MANAGEMENT DISCUSSION AND ANALYSISCompany Overview
Tech Mahindra Limited is a leading provider of IT, networking technology solutions andBusiness Support Services to the global telecommunications industry. Formed in 1986, it ispart of the US $11.1 billion Mahindra Group, in partnership with BritishTelecommunications plc (BT), one of the world's leading communications service providers,focused primarily on the telecommunications industry. In 2009 it expanded its IT portfolioby acquiring the leading global business and information technology services companySatyam Computer Services Limited ( Mahindra Satyam).
Tech Mahindra's capabilities spread across a broad spectrum, including Business SupportSystems (BSS), Operations Support Systems (OSS), Network Design & Engineering, NextGeneration Networks, Mobility Solutions, Security consulting and Testing. The solutionsportfolio includes Consulting, Application Development & Management, Network Services,Solution Integration, Product Engineering, Infrastructure Managed Services, RemoteInfrastructure Management and Business Support Services (earlier BPO). With an array ofservice offerings for TSPs, TEMs and ISVs, Tech Mahindra is a chosen transformationpartner for several leading wireline, wireless and broadband operators in Europe,Asia-Pacific and North America.
Tech Mahindra has a global footprint through operations in more than 30 countries with17 sales offices and 15 delivery centers. It has over 128 active customer engagementsmostly in the Telecom sector. Assessed at SEI CMMi Level 5, Tech Mahindra's track recordfor value delivery is supported by over 38,300 professionals who provide a unique blend ofculture, domain expertise and in depth technology skill sets. Its development centers areISO 9001:2008 & BS7799 certified.
During the year, your Company was ranked by NASSCOM as the fifth largest Indian ITservices company, in terms of export revenues and Dataquest ranked your Company in itscoveted DQ Top 20 list of year 2010.
Industry Structure and Development
The Global IT Services industry is operating in a rapidly changing economic andbusiness environment. Technology innovation is creating opportunities for marketexpansion, where the global companies are investing in cutting edge solutions to improvecustomer experience. The focus of the IT services sector is shifting from basicoutsourcing advantage of cost arbitrage and talent to higher value added services,innovation and transformation. Global sourcing is now evolving from being tactical tobeing of strategic benefit to clients.
From a telecom industry perspective, traditional service providers in developed marketsare seeing erosion in margins and emergence of non traditional competition. In mostdeveloped markets, subscriber growth is not possible due to the high levels of penetrationof telecom services. Continuous service innovation and a strong network strategy have beenimperative tools for telecom companies to retain subscribers. Consolidation through mergerand acquisition activity has been adopted by certain operators as a growth and marginenhancement strategy.
The situation is different in the emerging markets. These markets are stillunderpenetrated from a telecom perspective and are seeing continued subscriber growth.This growth is attracting capital investments either in the form of new Greenfieldoperators or through strategic investments into existing operators. This is leading togrowth across markets in Asia Pacific, Middle East and Africa.
From an overall perspective, the telecommunications industry, over the past few years,has also seen rapid changes with several key trends emerging. Mobile connections aredriving significant growth. According to Ovum, global mobile connections reached 5.3billion in 2010 and will reach 7.6 billion in 2015, a CAGR of 8% from 2010 to 2015.Devices like smartphones, tablets & netbooks have already become a common phenomenonin developed countries and are fast penetrating into developing markets. Introduction ofthird-generation (3G) mobile broadband network has transformed information sharing anddata transfer. Applications focused around virtual learning, shopping, gaming and bankingare continuously expanding the services market around smart devices. The growth inbroadband (fixed and mobile) is also generating higher interests in applications likeInternet Protocol television (IPTV) and mobile TV.
In order to cope with the increased demand for bandwidth and services, the industry ismoving to new technologies like 4G networks and cloud computing. Telecom companies areexpected to be early adopters of cloud technology since this would offer them and theircustomers significant benefits in terms of both cost of ownership as well as quality ofservice. The commoditization of voice has led to a focus on non voice revenue streams likefixed broadband service and IPTV.
