Tata Elxsi (India) Ltd - A Different Integrator

On the face of it, nothing has changed about Tata Elxsi. However, last year saw the
company getting its act together, with a growth

alt="+tata elx.jpg (18470 bytes)" border="0" hspace="2" vspace="2"> EXECUTIVE DIRECTOR: S Devarajan * PRODUCTS AND SERVICES: Systems Integration, Networking, Commercial Computing, Design and Development Services size="1" color="#FF0000">* START-UP YEAR: 1989 color="#FF0000">* EMPLOYEES: 515 color="#FF0000">* QUALITY CERTIFICATION: ISO 9002 for domestic operation, ISO 9001 Tick IT for design service * size="1"> ADDRESS: No 123, Richmond Road, Bangalore 560025 color="#FF0000">* TEL: 5563945, 564872 color="#FF0000">* FAX: 5583168 * size="1"> WEB SITE: www.tataelxsi.com PERFORMANCE HIGHLIGHTS 60 percent of business from existing customers. Got out of the networking products business. Hitachi's first development center outside Japan set up in Bangalore. Nearly 34 percent of revenue from software and services. border="0" hspace="2" vspace="2">

of over 20 percent. To begin with, it concentrated on its core
competency-knowledge of niche technologies. The company reorganized its business into five
industry groups-CAD/CAM, film and video (entertainment), research and visual simulation,
networking, and commercial business. Though Tata Elxsi has been operating in these areas,
it has now opted for businesses (within these areas) where the end needs are complex-which
calls for a high level of expertise in integration. That is, plugging all gaps in each of
these vast segments.

One such example is the virtual reality product it introduced for the manufacturing
sector, thus plugging a major gap in the CAD/CAM market. In other words, positioning
itself as a technology integrator within the framework of systems integration. Where
providing a total solution calls for integrating a variety of hardware (computers,
peripherals and others) and writing software to integrate all of these.

Another smart move was its decision to leave the advertising industry to the PC players
to concentrate on the film industry. As a result, half of last year's revenue was split
between CAD/CAM and film and video in near equal measure. Looking at the user segments, 30
percent of the company's revenue came from the manufacturing (process) sector, followed by
25 percent from public sector and defence, 24 from education and research and 21 percent
from services (film, video and entertainment). Ironically, its hardware business grew by a
mere 9 percent. It would have been much worse had it not shifted gear mid-way and
addressed non-automobile markets like the industrial design market. Maintenance of own
systems fetched Rs 6.92 crore, up 32 percent over the previous year's Rs 5.22 crore.

Software and services, which grew by 55 percent over the previous year, saved the day
for the company, bringing in Rs 35 crore. Interestingly, nearly 95 percent of its software
exports revenue came from offshore development. This is up from 47 the previous year.
Similarly, it moved out of Europe entirely to focus on the Japanese market. Last year,
Japan contributed 40 percent, with the remaining 60 percent coming from the traditional US
market.

Packaged software business brought in Rs 14.16 crore, up from Rs 8.4 crore the previous
year. The company is expecting to double its revenue from software products and also get
into financial markets with data warehousing and data mining products and capabilities.

Tata Elxsi has transformed several times in the last couple of years. One only hopes
that this time, it gets the image and positioning correct.