Tata Technologies - Make it Real. Make it Better.

Tata Technologies - Make it Real. Make it Better.

Tata Technologies, an Indian largest pure play engineering and design service provider for the manufacturing sector, belongs to an India's oldest, non-sectarian philanthropic diversified business house, the Tata Group, founded as an in-house product development business unit of Tata Motors in 1989. In 1994, Tata Technologies spins off as an independent business unit, headquartered in Singapore with the mission of supporting industrial companies in their product design.

About the company

Tata Technologies provides services to create better products and run better businesses in engineering and design, product lifecycle management, manufacturing, product development, IT service management to automotive, aerospace original equipment manufacturers, industrial machinery and their suppliers. The company is active in North America, Europe, the Middle East and the Asia Pacific region having workforce of a diverse team of globally recognized executives numbered nearly 8,500 up nearly 700 from last year’s count of 7,800.

Company maintain its leadership in three critical market segments of Engineering Services Outsourcing (ESO) with a special focus on cost-effective Engineering, Research and Development (ER&D) talent access through offshore value proposition; Product Lifecycle Management (PLM) solutions for manufacturing; and Connected IT solutions that support the entire manufacturing enterprise.

Line of Service – with Product Development at its core

The manufacturing industry is being challenged by various forces: rising price pressure, volatile input costs, intense competition, and continuous innovation to name a few. Tata Technologies' three synergistic lines of service meet the stringent business requirements of global product development by focusing on helping the manufacturing industry realize better products.

Driven by the current industry trends such as global OEMs entering the emerging markets like India, rise of new customers with disruptive technologies, growth of alternate propulsion systems (eg. electric vehicles) and the digitization of the product realization process, company has focused its efforts on achieving a deep understanding of the product development process and related enabling

technologies.

Shareholding

Promoters (Tata Motors Ltd.) - 70.42%

Top 10 Shareholders - 23.17%

Tata Motors Ltd. holds 30,300,600 shares (70.42%)

Other Tata Entities holds (5 shareholders) holds 7,469,748 shares (17.36%)

Directors (3 shareholders) holds 3,15,400 shares (0.73%)

Employees / Associates / Others (2061 shareholders) holds 4,945,578 shares (11.49%)

Financial Performance: Exponential growth driven by strong adaptability

Tata Technologies continues to perform on a sustained basis and, despite certain headwinds, it has been able to demonstrate its robust business model with strong, satisfactory results for the year 2016-17.

Company reported consolidated revenue of $417.7 million, delivering a currency and divestment adjusted growth rate of more than 11 percent, in line with industry benchmarks. Company have therefore added $21.12 million to its revenues during fiscal 2016-17, a 6 percent increase over fiscal 2015-16.

Revenue by Segment

India contributed Rs. 707.79 Crs. (25.26%), USA Rs. 740.20 Crs. (26.42%), UK Rs. 951.90 Crs. (33.97%), Rest of Europe Rs. 193.51 Crs. (6.91%), Rest of the world Rs. 208.55 Crs. (7.43%)

EBITDA stands at $78.6 million, with PAT at $52.8 million. This performance came in the backdrop of demonetization-driven slowed economic growth in India, and unfavorable currency exchange impacts due to Brexit. This caused slight year-over-year retrenchment in PAT and EBITDA figures (-2 percent and -9 percent, respectively).

The Services/Products business mix was a 84/16 split respectively (Rs. 2,361.03 Crs. for services and ` 440.92 Crs. for products) compared to FY2016 when the Company recorded Rs. 2,189.58 Crs. for services and Rs. 493.80 Crs. for product or a 82/18 mix. The Americas produced Rs. 796.68 Crs. with Asia Pacific recording Rs. 1,290.28 Crs. and Europe generating Rs. 1,153.26 Crs. The three territories combined produced Rs. 2,801.94 Crs. top line after reducing inter-company billing, in FY 2017 compared to Rs. 2,682.34 Crs.  for FY 2016.

Company has maintained its profitability with operating and net profit margins at 19 percent and 13 percent respectively. Company grew services business outside of Tata Motors and Jaguar Land Rover by 38 percent when revenues are normalized to account for currency fluctuations and divestments. During FY2016-17, company entered two new geographies at scale, generating sales in excess of $20 million in both China and Sweden.

Despite the headwinds from India’s demonetization campaign to the UK’s vote to leave the European Union and the election of a new protectionist administration in the US, none of Tata Technologies’ operational geographies were spared disruption in fiscal 2017 yet the business fundamentals that underpin company’s strategy remain solid. As a result, the company remains committed to its comprehensive client-focused global growth, and building domain leadership in the automotive industry, with a diversification push in the aerospace and industrial machinery verticals.

Company expanded the number of $1 million-plus accounts from 20 to 22 in FY17.

Company is generous in rewarding its shareholders with Dividend every year since its first year of operation. Company has shell out Rs. 40/share in fiscal year 2017

The authorized equity share capital as on March 31, 2017 was 60 Crs. divided into 6 crore equity shares of 10 each. Issued, subscribed and fully paid-up share capital as on March 31, 2017 was 43.03 Crs.

Conclusion

Tata Technologies is in a unique position to leverage industry trends such as global original equipment manufacturers (OEMs) entering emerging markets like India, emergence of new customers with disruptive technologies, growth of alternative propulsion systems and the digitization of the product realization process.

With a mission to make the world drive, fly, build and farm better, Tata Technology with domain expertise is building multinational business that seeks differentiate themselves through customer centric nature, innovation and trustworthiness while balancing the interest of shareholders, employees and of society along with of an organisation as a whole with a core purpose of long term stakeholder value creation based on core principle of TATA Group - a leadership with trust.