These changes in the business environment have created opportunities for companies likeTech Mahindra. Cost containment initiatives have led to an increased acceptance of theglobal delivery model and most customers are now looking at offshoring as a strategic longterm initiative. Consolidation seen in some markets across the world could lead toincreased spend on integration in the near term. New services - such as IPTV, direct tohome, voice over Internet Protocol, triple-play and mobile value-added services - and agrowing customer focus, are leading to demand for specialized solutions such as convergentbilling, Web self-care and real-time provisioning.
Outlook
Year 2010 was a turning point world over with varied economic environment acrossdeveloped and emerging markets. However, IT spending witnessed an upsurge, with globalsourcing growth outpacing the IT spending worldwide. According to Gartner Inc, in 2010,worldwide IT spending totaled $3.4 trillion, up 5.4 percent from 2009 levels.
While the robust demand backdrop continued throughout 2010, there is cautious optimismfor sustained growth for 2011 with clients focusing on growth initiatives. Gartner hasraised its outlook for 2011 global IT spending from its previous forecast of 3.5 percentgrowth. According to Gartner the growth for IT services for the year 2011 would be 4.6%from US$ 782 billion to US$ 818 billion, however growth forecast for Telecom Services islower at 3.4%, which is expected to grow from 1,592 billion in 2010 to 1,647 billion in2011.
Over the past few years, software and IT services providers have expanded and upgradedtheir service offerings in order to cater to the changing needs of TSPs. The migration tonext generation networks has created increased demand for software and IT services. ITservices and software providers handle business functions of converged networks andprovide solutions across multiple network elements, in both legacy and next generationnetworks.
In addition to the migration to next generation networks and the rationalization oflegacy networks, competition in the telecommunications services industry could be a keydriver of demand for IT services and software. As competition has increased, fixed-linerevenues have declined, mainly as a result of decreasing long distance prices andcompetition from mobile TSPs. In the mobile TSP sector, competition driven by the increasein the number of mobile TSPs and emergence of Mobile Virtual Network Operator (MVNOs),among other factors, has also placed pressure on revenues, although to a much lesserextent than fixed-line revenues. Software and IT services providers are attempting to takeadvantage of increased competition in the TSP industry. Pressure on margins has causedTSPs to focus on reducing costs. IT is becoming an important element in determining costefficiency of TSPs.
In order to reduce costs, TSPs are increasingly using packaged software, systemsintegrators and outsourcing companies to help them achieve their goals.
Opportunities
Growth in Emerging Markets
Emerging markets will continue to drive growth due to new spectrum licensing, migrationto direct to home platforms, broadband penetration, focus on value added services andconducive regulatory environment. This will create opportunities for the software serviceproviders who can assist operators in achieving their business objectives in these areas.
Legacy to Next Generation IT transformation
Service providers around the globe, on the back of dropping legacy revenues and highcost, are looking to transform their legacy platforms into next generation platforms. Thiswill enable them to optimize their product portfolio, and rationalize the costs associatedwith running the systems. These transformation initiatives will lead to outsourcingopportunities.
Increased scope of outsourced activities
Telecom service providers are adopting several transformational strategies to optimizetheir operational costs. More service providers are adopting outsourcing and offshoring inthe IT and BPO domain leading to increased scope. In the network domain, Networkoutsourcing provides an opportunity for wider range of services like field services,maintenance & support, E2E implementations and network infrastructure management.Managed services deals to cover network legacy systems have been tried in the maturemarkets and a similar trend will continue for the coming years.
Threats
Reduction in Telecom Spending
The global economy is emerging from recession and returning to growth; however there isuncertainty around the stability of economic recovery. The service providers continue tofocus on reducing costs by adopting measures like optimizing IT spend and postponinginvestments. A continuing reduction in IT spend by service providers due to lack ofadequate budgets could adversely impact outsourcing.
Global IT companies posing challenge with growing India presence
Global IT service providers such as Accenture, HP, Cap Gemini and IBM are expandingtheir presence in India and pose a challenge to Indian IT service companies with theirglobal client relationships, deep pockets and domain knowledge.
