Harman International, a subsidiary of Samsung Electronics, is reportedly looking to divest a controlling stake in its India Digital Transformation Services (DTS) business. The potential sale has attracted significant interest from global private equity firms, with several leading names vying for the opportunity. The deal is expected to value the Indian DTS business at $400-500 million. Deutsche Bank is facilitating the sale process, and second-round bids are anticipated next month.
The list of potential buyers includes prominent global private equity firms such as Apax Partners, Bain Capital, Carlyle, and General Atlantic. These firms are currently conducting due diligence on Harman India's DTS operations. The sale is expected to be structured as a controlling stake, offering the buyer significant influence over the future direction of the business.
Harman's Digital Transformation Solutions (DTS) division is a global engineering partner that assists businesses with scalable and intelligent technology solutions. The India DTS team plays a crucial role in the company's innovative digital solutions. Out of the 7,000 employees in the DTS team globally, 6,000 are based in India. These 6,000 employees are involved in cutting-edge work across various industries, including healthcare, telecommunications, hospitality, and manufacturing. One area where the Indian engineers are focusing their efforts is quantum computing, specifically quantum optimization.
Samsung's move to divest part of Harman India aligns with a broader strategy to streamline its portfolio and focus on core business areas. For Harman, this potential divestment could allow it to pursue growth opportunities in the automotive electronics sector through mergers and acquisitions. This strategic shift suggests a focus on high-growth areas within the automotive industry, leveraging its existing expertise in automotive infotainment systems and connectivity solutions.
Harman India has four major business segments: Lifestyle (LS), India Development Centre (Software division; IDC), Connected Car (CC), and Professional (PRO). The Lifestyle segment focuses on consumer audio products like headphones, earphones, and speakers. The IDC segment provides software development services exclusively to Harman group entities. The Connected Car segment develops infotainment systems and telematic solutions for automotive OEMs.
In FY23, Harman India recorded revenues of ₹4,113.41 crore, compared to ₹3,162.66 crore in FY22. The company's profit after tax stood at ₹294.24 crore in FY23, up from ₹221.95 crore in FY22. Harman's Indian business has experienced growth following the relaxation of COVID-19 restrictions.
