Tata Technologies Ltd (NSE: TATATECH) Q3 2025 Earnings Call dated Jan. 21, 2025
Corporate Participants:
Vijay Lohia — Head of Investor Relations
Warren Harris — Chief Executive Officer and Managing Director
Savitha Balachandran — Chief Financial Officer
Analysts:
Chandramouli Muthiah — Analyst
Bhavik Mehta — Analyst
Abhishek Kumar — Analyst
Karan Uppal — Analyst
Rajiv Berlia — Analyst
Kumar Saurabh — Analyst
Vidyadhar Ginde — Analyst
Ruchi Makhija — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Tata Technologies 3Q FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone.
I now hand the conference over to Mr Vijayl, Head of Investor Relations at Tata Technologies. Thank you, and over to you.
Vijay Lohia — Head of Investor Relations
Thank you, Ryan. Good day, everyone, and welcome to Tata Technologies Third Quarter of Fiscal 2025 Results Call. I’m Vijay, Head of Investor Relations. Joining me on the call today are Mr Warren Harris, CEO and Managing Director; Ms, COO; and Ms Avita Balachandra, CFO. We’ll begin with an overview of the company’s performance, followed by a Q&A session.
Please note that we do not provide specific revenue or earnings guidance. Any forward-looking statement made during this call should be considered in the context of the risks that the company faces as outlined on the second slide of the quarterly fact sheet available on our website. The press release and earnings presentation have been submitted to the stock exchanges and are also available on our website, www.tatotechnologies.com. We hope you’ve had a chance to review them.
With that, I’ll now hand over the call to Warren.
Warren Harris — Chief Executive Officer and Managing Director
Thanks,, and welcome to the call, everybody. Let me start by wishing you and your families a healthy and prosperous new year. I will begin by sharing highlights of our 3rd-quarter before inviting Savita to provide a detailed analysis of our financial results. I’m pleased to report that we achieved sequential revenue growth of 1.7% in constant-currency, despite operating in an environment marked by economic uncertainty and Q3 being a seasonally soft quarter. The 3rd-quarter typically features fewer billing days due to festivals and holidays in different parts of the world. Our services business grew sequentially by 1.1% in constant-currency terms, aligning with the outlook we shared during last quarter’s call.
Meanwhile, our Technology Solutions segment delivered robust sequential growth of 3.7% in constant-currency, driven by an impressive 55% growth in our products business, partially offset by a 20% decline in the Education segment. The products business typically delivers strong performance in Q3, driven by the discharge of year-end customer PLM software budgets. In contrast, our education business faced challenges due to delays in infrastructure readiness. Our digital tech model relies on fully operational labs within the academic institutes that we partner with. Construction delays impacted bookings in Q3. However, we anticipate that these facilities will become available in early part of calendar year 2025, coupled with a robust pipeline we expect to convert, we are confident that the growth — momentum of our education business will continue.
Our operating EBITDA for Q3 stood at 17.8%, reflecting a sequential decline of 40 basis-points. This performance, however, underscores the strength of our operational discipline as we effectively absorbed a 150 basis-point impact from wage hikes implemented during the quarter. From the perspective of demand, let me comment on the demand trends within the three industry verticals in which we operate. In the automotive segment, demand patterns remained consistent with what we’ve seen in the prior quarter with decision-making delays persisting due to regulatory uncertainties in the US and the challenges in the European market-driven by weakening consumer demand and competition from China.
While these headwinds have tempered EV growth, we see this as being temporary with passenger vehicle market still projected to grow in calendar year 2025 by 1.7% as confirmed by S&P Global. We anticipate greater policy clarity in the coming months that is likely to prompt a diversification of OEM investments across various propulsion technologies. This shift plays to our strengths as we offer deep expertise across battery-electric vehicles, plug-in hybrids and internal combustion engine propulsion systems.
In contrast, the aerospace and industrial heavy machinery segments showed continued resilience with strong demand for our services. Notably, our aerospace business achieved 39% sequential growth in Q3, supported by a growing order book. We expect this momentum to continue into Q4 and into the next fiscal year. From a deal signings perspective, we closed four significant deals in Q3, reflecting strong traction in digital engineering, smart manufacturing, Gen AI and embedded software solutions. The key wins include a multi-year contract with a European luxury automotive OEM for testing and validation of a new battery-electric vehicle.
