Hi, I got the below reply. It says the money was paid from Sentient to KPIT not the other way around. Not sure how sentient was able to give that money. I think the reply is fine. What you think?
Trust you are doing well.
We value and appreciate your investment in KPIT.
Apologies for a late revert on this.
Since the year 2019-20, KPIT Technologies Limited has sharpened its business focus only in the field of the automotive embedded software development. Till then
KPIT was also engaged in development of technologies for generation of hydrogen from bio-mass, non-lithium battery chemistry which could be safe and affordable as well as fuel cells. None of these products were in the new focus that the company had decided for itself since they had minimal embedded software content. Moreover, these products were in the initial R and D stage and so the technologies were not saleable.
Sentient Labs Pvt Ltd is a research and development focused company. From the beginning of the year 2020-21, Sentient took over the further development of the above hardware-led research activities. Sentient would now be actively seeking different models for monetization, including bringing a majority investment from operating or financial investors. Sentient along with the new investors will decide on the appropriate way forward, either as a complete product licensing or outright sale to third parties or other monetization opportunities. The new majority investor or operating partner along with Sentient will explore appropriate options for building an independent management team, along with new investors. KPIT has not made any investments in these non-software research areas since 2020-21 either by itself or through Sentient. All Investments made before 2021 have been fully written off.
The financial transactions reported in the years 2021-22 and 2020-21 represent reimbursement of costs incurred by KPIT on behalf of Sentient, for which KPIT has received advance from Sentient Labs.
Having said that, if Sentient is able to register profits either by licensing or outright sale or any other monetization model, those gains will flow to KPIT through a separate royalty arrangement with KPIT, subsequently.
Thus to summarize:
KPIT has no intent and focus on Hardware Business
Sentient is an independent entity with focus on the above
The financial transactions between Sentient and KPIT are only money paid by Sentient to KPIT for the work done by KPIT for Sentient. These are at arm’s length and Sentient always pays advance money to ensure KPIT is never out of the money.
Whenever (and if) Sentient is able to make profits on the technology, the gains will flow to KPIT.
We had clarified the above in our quarterly Investor Update for Q1FY2022. Please have a look at page 16 and page 17 of the attached Investor Update. This is also available on the exchanges as well as KPIT website.
Trust this clears your queries.
Please give me a call on my cell () if you need any further clarifications.
Head Investor Relations