Tata Interactive Systems Sold to MPS Ltd at Just Rupees 80 Crores. Shocking, Humiliating & Dubious!

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The recent shock of Indian eLearning Industry is Tata Industries Ltd announcing the acquisition of its e-learning solutions unit, Tata Interactive Systems, to Noida-based publishing services company MPS Ltd.

Tata Interactive Systems backed up by one of the most influential brands in India, has pioneered eLearning business in India. It has offices in 8 countries and boasts several hundred awards for its services has come under extreme pressure from mushrooming eLearning companies across the world.

What is shocking (read humiliating) is the price at which Tatas have to sell TIS to MPS Limited. The buyers have valued the 27 years old organization with a workforce of 1200 employees for just US$ 12 Million that translates to INR 80 Crores. Tata Interactive is supposed to have crossed U$ 20 Million (140 Crores) in sales in 2017.

Financially Dubious Deal

In a report filed by MPS Limited, Sector 62, Noida, India signed by Sunit Malhotra (CFO) to National Stock Exchange of India Limited, MPS is acquiring three companies in this deal namely – 1. Tata Interactive Systems (A business division of Tata Industries Limited) (TIS), 2. Tata Interactive Systems GmbH, a German-based subsidiary of Tata Industries Limited (TIS GmbH) & 3. Tata Interactive Systems AG, a Switzerland based subsidiary of Tata Industries Limited (TIS Zug)

The same report mentions that the Consolidated revenue of INR 1400 Million in Financial Year 2017. MPS has declared that the cost of acquisition or the price at which the shares are acquired shall not exceed INR 80 Crores i.e. US$ 12 Million.

It is unknown whether the Tata Interactive Systems Companies are running in loss or profit – selling a company at the half the cost of its revenue must catch the lawmakers attention.

Bad for eLearning Companies in India

MPS Limited is trying to acquire a good elearning company for 1-2 years and the deal they have closed is fantastic. The news is, however, bad for top e-Learning companies in India like Upside Learning, e-Nyota, Learnnovators, G-Cube, Info Pro, that may have ambitions for acquisition. When a company of the stature Tata Interactive has been acquired at the half of its revenue, the companies that have revenue in the range of 4-8 million stands feeble chances.

Apart, the new competition will be very aggressive in filling the gaps that Tata Interactive Management has. That will make life for other elearning companies in India a little difficult.

The Deal is not yet through

The deal is yet to pass through several approval processes from the government of three countries. Due to several frauds, Indian companies are under scanner for circumventing government taxes including companies like Vodafone.

The approvals that are yet to be through are – 1. Business Transfer Agreement for TIS is subject to approval from Falta Special Economic Zone, Unit & Committee for transfer of its unit based at Kolkata. 2. Share Purchase Agreement of TIS GmbH is subject to the approval of German Federal Ministry of
Economics and Energy (‘BMWi’)

Sources: 1. http://www.adi-mps.com/wp-content/uploads/2018/04/Agreement-to-acquire-Tata-Interactive-Systems.pdf

Note: We have not contacted anyone in MPS Limited or Tata Interactive Services for the comments. If their comments are received, we will update here.

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