We’ve also secured the responsibility to stand-up an offshore development center for a global Tier-1 automotive company. In addition, we won a software and embedded engagement with a global technology provider to the automotive industry that will provide emission reduction and energy efficiency solutions for turbo, hybrid and electrified components and subsystems. And in the education sector, we’re partnering with the government of Tripora to deploy our Ed proposition across 19 ITIs. From an investment perspective, we continue to develop solutions that deliver value for our clients in areas that are relevant to their strategic imperatives.
In the area of sustainability, we are developing a prognostics platform for a European automotive OEM that will help them predict the future condition or the remaining useful life of vehicle components using data-driven or model-based approaches. We’re also developing a battery passport platform for the same customer, which will offer lifecycle analysis tools for environmental impact assessment, material traceability and carbon footprint reduction strategy. Across each of these areas, we continue to double down on our investments in AI and Gen AI. A notable achievement for our company in Q3 was the formal launch of our proprietary AI and Gen AI framework.
The plan is to leverage the platform for both internal and external use cases. This framework leverages modular architectures, pre-trained models and real-time IoT data to streamline application development. By enabling faster prototyping and seamless integration, it empowers businesses with predictive analytics, defect detection and workflow optimization, whilst integrating seamlessly into open-source and closed source LLMs and existing enterprise IT applications. The platform is currently being used by North American Tier-1 customer as part of a manufacturing transformation engagement to drive improvements in productivity, predictability and efficiency across multiple plants.
And moreover, our AI and Gen AI-based capabilities are increasingly being recognized by the technology and the manufacturing sectors. For instance, one of our Gen AI-powered sales assistant applications that we’ve deployed for an Asian automotive OEM dealership network has recently received several innovation awards. I’m also delighted that in Q3, the partnership with BMW has begun operations. We now have facilities in Pune, Bangalore and Chennai. The business has begun with a headcount of over 100 people. We’re scaling rapidly and we expect to stand-up a team of more than 1,000 people by the end of this calendar year.
We’re incredibly proud of the endorsement that BMW have given to Technologies. Their commitment to partner with us to establish a global hub for automotive software and digital services is a tremendous testament to our industry-leading capabilities. Despite the economic uncertainties, we remain confident in our ability to deliver value to our clients. Our robust pipeline, coupled with strategic investments in technology and innovation position us well for sustained growth as market conditions stabilize and improve. And with that, I’ll hand over to Suvita for a detailed commentary of our financial performance
Savitha Balachandran — Chief Financial Officer
Thank you, Warren. Good morning or good evening everyone depending on your location and thank you for joining this call today. In continuation to the details that Warren shared about the progress in different areas of our business, let me share with you the financial performance in the 3rd-quarter of fiscal ’25. Overall, while our operating environment continued to present some challenges, our results for the quarter were resilient with revenues from operations growing 1.6% sequentially to INR2,318 crores. On a constant-currency basis, our total revenues were up 1.7% in the quarter. As far as segmental performance is concerned, revenue from our services business, which contributed approximately 77% to our total revenues, increased 1.1% sequentially in constant-currency terms and 0.8% on a reported basis, reaching approximately INR10 billion. It is particularly noteworthy that this growth has been delivered in the backdrop of a challenging business environment and a seasonally weak quarter with higher number of holidays.
Overall, we believe our strong service portfolio positions us well to effectively adapt to the challenges of the current market, demonstrating both resilience and agility. An additional data point that demonstrates the health of the underlying business is the 17% year-over-year increase in the Nine-Month services dollar revenue, when you exclude the effect of the very large project completion we did for Windfast last year, which in fiscal ’24 contributed to over 14% of our services revenue. Overall, we believe a strong service portfolio positions us well.
Moving on to the technology solutions, which formed the remaining 23% of revenues. The segment grew by 4.6% over Q2 to clock a revenue of INR305 crores, largely supported by the renewal deals, which is characteristic of the final quarter of the calendar year in the products business. On a constant-currency basis, the segment witnessed a 3.7% sequential growth. On the margin front, performance is noteworthy with the EBITDA margin for the quarter coming in at 17.8%, arresting the sequential decline to 40 basis-points despite the 150 basis-point increase in our salary cost from the organization-wide annual salary increase across all levels during the quarter.
