IBM buys out Tatas'' stake

IBM has bought out the share of Tata Industries in their 50:50 joint venture company, Tata IBM. This happened early in June and comes in the wake of rumours and suggestions of consolidation of Tata''s infotech companies.

The Tata-IBM alliance, which was in the hardware business, lasted seven years. The decision to part was taken mutually and now the Tata group''s stake in the venture is a token and symbolic one per cent held by the managing director and CEO Mr Ranjit Limaye. While it lasted the company had an IBM look to it in terms of people, products and business ethos.

IBM has received the clearance from the Foreign Investment Promotion Board for this buyout, and will go ahead with it along with an accompanying name change. The new company will be named IBM India Ltd, following IBM''s convention of adding the country name as part of the name for all its wholly-owned and registered companies. Another company, IBM Global Services, which is into software development, will retain its separate identity.

Tata IBM''s turnover in the year ending 31 March 99 was Rs 480 crore while IBM Global Services achieved Rs 350 crore in turnover. IBM had committed market development funds in India through Tata IBM, in a manner that similar to its practice in 10 other countries. These funds will be a percentage of the projected turnover of the company (up to 18 per cent in India) set aside for market development but not in the form of a corpus funds.

IBM''s other major commitment to its Indian operations is its software development programme, which offers facilities to test, port and certify software developed by smaller companies. It also provides Java and Netfinity certification.

In its new avatar, market watchers expect IBM to zoom off the pad with its ventures and market plans. The company will focus on solutions development and e-business education in India. Its e-business solutions like websphere server are expected to be at the forefront of its commitment to e-business.

IBM has invested in two Indian software companies, Indus software and Magic software. The former is involved in building lending solutions for the consumer electronics industry while the latter is developing an enterprise resource planning or ERP, package, for the low end of the market.

Significantly, in an interview to the infotech magazine Dataquest (in its 15 June 1999 issue), Ranjit Limaye, MD and CEO of Tata IBM Ltd and Tata Global Services India Pvt Ltd, said these companies derive strength, advice and guidance from the Tatas, which should have been pretty useful considering that global computer giant had been out of India for over a decade since 1977. A question about IBM dropping the Tatas had elicited a "no-comment".

Things change pretty fast, more so in infotech, don''t they?