No firm plans for IPO: Tata Technologies

Company eyes Silicon Valley start ups for investments and partnerships

Refuting all the possibilities to list Tata Technologies , an engineering solutions company and IT product development arm of Tata Motors on stock exchange, Warren Harris, CEO and MD, Tata Technologies said, "There are no firm plans for the organisation to go for public.  A lot more stuff coming in the press is just a speculation."

There were media reports saying that the company is planning to raise Rs 1,400 crore through an initial public offering (IPO).

Harris added, "The board of directors and share holders will continue to look at opportunities to drive share holder value and provide capital for the organisation in terms of our growth plans. We have a strong balance sheet and  we finished the year with $130 million cash on our balance sheet. We don't need to access public market to raise additional capital. At this point of time,  we will rather concentrate on employees and customers. The focus will be growing business to $1 billion. In future,  we may consider that but not at this point of time. "

Tata Motors holds 70.43% stake in Tata Technologies, while Alpha TC, a wholly-owned subsidiary of the partnership sponsored by Mizuho Securities and other international investors, owns 8.71% in the company. Other investors in the company include Tata Capital, Barclays Wealth Corporate Services, Sheba Properties, Tata Entertainment Overseas and Walbrook Nominees, which own between 1% and 5%% each. 

Tata Technologies was planning an IPO in 2008 to fund expansion and repay some of its debts, but the plan was dropped due to the global market meltdown. 

For the financial year ended March 31, the company reported revenue of Rs 2,686.20 crore, up 3.6% over the previous year. The company's net profit for the year was Rs 382 crore, up 14.25% from last year. 

Silicon Valley Focus 

To achieve,  $1 billion mark, the company is now heavily relying on California region of United States where  majority of the R & D centres of automobile companies are located. It is also exploring partnerships in start up companies and planning to invest in VC firms. 

 "In United States, a centre of gravity in terms of automotive industry is moving from Detroit to Silicon Valley.  Almost every single automotive in the world has an R & D centre in Silicon Valley.  So we are trying to build relationship with some of the start up organisations and some of the technology providers that we believe will decide space in the future. We may invest in some of the start ups and we are looking at different models like partnering with venture capitalist firms for instance or investing in a VC so that we can influence the investments decisions that they make.  If we put enough money into a fund, we can control investment thesis and we can get exposed to the type," Harris said. 

If we are successful in terms of establishing a model in Silicon Valley, we can take it to other parts of the world. But right now, our main focus in on west coast of the United States, China, India and Israel. 

The company has set up an engineering R & D centre, Axia - VAVE Centre of Excellence, at its Hinjewadi campus.This facility will provide Tata Technologies’ clients with end-to-end product development capabilities including product innovation, value engineering and cost engineering.

Tata Technologies earns one-third of its revenue from North America, Europe and the Asia-Pacific region. Nearly 65%  of its business comes from the automotive sector, 12% from aerospace and the rest from indus trial machinery and other businesses.