I am pleased with the swift cost optimization measures taken that enabled us to partially offset this cost headwind. There is a 40 basis-point reduction in the outsourcing and consultancy charges achieved through effective bench management and replacing external resources with internal talent. We’ve also seen a 50 basis-point benefit from the reversal of provisions for credit-loss as we collected some old dues and a 60 basis-point reduction in certain discretionary expenses that helped us to ensure that our margin decline is arrested.
We continue to make progress on updated margin expansion levers such as pyramid optimization as well as improved productivity and these actions will reflect our commitment to maintaining operational efficiency while supporting sustainable growth. As Warren mentioned in his remarks, I’m very pleased to share that our partnership with BMW began operations in Q3. As far as the accounting treatment is concerned, we are applying the equity-method of accounting and in Q3, our share of profit amounted to INR56 lakhs. Furthermore, the other income also includes a deferred income of INR8.3 crores, representing the fair-value gain on the call and put option relating to the investment in this company.
I would like to highlight that beyond the technical form of a vehicle that’s used to deliver services to BMW, this partnership is a multi-year large deal from our perspective and hence an extension of Tata Technologies operations. Due to client confidentiality, we are unable to disclose specific details on the commercials, but the deferred income represents a recurring item alongside the share of profit. Consequently, we report this income as part of our operating profit or EBIT, which grew by 3.1% sequentially to INR212 crores. During the quarter, we reported the other income of INR27.6 crores, marking a sequential increase of 68% compared to INR16.4 crores in the previous quarter.
In addition to the deferred income already discussed, this growth was primarily driven by an increase of INR2.8 crores in interest income resulting from higher cash balances as well as a net gain of INR2.2 crores from fair-value measurement of certain investments. As a result, profit before-tax increased INR226 crores, representing a 4% sequential growth. Our effective tax-rate in the quarter came in at 25.4%, a decrease of 220 basis-points compared to previous quarter. As a result, the profit-after-tax saw a robust increase of 7.1% quarter-on-quarter to INR169 crores. We observed a modest increase in DSO during the quarter, reflecting increased billing velocity of the seasonally strong products business. However, our collection efficiency continues to remain robust, reflecting the strength of our credit management process.
Turning to cash flows. Our free-cash flow for the first-nine months of the fiscal stood at INR681 crores. We remain focused on enhancing the cash collections and optimizing the conversion levels to maintain liquidity and support sustainable growth. At the close of 3rd-quarter, our net cash position stood at $154 million, up from the $145 million of the previous quarter.
Moving on to highlights of operational metrics. We continue to optimize capacity by balancing full-time employees and outsourced resources. And as a result, utilizations improved by about 40 basis-points sequentially to 88.1% with a modest scope for further improvement in the near-term. We continue to strengthen our talent pyramid by increasing campus hires while making selective lateral recruitment aligned with business needs. Attrition trends also continue to move-in a favorable direction, supported by a broader decline in the industry-wide attrition rates.
Our last 12 month attrition improved further this quarter, decreasing to 12.9% from 13.1% of the previous quarter. And we remain focused on talent development, increasing training in key areas such as software-defined vehicles, generative AI and cyber security among others. As far as our onsite and offshore mix is concerned, we saw a sequential reduction of 200 basis-points with our offshore revenue mix reaching 41.7%, driven by a temporary shift of efforts to onshore work-in line with certain project milestones.
We remain focused on implementing measures to gradually increase the offshore ratio in the coming quarters. In conclusion, I’m encouraged with our performance this quarter, highlighted by a 1.7% top-line growth, 3.1% EBIT growth and a 4% sequential increase in pre-tax earnings. Looking ahead, we remain committed to strategic investments in our identified areas of growth. Simultaneously, we will also continue to prioritize operational efficiencies and maintain a competitive cost structure to drive long-term value-creation.
With that, I thank you for your time. We can now open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and 1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from Chandra Moli Muthaya from Goldman Sachs. Please go-ahead.
Chandramouli Muthiah
Hi, good evening and thank you for taking my questions. My first question is just around the environment for spending on electric vehicle R&D and autonomous vehicle R&D. You did mention in your prepared remarks that you expect more policy clarity around climate change and electrification related incentives from different governments around the world. So just want to understand post the inauguration of the US presidency last night, there are press articles talking about his focus on trying to come a little lower on the electric vehicle mandate, focus a little more on local fossil fuel production. Just want to understand what your initial thoughts are on some of the emerging news flow soon after the presidency inauguration last night.
