Once touted as a jewel in Tech Mahindra Ltd’s crown, Pininfarina S.p.A. has become a drag on the company’s finances, weighed down by an expensive lawsuit, hefty severance payouts and a shrinking business as automakers increasingly bring vehicle design in-house.
Tech Mahindra’s corporate guarantees for the former Ferrari design house quadrupled year-on-year to ₹735 crore (about $80 million) in 2025-26, meaning India’s fifth-largest information technology (IT) services firm would have to repay the Italian company’s lenders if it failed to meet its debt obligations.
According to its annual report for FY25, Pininfarina currently has outstanding external debt of €5.9 million, and a loan of €10 million from its parent.
and its parent, Mahindra & Mahindra Ltd, acquired Pininfarina in 2015 through PF Holdings B.V., a Dutch special-purpose entity owned 60:40 by the two companies. PF Holdings owns a 78.82% stake in the Milan-listed firm, with public shareholders owning 21.16% and the company holding the remaining 0.02% as treasury shares.
However, the design firm’s growth has lagged Tech Mahindra’s since the acquisition. Its revenue has increased just 25% from $94 million in FY15, while Tech Mahindra’s revenue has grown 73% from $6.4 billion over the same period.
Pininfarina, which follows a January-December financial calendar as against Tech Mahindra’s April-March, ended 2025 with a net loss of €6.7 million ($7.6 million), down 63% on-year. This was its fourth loss in the last five years. Its revenue rose 13% on-year to $118 million.
“The performance in 2025 was driven primarily due to a market environment characterized by persistent uncertainty, weaker demand and increasing competitive pressure, which adversely affected margins and overall profitability,” said a Pininfarina spokesperson, adding that the company is confident of delivering on its growth targets.
Tech Mahindra does not break down revenue by engineering services. But Pininfarina falls under the company’s manufacturing business, which makes up a fifth of its revenue.
The acquisition was meant to bolster the IT company’s engineering and design capabilities, as chairman Anand Mahindra said at the time of the deal. Instead, the Italian firm has become a recurring capital commitment for the Mohit Joshi-led firm, which aims to script a turnaround.
Fading shine
Pininfarina’s challenges are both old and new. Its troubles began as started cutting spending on external design houses. “Automotive businesses continued paying great attention to cost management and operational efficiency, revising their strategic plans and focusing on innovative and diversified solutions to mitigate market volatility,” read Pininfarina’s FY25 annual report.
Industry executives also identify weak demand and slowing growth at European car brands such as Volkswagen, Renault, and for the struggles of European design brands such as Pininfarina.
“The cost-cutting measures affect designing as companies have moved it internally to save costs and also have more control to save time. European carmakers are executing a lot of such measures to cut down costs,” said Amit Kaushik, founder of auto tech consultancy Mobidx AI.
Kaushik added that another factor is that carmakers are moving beyond traditional designs to more radical new introductions as China has disrupted the market. For instance, Ferrari recently outsourced the design of its first EV, Luce, to former Apple designers Marc Newson and Sir Jonathan Paul Ives.
Last year compounded the designer’s worries. Pininfarina’s Italian business reported a €14 million loss, higher than the Pininfarina Group’s €6.7 million loss because it wrote down the value of its investments in its Chinese and German subsidiaries.
The loss reduced its shareholders’ equity to €29.6 million against a share capital of €56 million. Under Italian law, if a company loses more than a third of its share capital, the parent is expected to invest money to keep it running.
Consequently, the Dutch parent was forced to write off about €10 million of the €14 million it loaned to Pininfarina last December. This write-off equals half the loans, or about €20 million, that the car designer got last year from Tech Mahindra and Mahindra & Mahindra.
This further led Tech Mahindra to quadruple its guarantees to the company, reflecting the group’s growing financial exposure.
But how did the car designer’s losses compound?
The company paid two-thirds of its losses in one-time expenses. First, it paid about €3.5 million in severance to former chief executive Silvio Pietro Angori, who served the company for 18 years until October 2025. It also paid €3.3 million to settle a lawsuit with hydrogen fuel cell company GreenGT.
Pininfarina has been diversifying into designing residential projects, consumer products, and even nuclear reactors to mitigate losses and boost revenue growth. Still, immediate recovery seems distant.
Queries emailed to Tech Mahindra remained unanswered till press time.
Financial liability
While Pininfarina is fighting for survival, Tech Mahindra seems to be charting a new growth roadmap after two years of revenue decline. Its operating margins have jumped 290 basis points on-year to 12.6%, and it has set a target to outpace its peers.
The company’s management is confident of navigating AI’s choppy waters.
“Clients are asking how AI will help them launch new products, enter new markets, and create new revenue streams. Done right, AI should drive more investment in technology, not less,” said chief executive Mohit Joshi, as part of his address in the company’s FY26 annual report.
Ayaan Kartik in New Delhi contributed to this story.