The company may also have to look at specific inorganic opportunities considering cash on books of Rs 200 crore
Design company Tata Elxsi, a part of the over $100 billion Tata Group, will have to look at revenue generation from outside its current areas of operation to reach its two-year-old guideline of Rs. 3,000 crore in revenues by 2020. The company may also have to look at specific inorganic opportunities considering cash on books of Rs 200 crore.
According to Madhukar Dev, MD & CEO, Tata Elxsi Ltd, the company continuously looks at ways to accelerate growth rate. "We'd targeted growing upwards of 20% year on year (YoY) and got quite close to it. Our immediate task is to again get back to growth rates in excess of 20%. However, if you were to add that (growth rate) over the next few years, you will find that organically we cannot get to Rs 3,000 crore from where we are. Obviously, there will have to be other events that will help us achieve the milestone," Dev said during an earnings call on Wednesday.
Tata Elxsi caters to the communications, consumer products, defence, healthcare, media and entertainment, semiconductor and transportation sectors. Interestingly, another Tata Group company Jaguar Land Rover (JLR) is its top customer, contributing 20% to the revenues. In fact, its top five customers contribute almost 50% to the overall revenues.
Among its fastest growing segments include transportation followed by broadcast. The company is also making significant inroads into the healthcare segment that it entered two years ago. It has initiated discussions with a dozen-odd new international clients in the healthcare space and hopes the segment will become fairly big in two years from now.
Last week, the company posted 13% rise in net profit at Rs 43 crore while total income from operations increased 15% to Rs 303.28 crore for the July-September quarter of fiscal 2017. The company had posted revenues of Rs 1,087 crore for fiscal 2016, an increase of 27% over FY15.
On the company's plans for inorganic growth, Dev said, "The logic we follow is that it has to make sense for us to acquire or invest in a business if it gives us a new capability or access to a new market. Also, if it (inorganic opportunity) is affordable and the numbers make sense. With these filters, we are always on the lookout for deals to conclude whenever we can."
During the last quarter, the company also took a hit on its revenues to the tune of Rs 10 crore owing to the depreciating British Pound (GBP). "This was the quarter when we do our salary revision, have taken a large number of fresh graduates and have withstood an erosion in revenues due to fall in currencies, especially the GBP," said Dev.
The company currently has a headcount of 5,300 employees and will see a net addition of 500 people by the end of this fiscal. The (employee) utilisation rate currently stands at 75% and the company is likely to keep it to the same levels in the near future.
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