Warren Harris
Yeah, thank you for the question and I think it’s particularly relevant you know, given the timing of yesterday’s inauguration. And we fully expect various components of the Inflation Reduction Act to be revisited that we think some of the incentives that have been provided in the United States for EVs will either be removed or will be resized. And so we think that will prompt some tapering of demand for full battery-electric vehicles. And we think that the industry response is going to be that the OEMs will invest in a much more balanced portfolio of propulsion propositions. So they will — they will not only invest in EVs, but we think that there will be much greater investment in plug-in hybrids and also optimizing and refining in the United States, legacy internal combustion engines. And I think the great news for us at Technologies is the strength of capability we have in all three of those areas.
We have a particularly strong EV proposition given the work that we’ve done with the likes of WinFast and Neo and companies like Rivian, and we have a plug-in hybrid set of references, the most notable of which is the work we did with Polestar when we completed the Polestar One and we’ve been in the automotive business for over 30 years. And so the breadth and depth of our legacy propulsion system capabilities is something that has helped us define the brand over the last 25 to 30 years. So you know for us what what’s kind of exciting is the fact that the policy clarity we think will prompt a release of R&D budgets, which will stimulate the type of demand that we intersect with. So we’re somewhat agnostic in terms of the type of investment where we’re much more dependent upon investments being made. So for us, our policy clarity is very much a good thing.
Chandramouli Muthiah
Got it. That’s helpful. My second question is just a follow-up on the aerospace business. You mentioned there is an impressive sort of 39% Q-o-Q growth there. Just want to understand post that sort of growth, what the rough size of the aerospace business could we just ballpark as a percentage of our total revenues today?
Warren Harris
Well, we’re incredibly ambitious for our aerospace business. I think we’ve signaled in the past the investments that we’ve made not only in relationships and capabilities, but also in terms of accreditation. One of the big customers that we are working with has recently granted design authority for the work that we undertake. And what that means is that we can actually sign-off on our own work and it’s not — it doesn’t have to go through an approval process with the client. That’s an accreditation that typically takes 2.5 years, three years. And so the fact that we have that now has certainly helped us scale the — that particular relationship. And so whilst I don’t — we don’t give out specific guidance and quantify what the aerospace business will mean in terms of mix, what I can say is that we certainly expect aerospace to grow at the fastest rate of all three verticals of a relatively small base, but we expect to increasingly become a very important and material part of our business mix.
Chandramouli Muthiah
Got it. That’s helpful. And just lastly, a housekeeping question around the deferred income that was discussed earlier. So you mentioned that the share of profit from the BMW contract will come in share of profit from associates and JVs line below the EBIT line. I just want to understand the deferred income a little better, how that’s getting accounted? Is that going into top-line? Is that going into any of the other lines in the P&L? Just want to understand that a little bit right now.
Savitha Balachandran
Sure. Thanks for the question. An opportunity to clarify,. As you rightly said, there are two effects in our P&L this quarter from our partnership with BMW. One is the share of profit, as you can see above the face of the P&L is above the PBT item. The other effect is the deferred income, which technically as per accounting standards, we are forced to show that as part of the other income because as I said, it reflects the fair-value gain on the option that the partners hold in the joint-venture company. But it is a continuing effect that we expect to receive in the foreseeable future. And therefore, from our perspective, given our ability and intention to collect this, we are covering it as part of our other income and that’s why it’s called out as included in our EBIT for this quarter.
Warren Harris
Yeah. And let me just reinforce, this is compensation for the — for the work that we are undertaking for BMW. We’ve taken the responsibility of setting up the three centers in Pune, Bangalore and. We have — we provided the leadership team for this joint-venture. And many of the systems and processes benefit from the infrastructure investments that we Technologies have made. So although we are constrained by the way in which we are accounting for this compensation through the various accounting rules, this again should be seen very much as a as a return for the investment that we’ve made in the energy.
Chandramouli Muthiah
Got it. So is this something that we expect to recur on a quarterly basis in our other income line just as we sort of model the other income line going-forward?
Savitha Balachandran
Yes, as I said for the foreseeable future, we do see this coming through on a quarterly basis.
Chandramouli Muthiah
Got it. That’s helpful. Thank you very much and all the best.
Operator
Thank you. Next question is from Bhavik Mehta from JPMorgan. Please go-ahead.
