Tata Technologies IPO Review

Tata Technologies IPO Review 

Summary

Tata Technologies provides Engineering R&D services, primarily to Automotive sector. It competes with specialized companies like KPIT Technologies, Tata Elxsi etc. and general IT service companies like TCS, Accenture, Tech Mahindra, Cap Gemini etc. It also provides education and training services for upskilling with its tie-ups with various state governments.

The upper price of the price band is available at a trailing PE ratio of 32 which is similar to valuations that other IT companies command. While generally high, we do not think this PE ratio is out of line compared to other companies in this sector.

There are some concerns such as its dependence on captive clients - Tata Motors and JLR, the offering being entirely an "Offer for Sale" and competition with group companies in this segment. 

In Conclusion, with the growing need for manufacturing R&D services in India, pedigree of the Tata brand, this IPO is an "APPLY" in our view.

 

Overview of the IPO

Prospectus Date: November 13, 2023​​.

Company: Tata Technologies Limited, a technology company offering a range of engineering and design services with a corporate office in Hinjawadi, Pune, Maharashtra, India​

Promoter: The IPO is promoted by Tata Motors Limited​.

Offer Details:

• Total Equity Shares Offered: Up to 60,850,278 shares.
• Offer For Sale: Shares offered by Tata Motors Limited, Alpha TC Holdings Pte. Ltd., and Tata Capital Growth Fund I.
• Face Value: ₹2 per Equity Share​
• Listing: Proposed on BSE Limited and National Stock Exchange of India Limited, with BSE as the Designated Stock Exchange​.
• Book Running Lead Managers: JM Financial Limited, Citigroup Global Markets India Private Limited​.
• Bid/Offer Period: November 22, 2023, to November 24, 2023​​.
• Price Band: Rs.475 - Rs.500.
• Net Offer: Includes a reservation for eligible employees and eligible TML shareholders.
• Allocation: Provisions for Qualified Institutional Buyers (QIBs), Non-Institutional Bidders, and Retail Individual Bidders (RIBs)

Company Overview

Tata Technologies Limited, initially incorporated as 'Core Software Systems Private Limited' in 1994, evolved through a series of acquisitions and rebrandings to its current identity. Its transformation into a public limited company and subsequent name changes reflect its alignment with the Tata group's broader focus on technology and innovation​

• Name of the Company: Tata Technologies
• Sector/Industry: IT Services & Engineering Solutions
• Brief History: Founded as a subsidiary of Tata Motors, specializing in engineering and design services.
• Mission and Vision: To help global manufacturers design, engineer, and validate the products of the future.

Pros

1. Opportunity to own a marquee name in Engineering R&D solutions provider 
2. Deep Expertise in Automotive segment. Exploring other segments like Aerospace having empanelled with Airbus
3. Tata Group IPO (Enough said?)

Cons

1. Purely an Offer for Sale (OFS) providing exit to existing shareholders
2. Expensive Valuation - Issue is priced at a PE ratio of approx. 32 as per its last quarter earnings report.
3. In house competition from Tata Elexsi and TCS

Conclusion

• Overall Assessment: Promising IPO with potential for strong returns, albeit with some industry-related risks.
• Recommendation: Buy, for investors seeking long-term growth with moderate risk.
• Potential Risks and Rewards: Risks tied to global economic conditions and technology shifts; rewards linked to company's innovative capacity and market position.

This IPO presents an opportunity to invest in a company with a strong background and association with the Tata group. However, potential investors should consider the inherent risks associated with IPOs, particularly for a company making its market debut. An in-depth analysis of the company's financials, market position, and future growth potential is advisable before making an investment decision. The final offer price, determined through the book-building process, will be crucial in assessing the IPO's attractiveness. Investors should also closely review the "Risk Factors" section in the prospectus for a comprehensive understanding of potential challenges and uncertainties.

