Debasis Mohapatra
Bengaluru, 11 January 2025
Automotive industry is facing a tepid demand environment, which is affecting the performance of engineering services companies.
Management of one of the leading engineering services companies of India, Tata Elxsi recently alluded to the fact in during Q3FY25 result announcement.
“The automotive industry has seen significant business challenges in the past few months, with OEMs especially in the US and Europe reporting sales and growth challenges in their major markets. This has impacted new deal closures, and Tier 1 supplier spend,” Manoj Raghavan, CEO and Managing Director of Tata Elxsi has said.
He, however, added that the Tata Group company would be able to navigate such demand slowdown well on the back of large deal ramp ups.
“Amidst this business environment, Tata Elxsi continues to do well to win and execute on the large deals won over this year and demonstrate differentiated value to customers, to protect and grow revenues in a difficult quarter for the entire automotive industry,” Raghavan has said.
During the quarter, Tata Elxsi has announced an Offshore Development Centre for Suzuki Corporation, Japan to support their global technology, software and engineering development.
“Tata Elxsi won a multi-million long-term deal from a leading US headquartered MSO to manage a portfolio of applications, that will ramp up over the next two quarters,” the company said in its investor presentation.
The ER&D firm drew around 55% of its revenue from transportation segment in Q3 of FY25, while media & communications’ revenue share stood at 32.4% during this period. 11.8% of revenue came from healthcare vertical.
“Transportation grew by 0.5% QoQ in CC (constant currency) terms, amidst longer deal closure cycles being witnessed in the automotive industry. Media and Communications revenue grew by 0.4% QoQ in CC terms in a quarter that is traditionally soft and impacted by furloughs,” the company pointed out.
