Tata Elxsi Q4Y17 Concall Summary

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Financial Highlights

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  • Fairly good quarter; 5% increase in the revenue when compared to the previous quarter
  • Revenue depleted by close to 4% due to the erosion of the currency
  • Unfavorable changes in the exchange rates resulted in reduced profits and revenues

Major Projects

  • Worked for Tata Motors for the Geneva Motor show in setting up virtual reality bar which was ideated, designed, equipped and operated by Tata Elxsi.
  • One of the main VFX studios which was commissioned for the movie Baahubali 2.
  • Converted couple of customers who were interested in the e-cockpit solution that was demoed in the CES presentation (presented in the previous quarter)
  • Steady ramp up in the ODC project for Panasonic in India
  • Completed a project for HAL for the design of interiors of Indian Multi-Role Helicopter (IMRH) in a record 60 days, utilizing variety of processes
  • Awarded contract from AAI to help them develop the way finding and signage design for 10 airports across the country

Major Achievements

  • Achieved a major win with an European operator for one of the automation tools and license the complete automation suite to this operator
  • Good roadshow observed in Japan and expecting to convert some into business in the automotive side
  • Japanese OEMs companies looking for OEM deals with Europe and US companies; However, large Tier 1s do not have any experience working overseas
  • Won the prestigious iF Design Award for works on Kochi Metro

 Business Strategies and Growth

  • Broadcast business has almost doubled in business due to one of the major customers
  • Supported Indian brand Blue Star to launch their new range of water purifiers
  • The top 10 customers contribute to 60% of the revenue on an average
  • Hedging – Apart from the natural hedge, the company also takes options at a premium; the company does not do any derivatives nor esoteric deals

Revenue Breakup

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  • Embedded Product Design (EPD) contributes 75-80% of revenue
  • Auto constitutes 60% of EPD
  • Growth rate of Transportation was close to 35% and that for broadcast was below 20% for FY17
  • Industrial Design (ID) constitutes 14% of revenue
  • 40% from the Old VCL revenue
  • Less than 50% from the entertainment market
  • 62% of the revenue are from offshore work and close to 38% is realized from onsite deployment
  • 44% revenues from Europe, 40% from US and the rest from India and Rest of Asia
  • Volume growth of 8% realized in this quarter when compared to Q3
  • Increasing significance of OTT and related applications
  • The company has its own IP and frameworks which help in testing and validation of some of the OTT frameworks
  • Gain in customers in the last quarter for licensing the framework which help launching these OTT services faster

No. of employees and hiring

  • The year ended with total of 5500 employees
  • Hiring against specific requirements; mostly fresh graduates

 Merger of VFX and industrial design team

  • Synergies have been extracted
  • Several projects, like the Tata Motors at Geneva, realized only through the combination of content

Other Updates

  • The Utilization Rate for the FY is around the mid-70s
  • CFO resigned owing to personal reasons; company in process of identifying the new CFO