Links

1) Red Herring Prospecus

https://ttlwebassets.tatatechnologies.com/app/uploads/2023/11/Red-Herring-Prospectus.pdf

2) Zinnov report commissioned by the Company

A lot of the information in the RHP on the outlook for the industry is based on the report by Zinnov, a study which was commissioned by the company, which can be seen below.

https://ttlwebassets.tatatechnologies.com/app/uploads/2023/11/B-32.-Industry-Report-ERD-Services-Market-Overview.pdf

3) Other relevant documents

Other relevant documents such as agreements, consent letters etc.

https://www.tatatechnologies.com/in/investor-relations/

 

 

Selected Extracts from the Red Herring Prospectus

Services offered by the Company

Primary Lines of Business

We primarily categorize our lines of business as follows:

Services:

Our primary business line is services (“Services”), which includes providing outsourced engineering services and digital transformation services to global manufacturing clients helping them conceive, design, develop and deliver better products. Our Services business contributed ₹35,311.55 million and ₹19,863.90 million to our revenue from operations in Fiscal 2023 and the six-months period ended September 30, 2023, respectively, comprising 80.00% and 78.62% of our revenue from operations for the respective periods.

Technology Solutions:

We complement our service offerings with our Products and Education businesses (collectively, “Technology Solutions”). Through our Products business we resell third-party software applications, primarily product lifecycle management (“PLM”) software and solutions and provide value-added services such as consulting, implementation, systems integration and support. Our Education business provides “phygital” education solutions in manufacturing skills including upskilling and reskilling in relation to the latest engineering and manufacturing technologies to public sector institutions and private institutions and enterprises through curriculum development and competency center offerings through our proprietary iGetIT platform. In Fiscal 2023 and the six-months period ended September 30, 2023, our Technology Solutions business contributed ₹8,830.22 million and ₹5,403.12 million to our revenue from operations, respectively, comprising 20.00% and 21.38% of our revenue from operations for the respective periods.

We are a pure-play manufacturing focused ER&D company, primarily focused on the automotive industry and we are currently engaged with seven out of the top 10 automotive ER&D spenders and five out of the 10 prominent new energy ER&D spenders in 2022 (Source: Zinnov Report). Our automotive revenue attributable to the Services segment for Fiscal 2023 and the six- months period ended September 30, 2023 was ₹31,314.66 million and ₹17,457.56 million, respectively, comprising 88.68% and 87.89% of our revenue attributable to the Services segment for the respective periods. Additionally, our revenue attributable to the Services segment from verticals other than automotive for Fiscal 2023 and the six-months period ended September 30, 2023 was ₹3,996.89 million and ₹2,406.34 million, respectively, comprising 11.32% and 12.11% of our revenue attributable to the Services segment for the respective periods.

Our domain expertise has also been recognized by industry bodies and external analysts. We are positioned in the “leadership zone”by Zinnov Zones for ER&D services ratings in 2023 for the seventh consecutive year. We are also ranked first among all India-based ER&D service providers and are among the top two globally, in electrification. For automotive ER&D services, we are ranked first among India service providers and third globally among rated service providers by Zinnov. In addition, we are also ranked in the “leadership zone”in the aerospace ER&D ratings in 2023 by Zinnov Zones and were ranked in the “leadership zone”for digital thread by Zinnov Zones in 2021. We are also ranked in the “established-expansive” zone in the 2023 rankings for Industry 4.0 by Zinnov Zones. Additionally, Frost & Sullivan recognized us as the ‘Company of the Year’ in 2020 for global digital solutions in the enterprise modernization industry. For further details, see “History and Certain Corporate Matters – Awards, Accreditations, and Accolades received by our Company” on page 213.

We have a diversified global client base. The table below sets forth our revenue from operations from clients in India, Europe, North America and the rest of the world for the periods indicated:

(₹ in million, except for percentages)

Region	Six-months period ended September 30, 2023		Fiscal 2023
	Portion of Revenue from Operations	% of Revenue from Operations	Portion of Revenue from Operations	% of Revenue from Operations
India	8,877.84	35.14%	13,138.31	29.76%
Europe	6,795.74	26.90%	10,076.24	22.83%
North America	4,866.61	19.26%	9,465.35	21.44%
Rest of the world	4,726.83	18.71%	11,461.87	25.97%
Revenue from Operations	25,267.02	100.00%	44,141.77	100.00%

Key Performance Indicators

In evaluating our business, we consider and use certain key performance indicators that are presented below as supplemental measures to review and assess our operating performance. The presentation of these key performance indicators is not intended to be considered in isolation or as a substitute for the Restated Consolidated Financial Information included in this Red Herring Prospectus. We present these key performance indicators because they are used by our management to evaluate our operating performance. Further, these key performance indicators may differ from the similar information used by other companies, including peer companies, and hence their comparability may be limited. Therefore, these matrices should not be considered in isolation or construed as an alternative to GAAP measures of performance or as an indicator of our operating performance, liquidity, profitability or results of operation.

