Hero Electronix, a Hero Group company engaged in electronics design and manufacturing, on Wednesday said it has bought the India business of TES DST Holding Europe, a German electronics design services company.

Hero Electronix founder-director Ujjwal Munjal said the acquisition was made through Tessolve Semiconductor Pvt. Ltd, a Bengaluru-based company in which Hero Electronix purchased a strategic stake in April. He did not disclose the value of the acquisition.

The new division, to be called Tessolve Embedded Systems (TES), will focus on supporting the design and manufacture of electronic products for global companies by bringing together capabilities in chip design, system design, and embedded software. TES will be an innovation lab for companies working on Internet of Things in the country.

“The aim would be to offer the complete product development lifecycle solution – from idea conceptualization to product development and manufacturing in ODM model,” Munjal said. ODM refers to original design manufacturer.

Through this acquisition, Hero also gets clients such as Lufthansa Technik, PGA-Astronics, and GE Healthcare.

“This acquisition is another step towards building Hero Electronix into a $1 billion global digital products and solutions enterprise through investments in engineering-led and IP-driven businesses,” Munjal said, adding his company, along with other group companies, plan to invest up to Rs.1,200 crore for expansion.

The acquisition will help Tessolve with capabilities from chip design to developing digital systems and products.

It also plans to strengthen its capabilities in analog chip design. Hero will offer products automotive, avionics, transportation, industrial and home automation sectors. “We will increase focus on Europe and US by setting up sales offices there,” Munjal said. The company is also looking at a couple of other acquisitions, but that may only happen in 2017, he added.

Hero Electronix was formed in 2015. It marked the Delhi-based Hero Group’s entry into the electronics and technology space. Last year, it acquired Mybox Technologies, which makes set-top boxes in India. In 2015-16, Mybox Technologies clocked revenue of Rs.300 crore, which Munjal is seeking to double in the current financial year.

“What is happening in electronics is largely coming up from large MNCs who are based out of countries such as Taiwan, China, and Singapore. With IoT, the spread is getting bigger. The idea is to generate confidence in India and build such kind of products,” Munjal said.

The company’s business will largely be focused on the business-to-business segment, which requires the highest quality.

“Once we learn things, we will get into the customer space,” he said.

In February 2015, Hero Group, which controls India’s largest scooter and motorcycle maker, sold a 3.5% stake in its flagship Hero MotoCorp Ltd to raise funds to diversify into other business areas. The group sold 7 million shares of Hero MotoCorp for as much as $306 million. The sale proceeds are being utilized to fund new growth opportunities, the group said in a statement on Wednesday.