KPIT acquires Caresoft Global Engineering Solutions Business for $191 million

Automotive software solutions provider KPIT Technologies Ltd has acquired Caresoft Global’s Engineering Solutions Business for $191 million as the IT major looks to deepen its focus on trucks and off-highway segments and accelerate its foray into China.

The $191 million buyout includes $25 million of variable consideration based on achievement of revenue and other business synergy milestones, the Pune-based automobile software company said in a regulatory filing.

This total consideration can be paid in one or more tranches over a period of four years with cash consideration and/or equity shares at the option of KPIT for an amount not more than $25 million, the statement said.

Caresoft Global, known for automotive benchmarking and cost reduction-driven engineering solutions, will restructure its business into three business units: Benchmarking, Technology Optimization & Cost Reduction Engineering; Engineering Talent Solutions; and Engineering Solutions. KPIT will acquire the carved-out Caresoft Global’s Engineering Solutions business globally.

Aligned with the needs of Global OEMs (original equipment manufacturer) and KPIT’s goals, this partnership will create multi-dimensional synergies, the statement said. “In line with KPIT's strategic focus on the commercial vehicle segment, this partnership will acquire Caresoft’s deep relationships and domain knowledge in the Trucks and Off-highway segments,” the statement said.

Caresoft’s deep understanding with Chinese OEMs, NEVs (new energy vehicles), and suppliers, as well as its longstanding presence in China, will accelerate KPIT’s foray into the country, it said.

The deal is expected to ramp up value creation through full vehicle cost reduction solutions for passenger cars, trucks, and off-highway segments. “A significant portion of vehicle development costs is driven by the engineering of hardware components. Caresoft has deep cost benchmarking and teardown expertise across hundreds of vehicle models and has delivered cost optimization for OEMs, which has saved billions of dollars,” the statement said.

KPIT will also tap into the rich insights generated by Caresoft’s technology optimisation and cost reduction programmes, expand into new areas such as software benchmarking, create unique market differentiators, and jointly explore downstream implementation opportunities, the company said.

The deal will allow KPIT to provide manufacturing engineering solutions for the mobility segment. KPIT will also acquire new capabilities in areas such as manufacturing and industrial engineering, plant layout planning, and assembly line optimisation for the mobility ecosystem. “It will help OEMs make smarter decisions on product design and production from the ground up, and also help OEMs implement the best design in their factories. The focus is to make changes early in the vehicle development cycle and do it right the first time,” said KPIT.

"At KPIT, we are deepening relationships with trucks and off-highway makers and accelerating foray into China. Also, OEMs across segments are looking for a partner who can bring more agility and cost efficiency by taking an integrated view of software, hardware, and manufacturing. With Caresoft’s strong expertise, we have a strategic partnership which will bring unparalleled value to the mobility ecosystem,” said Kishor Patil, Cofounder, CEO & MD, KPIT Technologies.

Commenting on the deal, Mathew Vachaparampil, CEO of Caresoft Global, said, “This milestone reflects more than growth. It honors our shared values with KPIT: being relentlessly customer-centric and caring deeply for our people. We will jointly deliver more value to our automotive customers in terms of technology, cost, and speed to market.”