TCS buyback from May 18

Mumbai, May 15: The Rs 16,000-crore buyback offer of Tata Consultancy Services (TCS), the country's largest software services firm, will start on May 18.

The buyback programme, which received shareholder approval last month, will remain open till May 31, the company said in a regulatory filing.

TCS will dispatch the "letter of offer" for the buyback to eligible shareholders on or before May 16, it said.

The share buyback, if successful, will be India's biggest, surpassing Reliance Industries' 2012 share repurchase of Rs 10,400 crore.

Share buybacks typically improve earnings per share and return surplus cash to shareholders while also supporting the share price during periods of sluggish market conditions.

The Indian IT companies have been under pressure to return excess cash on their books to shareholders through generous dividends and buybacks.

TCS had earlier said that it had received suggestions from investors on the need for certainty in dividend policy along with share buyback to distribute the cash.

The Mumbai-based company has a cash pile of Rs 43,169 crore, which is nearly 10 per cent of the company's market capitalisation.

TCS rival Infosys has also announced its capital allocation policy to return up to Rs 13,000 crore this financial year through dividend and/or buyback.

Earlier this year, Cognizant announced a $3.4-billion share buyback, bowing to pressure from activist investor Elliott Management Corp.

Smaller peer HCL Technologies has also approved a buyback of up to 3.50 crore shares worth Rs 3,500 crore.

In February, the board of TCS had approved the proposal to buy back up to 5.61 crore equity shares for an aggregate amount not exceeding Rs 16,000 crore.

The proposed quantum of shares to be bought back represents 2.85 per cent of the total paid-up capital at Rs 2,850 per equity share.

In a separate filing, TCS said Vijay Kelkar had ceased to be a director on the company board from May 14 in accordance with the retirement age policy of the company.

TATA Consultancy Services ( TCS )