Outsourcing: Ravi Pandit, Chairman And Group CEO, KPIT Cummins (Part 2)

Sramana Mitra: Where are most of your customers, and where are most of your operation? Would you talk a bit about customers and how your company is organized geographically?

Ravi Pandit: We are all over the world. We work with almost 15 auto OEMs all over the world, and these include auto OEMs (original equipment manufacturers) in the U.S., Germany, Korea, Japan, England, and France. We have clients wherever there is an automotive industry. We also work with some 50 or 60 automotive tier ones.

We are about a quarter of a billion dollar company. That is what we did in revenue last year. We believe that we should do at least 20% growth on an organic basis plus another $60 to $70 million of growth by virtue of some of the investments that we have made recently. We have been growing substantially; last year our growth was 46%, if you leave out that single year when the whole manufacturing industry in the world suffered. Even though [that] year, five years [out] our CAGR was 50% top line and 50%  bottom line.

SM: When was the company founded?

RP: This company was founded in the early 1990s. We became a sharply focused company four or five years ago. We have been listed since 2001, and our market cap is about $350 million. Further, we have about 6,000 to 6,500 people.

SM: And where are these 6,000 to 6,500 people?

RP: A large number of them are based in India. In India, our major work is done in Pune. We have about 3,000 people in Pune. We also have about 1,500 to 2,000 people in Bangalore. Then we have people in Chennai,  in Gurgaon, and in Hyderabad, which is where automotive industry operations are. We are spread all over India. In the U.S., we have a strong presence in Detroit, in Indiana, and on the West Coast. We have two offices in Germany, an office in Japan, an office in Korea, an office in France, one in England, and so on.

SM: It sounds as though most of your work is in automotive, so let’s focus on that. How does the automotive work split out? What portion of it is in design services?

RP: Almost 35% of our work is in product design, and within that, we cover three  layers of work. We design chips, which go into the automotive applications. Here we work with chip manufacturers, helping them to build chips that are relevant for the automobile industry. Then we do embedded software, the software that goes on these chips, and mechanical engineering consulting. We help design mechanical products. The remaining part of the work we do is in business IT. Whether the application of the Oracle suite of products or SAP, we work on that. Supply chain management and business inclusion are other areas we work in.

SM: Let’s talk about how the product design services business works in terms of infrastructure. That is world of computer-aided design (CAD). Such work tends to be collaborative efforts with large design teams and lots of information passing back and forth among multi-tiered design chains, not just multi-tiered supply chains. How does that work? How do you work in that ecosystem?

RP: Out of the 2,500 people we have who work on product design, 2,000 work on embedded software and electronics. Our basic trend is in embedded software. Actually, we are India’s leaders in this. We are India’s largest automotive embedded third-party vendor. So, the focus is not so much on CAD; it is more on the electronic side, on the embedded side. Almost 90% of the work done is done offshore, and probably, these are one-line problem statements. To illustrate, a problem statement could be “develop an anti-skidding break system for a car.” We do everything else. Or a single line problem statement can be “build a cluster system that can be fit on a big chip and not a particular chip.

SM: That makes it very easy to manage the process. None of the CAD collaboration issues; none of that comes up, really.

RP: That is right. But it is also a statement that a customer will give you only if he feels that you understand his problems and his challenges.

SM: How do you get to that position?

RP: We have been working at it for the last 10 years in a very focused manner. Today now we are a part of that ecosystem. We are a part of the standard-setting bodies.

This segment is part 2 in the series : Outsourcing: Ravi Pandit, Chairman And Group CEO, KPIT Cummins
1 2 3 4 5