Risks
High customer concentration
In fiscal 2011, Revenues from Top, Top 5, and Top 10 clients account for 41%, 73% and81% respectively. Though customer concentration has been declining over the years; loss ofany of these clients could have a material adverse impact on our revenue andprofitability.
Withdrawal of tax benefits
In the past we benefited from certain income tax incentives under Section 10A of theIncome Tax Act for the IT services that we provide from specially designated"Software Technology Parks" or STPs & also from Section 10AA of the IncomeTax Act, for the IT services we render from units set up in SEZs. As a result of theseincentives, our operations in India have been subject to relatively low tax liabilities.The income tax benefits available to STP units have been discontinued from 1st April 2011.As this withdrawal was forseen, company decided to set up facilities in SEZ units atvarious locations as the units set up in SEZ area would continue to provide us with taxbenefits similar to those in STPs. We commenced operations at Hinjewadi Pune, Chennai andChandigarh SEZ and more units are coming up at Noida & Kolkata. But despite this taxincidence will increase over the previous years due to withdrawal of Section 10A benefits.There is no assurance that the Indian government will not enact laws in the future thatwould adversely impact tax incentives further and consequently, our tax liabilities andprofits. When our tax incentives expire or are terminated, our tax expense will materiallyincrease, reducing our profitability.
Exchange rate risks
The exchange rate between the Indian rupee and the British pound and the rupee and theU.S. dollar has fluctuated widely in last year and may continue to fluctuate significantlyin the future. The average value of the rupee as on March 31, 2011 against the Britishpound appreciated by approx 7% and against U.S. dollar by approx 4% over March 31, 2010.Accordingly, our operating results have been and will continue to be impacted byfluctuations in the exchange rate between the Indian rupee and the British pound and theIndian rupee and the U.S. dollar, as well as exchange rates with other foreign currencies.Any strengthening of the Indian rupee against the British pound, the U.S. dollar or otherforeign currencies, as witnessed in the last year, could adversely affect ourprofitability.
Discussion on Financial Performance with respect to Operational Performance
Overview
The financial statements have been prepared in compliance with the requirements of theCompanies Act, 1956 and Generally Accepted Accounting Principles (GAAP) in India.
The Consolidated financial statements have been prepared in compliance with theAccounting Standard AS 21, AS 23 and AS 27 issued by the Institute of CharteredAccountants of India (ICAI).
The discussion on financial performance in the Management Discussion and Analysisrelate primarily to the stand alone accounts of Tech Mahindra Limited. Wherever it isappropriate, information pertaining to consolidated accounts for Tech Mahindra Limited& its subsidiaries is provided. For purpose of comparison with other firms in thisindustry as well as to see the positioning and impact that Tech Mahindra Limited has inthe marketplace, it is essential to take the figures as reflected in the ConsolidatedFinancial Statements.
A. STANDALONE FINANCIAL POSITION
1. Share Capital
The authorized share capital of the Company is Rs. 1,750 Million, divided into 175Million equity shares of Rs. 10 each. The paid up share capital stands at Rs. 1,260Million as on 31st March 2011 compared to Rs. 1,223 Million on 31st March 2010. Theincrease in paid up capital during the year is due to conversion of options into shares byemployees under Employee Stock Option Plan.
2. Reserves and surplus
a) Share premium account
The addition to the share premium account of Rs. 225 Million during the year is due tothe premium received on issue of 3,635,367 equity shares on exercise of option under stockoption plan.
b) General reserve
General reserve stands at Rs. 4,451 Million on 31st March 2011 as compared to Rs. 3,451Million on 31st March 2010. Rs. 1000 Million has been transferred from profit and lossaccount as compared to Rs. 750 Million in previous year.
c) Profit and loss account
The balance retained in the profit and loss account as of 31st March 2011 is Rs. 22,411Million compared to Rs. 17,739 Million as of 31st March 2010.
3. Loan Funds
Loan funds as on 31st March 2011 stand at Rs. 12,227 Million including Rs. 6,000Million of secured loans and Rs. 6,227 Million of unsecured loans, compared to Rs.13,672Million including Rs. 7,500 Million of secured loans and Rs. 6,172 Million of unsecuredloans as on 31st March 2010.
