Confident of a 'Breakout Year' in FY27: Tata Technologies CEO & MD

Global product engineering and digital services firm Tata Technologies Ltd is confident of having a 'breakout year' in the ongoing fiscal year riding on accelerated investment from automobile manufacturers on new products that have helped it win full development projects, according to its CEO and Managing Director Warren Harris.

The company is strategically poised to take advantage of a shift taking place in the industry where OEMs are increasingly looking to outsource more development work while focussing only on the core of the DNA of their respective brands, Harris told PTI in an interview.

"We are doing well because of our value proposition. The industry from a product perspective is having the catch up from a period of under-investment and we are the beneficiaries of that because we won a number of full vehicle programmes in the first quarter (of this fiscal). That is helping us," he said.

Among the major deals that Tata Technologies won in the recent past, is a $100 million deal with Tenneco, covering engineering, digital, and business process transformation, leveraging AI and automation to drive greater efficiency, scalability, and business outcomes across the delivery model.

While a leading Japanese automotive OEM has selected the company for a full vehicle engineering programme, it also entered into a multi-year engagement with a leading European luxury automotive OEM, taking ownership across engineering, manufacturing, supply chain, purchasing, and IDT domains.

"All of these things certainly reinforce our confidence that this is going to be a breakout year for the company," Harris said.

Stating that the company is confident of meeting its "strong double-digit growth guidance for the full year", he said, "It is despite the geopolitical issue and the distractions that represent. It is also despite the restructuring at customers like Volkswagen and some of the profit warnings that continue to come out of companies like BMW." He further said,"Somehow counterintuitively those decisions and those announcements have provided tailwinds for us in a context that allows those organisations to scale capability in lower cost locations than Germany." Tata Technologies is doing well because of its value proposition, Harris asserted.

Elaborating on the reasons for the company's bullishness, he said, "What we are starting to see in the industry is what we have been predicting for a number of years. We have always felt that the industry would pivot to a position whereby the OEMs would increasingly reduce their focus to the things that are core to the DNA of their brand." Citing the example of super car company McLaren, Harris said, "Driving experience is what is core to their brand. Everything else we believe will increasingly be outsourced." Stating that the market of engineering services organisations will likely be divided into two, he said, "We think that the companies that can take on responsibility for full vehicle (development), full work packages will do very well. Those that just deliver services, they will be dependent upon the capex spends of the OEMs themselves." Harris further said, "We think we are on the right side of that divide. What we are seeing over the last nine months in terms of an improvement of the growth trajectory of a couple of years ago. We think that is likely to sustain and quite probably expand in terms of growth and margins." Noting the uncertainty over the last 18 months about the viability of electric vehicles due to developments in the US and regulatory changes in Europe has concluded, he said the global auto industry is now back investing in a much more balanced portfolio of propulsion systems.

"They (auto manufacturers) are clear now on their future product strategy. Investment decisions are being made," Harris said, adding that the industry is seeing continuous investments witnessed in the past.

That's what is really fuelling the improvement in the first quarter, he said, referring to the company's total operating revenue of ₹1,664.6 crore in Q1 up 33.8% year-on-year.

"For us that represents breakout performance," Harris noted.