The following table sets forth certain of our key performance indicators for the periods indicated below:

(₹ in million, unless otherwise indicated)

Particulars^#	Six-months period ended		Fiscal
	September 30, 2023	September 30, 2022	2023	2022	2021
Revenue from Operations(1)	25,267.02	18,879.06	44,141.77	35,295.80	23,809.11
Revenue from Operations ($ million)(2)	306.50	240.11	546.87	473.51	321.53
Revenue attributable to the Services segment(3)	19,863.90	16,408.80	35,311.55	26,513.51	19,143.71
Revenue attributable to the Services segment (% of Revenue from operations)(4)	78.62%	86.92%	80.00%	75.12%	80.40%
YoY growth in Revenue from Operations (%)(5)	33.84%	N.A.	25.06%	48.24%	(16.52%)
YoY constant currency growth in Revenue from Operations (%)(6)	28.59%	N.A.	24.02%	45.18%	(19.74%)
Profit for the period/year(7)	3,519.01	2,590.61	6,240.37	4,369.91	2,391.73
Profit Margin for the period/year (%)(8)	13.93%	13.72%	14.14%	12.38%	10.05%
EBITDA(9)	5,254.72	3,950.03	9,086.86	6,944.64	4,305.36
Adjusted EBITDA(10)	4,647.50	3,725.19	8,209.34	6,456.62	3,857.09
Adjusted EBITDA Margin (%)(11)	18.39%	19.73%	18.60%	18.29%	16.20%

^ Other than the KPIs listed herein, no other KPIs have been disclosed to our investors in the immediately preceding three years.

# The KPIs disclosed in the table above have been approved by our Audit Committee pursuant to their resolution dated November 2, 2023, and have been verified and certified by Manian and Rao, Chartered Accountants pursuant to their certificate dated November 13, 2023. This certificate has been designated a material document for inspection in connection with the Offer. See “Material Contracts and Documents for Inspection” on page 488.

Lines of Business

Our value proposition has two primary components. The first being our Services offerings which include providing outsourced engineering services for manufacturing clients and leveraging digital technology to optimize the way in which a manufacturing company conceives, develops, manufactures and services new products. The second component of our value proposition concerns our Technology Solutions offering which includes our Products business comprising of the reselling of specific software that manufacturing companies deploy to conceive, develop, build and service new products and our Education business where we work with colleges, universities, private enterprises and State Governments to equip the next generation of engineers and technicians with relevant skills that are required by the global manufacturing industry.

The table below sets forth our Services and Technology Solutions lines of business and their percentage contribution to our revenue from operations for the periods indicated:

(₹ in million, except for percentages)

Particulars	Six months period ended				Fiscal
	September 30, 2023		September 30, 2022		2023		2022		2021
	Portion of Revenue from Operation s	% of Revenue from Operations	Portion of Revenue from Operations	% of Revenue from Operation s	Portion of Revenue from Operations	% of Revenue from Operation s	Portion of Revenue from Operation s	% of Revenue from Operations	Portion of Revenue from Operation s	% of Revenue from Operations
Services Segment	19,863.90	78.62%	16,408.80	86.92%	35,311.55	80.00%	26,513.51	75.12%	19,143.71	80.40%
Technology Solutions Segment	5,403.12	21.38%	2,470.26	13.08%	8,830.22	20.00%	8,782.29	24.88%	4,665.40	19.60%

Services

We provide global outsourced engineering services to assist our global manufacturing clients in conceiving, designing, developing, and realizing competitive products. We also partner with our clients to synchronize their people and processes across the company, allowing for optimal product lifecycle realization. We service our clients using our global sales network comprising 19 global delivery centers in North America, Europe and Asia Pacific, leveraging our balanced on-shore/offshore global delivery model. From offshore development centres to the design and development of components, subsystems, and systems, embedded systems, to full vehicle turnkey projects including electric vehicles, we deliver complex engineering programs and expert domain services to our clients, leveraging a global resource pool throughout the product realization lifecycle. We also specialize in ‘digital thread’ which enables solutions across processes and enterprises. These enterprise solutions help OEMs address challenges of process effectiveness across their value chain from product development to customer experience and accelerate the digital transformation journey.