4. Fixed Assets
The movement in Fixed Assets is shown in the table below-
| | Rs. in Million |
| As of 31st March | 2011 | 2010 |
| Gross Book Value | | |
| Land - free-hold | 175 | 175 |
| - lease-hold | 425 | 425 |
| Buildings | 4,102 | 3,939 |
| Leasehold Improvements | 822 | 633 |
| Plant and machinery | 2,784 | 2,279 |
| Computer equipments | 2,470 | 2,174 |
| Furniture and fixtures | 1,583 | 1,384 |
| Vehicles | | |
| - Leased | 0 | - |
| - Owned | 48 | 43 |
| Intangible assets | 76 | 76 |
| Total | 12,485 | 11,128 |
| Less: Accumulated depreciation & amortization | 6,485 | 5,188 |
| Net block | 6,000 | 5,940 |
| Add: Capital work-in-progress | 1,103 | 1,188 |
| Net fixed assets | 7,103 | 7,128 |
The Net Block of Fixed Assets and Capital Work in Progress decreased to Rs. 7,103Million from Rs. 7,128 Million as at 31st March 2010 as a result of depreciation providedin the year. During the year, Company incurred capital expenditure (gross) of Rs.1,454Million (previous year Rs. 2,339 Million). The major items of Capital Expenditure includedLeasehold improvements, Office building, Plant and Machinery, Computer equipment andFurniture & Fixtures including amount spent on Hinjewadi, Pune and Chandigarh &Chennai campus.
5. Investments-
The summary of Company's investments is given below
| | Rs. in Million |
| Investments | As at 31st March 2011 | As at 31st March 2010 |
| Investment in Subsidiaries | 31,502 | 31,493 |
| Investment (others) | 1 | - |
| Total Investments | 31,503 | 31,493 |
| Less : Provision for diminution of value | 354 | 354 |
| Net Investments | 31,149 | 31,139 |
I. Investment in Subsidiaries
The Company had investment in the following subsidiaries:
a) CanvasM Technologies Limited
CanvasM was set up as a joint venture between Tech Mahindra Limited and Motorola CyprusHolding Limited in October 2006 with an objective to provide software services andsolutions to wire line and wireless telecom service providers, cable companies,enterprise, media and broadcast companies, using SI expertise of Tech Mahindra and R&Dinvestments of Motorola Cyprus. Tech Mahindra owns 80.1% of the shareholding while thebalance 19.9% is held by Motorola Cyprus.
b) Tech Mahindra (Americas) Inc.
Tech Mahindra (Americas) inc. was incorporated in November 1993 to provide marketingsupport services for the USA and Canada region. It acts as a service provider for sales,marketing, onsite software development and other related services.
c) Tech Mahindra GmbH
Tech Mahindra GmbH was established in July 2001 to provide marketing support in centralEurope region.
d) Tech Mahindra (Singapore) Pte.
LimitedTech Mahindra (Singapore) Pte. Limited is Tech Mahindra's representative in Singaporeand acts as a service provider for sales, marketing, onsite software development and otherrelated services.
e) Tech Mahindra (Thailand) Limited
Tech Mahindra (Thailand) Limited was established in August 2005 to strengthen itsmarketing infrastructure in Thailand.
f) PT Tech Mahindra Indonesia
PT Tech Mahindra Indonesia is Tech Mahindra's representative in Indonesia and acts as aservice provider for sales, marketing, onsite software development and other relatedservices.
g) Tech Mahindra Foundation
Tech Mahindra Foundation was promoted by Tech Mahindra Limited as Section 25 Companywith the objective of promoting social and charitable activities. TechM Foundationprimarily concentrates on rendering assistance to the needy and under privileged people inthe society.
h) Tech Mahindra (Beijing) IT Services Limited
Tech Mahindra (Beijing) IT Services Limited was established in December 2007 tostrengthen its marketing capabilities in China.
i) Tech Mahindra (Malaysia) Sdn. Bhd.
