Tata group company CMC, which announced a plan to merge with its parent TCS, today posted a 13 per cent increase in its September quarter net profit at Rs 76 crore.
CMC announced a consolidated operating revenue of Rs 617 crore, up 10 per cent over the same period last year and posted an operating profit of Rs 104 crore, which is 18 per cent higher than last year, it said in a release.
The company's operating margin widened by 1.49 per cent, the release said without divulging the absolute number it has climbed up to.
During the reporting period, CMC added 17 clients and there was a net addition of 193 employees.
The company share gained 1.92 per cent to close at Rs 2,187.65 a piece on the BSE, whose 30-share Sensex ended the session with a drop of 1.33 per cent.
Incorporated in 1975, the company was acquired by Tata Sons in 2001 and later got transfered to the largest software exporter TCS, which currently holds a majority 51 per cent in the company.
The boards of directors of both the companies today decided to amalgamate the company with the parent, and also announced a swap ratio under which CMC's share-holder will get 79 shares of TCS for every 100 shares held.
The company also announced a change in the senior leadership, stating that S Ramadorai, who completed 70 years in age recently, will be stepping down as the director and chairman.
TCS's managing director and chief executive N Chandrasekaran will be taking over as the company chairman effective from tomorrow, the statement said.
Chandrasekaran spelled out the rationale for the merger, saying "by getting both companies together, we can rationalise some cost structures and also we can go to the market better. I think they will add to the overall momentum. I think it makes sense to merge."
He, however, stressed that overall on the numbers front, nothing much will change as the consolidated numbers of TCS, which already holds a majority 51 per cent stake in CMC, reflect the performance of the subsidiary.
All the 11,000-odd employees of CMC will be retained, Chandrasekaran said the merger will help operations as TCS already sub-contracts work to CMC.
The process of merger is expected to be completed in six months, he added.
A senior TCS official expressed satisfaction at the way CMC is being run, saying that the operations are very "lean" and will not require much efforts for the merger.
