account opened with an Escrow Collection Bank and in whose favour the Bidderiv
TermDescriptionwill issue cheques or drafts in respect of the Bid Amount when submitting a Bid.Agreement entered into among TCS Limited, the Selling Shareholders, theRegistrar, the Escrow Collection Bank(s), the Syndicate Members and the BRLMsfor collection of the Bid Amounts and refunds (if any) of the amounts collected tothe Bidders.Escrow Collection Bank(s) The banks at which the Escrow Account will be opened.First Bidder. The Bidder whose name appears first in the Bid cum Application Form or RevisionForm.Floor Price . The lower end of the Price Band below which the Offer Price will not be finalisedand below which no Bids will be accepted.Fresh Issue or PrimaryThe issue of 22,775,000 Equity Shares at the Offer Price by the Company pursuantIssue . to this Draft Red Herring Prospectus.Fiscal or FY or FinancialYear . Twelve months ending March 31 of a particular year.Green Shoe Lenders. Tata Sons, Sheba Properties Limited, Kalimati Investment Company Limited,Af-taab Investment Company Limited, Shapoor Pallonji Mistry and Cyrus PallonjiMistry.Green Shoe Option . An option to the BRLMs and the Company in consultation with the StabilisingAgent, to allocate Equity Shares in excess of the Equity Shares included in the Offerand operate a post-listing price stabilisation mechanism in accordance with ChapterVIII-A of the DIP Guidelines.Green Shoe OptionThe portion of the Offer being 8,317,880 Equity Shares aggregating Rs. [ ] millionPortion . if exercised in full.Green Shoe Transferor Tata Sons.GSO Bank Account . The bank account opened by the Stabilising Agent under the Stabilising Agreement.GSO Demat Account . The demat account opened by the Stabilising Agent under the StabilisingAgreement.Indian GAAP . Generally accepted accounting principles in India.Loaned Shares . 8.317,880 Equity Shares of TCS Limited loaned by the Green Shoe Lenders interms of the Stabilisation Agreement.Margin Amount . The amount paid by the Bidder at the time of submission of his / her Bid, whichmay range between 0% to 100% of the Bid Amount.Members of the Syndicate The BRLMs and the Syndicate Members.Memorandum . The Memorandum of Association of TCS Limited.Escrow Agreement .Net Offer.Non-Institutional Bidders .Non-Institutional Portion.NSE .OCB / Overseas CorporateBody .Offer for Sale .Offer .The Offer of Equity Shares other than that included in the Employee ReservationPortion.All Bidders that are not Qualified Institutional Buyers or Retail Individual Bidders.The portion of the Net Offer being a minimum of 7,486,090 Equity Shares availablefor allocation to Non-Institutional Bidders.National Stock Exchange of India Limited.A company, partnership, society or other corporate body owned directly orindirectly to the extent of at least 60% by NRIs, including overseas trusts in whichnot less than 60% of beneficial interest is irrevocably held by NRIs directly orindirectly as defined under Foreign Exchange Management (Transfer or Issue ofSecurity by a Person Resident Outside India) Regulations, 2000. OCBs are notallowed to invest in this Offer.The offer for sale by the Selling Shareholders of 32,677,600 Equity Shares of Rs.[ ] each at the Offer Price.Collectively, the Fresh Issue and the Offer for Sale excluding the Green ShoeOption Portion.v
TermDescriptionOffer Price .The price at which Allotment of Equity Shares will be made in this Offer, asdetermined by TCS Limited and Tata Sons, in consultation with the BRLMs, on thePricing Date.Over Allotment Shares . Equity Shares allotted pursuant to the Green Shoe Option.Pay-in Date . The last date specified in the CAN sent to Bidders.Pay-in-Period . This term means (i) with respect to Bidders whose Margin Amount is 100% of theBid Amount, the period commencing on the Bid Opening Date and extending untilthe Bid Closing Date, and (ii) with respect to Bidders whose Margin Amount is lessthan 100% of the Bid Amount the period commencing on the Bid Opening Date andextending until the Pay-in Date.Price Band . Being the price band of a minimum price (Floor Price) of Rs. and the maximumprice (Cap Price) of Rs. (both inclusive), including revisions thereof.Pricing Date . The date on which TCS Limited and Tata Sons, in consultation with the BRLMs,finalise the Offer Price.Promoter . Tata Sons.Prospectus . The prospectus to be filed with the RoC containing, inter alia, the Offer Price that isdetermined at the end of the Book Building Process, the size of the Offer andcertain other information.Public Issue Account . Account opened with the Bankers to the Offer to receive monies from the