Tech Mahindra (Malaysia) Sdn. Bhd. was established in May 2007 as Tech Mahindra'srepresentative in Malaysia. It acts as a service provider for sales, marketing, onsitesoftware development and other related services.
j) Venturbay Consultants Private Limited (VCPL)
VCPL became wholly owned subsidiary of the Company as on 19th March 2009. It wasacquired to act as a special purpose vehicle (SPV) to bid for the acquisition of Satyam.It emerged as the highest and successful bidder in the global competitive bidding processand has since acquired 42.67% shares of Satyam. The Company has invested Rs. 30,461Million in VCPL
k) Mahindra Logisoft Business Solutions Limited
Mahindra Logisoft became wholly owned subsidiary of the Company in April 2009. It wasacquired to augment software development capabilities in the area of Infrastructuresupport and dealer management.
l) Tech Mahindra (Nigeria) Limited
Tech Mahindra (Nigeria) Limited was incorporated in August 2009 as Tech Mahindra'srepresentative in Nigeria. It acts as a service provider for sales, marketing, onsitesoftware development and other related services.
m) Tech Mahindra (Bahrain) Limited (SPC)
Tech Mahindra (Bahrain) Limited (SPC) was incorporated in November 2009 to providesales, marketing and account management support to customers in and around Bahrain. Itacts as a service provider for sales, marketing, onsite software development and otherrelated services.
n) Tech Mahindra Brasil Servicos De Informatica LTDA
Tech Mahindra Brasil Servicos De Informatica LTDA was incorporated in July 2010 as awholly owned subsidiary of your Company to provide sales, marketing and account managementsupport to customers in and around Latin America. It acts as a service provider for sales,marketing, onsite software development and other related services.
II. Investment in liquid mutual funds
The Company has been investing its surplus in various mutual funds. These are typicallyinvestments in short-term/liquid funds to gainfully use the excess cash balance with theCompany. There are no investments in liquid mutual funds as at 31st March 2011 as inprevious year also.
6. Deferred Tax Asset
Deferred tax asset as at 31st March 2011 was at Rs. 532 Million as compared to Rs. 223Million as of 31st March 2010. Deferred tax assets represent timing differences in thefinancial and tax books arising from depreciation of assets, provision for debtors andleave encashment & gratuity. The Company assesses the likelihood that the deferred taxasset will be recovered from future taxable income before carrying it as an asset.
7. Sundry Debtors
Sundry debtors increased to Rs. 11,720 Million (net of provision for doubtful debtsamounting to Rs. 130 Million) as of 31st March 2011 from Rs. 9,930 Million (net ofprovision for doubtful debts amounting to Rs. 78 Million) as of 31st March 2010. Debtordays as of 31st March 2011 (calculated based on per-day sales in the last quarter) were 95days, compared to 84 days as of 31st March 2010.
8. Cash and Bank Balance
The bank balances in India include both Rupee accounts and foreign currency accounts.The bank balances in overseas current accounts are maintained to meet the expenditure ofthe overseas branches and overseas project-related expenditure.
| | Rs. in Million |
| As of 31st March | 2011 | 2010 |
| Bank balances in India & Overseas | | |
| - Current accounts | 1,807 | 1,367 |
| - Deposit accounts | 131 | 13 |
| Total cash and bank balances* | 1,938 | 1,380 |
*including unrealized (gain)/loss on foreign currency
9. Loans and Advances
Loans and advances as on 31st March 2011 were Rs. 8,251 Million compared to Rs. 8,551Million as on 31st March 2010. Significant items of loans and advances include paymentstowards rent/lease deposits, finance lease receivables, fair value of foreign exchangeforward and currency option contracts and advance income tax.
10. Current Liabilities and Provisions
Current liabilities and provisions were Rs. 8,795 Million as of 31st March 2011compared to Rs. 8,349 Million as of 31st March 2010. Liabilities and provisions increasedmainly due to higher employee related liabilities & proposed dividend.
