Logically, Tata Elxsi and Nelito should be the next on the chopping block; the formers SI and services (exports) business could complement TCS, especially on CAD-related projects. There is another little known company in the Tata stable called Nelito Systems that develops software products and solutions for the banking industry. The reason why Tata Group is reviewing Nelito Systems (and its possible merger into TCS) is because it is not seen as fitting strategically with Nelcos current lines of businesses. These include SI and product management for industrial controls, defense electronics and VSAT (very small aperture terminals) networks. The logical thing to do, believe analysts, is exit from the company and unlock whatever value that exists in it.

The most interesting case is however Tata Technologies, the IT subsidiary of Tata Motors. Though its acquisition of INCAT, a leading global PLM vendor, reduced its dependence on Tata Motors, a straight merger with TCS might be difficult, as it would involve more internal restructuring between two Tata behemoths, TCS and Tata Motors.

However, the two share plenty of business synergies, especially in engineering services for the automobile and aerospace sectors. With the Tata-Fiat alliance unfolding, analysts expect the INCAT-TCS combine to do more development work for Fiat. On the flip side, while TCS boasts of Ferrari as a marquee client, Tata Tech has been breaking bread in FY 07 with another Formula One team, Williams; imagine the impact a common entity would have on the world of Formula One.

It is often taken for granted that TCS would help settle the IT infrastructure for all group companies. And this includes Tata Teleservices and VSNL (a landmark strategic outsourcing contract) and the lesser-known Tata Chemicals. The engineering services arm of TCS now plans to leverage the expertise of Tata Consultant Engineering to address the construction vertical. But there is no defined IT mandate for the group and TCS does not meddle into routine operations of the other entities, notwithstanding Ramadorai being the chairman of Tata Technologies and vice chairman of Tata Elxsi and TIS.

There was some change of guard in a couple of group companies last year. Tata Technologies CEO Patrick McGoldrick and COO Jeff Sage moved to Singapore, while Sameer Yagnik came over from the UK to head operations in the Pune center. In Tata Elxsi, veteran VFX specialist Pankaj Khandpur took over as creative director in Visual Computing Labs. (Syamal Gupta remains chairman, and Madhukar Dev continues as managing director.)DQ

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