Bhavik Mehta
Hi, thank you. So my first question is around the broader demand in auto here. India, obviously, there has been a slowdown, but if you have to characterize the extent of slowdown that’s across US, Europe and Asia, how will you define that in terms of where it is on the highest? And also related question is, as you expect a pace of recovery to happen, which geography could be the first one to recover from this downturn?
Warren Harris
Again, a very fair question. If I look at this geographically, what we’ve seen in the US and Europe, we’ve not seen in Asia. So the slowing of demand that we’ve seen in the Western markets, we’ve not seen in Asia. We’ve not seen in China, we’ve not seen here in India. So the demand here continues to be relatively robust. As far as the US is concerned, I think the extreme policy positions of the Democrats and the Republicans have presented a challenge for the industry in terms of aligning investment with what the regulatory framework is likely to look like. And so now that we have clarity, at least in terms of what we expect, then I think you’ll see investments return much sooner in that region than you will in Europe.
I think Europe is still grappling with the fact that many of the OEMs are still selling a significant number of units in the China market. And so any regulatory reaction to the competition that Chinese OEMs represent in Europe is likely to be considered and thoughtful and calibrated. And we expect the clarity around that to take several months. There will be a response, there is no doubt about that, but it will — it will probably clarify after we see the administrative position of the new administration in the United States. So Asia, we’ve not seen any real dip in-demand. Europe is likely to come, come is likely to rebound after the United States.
But what I will say overarching in terms of the relative positions of the different regions is that the automotive industry is going through somewhat of an existential challenge. If you look at the recent merger discussions that are going on between and Honda, there is significant change that is really being driven by the competition that is expected to manifest itself in and around the movement to EVs, the movement to connected, software-defined vehicles and autonomous driving. And for those organizations that are committed to not only survive but thrive, they have to continue to invest and invest in a way that is not exactly linked to the sales performance of the individual company. And that’s one of the reasons that we continue to be bullish certainly in the medium-to-long term in terms of the opportunity that also now it represents for our company.
Bhavik Mehta
Okay, that’s very helpful. The second question was because of the slowdown we are seeing in euro, does this impact both the planned capacity additions within the BNWJV in India, is there any risk to it?
Warren Harris
Not at all you know, in fact, even when I make high-level comments about the regions, you know you you need to look at the individual positions of each company before I think you can judge what the implications are for the various brands. And one of the things that I think characterizes BMW is, one, a very strong balance sheet. And two, the focus that they always have on the medium-to-long term. So the cyclical nature of the automotive industry typically does not impact the R&D commitment of the more successful companies and BMW is certainly one of those.
Bhavik Mehta
Okay, good morning. Thank you.
Operator
Thank you. The next question is from Abhishek Kumar from JM Financial. Please go-ahead.
Abhishek Kumar
Yeah, hi, good evening and I think good performance in a difficult environment. First question, Warren, you know you mentioned in your initial remarks that you expect the slowdown to be temporary. Just wanted to understand how do you define temporary? Is it like two quarters a year longer? And a related question is, what are the kind of conversations that we are having with some of these OEMs which are under pressure, especially the mass-market OEMs in Europe, et-cetera? Are there any talks around more outsourcing, larger cost takeout deals you know that will help them you know in the current environment? Thank you.
Warren Harris
Yeah, two great questions. I think we will continue to calibrate and recalibrate expectations on every day, every week, every month and every quarter. But I think if we look at our current visibility, our anticipation is that within the next couple of months, the big three in Detroit and the new energy vehicle companies on the West Coast will return to the type of investment that we saw running up to the beginning of last year. And I think, again, Europe will take a little bit longer, but organizations like BMW will stand-out and continue to invest. And again, we don’t expect any real change to the demand environment here in Asia. And so if you aggregate all of that together, you know, we’re expecting an improvement in the early part of the next fiscal year.
As I said before, we’ll continue to calibrate and recalibrate, but that’s our view. This is a short-term slowdown and certainly the type of conversations that we are having with our customers right now and the opportunities and the — and the deals that we are adding to the pipeline, certainly reinforce confidence around that. You know, as in response to the second question, you know one of the things that I always reinforce to our business development teams is that when things are tough for our customers specifically, that represents massive opportunity for us. One, it gives us an opportunity to communicate to our clients that we’re there for them in the good times — we’re there for them in the bad times as well as the good times.
