Tata Pulls Out of IBM Indian Joint Venture

Computergram International, June 4, 1999

IBM Corp and its local partner, the Tata Group are dissolving their Indian joint venture. IBM and Tata formed the 50-50 venture, Tata Information Systems Ltd in 1992. But Tata has announced that it is exiting the venture, which was renamed Tata IBM two years ago, but will retain a token 1% holding. Tata Group is also withdrawing from another company, IBM Global Services, a two-year-old enterprise in which it has a 10% stake. The two are expected to combine and be renamed IBM India.

Tata IBM Ltd markets and supports IBM products in India and IBM Global Services offers IT services including managing IT set-ups for big corporates. Analysts estimate Tata IBM had sales of about $165m in the 1988/89 financial year while IBM Global Services turned over about $85m. IBM India's chief executive Ranjit Limaye was quoted in the local media as saying the move is in line with the corporation's global strategy "of operating preferably through wholly-owned subsidiaries." He would not say how much IBM was paying for the stake. "We have mutually agreed with the Tatas not to make public details of the financial transactions," he said.

Ratan Tata, the chairman of Tata Industries, said: "We have learnt a great deal from IBM, which is a model for managing the complex information technology business globally. Our relationship has been cordial, constructive and characterized by mutual cooperation."