Tata Elxsi: Near Bankruptcy to Tech Powerhouse

New Delhi, Feb 7 (PTI) After its incorporation in 1990, Tata Elxsi was almost on the brink of bankruptcy and there were even suggestions that it should either shut down or merge with sister company TCS, says a new book which tells the inside story of the firm's business turnaround.

In "Designed to Win: The Tata Elxsi Story", S Devarajan, who joined Tata Elxsi as head of sales in 1993, writes how the company went on to become a leading name in EV design, tech innovation and VFX backend solutions provider to Hollywood among others.

On the early days of Tata Elxsi, the author says Elxsi was founded in 1979 in California by Joe Rizzi and Thampy Thomas, one of the first Indians to found a computer start-up in the US.

"Elxsi was ahead of their time, designing mainframes and supercomputers, when the world was just beginning to grasp the potential of computing power. The Tata Group saw the promise early on. The Tatas invested in Elxsi and brought the company to Singapore, and later, in 1990, to India, where Tata Elxsi was formally incorporated," the book, published by Penguin Business, says.

In 1991, Tata Elxsi went public with an IPO that raised Rs 15.50 crore - a considerable sum at the time.

But Devarajan says raising money and building a profitable business are two very different things, and soon the company found itself struggling.

"The strategy to use Elxsi computers in India's banking, stock exchanges and for enterprise applications was ambitious, but the technology wasn't fully suited for those enterprise markets. Meanwhile, the US operations got sold, and Tata Elxsi was left with a warehouse full of expensive, unused capital equipment," he writes.

Post liberalisation reforms, Tata Elxsi's losses mounted and at one point, the accumulated losses almost equalled its net worth.

Devarajan says his book is an "attempt to share his journey not just as a leader who was entrusted with the task of turning the company around, but as part of a larger


team that achieved what many thought was impossible".

He says after joining Tata Elxsi, his first outstation trip was to meet a senior official of Tata Steel, then a prospective customer, in Jamshedpur.

"This trip brought home some tough realities," he recalls about his visit to Jamshedpur to meet the general manager of the management services division of Tata Steel.

Devarajan says the meeting did not turn out to be fruitful as the atmosphere was somewhat intimidating.

"... He asked me why I had joined this company and that it was defunct from the day it started... I was utterly taken aback by his attitude and the cold welcome. I seriously attempted to defend my case, but it was quite futile. He even mentioned that we should either shut down Tata Elxsi or merge it with TCS," he writes.

"It was disappointing that a senior executive of a Tata company was so insensitive. On further discussion and probing, I realised that Tata Steel was not even in the run for the solutions that we were offering. In fact, they were looking for solutions in the process control space, and we had nothing to do with that business," Devarajan adds.

He says it was a wasted trip, but he "came back with a lot of learning".

"... My company should stand with respect. We were a Tata company. With that name, I should hold the flag high and command respect. And for that, I needed to rebuild the Tata Elxsi brand all over again," Devarajan, who went on to become the CEO in 1996 and worked with Tata Elxsi till 2001, writes.

"By the late 1990s, we had wiped out our losses and become a dividend-paying company again. We opened our second development centre in Technopark, Trivandrum, an initiative of the Kerala government. Our services' business grew to 50 per cent of our revenues, and our reputation in the market soared. We had transformed Tata Elxsi from a struggling hardware manufacturer to a cutting-edge design and technology powerhouse," the book says. PTI ZMN RB

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