‘Automated driving is an area that we are very excited about.’
In this exclusive interview after becoming CEO and MD at Tata Technologies, Warren Harris spoke to Amit Panday about his vision, leadership, roadmap to US$ 1 billion revenue target, and organic and possible inorganic routes to fuel growth. Excerpts:
You have succeeded Patrick McGoldrick, who spent close to 20 years heading the company. How was it working with a leader like him and what is it that you are still looking forward to learn from him in your new role?
Pat and I have worked very closely for the past 8 years. He not only introduced to the entire group, but also introduced me to India. He has also helped in educating me about some of the key relationships which Tata Technologies have cultivated over many years, and he has been a mentor and a confidant for me during the time we have worked closely together.
Many of the decisions, which have enjoyed success in the recent past for this company, we have made together. So I certainly see my endorsement as his successor as a vote for continuity and a vote for the business plan that we jointly crafted.
You have joined as the new CEO from September 9. How has it been working in this new capacity since then?
It still is early to say anything but I am truly overwhelmed by the positive reaction from our employees, our business partners, and our customers. I guess I was expecting a reaction but not the outpouring of goodwill and best wishes that I have received.
I am very gratified by that, and I am also very pleased by, specifically, the comments made by our customers, which reinforces the importance of continuity and their commitment to what we are trying to do with the organisation.
That tells me that we are on the right track, and tells us that the plans we have got for the next couple of years are not the plans we are supporting in isolation but are the plans that we have been able to globalise a lot of support for in the key constituencies, and that would be important for us to continue to engage.
You talk about the aim of achieving the US$ 1 billion/Rs 6,141 crore worth of revenues for Tata Technologies. Explaining the roadmap for achieving that, can you tell us what your immediate priorities are now?
I think there are a number of priorities that I am going to be managing now. But first let me first talk about my comment on the billion dollar target before I talk about other things. The US$ 1 billion target is very much the target driving the business, and right now our growth rates are at a level that can mature with the market or is better in some areas. So I think that the organic growth plan that we have got currently will see us, over the next three years, get close to about US$ 700 million (Rs 42,98 crore) of the said US$ 1 billion. But I think that the gap that represents between what we can drive through the current operations and what we will need to complement through targeted acquisitions.
We are looking at the main areas where we don’t have the critical capabilities, we are looking at customer relationships, customers that we would like to add to our portfolio, we are looking at a geographic expansion.
I think, if you look at what we have done with Cambric over the last 12 months, we have really demonstrated the ability to be able to do cross border acquisitions and we have managed them in the right way. We have retained the entire leadership team at Cambric, we have managed to not only protect the customer relationships but have managed to leverage those customer relationships for opportunities. With all the customers that we inherited through Cambric, we are now managing a much bigger portfolio of services. And I think what we have done in terms of the cultural alignment; the employees have really reinforced the level of engagement, which is exciting for me.
I think what we have done is institutionalised the acquisition process that we will be able to leverage to be able to do more acquisitions over the next three years. So in terms of growth, I think we are excited about the momentum we have generated organically, and we are also confident that we can complement that through the right type of acquisitions, given the experience we now have.
In terms of the growth challenges, the key for us is growing the leadership ranks of the company. One of the priorities that I am going to sponsor inside the business is a leadership development program that we have spent last 12 months on architecting and selecting the various candidates for. This program will reinforce the commitment to succession by internal promotions, and it’s the leadership development program that will see the organisation move from the 7,500 people that we have currently have in the company today, to somewhere close to 20,000 when we get to the USD one billion mark (by 2017).
You have spent nearly 26 years in Tata Technologies so far. What, in your opinion, are the skillsets your teams based across various locations around the world bring to the table in the context of automotive, which is close to 65 percent of all operations?
We have very deep capabilities in the automotive, aerospace and industrial machinery areas. And specifically if you drill down into the domains that are pertinent to those industry verticals, we have very strong full vehicle capability that has allowed us to take the turnkey projects in the automotive, aerospace and the industrial machinery areas. So program management and the overall management of multiple stakeholders, the delivery of a product into the plant –are the differentiators in terms of our capabilities.
I think in automotive, traditionally, our depth has really been in the body structures, interiors and exteriors. But with Cambric acquisition, we brought in powertrain capabilities, which was a great complement to what we have done in the body area.
Relatively, we have an embryonic presence on the embedded electronic side of things. That’s an area that we are very excited about, I think, in terms of future acquisitions, investments and capabilities – areas that will be increasingly important to us.
Two points that I would like to mention against that question – first and foremost, we manage our resource pool not geographically but on a global basis. So when we present a proposition to a customer, we aggregate our capabilities from all over the world. So drawing the lines of demarcation between what’s in Thailand to what’s in UK, Germany, North America is something that we do but we do in a way to leverage skill sets and different cost basis that we have in different geographies.
In terms of the relative capabilities, one of the things that are very important to us in the context of India is the frugal innovation capabilities that exist in India. If we take a look at some of the value engineering projects that we have taken on for all three verticals, India has far more depth than anywhere else in the world. An Indian engineer has grown up through limited resources, and that conditioning enables India to do a much better job. (15:40)
What we are also finding is that in very technical areas such as analysis and simulation, the resource pool in India is far more sizeable than the resource pools available to us in the United States or in the UK. I think increasingly, what we are finding in UK, mainland Europe, Japan and North America is that the proximity to the customer and its manufacturing plants enables us to, perhaps, be more innovative than the teams that are remote from the market places that our customer serve. So increasingly, I think we are going to recognise that and invest in order to be innovative not just in the context of the products that we help our customers with, but also with the IP that we ourselves capitalise.
There are a lot of OEMs that are developing global vehicle platforms. What, in your opinion, how good this is in terms of engineering and costs?
I think that there is a contribution that a global platform can make to the economics of producing products for different geographies and market places. I have always been of this view that a balance needs to be struck between a commitment to globalisation and re-use of cars and the need to develop products that are specifically going to meet the requirements and needs of a particular market.
There is a role that a global platform can provide or support. I think that it is very important that the market requirements are understood. The requirements in India are very different than the requirements in the UK and the requirements in China are very different than that in North America. So respecting those differences and building flexibility into those programs that allows the balance between a global standard and the ability to be able to change is I think is what is critical.
Is Tata Technologies associated with the developments in the area of automated driving?
Yes, I can say that we are, but I won’t be able to more details on that. It’s an area that we are very excited about; it’s an area that we believe that will be disruptive in terms of its impact on the market. And we believe that we need to invest in it as it will be relevant and meaningful.
Tata Technologies had built the smart city car, eMO over 2 years back. Will that see the light of the day eventually?
Many of the concepts and much of the IP that we were able to validate and crystallise on the project is already seeing itself in various projects that we are supporting for our clients. Whether or not the eMO in its entirety will see the light of the day is still a topic that we are debating. There is a lot of interest but as of now, there are no firm plans. And if does come to the market, it will not come through Tata Technologies.
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