Incorporated in 1994, Tata Technologies is a leading global engineering services company offering product development and digital solutions to global OEMs (original equipment manufacturers) and their Tier 1 suppliers globally.
With over two decades of experience, they have deep domain expertise in the automotive industry and leverage such expertise to serve clients in adjacent industries, such as the aerospace, transportation and construction heavy machinery (TCHM) industries. Tata Technologies Limited is part of the Tata Group, which has been recognized as the most valuable brand in India. It is a subsidiary of Tata Motors Limited.
ABOUT THE INDUSTRY:
The global ER&D spend for 2021 was approximately USD 1.64 trillion and is expected to grow to approximately USD 2.28-2.33 trillion by 2025. The ER&D spend outsourced to third party service providers reached USD 85-90 billion in 2021 and is anticipated to grow at a 10-12% CAGR between 2021 and 2025.
The key growth drivers within the ER&D market include an increasing propensity to outsource, regulatory push for safer and cleaner products, shorter product innovation cycles and next-generation product technologies.
Strengths And Risks
+ Deep Expertise in the Automotive Industry: Their automotive ER&D services span the entire automotive value-chain and includes concept design and styling, vehicle architecture, body & chassis engineering, manufacturing engineering, test and validation and vehicle launch.
+ EV Capabilities: They offer suite of product engineering solutions for EV segment including outsourced turnkey EV development to help OEMs develop products within competitive timelines.
+ Strong Digital Capabilities: The suite of digital services and accelerators are designed to help OEMs manage the entire digital product life cycle and engage the customer throughout the product journey. The solutions leverage their deep manufacturing domain knowledge.
+ Marquee Clients: They have a diversified global presence across Asia Pacific, Europe and North America and partner with many of the largest manufacturing enterprises in the world. Their clients comprised more than 35 traditional automotive OEMs and tier 1 suppliers and more than 12 new energy vehicle companies. The client portfolio includes Anchor Clients, Tata Motors and Jaguar Land Rover, leading traditional OEMs like Airbus, McLaren, Honda, Ford, and Cooper Standard and tier 1 suppliers as well as new energy vehicle companies such as VinFast, Cabin Interiors and Engineering Solutions, ST Engineering Aerospace.
+ Global Delivery Model: They have a global workforce of over 11,081 employees serving multiple global clients from 18 global delivery centers in Asia Pacific, Europe and North America.
- Client Concentration: The company generates a large portion of revenues from its top 5 clients which include Tata Motors Limited, its Promoter and some of its subsidiaries and Jaguar Landrover. Any deterioration in the top 5 can disrupt their business.
- Automotive Segment: Their revenues are highly dependent on the automotive segment. An economic slowdown or factors affecting this segment may have an adverse effect on business.
- New EV Segment Risk: They expect a significant amount of future revenue to come from new energy vehicle companies, many of whom may be startup companies. Uncertainties about their funding plans, future product roadmaps, ability to manage growth, creditworthiness and ownership changes may adversely affect business.
- Exchange Rate Risk: The reporting currency is in Rupees, and they transact a significant portion of business in several other currencies, primarily USD, GBP, CNY, Euro, SGD and the Swedish Krona. Major fluctuations in currency directly impacts revenue and receivables.
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