Madhukar Dev, MD & CEO and Manoj Raghavan, EVP – EPD of the company addressed the call.

Highlights of the call:

Tata Elxsi, a part of the Tata Group, provides design and technology services for product engineering and solutions across industries including broadcast, communications, and automotive.

It also provides solutions and services for emerging technologies such as Internet of Things (IoT), big data analytics, cloud, mobility, virtual reality and artificial intelligence.

Manoj Raghavan will take over as MD and CEO from October 2019.

Manoj Raghavan has been working since past 20 years. He was given the responsibility of overlooking the Japanese business which went up and stood at 35% of sales.

The quarter was indeed a tough quarter but it is not as tough as the numbers suggest. There were number of things that went according to the plan.

New orders during the quarter were significantly higher than previous quarter.

2 business units, broadcasting and communications and Medical clocked highest growth rate.

However if auto business fails to pick up these two segments will not be able to compensate the loss.

Loss of business from JLR was expected but the pace and extent of ramp down was not expected. Tata Elxsi could not do anything about it.

Being preferred vendor of JLR, the management thinks that as JLR ramps up its business, Tata Elxsi will benefit.

During the quarter the company got into a new country in Europe.

The management hopes it should be back to normal growth soon.

JLR accounted for 22% sales qoq which fell to 15% in June 2019 quarter and fell 25% yoy.

Transport business unit accounted for 60% of sales qoq which fell to 15% in June 2019 quarter.

The company had one off sales of around Rs 25-30 crore in March 2019 quarter. This came down to Rs 2 crore in the current quarter.

Fall in revenue led to fall in margins.

Going forward margins will trend sales growth. If sales grow 10% qoq even margins will grow 10%.

The margins it saw in the past of 25-26-27% were aberration. It hopes the margins will be in the range of 22-24%. Even though for some quarter it may see 26% margins, for the whole year it should be between 22-24%..

The company saw significant slowdown in non auto JLR business also.

There are no cut in pricing from JLR.

The company plans to hire 500 fresh graduates.

CC growth rate excluding the one off (IP revenue) is flat.

IP revenue was 3.5% to 5% every quarter but this quarter it fell down to 1% in the current quarter.

Communication and Broadcast grew 10% qoq. Medical business grew 35% on a small base.

The management hopes to show reasonable sales growth in the current quarter.

In Q1 Embedded Product Design accounted for 88.0% of sales

Industrial Design & Visualization accounted for 9.2%. System Integration accounted for 2.8%.

The company is not currently planning to enter the electric 2-wheeler business.