We provide engineering services to clients primarily in the automotive vertical, as well as aerospace, TCHM and our other adjacent verticals. We have participated in new trends in the automotive vertical, especially with electrification and connected vehicles requiring capabilities in domains such as embedded systems and software defined vehicles. In 2012, we launched eMo: the first full-vehicle EV concept developed by an Indian engineering services firm. Over the years, we have worked with both traditional and new energy vehicle companies on their EV programs successfully completing multiple smaller projects as well as turnkey vehicle development.

Our key areas of competence in the automotive sector span the following:

· Concept Design – including ideation, concept design, studio engineering, surface design (computer aided styling (“CAS”) and Class-A) and prototyping (e.g., a Swedish luxury vehicle manufacturer)

· Tear Down and Benchmarking– including dis-assembling and carrying out competitive benchmarking of vehicles, should- cost studies, value analysis and value engineering (VAVE) studies for cost and weight optimization, alternative material studies and proposals and maintaining correlated databases of materials, parts and assemblies (e.g., TML)

· Vehicle Architecture – including development of the vehicle architecture (base layout structure of the vehicle) based on the overall attributes from marketing, the regulatory requirements for target markets, competitive benchmarks to output the initial engineering concept and high-level engineering (e.g., VinFast)

· Body Engineering – including design detailed engineering of all body parts (mainly divided into interiors including HVAC, exteriors, body-in-white, and closures), design failure mode and effect analysis (“DFMEA”) studies, geometric dimensioning and tolerancing studies, supplier management for full service suppliers, material studies and alternative material proposals, computer aided engineering ("CAE”) studies, and vehicle crash including passive and active safety (e.g., a Chinese new energy vehicle company)

· Chassis Engineering– including the design and development of chassis systems such as brakes, steering, suspension, wheels and types and powertrain systems like engine, cooling, fuel and transmission (e.g., British luxury automobile manufacturer)

· CAE Virtual Validation – including CAE virtual simulation of components, sub-systems, systems and full vehicle analysis for durability, fatigue, crash and visual simulation (digital mockup and analysis) (e.g., VinFast)

· ePowertrain– including design and development of components like inverters, DC-DC convertors, high-power electric motor, electric drive unit) and mounting, power delivery module (“PDM”), embedded software development and testing, application and integration of components (motors, batteries, invertors) and systems into vehicles and machines and calibration activities (e.g., a British tier- 1 supplier)

· Electrical and Electronics – including electrical architecture system design, circuit schematic design, simulation, wiring harness 3D routing, diagnostics, electrical and electronics integration and supplier management (e.g., VinFast)

· Embedded Solutions and SDV – including design, development, and implementation of AUTOSAR-based software covering control software development, configuration and validation of the developed software across the vehicle development cycle (e.g. a British premium automotive OEM)

· Manufacturing– including simultaneous engineering, DFMEA studies, tool process planning and design for sheet metal and plastic parts like dies, jigs and fixtures, assembly fixtures, plastic molds, tool manufacturing computer numerical control (“CNC”) support, design for manufacturing (“DFM”) studies like sheet metal formability simulation and soft-tool design (e.g., a British luxury vehicle company)

· Build and Test– including support for building prototypes, soft tooling of parts, supplier management and integration support and testing the prototypes for assembly and full vehicles including climate tests. Includes leveraging test facilities at external partners to support full vehicle testing (e.g., TML)

· Launch – including support during the launch phases of the vehicle, vehicle integration support, supplier interaction for issue resolution and concurrent engineering to fix assembly issues, feedback and implementation of design changes (e.g., a Swedish luxury vehicle manufacturer)

Our other service offerings include:

· Product Data Management – including implementation of PLM solutions for our clients and also helping them reduce the gap between physical and digital product development (e.g., a Chinese new energy vehicle company)

· Smart Manufacturing – helps manufacturing companies adopt Industry 4.0 technologies across their product development value chain and manufacture competitive products while optimizing cost and improving productivity (e.g., a British luxury vehicle company)

· Enterprise Resource Planning – including implementation and transformation solutions that are designed to help organizations seamlessly implement, migrate and upgrade to future ready platforms (e.g., a North American new energy vehicle company)

· Customer Experience Management – including solutions to manage a client’s entire omnichannel customer journey offering the flexibility of virtual product interaction with the convenience of buying products online, enabled through digital applications and mobile apps (e.g., TML)

· Application Management – including services of enterprise application management cutting across PLM-ERP-MES, legacy applications, digital applications and analytics applications (e.g., TML)

· Data Intelligence – including implementation of analytics solutions across the manufacturing enterprise. This includes use of AI/ML to solve business problems (e.g., TML)

· Process Automation– including optimization of enterprise processes through automation and simplification (e.g., TML)

Additionally, we also run a full vehicle turnkey program covering the entire spectrum of solutions. Our turnkey solutions are complete and ready to use.