So it’s an opportunity for us to reinforce relationships, but it’s also an opportunity for us to look at creative ways of increasing the value that we can we can deliver to those customers. And one of the things that we’ve seen recently is conversations with customers, whereby we’ve been looking at opportunities to deliver things like hardware infrastructure and deliver that back as a service. Wrap that wrap a service around that. We’ve looked at ways of carving out capabilities from our customers and delivering that from offshore locations. None of these things are baked into our operating plan as yet.
None of them are based into our forecast. But I share that with you primarily to signal that during these types of times, the conversations that we’re having with our customers provide the opportunity for us not only to do more from an offshore perspective, but also enter into white space that typically we’ve not — we’ve not competed or delivered services in. So we’re seeing those conversations play-out in many of our strategic customer relationships and it’s another reason, another and would like to point out that we continue to be optimistic about the future.
Abhishek Kumar
That’s very detailed. Thank you. One question for Savita. Santa, our medium-term margin aspiration of 20% plus, do you think in the current environment that kind of gets pushed out? I know we have not given any timeline, but still given the growth challenges, et-cetera, do you think it will be a lot more gradual now to reach that aspirational level? Thank you.
Savitha Balachandran
Thanks, Abhishek. So I would say we continue to remain bullish on the medium to long-term also on the structural tailwinds available to the industry and the market. And therefore, we believe that our performance both from a top-line and a margin perspective should benefit from that. So to your question, the aspirational goal of 20% definitely continues to be live for us.
Abhishek Kumar
Great. Thank you and good luck.
Operator
Thank you. Next question is from Karan Oppal from PhillipCapital. Please go-ahead.
Karan Uppal
Yeah. Thanks for the opportunity. So Warren, just a question on our anchor clients. So what’s the outlook there both within JLR and Motors. You sounded quite optimistic on the on the APAC business, which includes Tata Motor. So what’s the outlook there? And the larger context of the question is, is the to an extent insulated from the headwinds which other ER&D players might be facing because of their higher exposure to the Western OEM.
Warren Harris
I think in terms of Q3, the performance of the anchor clients was robust. We didn’t see any runoff. And both of those organizations in terms of their sales performance continued to do well and we obviously have visibility on their investment plans and we are confident that we will continue to support them in many of the ways that we are currently supporting them. So we do not see any material change to the — to the relationships and the performance of the of the anchor customer. And in terms of, does our mix protect us vis-a-vis some of the competitors that are more exposed to the Western geographies. And I think the fact that we have a global footprint in terms of people and customers, I think that does interject some balance and some form of protection against the ebbs and flows in different markets. And it’s something that we’ve worked hard to build over the last 20 25 years, something that I think we’ll continue to invest in.
Karan Uppal
Okay, great. Second question is on aerospace. So you sounded quite optimistic on the Aero growth story. So just wanted to check with you in terms of the service mix with which services are finding traction at this point of time? Is it new product development? Is it MRO, is it Avionics? Any color would be helpful important.
Warren Harris
Yeah. Again, another fair question. We look at aerospace in the context of four areas. We look at aero structures, which for us includes interiors, we look at propulsion systems, we look at MRO and we look at digital. And those are the relevant areas for us. Where we are seeing traction is digital, particularly in the context of manufacturing throughput. Now the likes of Airbus and Boeing and their associated supply chains can’t build aircraft quickly enough. And so they’re leveraging technology to optimize the way in which they build aircraft and we are playing a big part of — a big role in that, particularly at Airbus. And as far as the other sectors are concerned, MRL has been relatively stable for us. And really started to contribute in a material way.
I announced in the last quarter, one of the deals that we had won with a business-class seat manufacturer in Europe and that has scaled during the 3rd-quarter and has now come online in terms of contributing in a in a material way. So that’s going well. On propulsion, we are seeding the relationships with a number of North American engine providers through the placement of people and through some small project work and that’s helping us build the relationships and those things are going well and certainly gives us confidence that we’ll continue to scale that through this quarter and into the next fiscal year.
Karan Uppal
Okay, great. Thanks, thanks and all the best.
Operator
Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. Next question is from Rajiv from Citigroup. Please go-ahead.
Rajiv Berlia
Thank you for the opportunity. Two questions from my side. On the — I’ll say the client bucket, 10 million to $15 million, we saw one drop decline. Can you please clarify that? And secondly, you mentioned in the opening remarks that you won four deals. From a 10 perspective, can you talk about on the TCV, how the TCV has been in the last three, four quarters? Thank you.
