Some Basic Knowledge About Tata
Tata Technologies is going to be one of the most sensational IPO of 2023. And this is a very very big deal because this is the first TATA company to go IPO IN 18 Years only after the iconicTATA consultancy company and we all know how TCS became a star in the INDIAN Stock market with an appreciation of 2600% and you know what just like TCS became a pioneer in the I.t revolution of INDIA. TATA Technologies is the pioneer in the EV revolution of INIDA, but while most of the news channels only spoke about the numbers in the financials of Tata Tech very few of them actually taught us the fundamental business strategy of Tata.
All About Tata Tech
The first thing we need to understand is why the Tata Technology IPO is so so special and amongst all the IPO in India why is every investor specifically excited about this particular IPO. Well, apart from the Tata brand and the EV Revolution the investors are very very excited to see the string financial of the company as you see their revenues have been growing vert-very steadily from 2380 crore to 3011 in the financial year 21 to the third quarter of Fy 23 SIMILARLY it’s profit gone up from 239 cr in Fy21 to 407 crores In the same period.
Secondly, this company is a zero-debt company which means it has no debt obligation at all lastly its current ratio is very-very strong. For those who don’t know the current ratio is a financial ratio that measures a company’s ability to pay short-term obligations and it is calculated by dividing the company’s current assists by its current liability, so the more this ratio the better it is for the company.
Now while Reliance has a current ratio of 1.1 Adadi ports stand at 1.29 and TATA Tech has a current ratio of 1.87 this means for every rupee of short-term liability it owes it has 1/87 rupees of assets to pay off but if you compare the current ratio of Tata tech with its direct competitors you will see that while Kpid’s current ratio stood at 2.5 Tata Galaxy stands at 4.13, LNT technologies services stand at 3.27 and Tata tech stands at 1.87 and in general current ratio, 1.5 is considered to be very good so the tata brand it’s revenue its profits and the strong financial ratios are the reasons why the Indian investors are very-very keen to see Tata technology go IPO.
What Kind Of Company does Tata Tech Have?
Tata Technologies works in a domain called engineering research and development services and if you don’t know how an EERD company works here is a very very simple explanation of the same let’s say Tesla is releasing their new EV model called Model X and they need expertise in designing developing and testing and one of the problems statements is the reduction of the cost now to do this tesla has two options number one to set up an in-house team of scientists researchers and engineers who can actually do the designing developing and testing of the products now this will involve a tedious recruitment process payroll processes HR heads office infrastructure giant high-tech equipment and a ton of other procedural work that will cost Tesla both ton of time and a ton of money but,
The second option that they have is to outsource this particular problem to a special company that already has engineers scientists and researchers who in fact specialize in this type of problem solving now this special company is nothing but an engineering research and developing company. what will do is they will use computer simulations to actually identify the area where the materials can be changed for example aluminum alloys are commonly used to make cars because they are both light and they have high tensile strength, so it helps keep the overall weight of the car low and improves the fuel efficiency however the problem with aluminum alloy is that they are very very expensive as compared to other materials like steel and this increases the cost of manufacturing of the product but at the same time if you use steel then it is very heavy material so it increases the weight of the car and then it decreases the fuel efficiency so this is where the ER and development company would use computer simulation to actually identify the most efficient shapes and thickness of the aluminum components.
similarly, the scientist will be able to identify which part will be used to make using alternate materials like polymers or steel and the engineers will also analyze the ways to reduce waste eventually they will be able to advise Tesla on where to use steel and where to use aluminum alloys where to use polymers and how to reduce the waste in their manufacturing units and this structure follows Tesla may be able to decrease the cost of its car by 4.5 % this is how an engineering research and development company actually solves the pain points of their clients.
This is exactly what Tata Technologies does, in this case, Tata Technologies has three major verticles of business and for each verticle, I will explain what Tata Tech does so that you have a better idea about not just the number but also the incredible Tata Tech actually doing in India.
The first verticle that we have is the automotive industry and for that, you already know what kind of work Tata Technologies does because of the Tesla examples.
The second verticle business is the Aerospace and defense sector for this we have a case study whereby an aviation industry was looking to make their engines more efficient and here’s where the customer was actually seeking a partner with a very unique combination of engineering skills applications know how a development experience and here’s where Tata Technologies came into the picture and amongst the many things they did, they implemented something called the tool harmonization for those who don’t know tool harmonization refers to the process of standardizing and aligning tools methodologies and processes across different teams different departments and organizations.
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