Tata Technologies acquires Swedish engineering and design specialist Escenda Engineering

Tata Technologies, the global engineering services company, has entered into a definitive agreement to acquire Escenda Engineering AB of Sweden.

The acquisition is an essential component in Tata Technologies’ European growth strategy and follows the recent US$26 million investment in the development of a new European headquarters in the UK.

The Escenda Engineering acquisition will help Tata Technologies accelerate its plans to expand in Europe due to the rapid growth opportunity the region offers in both the automotive and industrial machinery sectors. Europe’s automotive industry is the world’s leading producer of motor vehicles by volume and is also the largest private investor in R&D in Europe.

Escenda Engineering, which will become a wholly owned subsidiary of Tata Technologies Europe, will maintain the same management team and full workforce under the new ownership.

Founded in 2009, the Gothenburg-based Escenda Engineering is a leader in automotive product engineering and design. Its proven product development knowledge and history of working with top global manufacturers will deepen Tata Technologies’ automotive sector expertise, expand the company’s facilities in Sweden, add strong local leadership, and further grow capabilities through key partnerships in Sweden.  

Through this acquisition, Tata Technologies will leverage its global expertise in engineering services to support key accounts in Sweden and the European market and help them develop better products.

Ambitious growth strategy in Europe
Speaking on the agreement, Warren Harris, CEO of Tata Technologies, said: “Tata Technologies is always looking to evolve, innovate and ultimately grow our value proposition with our most important customers. Our new colleagues in Europe are some of the world’s finest engineers and we are united by a shared vision to bring better products to the market for our customers and for the millions of people around the world who benefit from them.”

“The acquisition of Escenda is another boost to our international footprint as well as our capabilities in the automotive sector, where we already support a range of global OEMs. The deal showcases Tata Technologies’ ability, confidence and commitment to continue to grow and enhance our international operations.”            

Stefan Wedin, CEO of Escenda Engineering AB, said: “We are delighted to become a part of the Tata Technologies’ family and support their ambitious growth strategy in Europe. We look forward to working together and supporting pioneering projects through our combined deep industry knowledge and innovative approaches to product development.”

Escenda Engineering’s revenue has grown by approximately 230 percent across the last four years. In 2016, Escenda Engineering was awarded the Volvo Quality Excellence Award, an annual accolade given to partners who fulfilled and met the highest standards and demands of Volvo Cars.

Acquisitions aligned to strategic goals
In an exclusive interview to Autocar Professional earlier this year, Warren Harris had said: “The plan is very much to replace what we are divesting with business and revenue that's aligned with our strategic goals. We will announce one acquisition in April (this is the Escenda Engineering buyout) and we expect to be able to complement that with one or two other transactions in the next 12 months.” 

Commenting on the areas of interest for acquisitions, Harris said: “We are targeting four areas. One is capability, predominantly engineering capability, and in engineering we are looking at embedded electronics. We are looking at powertrain as areas that will round out our coverage part of the plan.

We are also, on the IT side of things, looking at IoT, diagnostics and digital capabilities that will complement what we deliver to our manufacturing customer base. So, it's a capability vector that we are looking at, and there's also a customer vector.

Along with additional capability, new customers, we are looking at geographic expansion. In some territories which are relatively nascent for us, we are looking at reinforcing the infrastructure that we have with targeted acquisitions. Our approach as a company is predicated upon, at a level of maturity after we've initially grown. We want to get to a mix of employees where there are about 70 percent locals and only 30 percent coming from outside because we believe that customer intimacy is so important. Acquisitions that can help accelerate our way to that type of balance is important.

The fourth play is that we are in discussion with a number of our customers about how to manage their captive centres more effectively. A lot of our customers have made investments in low-cost countries like India and they find it very difficult to manage them from Europe or North America. So, those are the four inorganic growth factors that we are looking at."