Warren Harris
Could you repeat the first question? I got the TCV 3CB question, but if you could repeat the first part of the question, I very much appreciate it.
Rajiv Berlia
Yeah. So in the client metrics, if you look at it, 10 million to 15 million size of clients, we saw on a sequential basis a drop-in client
Warren Harris
So in terms of the drop-in quiet, I think the primary impact has been the way in which Windfast is dropping through our various customer categories. And the baseline effect of Windfast in terms of year-on-year comparisons continues to impact the way in which we look at not just customer categories, but also the growth trajectory of the company. I think Savita commented in her opening comments that we’ve grown 17% outside of Windfast in the in the last 12 months. So we continue to perform well, but obviously the runoff of that material engagement has impacted our performance at a — at an aggregate level. In terms of TCV and we don’t disclose the quantum of deals that we closed. But what I would say is that from a large deal perspective, our performance in Q3 was commensurate with the performance in the first two quarters of this year. So we’ve not seen a drop-off in terms of our large deal conversion capability.
Rajiv Berlia
Thank you. That’s all from me my side. Thank you.
Operator
Thank you. Participants who wish to ask questions may press star and one. The next question is from Kumar Saurab, who is an Individual investor. Please go-ahead.
Kumar Saurabh
Hello, sir. Good evening, everybody. I’m Saurav. Am I audible?
Warren Harris
Yes, sir. Go-ahead.
Kumar Saurabh
I’m Saurav, a retail investor. I’m trying to buy stock of Tata for a long-time, but unfortunately, it’s all-in stock prices stopping you from enter into the stock. Now I’m fortunate to talk to the management, I want to ask two questions. With a large portion of our revenue coming from the automotive sector, isn’t there a significant risk of over-dependence on this technical industry? What steps are we taking to diversify into other sectors and what measurable progress have we made so-far in diversifying our revenue stream,
Warren Harris
Yeah, we are — we have a significant amount of our business in automotive. There’s three verticals that we support, automotive, aerospace and industrial heavy machinery. And we’ve built our brand and our reputation on the back of the value that we are we deliver to automotive. And one of the things that distinguishes Technologies is that we are still the only ESP in India that demonstrated its ability to be able to develop a full vehicle from concept all the way through the launch of the vehicle and the delivery of the vehicle to the — to the consumer. So that’s a very strong part of our value proposition. And when we look at the industry, if we look at-the-market size and we look at the growth projections, we think that there is more than enough headroom for us to satisfy the growth aspirations of our business in that space.
There will be, as we have seen over the last couple of quarters, that there will be tactical slowdowns that we have to navigate our way through. But if we look at medium-to-long term, we think that there is a massive — there will continue to be a massive opportunity in that — in automotive. And that will be driven by the once in a generation shift that we are seeing in the automotive sector as the industry pivots towards alternative propulsion systems as the importance of software becomes more pervasive and as the as the industry embraces the move to autonomous. At these vectors of change, we believe a significant amount of opportunity and we think we are ideally positioned to take advantage of that.
Now there is some diversification that we have in the business through the investments we made in aerospace and industrial heavy machinery. And those sectors, as we profiled previously are growing at a very healthy rate. And one of the things that I think we benefit from is particularly as it pertains to smart manufacturing, the responsibility across the three sectors that we’re able to support. And so that we are able to leverage the investment we’ve made in automotive in these other sectors. But we constantly look at our strategy and we always look at the balance that we need to affect between focus and diversification. And right now, we think we have the balance about right for where the company is at.
Kumar Saurabh
Thank you, sir. That’s very helpful. Next question, in the investor presentation, concerned that policy clarity would drive future growth. Does this indicate that our growth strategy is overly reliant on external factors. So don’t we place a stronger focus on internal readiness to ensure growth regardless of external conditions hello.
Warren Harris
In terms of what we are what we’re doing to stimulate growth if I understand the question correctly, what are we doing to stimulate growth despite the impact of the external factors? And I think I outlined in my opening comments, the investments that we are making in capitalizing our experience in IP and investing in technologies such as AI and Gen AI. And through the investments that we’re making in these platforms and these technology accelerators. We believe that we are building compelling propositions that not only make sense for our customers during times of good performance for them, but these are propositions that will make sense when when things such as budgets are a little bit tighter. So we’re taking the opportunity to complement the headcount growth commitment that we are making by investing in IP and using both aspects of that value proposition to stimulate the type of growth that will help us navigate through the ups and downs of the various markets that we support.