Technology Solutions Products

One of the two key components of our value proposition is to assist our clients to identify and deploy technologies and solutions that are used to manufacture, service and realize better products, as well as train people who need to enable the development of these competitive products. Our Products business helps us facilitate this through our partnership with manufacturing software providers including PLM and MES software. Our Products business also consists of our value-added reselling business which sells software and attached services to software developed by our PLM partners.

Our long-standing relationships with different partners have also led to multiple strategic benefits, including better visibility of future product roadmaps, allowing us to provide better, more effective client solutions and reducing client acquisition costs. The table below sets forth the revenue from our Products business and its percentage contribution to our Technology Solutions segment for the periods indicated:

(₹ in million, except for percentages)

	Six-months period ended		Fiscal
	September 30, 2023	September 30, 2022	2023	2022	2021
Revenue from Products business	2,349.02	1,854.29	4,961.56	4,319.36	4,238.84
Revenue from Technology Solutions Segment	5,403.12	2,470.26	8,830.22	8,782.29	4,665.40
% of Revenue from Products business attributable to Revenue from Technology Solutions Segment	43.48%	75.06%	56.19%	49.18%	90.86%

Education

Our Education business focuses on addressing academia and corporate skilling requirements by leveraging our manufacturing domain knowledge and the iGetIT offering.

We have had a long-standing presence in the education sector, including our acquisition of the iGetIT platform in 2005. This has helped us to secure high-profile enterprise clients. We have since expanded our offering to assist colleges and universities to develop curriculum and build dedicated innovation labs to teach students next generation skills and capabilities required by the global manufacturing industry. We were able to further leverage these engagements to create additional engagements with six State Governments for industrial training institute (“ITI”) upgradation and over five private institutions for further upskilling which has allowed us to build strong capabilities and enhance our presence in the educational sector.

Our Education business helps our clients upskill and reskill their engineers and technicians through competency centers which provide training courses for such engineers and technicians, thereby capitalizing on the opportunities presented by the digital wave where organizations are focused on upskilling their employees while investing in technology. Our education competency centers offer students the learning facilities to prepare themselves with industry-relevant skills and competencies. We offer tools, practices and techniques across various types of courses, such as Industry 4.0 and EV related courses, to help students enhance their skills through experiential learning.

The Education business, and more specifically the competency centers, leverage our iGetIT platform. iGetIT is based on the blended learning methodology that offers self-paced courses on more than 2,000 mechanical computer aided design (“MCAD”), PLM and niche skill sets. The platform is widely used by a large number of members worldwide to meet their learning goals across 60 countries.

As State Governments work towards the upgradation of various ITIs in India, we believe we are well placed to collaborate with various industry partners to integrate various tools and technologies that are needed for the upskilling of talent. We believe we are well positioned to help address this need and we have, with our large number of partners, first mover advantage and strong prior experience, a strong foothold in the market (Source: Zinnov Report). The strength of our value proposition has been validated by the proactive and positive reception received from several other State Governments and public universities that have indicated interest in creating similar skilling and upgradation programs for their respective states (Source: Zinnov Report). We have entered into memorandums of agreement with several State Governments to transform and upgrade their ITIs into centers of excellence (“CoEs”) as part of their nation building initiative focused on improving youth employability. For example, we have signed an agreement with a State Government to upgrade 150 government ITIs, of which five will be developed into CoEs. We have also collaborated with another State Government to establish a center for invention, innovation, incubation and training (“CIIIT”) to facilitate upskilling in areas related to advanced technologies, thereby improving employability and entrepreneurship among the beneficiaries. We also signed an agreement with another State Government to upgrade 149 ITIs into CoEs and collaborated with various other State Governments. Between the State Government engagement in November 2020 and September 30, 2023, we have entered into memoranda of agreement to upgrade five State Government- owned ITIs, with ₹22,983.48 million in contracted revenue to be earned in connection with the projects. The table below sets forth the revenue from our Education business and its percentage contribution to our Technology Solutions segment for the periods indicated:

(₹ in million, except for percentages)

