Pune-based KPIT says it bagged close to $155 million worth of orders during Q1FY23, a significant part of which came from architecture and middleware domain parts, electric powertrains, vehicle engineering and design work.
Kishor Patil, co-founder, CEO and MD, KPIT said the new engagement is pretty well balanced across the segment it operates in and will get implemented in a staggered manner over a period of 2-3 years. "The new engagement has a fair mix of new programmes as well as the renewed ones," Patil noted.
KPIT, which works in segments such as advanced driver assistance systems (ADAS), autonomous and semi-autonomous driving, EV powertrains, battery management systems derives a significant part of its revenue from the automotive industry. About 77 percent of its revenues in fiscal 2021 came from passenger cars. Commercial vehicles and new mobility contributed 22 percent and 1 percent respectively. In terms of geography, the company's revenues come almost equally from Europe and the US, while the rest of the world chips in with close to 17 percent.
These developments need to be seen in the context of several industry reports suggesting that R&D investments in connectivity, autonomous and shared electric (CASE) is expected to grow by 25 percent on an annual basis to $ 61 billion during the period fiscal 21-26.
Sachin Tikekar, President and Joint MD, KPIT highlighted the fact that the entire automotive industry is currently undergoing a major transformation as a result of which almost all the OEMs have accelerated their spending for adoption of latest technologies in order to mitigate the environmental and regulatory impacts. " Looking at this, we feel positive," said Tikekar, adding that the challenges continue to remain in the micro economy and therefore there is a need to keep an eye on it.
As part of its growth strategy, KPIT in the recent past made a couple of acquisitions and is looking to increase its stakes in both of them. In September 2021, the company announced making the first tranche of investment in Future Mobility Solutions (FMS) and has plans to take it to 100 percent by fiscal 2023-24. The total consideration for 100 percent shareholding is expected to cost the company around € 15.6 million. FMS offers proprietary offerings in the autonomous driving domain and the partnership is expected to improve KPIT's access to one strategic client with new offerings and strengthen KPIT market presence in Germany.
Likewise, in May this year, KPIT also made an acquisition in SOMIT solutions which enables after-sales operations of high-tech luxury and new-age OEMs through a cloud-based vehicle diagnostics platform and expert consulting services for a total consideration not exceeding £ 7.68 million over a 3-year period. The first tranche constitutes 65 percent of equity and was completed in May while the plan is to increase it to 100 percent by the third quarter of current fiscal.
"In some ways, it's a slow integration process. We thought it's better to let them grow" continued Patil, CEO & MD emphasising that he is happy with the way things are moving on. " We are taking it step by step," he added.