Kumar Saurabh
Okay, sir, that’s very helpful. Thanks for the opportunity and I want to see the same sales growth in coming quarters. Thank you very much for the opportunity, sir and good luck for the future.
Warren Harris
Thank you.
Operator
Thank you. Next question is from Vidyadhar Ginde from Soham Asset Managers. Please go-ahead.
Vidyadhar Ginde
Thank you. You did mention in one of your answers that the automotive industry in the West is facing an existential crisis. So do you think that if some of the big auto players in the West, especially in Europe or the US, US if they were to not survive or would it take a considerable year before that happens or is that an event which can happen in the next 12, 18, 24 months
Warren Harris
Well, I think you could say it’s a great question that I’d love to discuss over dinner with you. But I think if I look at how things are likely to play-out the existential crisis does not mean that the capability that’s in the automotive industry today will go away. The volumes still need to be delivered by somebody and the plants and the IP and the skills and the capabilities will still continue to be relevant. And I think that there are likely to be more mergers. I think there are likely — there’s likely to be more consolidation. I think you’ll likely see new energy vehicle players continue to evolve in terms of their market position and the influence that they have over the overall market. So I think that the industry is likely to change and I think it’s incumbent upon organizations like ourselves to ensure that we are agile and flexible. And we are in a position to take advantage of the change as it manifests itself. So we’re not intimidated by this existential challenge that I referred to before because we actually think that will be more-and-more opportunity that will be generated through the investments that
Vidyadhar Ginde
My understanding is that in terms of EV part, except for Tesla and some of the top Chinese guys, almost all other players in the West are a behind. And so is that correct? And so even if they merge some of these guys, how does it really help in a sense that and is the gap between the stop players in China and Tesla, can it be narrowed much more in say 124-year timeframe? And because from the other thing I understand is that one of the big issues for these guys is providing an EV which in terms of quality which matters the stock guides plus at the price at which they are able to deliver, especially what the Chinese rates.
Warren Harris
Yeah, I’m sure you understand that I can’t comment on individual companies. Particularly those companies that are our customers. But what I will say is that you know, yes, China enjoys today a tech and a bill of materials advantage over the players in the West. But don’t underestimate the capabilities of the European automotive industry and certainly don’t underestimate the ability of the Americans to innovate and to play catch-up and so you know whilst there is an advantage that China has today, I’m fully confident that the Europeans and the Americans, those organizations that make the progressive calls and invest in the right areas, they will affect increasingly greater balance in terms of the EV marketplace. So again, this is an exciting space for us to be in. Because of the imbalance again in terms of the tech stack and in terms of BOM cost, all of the players that are committed to being competitive in the future, all of them are having to invest, which by association provides opportunity for organizations like ourselves.
Vidyadhar Ginde
Thank you.
Operator
Thank you. Next question is from from ICICI Securities. Please go-ahead.
Ruchi Makhija
Thank you for the opportunity and congratulations on the resilient performance. Second, I wanted to check more in terms of client conversation, do we see any change in the commitment from our clients on the existing projects like deferral or temporary pauses? And secondly, on the new deals that we are winning, now are they ramping as per the expected time-line?
Warren Harris
And now in terms of our customer decision-making, what we’ve seen over the last six months is not really delays to existing projects. The projects that have been committed to and the projects that we are engaged in have continued as expected and as planned. What we’ve seen is a delay in decision-making, particularly as it pertains to things like powertrains. And as I referred to before, we expect clarity to be provided, particularly in the US and Europe during the early part of calendar year 2025 and that will we believe translate into those decisions that have been delayed have been made. So we’ve not really seen any short closing of existing projects. The impact has really been on new business.
Ruchi Makhija
Thank you and all the best.
Warren Harris
Thank you
Operator
Thank you. Thank you very much. We’ll have to take that as the last question. I would now like to hand the conference back to Mr Vijay Loya for closing comments
Vijay Lohia
Thank you all for joining us on today’s call. We hope we’ve addressed most of your questions. If you have any additional queries, please feel free-to reach-out to the Investor Relations team and we’ll be glad to assist you. Wishing you all the best and goodbyear from all of us. Thank you.
Savitha Balachandran
Thank you.
Operator
Thank you very much. On behalf of Tata Technologies, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.