	Six-months period ended		Fiscal
	September 30, 2023	September 30, 2022	2023	2022	2021
Revenue from Education business	3,054.10	615.97	3,868.67	4,462.93	426.56
Revenue from Technology Solutions Segment	5,403.12	2,470.26	8,830.22	8,782.29	4,665.40
% of Revenue from Technology Solutions Segment attributable to Revenue from Education business	56.52%	24.94%	43.81%	50.82%	9.14%

Clients

The table below sets forth our key client concentration, in terms of our revenue from sale of Services for the periods indicated. For further details, please see “Risk Factors —2. We continue to derive a material portion of our revenues from our top 5 clients by revenue generated in each of the six-months period ended September 30, 2023 and September 30, 2022 and for Fiscals 2023, 2022 and 2021 (“Top 5 Clients”) which include Tata Motors Limited (our Promoter) and certain of its subsidiaries (other than Jaguar Land Rover Limited) (collectively, “Tata Motors”) and Jaguar Land Rover Limited (and certain other subsidiaries of Jaguar Land Rover Automotive PLC) (collectively, “JLR”, and together with Tata Motors, the “Anchor Clients”). If any or all of our Top 5 Clients were to suffer a deterioration of their business, cease doing business with us or substantially reduce their dealings with us, our revenues could decline, which may have a material adverse effect on our business, results of operations, cash flows and financial condition.” on page 34, “Risk Factors — 32. We derive a material portion of our revenues from our Anchor Clients, who are related parties. Any deterioration in our relationship with our Anchor Clients may adversely affect our business, financial condition and results of operations.” on page 56 and “Risk Factors —3. Our revenues are highly dependent on clients concentrated in the automotive segment. An economic slowdown or factors affecting this segment may have an adverse effect on our business, financial condition and results of operations.” on page 36 .

(₹ in million, except for percentages)

Client Concentration	Six-months period ended				Fiscal
	September 30, 2023		September 30, 2022		2023		2022		2021
	Portionofrevenue attributable to the Services segment	% of revenue attributa ble to the Services segment	Portionofrevenue attributable to the Services segment	% of revenue attributa ble to the Services segment	Portionofrevenue attributable to the Services segment	% of revenue attributa ble to the Services segment	Portionofrevenue attributable to the Services segment	% of revenue attributa ble to the Services segment	Portionofrevenue attributable to the Services segment	% of revenue attributa ble to the Services segment
Anchor	9,130.39	45.96%	6,418.63	39.11%	14,210.43	40.24%	10,696.45	40.34%	9,839.52	51.40%
Top 5 Clients	14,086.69	70.92%	11,852.91	72.24%	25,847.59	73.20%	17,434.13	65.76%	12,347.44	64.50%
Top 10 Clients	15,916.85	80.13%	13,256.23	80.81%	28,528.62	80.80%	20,588.95	77.65%	14,634.82	76.45%
Top 20 Clients	17,477.84	87.99%	14,468.58	88.21%	31,216.03	88.40%	23,070.05	87.01%	16,245.37	84.86%
Services segment	19,863.90	100.00%	16,408.80	100.00%	35,311.55	100.00%	26,513.51	100.00%	19,143.71	100.00%

The table below sets forth the number of our Active Clients related to our Services Segment by restated revenue for the periods indicated.

Client Concentration	Six-months period ended		Fiscal
	September 30, 2023	September 30, 2022	2023	2022	2021
$50 million +	3	3	3	3	2
$20 million +	3	3	3	3	2
$10 million +	6	6	6	6	6
$5 million +	10	11	7	11	8
$1 million +	38	34	34	31	27

Proprietary Platforms and Intellectual Property

Our intellectual property rights are critical to our business. Our IP portfolio (either directly or indirectly through our subsidiaries) consists of 10 registered patents and two pending patent applications and 38 registered trademarks. We believe our IP covering proprietary manufacturing value chain solutions and platforms create a competitive advantage for us and allow us to continue to deliver efficient solutions to existing clients and help retain new clients.