EscrowAccount of TCS Limited on the Designated Date.Qualified Institutional . Public financial institutions as defined in Section 4A of the Companies Act, FIIs,Buyers or QIBsscheduled commercial banks, mutual funds registered with SEBI, venture capitalfunds registered with SEBI, foreign venture capital investors registered with SEBI,state industrial development corporations, insurance companies registered with theInsurance Regulatory and Development Authority, provident funds with minimumcorpus of Rs. 250 million, pension funds with minimum corpus of Rs. 250 million,and multilateral and bilateral development financial institutions.QIB Portion . The portion of the Net Offer being 29,944,410 Equity Shares available forallocation to QIBs.Red Herring Prospectus . Means the Red Herring Prospectus issued in accordance with Section 60B of theCompanies Act, which does not have complete particulars on the price at which theEquity Shares are offered and size of the Offer. The Red Herring Prospectus will befiled with the RoC at least three days before the opening of the Offer and willbecome a Prospectus after filing with Registrar of Companies after the pricing andallocation.Registrar or Registrar tothe Offer. Karvy Computershare Private Limited.Registrar of Companies orRoC. Registrar of Companies at Mumbai, Maharashtra.Retail Individual Bidders. Individual Bidders (including HUFs and NRIs) who apply or bid for securities of orfor a value of not more than Rs. 50,000 in any of the bidding options in the Offer.Retail Portion. The portion of the Net Offer being a minimum of 12,476,840 Equity Sharesavailable for allocation to Retail Individual Bidder(s).Revision Form . The form used by the Bidders to modify the quantity of Equity Shares or the BidPrice in any of their Bid cum Application Forms or any previous Revision Form(s).Selling Shareholders . Shareholders offering Equity Shares in the Offer for Sale, consisting of Tata Sonsand certain other shareholders of TCS Limited as listed in the notes to “CapitalStructure”.Stabilising Agent or SA . JM Morgan Stanley Private LimitedStabilising Agreement . Agreement entered into by TCS Limited, the Green Shoe Lenders, the Green ShoeTransferor and the Stabilising Agent on June 9, 2004 in relation to the Green Shoevi
TermStabilisation Period .Stock Exchanges.Syndicate Agreement.Syndicate Members .Tata Sons .TRS or Transaction .Registration SlipUnderwriters .Underwriting Agreement .U.S. GAAP .DescriptionOption.The period commencing from the date of obtaining trading permission from theStock Exchanges for the Equity Shares, and ending 30 days thereafter unlessterminated earlier by the Stabilising Agent.NSE and BSE.The agreement to be entered into among TCS Limited, the Selling Shareholders, theBRLMs and the Syndicate Members, in relation to the collection of Bids in theOffer.[ ]Tata Sons Limited.The slip or document issued by the Syndicate Members to the Bidder as proof ofregistration of the Bid.The BRLMs and the Syndicate Members.The agreement dated [ ] entered into among the BRLMs, the Syndicate Members,the Selling Shareholders and TCS Limited, on or after the Pricing Date.Generally accepted accounting principles of the United States.Abbreviation of General TermsTermDescriptionAGM.AS.CAGR .CDSL.DIP Guidelines .DSPML.ECS.EEFC .EGM .EPS .ESPS.FCNR Account .FEMA.Annual general meeting of the shareholders.Accounting Standards as issued by the Institute of Chartered Accountants of India.Compounded Annual Growth Rate.Central Depository Services (India) Limited.SEBI (Disclosure & Investor Protection) Guidelines, 2000, as amendedDSP Merrill Lynch Limited.Electronic Clearing System.Export Earner’s Foreign Currency account.Extraordinary general meeting of the shareholders.Earnings per Equity Share.Employee Share Purchase Scheme.Foreign Currency Non Resident Account.Foreign Exchange Management Act, 1999, as amended from time to time, and theRegulations framed thereunder.Foreign Institutional Investor (as defined under SEBI (Foreign InstitutionalInvestors) Regulations, 1995), registered with SEBI under applicable laws in India.Foreign Investment Promotion Board.The Government of India.High Net-worth Individual.Hindu Undivided Family.The Income Tax Act, 1961, as amended.JM Morgan Stanley Private Limited.J.P. M
a Fresh Issue of 22,775,000 Equity Shares of Re. 1 each by Tata Consultancy Services Limited (“TCS Limited” or the “Company” or the “Issuer”) and an Offer for Sale of 32,677,600 Equity Shares by Tata Sons Limited (“Tata Sons”) and certain other shareholders of TCS Limited (together with
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