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Home > THE DQCI SILVER CLUB 2004
 

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TATA ELXSI: Back On Its Feet
 
Systems integration business for Tata Elxsi found new vigor with revenues surging to FY 01-02 levels. Business from defense made up for a quarter of its topline. However, its focus on customers in life-sciences segment dipped.
 

 
Monday, September 20, 2004

 

Madhukar Dev, CEO

SERVICES: Storage, high-performance computing, CAD/CAM and media solutions
BRANCHES: 14
ADDRESS: 123, Richmond Road, Bangalore 560025
TEL: 080-25563945

STRENGTHS
l Deep entrenchment into defense, automotive and aerospace segments
l Commands strong SGI sales, above-average profitability in CAD/CAM business
WEAKNESS
l Unable to address a more diverse mix of customers, so far
l One of the lowest revenues among solution providers, despite the 'Tata' branding

It was year 2001-02 revisited for this design and systems integration arm of the Tata group, as the company touched Rs 65 crore in revenue last fiscalsimilar to what it clocked two years ago.

This marks a whopping growth of 97%, one of the highest percentage increase in revenue among solution providers featuring in the Silver Club.

After revenue dipping to Rs 33 crore last fiscal, Tata Elxsi's systems integration division found a new lease of life, with its major customer segmentdefense, coming back to the spending mode. 25% business happened from this vertical last fiscal.

Being a niche player, as it has always been, the company focused on businesses from automotive and aerospace industry.

Some good traction happened for it in the education and R&D sector as well. However, its focus on customers in the life-sciences segment decreased appreciably.

SGI played a major role in shaping up company's fortunes last year and it also emerged to become the vendor's largest partner in India.

It deployed a PLM (product lifecycle management) solution for Tata Motors worth Rs 10 crore, largely based on SGI hardware. Other significant wins for included a Rs 6 crore project for Gas Turbine Research Establishment and another Rs 5 crore storage solution deployment for TCS.

Between hardware and software, the revenue split was 60:40 with majority of software business happening in the field of CAD/CAM. Incidentally, this was the best business line as far as profitability was concerned.

To bring an increased focus to its systems integration services, Tata Elxsi also created four distinct business divisions: storage solutions, CAD/CAM, high-performance computing and media solutions.

It almost stopped activity in the field of biometrics and GIS. In its media business, it implemented solutions for Doodarshan and also sold large number of licenses for Maaya, the animation software.

Services contributed around 30% to the overall turnover, ensuring decent bottomlines for company's systems integration business.

Also, in an attempt to bring about a consolidation in its business, it briefly trimmed its headcount, hence bringing down the costs, while raising the profitability.

It continued with its existing vendor tie-ups including those with HP, EMC, StorgeTek and Veritas, and added Intransa's IP-SAN solutions to its basket of offerings last year.

Further, with revenues from systems integration business contributing 42% to company's overall turnover, Tata Elxsi is now looking at regaining its original identity of an SI, which is what it started with, 15 years ago.

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