The newly-listed Tata group infotech company Tata Consultancy Services (TCS) has bought an innovative insurance cover for over $100 million (in excess of Rs 450 crore), for protecting itself against the numerous business risks which it is likely to face during the course of its day-to-day operations. TCS has just been listed on the stock exchanges after it concluded a Rs 5,000 crore IPO, which has been the biggest ever to hit the Indian primary markets. The insurance cover, known internationally as Public Offering Securities Insurance (POSI), will mark the first instance of an Indian company buying such a cover. TCS bought the insurance cover from another Tata company, Tata AIG General Insurance. The cover is valid for three years in TCS’s case, though in some countries, it can last for six years. Sources pointed out that the POSI covers an extensive range of risks including Directors’ & Officers’ (D&O) liabilities. The D&O policy is attached to POSI and gives cover to the top management of the companies. The POSI can protect TCS in terms of legal costs, in case shareholders, competitors, customers and other entities transacting with TCS sue the company. The cover assumes importance as the qualified institutional buyers (QIBs) in TCS possess the right to sue the company in their home countries. This could pose a hefty financial risk to TCS. Indiabulls prices share at Rs 19