B. RESULTS OF OPERATIONS
The following table sets forth certain income statement items as well as these items asa percentage of our total income for the periods indicated:
| Fiscal 2011 | Fiscal 2010 |
| Rs. (In Million) | % of Total Income | Rs. (In Million) | % of Total Income |
| INCOME | | | | |
| Revenue from Services | 49,655 | | 44,838 | |
| Other Income | 1,152 | | 909 | |
| Total Income | 50,807 | 100.00% | 45,747 | 100.00% |
| EXPENDITURE | | | | |
| Personnel Cost | 19,438 | 38.26% | 16,071 | 35.13% |
| Operating and Other Expenses | 20,927 | 41.19% | 17,950 | 39.24% |
| Depreciation | 1,383 | 2.72% | 1,299 | 2.84% |
| Interest | 999 | 1.97% | 1,600 | 3.50% |
| Total Expenditure | 42,747 | 84.14% | 36,920 | 80.70% |
| Profit before tax and exceptional items | 8,060 | 15.86% | 8,827 | 19.30% |
| Provision for Taxation | 1,093 | 2.15% | 1,314 | 2.87% |
| Profit after taxation and before exceptional item | 6,967 | 13.71% | 7,513 | 16.42% |
| Exceptional items | - | - | (85) | 0.18% |
| Net profit for the year | 6,967 | 13.71% | 7,428 | 16.24% |
1. Revenue
The Company derives revenue principally from technology services provided to clients inthe telecommunications industry.
The revenue increased by 10.7% to Rs. 49,655 Million in fiscal 2011 from Rs. 44,838Million in fiscal 2010. This reflected an increase in the number of clients served duringthe respective years as well as an increase in the amount of business from these clients.Revenue from Europe as a percentage of total revenue was 52.3% in fiscal 2011 compared to61.0% in fiscal 2010. Revenue from the Americas increased to 29.4% in fiscal 2011 from28.8% in fiscal 2010 while the share of revenue attributable to the Rest of the World (including India) segment was 18.3% in fiscal 2011 compared to 10.3% in the previous year.
Consolidated Revenue
Consolidated Revenue for the fiscal 2011 stood at Rs. 51,402 Million compared to Rs.46,254 Million last fiscal, a growth of 11.1%.
Consolidated revenue by Geography
Europe contributed 50.5% of the consolidated revenue in fiscal 2011 while Americas andRest of the World contributed 29.9% and 19.6% respectively. The revenue share from Europe,Americas and Rest of the World in fiscal 2010 was 58.6%, 29.4% and 12.0% respectively.
Consolidated Revenue by Segment
For fiscal 2011, 87.0% of revenue came from TSP segment, 5.1% from TEM, 6.3% came fromBSG(BPO) segment while 1.6% from others. The revenue share in fiscal 2010 from TSP, TEM,BPO and Others segment was 85.9%, 5.7%, 5.8% and 2.8% respectively.
2. Other Income
Other income includes interest income, dividend income, profit on sale of currentinvestments, foreign exchange gain/loss and sundry balances/provisions written back.
Interest income mainly consists of interest received on bank deposits. Dividend incomeincludes dividend received on long term investments as well as that received on currentinvestments. Exchange gain/loss consists of mark to market gain/loss on ineffectivehedges, realized gain/loss and revaluation gain/loss on translation of foreign currencyassets and liabilities.
Other income is at Rs. 1,152 Million in fiscal 2011 compared to Rs. 909 Million infiscal 2010.
3. Expenditure
| Particulars | FY 2010-11 | FY 2009-10 |
| Amt Rs. Mn | % of Total Income | Amt Rs. Mn | % of Total Income |
| Personnel Cost | 19,438 | 38.26% | 16,071 | 35.13% |
| Operating and Other Expenses | 20,927 | 41.19% | 17,950 | 39.24% |
| Depreciation | 1,383 | 2.72% | 1,299 | 2.84% |
| Interest | 999 | 1.97% | 1,600 | 3.50% |
| Total Expenses | 42,747 | 84.14% | 36,920 | 80.70% |
Personnel cost includes salaries, wages and bonus, allowances paid to associatesdeputed outside India,contribution to provident fund and other funds and staff welfarecosts. The increase in personnel cost in absolute value is mainly due to increase inheadcount and annual increments.
