Tata Motors on December 12 stated that it had approved the partial divestment of its equity shares in subsidiary Tata Technologies via an initial public offer ( IPO).
On July 8, 2022, Moneycontrol was the first to report the listing plans of Tata Technologies, a global product engineering and digital services company, on the back of accelerated demand in the electric vehicles and the aviation segment.
Since TCS in 2004, no company from the Tata Group has made a debut on the domestic bourses in the past 18 years.
Tata Autocomp Systems shelved a $260 mn IPO and earlier this month, Tata Play ( earlier called Tata Sky) filed for a confidential pre-filing of offer documents.
“We wish to inform you that the IPO Committee [duly constituted by the Board of Directors of Tata Motors Limited , at its meeting held today, i.e., on December 12, 2022 has accorded its in-principle approval to explore the possibility of partial divestment of the Company’s investment in Tata Technologies Limited , a subsidiary of the Company, through an IPO route at an opportune time, subject to market conditions, applicable approvals, regulatory clearances (including observations from the Securities and Exchange Board of India) and certain other considerations,” said the stock exchange disclosure from Tata Motors.
It further added, “The Company will make further announcements of all material developments relating to IPO, as and when required, as per SEBI LODR Regulations and other applicable law.”
Tata Motors holds little more than 74 per cent stake in Tata Technologies, according to the former’s 2022 annual report. Interestingly, in early 2018, Tata Motors had called off the sale of a significant minority stake ( 43 per cent) in Tata Technologies to private equity major Warburg Pincus for $360 mn after an official announcement on the deal citing non-receipt of regulatory approvals and challenges in internal performance due to market conditions.
Based on the contours of the aborted deal, a 100 percent stake in Tata Technologies was valued at $837 mn in February 2018.
TATA TECHNOLOGIES: RUNWAY TO GROWTH
In the last year, Tata Technologies which is led by CEO Warren Harris has seen a sharp uptick in revenues due to relaxation in regulatory and health guidelines that enabled improved business activities coupled with new business opportunities in South East Asia.
The chairman of the board of directors, ex-TCS veteran S Ramadorai alluded to the better performance in the firm’s latest annual report.
“Despite the headwinds that we have faced, your company has delivered stellar results. For the year ended 31st March 2022, Tata Technologies delivered revenue of USD 473.5 M (INR 3529.6 Cr), together with underlying operating profit of USD 86.5 M (INR 645.6 Cr) and profit after tax of USD 58.0 M (INR 437.0 Cr). These best ever results equate to year-on-year revenue growth of 47%, operating profit growth of 65%, and profit after-tax growth of 74%, in USD terms,” Ramadorai said.
Parent Tata Motors which is targeting a ‘near zero net automotive debt’ status by FY24 also took note in its 2022 annual report. “Revenue from other operations (before inter-segment eliminations) increased by 45.8% to Rs 3,809 crore in FY 2021-22 compared to Rs 2,612 crore in FY 2020-21. This is mainly on account of increase in revenue of Tata Technologies post recovery from the COVID-19 pandemic,” the report said.
Tata Motors net auto debt, including leases, rose to Rs 48,679 crore in FY22, from Rs 40,876 crore in FY21.
TATA TECHNOLOGIES : A CLOSER LOOK
Tata Technologies focuses on 4 key verticals namely automotive, aerospace, industrial machinery and industrials. It’s offerings are delivered through the following lines of business: a) Engineering, Research, and Development (ER&D) services, b) Digital Enterprise Solutions (DES), which includes offerings in Connected Enterprise IT (CEIT) and Product Lifecycle Management (PLM) services, c) Education offerings, and d) Products, which includes our product value-added reselling and iProducts offerings.
The firm has a workforce of 9300 employees, worldwide, serving clients from facilities in North America, Europe and APAC. It has 18 global delivery centres at Pune (Head Quarter), Gurgaon, Bengaluru, Thane, Chennai (India), SEA – Shanghai (China), Bangkok (Thailand), Singapore, Tokyo (Japan), Hanoi (Vietnam), Europe – Brasov, Craiova & Iasi (Romania), Gothenburg (Sweden), Gaimersheim (Germany), Warwick (UK), North America – Detroit (USA).
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