‘We want to reimagine mobility, be the leader’

“Pivot” is a word start-ups are familiar with, but what happens when a listed entity known for its services and has a steady source of revenue decides to pivot. Pune-based KPIT Technologies is one such company. In 2018, it demerged its enterprise IT services business to Birlasoft while keeping its engineering services business. RAVI PANDIT, co-founder and chairman, KPIT, says the demerger has not only given good returns to shareholders but the company has focused on its core expertise. In an interview with Shivani Shinde, he talks about the shift the auto sector is seeing due to the pandemic, the rising demand for autonomous vehicles, and KPIT’S trajectory on global automakers’ digital road map. Edited excerpts.

You have stated the company will see double-digit growth in FY22. Can you tell us the demand environment?

As you know, KPIT is completely focused on the mobility sector, providing automotive, embedded software engineering services. The world of “automotive” is changing. You will find that high-end cars like a Lexus or BMW have 130 computers on them. A low-end car will have 50-60 computers.

The number of lines of code that cars today have runs into millions. I think the component of electronics and software inside the car will contribute to 40-45 per cent of its value.

We are focused on software and software integration in vehicles and that is emerging as a core focus area in any auto activity. That is what gives me confidence about growth. We are India’s only company that is 100 per cent engineeringand auto sector-focused. We work with almost every major auto company in the world. Millions of cars across the globe are running on KPIT software.

In 2018 the company demerged its IT services business. How has that worked?

We are the first port of call for any auto company in the world. Likewise, we have increased our presence in cities that are big names in the auto sector, like Munich and Detroit, and countries such as Japan, the UK, and China.

At the time we demerged, the share value was around ~150, and today we are ~200 and Birlasoft ~300. The other important part is the sense of self-respect among employees in being recognised as the best.

Our pivot has been successful. Our profitability has gone up, and 70 per cent of our balance sheet is cash. Look at it from any perspective, this has been very good.

How has the pandemic affected the auto sector, and how is KPIT placed to capture the shift in automakers’ technology road map?

You see the impact in the first two quarters of FY21. Two things happened; one, people’s movements stopped, and work from home impacted sales. But the pandemic has brought in a structural shift within the auto sector, and it will change the industry.

As consumers we would go and buy a car, and run it for 15,00020,000 km a year, and the vehicle would be sitting idle for a good 20 hours a day. In the past few years, we have all moved to shared mobility, and Ola and Uber have changed the way we travel and own a vehicle.

And these cars are running for 22 hours a day. So fewer cars may be sold but the life of the car is getting shorter. Because the life cycle is small the rate at which the innovation comes will be high.

Earlier if you talked to an automaker, for example in the year 2020, they would talk of a model that will hit the markets in 2025, but today the talk and targets have reduced by two-three years.

Research and development is going up. There is huge work in the area of electrification… For instance, GM recently said it would get completely into electric cars, and the scramble for tech is extremely high. These kinds of changes do not happen often.

...What does this mean for KPIT?

We are focusing on software integration. Until recently the focus was on infotainment, Apple has walked into it, and auto original equipment manufacturers (OEMS) need to get this system integrated into its vehicles, so we do a lot of integration for OEMS.

We also help with standardising products much faster. We do a lot of work in the autonomous vehicle segment. BMW has taken us as its strategic partner in the autonomous vehicles space. But for us it means we need to be always on the top of the curve in terms of AI and technology adoption. What has changed is the amount of depth we offer, for which we are hiring more Phds and researchers.

Where do you see KPIT in the next five years?

We want to reimagine mobility and be the leader. The passion within the company is to come up with solutions and drive this space.