We expect strong momentum to continue in business: Warren Harris, Tata Tech

“We are always going to have an exposure to new energy vehicle companies because a lot of innovation comes from those companies but there are some volatility issues that we have to grapple with and I think we have successfully done that in the context of the last fiscal year. So, we are very pleased with FY24 and the solid finish to the year that we had in Q4,” says Warren Harris, CEO & MD, Tata Tech.

What has led to the revenue softness in the fourth quarter, especially the services segment for you?
I would challenge the perception that growth has not been strong. If we look at the full year, we grew our business by 15.9% in Indian rupees. If we look at services specifically, we grew over 13%. I signalled in January that we had some runoff at VinFast as we transitioned from the completion of our engineering work to launch support. And so, if we put VinFast to one side, we actually grew our services business sequentially by 10%. And in the full year, again, if we put VinFast to one side, we have grown our business by a sector leading 30%.

Momentum is strong. We are always going to have an exposure to new energy vehicle companies because a lot of innovation comes from those companies but there are some volatility issues that we have to grapple with and I think we have successfully done that in the context of the last fiscal year. So, we are very pleased with FY24 and the solid finish to the year that we had in Q4.So, for VinFast, the worst is over or there could be a little trail of impact in the Q1 as well?
There is a certain amount of overhang that we will grapple with in Q1, but we are largely out from underneath it and we are not seeing a drop-off in demand as far as the market is concerned. We are not seeing a runoff in any other account and so we are looking forward to a very good fiscal year 2025.

You mentioned in your press release that you are looking at a major deal wins as well. Which verticals will drive these and what could be the potential size of these deal wins?
Well, we are in the final stages of converting a number of deals. They range from $5 million to $10 million deals all the way up to mega deals. We never celebrate a deal until it is done, but we are very encouraged with the progress that we are making on a number of the deals, which will be we think as transformative as the BMW deal has been. Again, I think I will have further information for you at the end of our first quarter. The beginning of the calendar year is typically a quiet period in terms of large deal conversion. We are starting to see that pick up now and again, by the end of the first quarter, FY25, I will certainly have improved visibility in terms of the deals that we have closed and what that will mean as far as the full fiscal year is concerned.

Given all this, will that be better than FY24?
We do not provide any guidance in terms of growth rate. So, I am not going to give you any specific numbers. But what I will say is that our aspiration is always to meet or exceed the growth rates that are expected of the markets that we serve. And certainly, the industry watch organisations are still bullish about the transformation that is going on in manufacturing in general and specifically in automotive and aerospace and transport, construction and heavy machinery, the three verticals that we support.Your margins have been in a narrow band. When is it that you see an improvement coming in?
When you see the transition from a large customer like VinFast, that does have an impact upon margins and so we have weathered that particular challenge, the teams have been redeployed and we certainly expect the upward trajectory in margins in the coming quarters. We certainly are not complacent about the position that we are in.

And just to confirm, 20% possible in FY25 or this is the medium term target?
It is more of a medium-term target, but we certainly expect improvement.