Operating and other expenses mainly include Subcontracting costs, Travelling expenses,Rent, Repairs and Maintenance, Communication expenses, Office establishment costs,Software Packages and Professional fees. The increase is due to increase in businessvolumes, increase in number of development centres/office locations in India and overseasand overall growth in business activity.
Increase in depreciation is mainly due to increase in investment in infrastructure andequipment to service our growing business.
The Company incurred interest expense of Rs. 999 Million in fiscal 2011 as compared toRs. 1,600 Million in fiscal 2010. The borrowings which were taken to fund acquisition ofMahindra Satyam were partly repaid in in 2010 & 2011 which along with lower interestrates on borrowings resulted in reduced interest.
4. Profit before tax
Profit before tax was Rs. 8,060 Million in fiscal 2011 compared Rs. 8,742 Million infiscal 2010. Profit before tax as a percentage of total income was 15.9% in fiscal
2011 compared to 19.1% in fiscal 2010.
5. Income taxes
The provision for income tax for the year ended 31st March 2011 was Rs. 1,093 Millionas compared to Rs. 1,314 Million in the previous year, lower by 16.8% due to lower profits& higher deferred tax asset. As a percentage of revenue, provision for taxes decreasedto 2.2% in fiscal 2011 from 2.9% in fiscal 2010. The effective tax rate in these years was13.6% and 15.0% respectively.
6. Profit after tax before exceptional items
Profit after tax before exceptional items was Rs. 6,967 Million in fiscal 2011 comparedto 7,513 Million in fiscal 2010. Profit after tax as a percentage of revenue was 14.0% infiscal 2011 and 16.8% in fiscal 2010.
Consolidated PAT
Consolidated PAT before exceptional item and minority interest for the fiscal 2011 wasRs. 7,458 Million compared to Rs. 7,117 Million last fiscal. PAT as a percentage ofrevenue was 14.5% in fiscal 2011 compared to 15.4% in fiscal 2010.
C. CASH FLOW
| | Rs. in Million |
| The cash flow position for fiscal 2011 and fiscal 2010 is summarized in the table below | Fiscal Year |
| Particulars | 2011 | 2010 |
| Net cash flow from operating activities* | 4,707 | 14,123 |
| Net cash flow from (used in) investing activities | (1,318) | (25,709) |
| Net cash flow from (used in) financing activities | (2,867) | 8,039 |
| Cash and cash equivalents at the beginning of the year | 1,396 | 4,943 |
| Cash and cash equivalents at the end of the year | 1,918 | 1,396 |
* excludes unrealized gain/(loss) on foreign currency
D. Internal Control Systems
The Company maintains adequate internal control system, which provides, among otherthings, reasonable assurance of recording the transactions of its operations in allmaterial aspects and of providing protection against significant misuse or loss ofCompany's assets. The company uses an Enterprise Resource Planning (ERP) package, whichenhances the internal control mechanism.
E. Material developments in human resources including number of people employed
Despite economic slowdown, Company continued to make addition to its human resourcesduring fiscal 2011. The Company had a net addition of 4,809 (previous year 8,552)employees through campus recruitment in addition to lateral hiring. The global headcountof the Company as on 31st March 2011 was 38,333 compared to 33,524 as on 31st March 2010,a growth of 14.3%. The Company used various sources for attracting talent during the year.It hires Engineering Graduates and Science Graduates for technical positions whereas MBA'sare typically recruited from premier management institutes such as IIM's, ISB, XLRI,London Business School etc for the future leadership positions.
The IT attrition was around 25% for the last quarter of year. The Company has beenworking towards containing the attrition rate by continuously investing in learning anddevelopment programs for associates, competitive compensation, creating a compelling workenvironment, empowering associates at all levels as well as a well-structured reward andrecognition mechanism.
The Company believes in promoting and nurturing work environment which is conducive tothe development and growth of an individual employee, by employing the best HR practicessuch as performance management, reward and recognition policy, leadership developmentprogram, succession planning, open work culture and effective employee communication.