Tata group companies like Tata Power, Tata Tea and Indian Hotels will be offered an exit option if the public float of $1 billion software powerhouse Tata Consultancy Services goes through. As a result, they will gain a huge windfall.

"If and when there is an IPO, the Tata group companies that hold a stake in Tata Sons will benefit from unlocking value," Tata Group Chairman Ratan Tata said at the annual general meeting of Tata Steel on Wednesday.

Some of the group companies that hold a stake in TCS are Tata Power, Tata Tea, Tata Chemical and Indian Hotels. They will be in a position to encash their stakes in the event of a public float.

TCS is a division of group holding company Tata Sons. The Bombay High Court has allowed Tata Sons to hive off TCS into Orchid Prints, a subsidiary in which the holding company has a 90 per cent interest.

This company will then be renamed TCS. The remaining 10 per cent stake in TCS will be held by the other Tata group companies.

Ratan Tata had said about 10 days ago that the prospectus for the IPO would be completed in about six weeks but no decision had been taken on the issue of going in for a float. In any case, there will be no float till the end of the year.

An IPO could value TCS at more than Rs 32,000 crore (Rs 320 billion) and the company will have to offload a minimum 10 per cent stake under the guidelines issued by the Securities and Exchange Board of India.