Our service offerings are well supported by advanced proprietary platforms across the value chain, including the following:

• Product Development: eVMP, a scalable and flexible electric vehicle accelerator platform for new energy vehicle companies or OEMs, providing rapid configurations as per client specifications to help enable reduced NPI cycle time and quicker launch timelines and PULSE, an agile program management tool with six modules for end-to-end ER&D process tracking.
• Manufacturing:FactoryMagix is a manufacturing execution systems solution that enables real-time data visibility providing improvement in overall equipment effectiveness. AMP.IOT is an IOT platform for improving traceability and efficiency in manufacturing operations, enabling plant monitoring and setting up a command center.
• Customer Experience:Power of 8 is a client lifecycle management platform in the automotive industry which helps to digitize the bulk of client engagements and has led to improved digital lead conversions. TRACE is an IoT-led connected vehicle platform for fleet management and telematics, deployed in thousands of vehicles while the REMO mobility platform helps in connectivity of enterprise systems on-the-go through preconfigured services, with over 200,000 satisfied users.

FactoryMagix and eVMP provide a strategic competitive advantage and help in cost competitiveness, faster deployment, scalability and de-risking while unique toolchain systems like PULSE help in delivering the project successfully by improving program management and driving operational logistics more efficiently. Additionally, client lifecycle experience platforms like Power of 8 redefines and accentuates client experience at every step.

We believe our IP portfolio as set out above positions us well to capitalize on major trends disrupting automobile manufacturing, such as embedded and digital engineering, sustainable engineering and digital manufacturing.

We have various systems and processes in place to safeguard the IP of our clients. We cover all aspects of IP including ownership, confidentiality, security and risk mitigation through contractual agreements (with our clients and employees) and enforce the same through process checks internally within the organization. Audits are conducted frequently to identify aspects of controls, security and risks with respect to IP. The IT team also works to provide a secure environment that prevents IP leakage and contamination. Additionally, we provide continuous IP awareness sessions to educate and empower our employees on aspects of IP, risks and mitigation solutions.

We are not aware of any threatened, proposed or actual proceedings that have been or will be brought against us for infringement of third-party rights or any infringement of our rights by third parties that if successfully prosecuted, would have a material and adverse effect upon our business.

Human Resources

As of September 30, 2023, we had 12,451 employees, of which 11,608 were FTEs and the rest were contracted employees. In the six-months period ended September 30, 2023 we hired 2,267 employees of which 1,973 were FTEs, our attrition rate was 17.20% and the average tenure of our FTEs was 4 years.

The following table sets forth our employee headcount (including FTEs and contractors) and attrition for the periods indicated for our onshore and offshore employees.

	Six-months period ended		Fiscal
	September 30, 2023	September 30, 2022	2023	2022	2021
Onshore employees	1,717	1,676	1,754	1,664	1,351
Offshore employees	10,734	9,013	9,862	7,674	6,603
Total number of employees at end of the period	12,451	10,689	11,616	9,338	7,954
Global Attrition rate (1)	17.20%	24.80%	21.70%	25.10%	11.50%

(1) Total number of FTEs who left the company voluntarily during a period divided by average number of FTEs during the period.

The following tables sets forth our employee headcount by job type as of September 30, 2023.

Job Type	As of September 30, 2023
Management personnel(1)	281
Engineers(2)	9,100
Other(3)	3,070
Total	12,451

(1) Includes management at level 4 and above. Level 4 management includes: Level 4 management includes program managers and above in delivery, account directors and above in sales and sub-function heads and above in corporate functions.

(2) Includes all remaining delivery staff.

(3) Includes non-delivery and non-sales employees, interns, apprentices, trainees, contractors and staff and technician grades and all other employees.

 

The table below sets forth the utilization (defined as total billable hours spent by our employees on client projects by the available base hours of the employees) in our Services business for the periods indicated.

	Six-months period ended		Fiscal
	September 30, 2023	September 30, 2022	2023	2022	2021
Global Utilization rate	87.60%	88.40%	87.10%	86.80%	75.80%

Competition

We operate in a global and fragmented market, competing with a variety of companies. Our key competitors in the ER&D service market include pure play Indian ER&D service providers such as L&T Technology Services, KPIT Technologies and Tata Elxsi, IT service providers such as Tata Consulting Services (“TCS”), Wipro and Tech Mahindra, global ER&D service providers such as Bertrandt, Magna Steyr and EDAG and in-house ER&D departments of our clients (Source: Zinnov Report). For further details, see “Industry Overview—Competition Landscape” on page 173.

Despite high competitive pressure, we believe that our global footprint with balanced talent presence across offshore and onshore locations, deep domain knowledge, technological and process knowledge and capabilities, scale capacity, ability to undertake turnkey projects and our long standing client relationships differentiate us from our competitors and will allow us to continue to successfully compete in our industry.