Black Box Ltd Management Discussions.


The pandemic has taken a turn for the worse in some parts of the world since the release of the April 2021 WEO. Meanwhile, a speedy vaccine rollout has helped bring down caseloads quickly in other regions. Economies are diverging even further, influenced by differences in the pace of vaccine rollout and policy support. However, smooth and durable recoveries are not assured even in places where infections are seemingly under control.

The global economy is projected to grow 6.0% in 2021 and 4.9% in 2022 (above Table). Although the 2021 forecast is unchanged from April, there are offsetting revisions across advanced economies and emerging market and developing economies reflecting differences in pandemic developments and policy shifts. The 0.5% point upward revision for 2022 largely reflects anticipated additional fiscal support in the United States, with associated spillovers to the global economy.

The significantly improved outlook for the US economy derives from the impact of anticipated legislation boosting infrastructure investment and strengthening the social safety net in the second half of 2021. The additional support is expected to lift 2021 US GDP growth by 0.3% point and 2022 growth by 1.1% points, with positive spillovers to trading partners.

Many emerging market and developing economies on the other hand are looking to rebuild fiscal buffers. Some, including Brazil, Hungary, Mexico, Russia, and Turkey, have also begun normalizing monetary policy to head off upward price pressures.

First-quarter GDP outturns overall surprised on the upside, notably in Asia and Latin America, while renewed lockdowns in Europe led to downside surprises. High-frequency data in the second quarter indicate the recovery is widening beyond manufacturing to services especially in economies where infections are under better control.


India Economic Outlook

Indian economy witnessed a rebound in spite of the drag caused by the second and more severe wave of COVID-19 that forced the majority of states to reimpose localised lockdowns and stop mobility completely from late April to early June. However, the impact of such state-wise lockdowns was not as severe as the nationwide lockdown that was imposed last year during the first wave.

This is the fastest quarterly growth witnessed by India since such data began to be released in mid-1990s.

The International Monetary Fund (IMF) in its July edition of World Economic Outlook has projected India to grow at the fastest pace of 9.5% during the year 2021. Besides, the Reserve Bank of India (RBI) also forecasted annual growth of 9.5% in the current fiscal year, although it has warned about the possibility of a third wave.

IMF projected Indias growth to be the fastest in 2021

In the July edition of World Economic Outlook Published by IMF, it projected Indias economy to grow by 9.5% in 2021.

Countries 2020-2022
India 7.3% 8.5%
US -3.5% 4.9%
Euro Area -6.5% 4.3%
Germany -4.8% 4.1%
France -8.0% 4.2%


Worldwide IT spending

The IT services segment is among the top three highest growth areas for 2021 primarily due to a boost in infrastructure-as-a-service (IaaS) spending that supports mission critical workloads and avoids high on-premises costs.

Table 1. Worldwide IT Spending Forecast (Millions of US Dollars)

Name 2020 2020 2021 2021 2022 2022
Spending Growth (%) Spending Growth (%) Spending Growth (%)
Data center Systems 178,466 2.5 191,648 7.4 201,659 5.2
Enterprise Software 529,028 9.1 598,957 13.2 669,114 11.7
Devices 696,990 -1.5 793,973 13.9 800,172 0.8
IT Services 1,071,281 1.7 1,176,676 9.8 1,277,228 8.5
Communications Services 1,396,287 -1.4 1,444,980 3.5 1,481,878 2.6
Overall IT 3,872,052 0.9 4,206,234 8.6 4,430,051 5.3

Source: Gartner (July 2021)

The IT services segment, meanwhile, is forecast to total $1.2 trillion in 2021, an increase of 9.8% from 2020. Technology spending is entering a new build budget phase. CIOs are looking for partners who can think past the digital sprints of 2020 and be more intentional in their digital transformation efforts in 2021. This means building technologies and services that dont yet exist, and further differentiating their organisation in an already crowded market.

Global ICT Spending

Technology Spending $M 2018 2019 2020 2021 2022 2023
Traditional Technologies $4,005,011 $4,146,194 $4,005,032 $4,130,413 $4,277,843 $4,453,674
New Technologies $653,808 $766,521 $891,760 $1,030,455 $1,189,208 $1,362,017

Traditional ICT spending is forecast to broadly track GDP growth over the next decade, the overall industry will be catapulted back to growth of more than 2x GDP as new technologies begin to account for a larger share of the market. The emergence of IoT is already contributing to significant market growth, and within 5-10 years new technologies such as robotics, artificial intelligence, and AR/VR will also expand to represent over 25% of ICT spending.

ICT spending in 2020 being fiat compared to 2019 and kept afloat by growth in new technologies. In 2021 through 2023, overall ICT spending will grow by at least 5% annually due to continued expansion in new technologies while traditional ICT will continue to see growth that tracks GDP. Growth in traditional hardware, software and services will be driven by cloud and mobile and will maintain a stable share of overall business and consumer spending. While some categories are declining, businesses continue to leverage traditional technologies as major components of digital strategies.



APAC ICT Spending

ICT spending in Asia Pacific is expected to grow by over 7.1% to reach $950 billion in 2021 and is expected to reach $1.1 Trillion by 2025, according to IDC.

Professional Services expect the highest year-on-year growth within the Distribution and Services sector right through the forecast period. The digital journey across the Professional Services sector has remote working as one of its priorities and has invested in upgrading for faster operations.

Personal and Consumer Services follow with second-highest growth compared to all other verticals as countries have started to allow travellers with utmost caution. Leisure and business travel activities show the highest growth in 2021 after a complete slowdown.

Very Large Businesses (1000+ employees) will hold the largest market contributing to almost half of the ICT spending with expected growth of 7% year-on-year for 2021. These enterprises will shift or add close to 45% of their technology budget to either address COVID-19-triggered business change or make the organization more competitive.



India ICT Spending

Indias ICT Spending is set to grow by over 10% to $91 billion in 2021 and expected to reach $111 billion by 2024, according to IDC. The revival of economic activities across India together with growing consumer demand played a key role in expediting this growth.

The accelerated push towards going digital was due to a change in focus of enterprises, be it their business model, or to create digital products and services and deliver digital-first experience. Major industries have reached operations at optimal levels as demand picked up owing to an improved supply throughout the end of last year and into 2021.

The banking and telecommunications industry contributes the highest, around 14% of the overall ICT Spend in 2021. The banking sector is expected to grow at 7.8% in 2021 and is mainly driven by increased ICT investments in redesigned customer experience (CX), business continuity, and cybersecurity.

Spend in the telecommunication industry is expected to grow at 9.1% in 2021 as India continues to be a hub for innovation and operators, even though cost-constrained, will focus on bringing in cost transformations in operations.

Unified Communications as a Service (UCaaS) Market

The uni_ed communication as a service market is expected to reach USD 87.20 Billion by 2026, growing at a CAGR of 19.25%.

The global COVID-19 pandemic has positively affected the uni_ed communication as a service market and provided many growth opportunities to UCaaS vendors worldwide, resulting in a more than 85% increase in UCaaS sales worldwide. High connectivity plays a vital role in cloud-based communication. The increasing penetration of 5G networks in several countries worldwide is expected to boost the adoption of 5G networks across various organizations for better productivity. This is likely to grow the demand for UCaaS in the market.

Telephony holds the highest share of 41.73% in the UCaaS market based on components. This is because of the huge importance attached to connecting with individuals at any time and at any place over call.

In 2020, North America dominated the uni_ed communication as a service market accounting for 31.71% share by revenue in the global market. Highly skilled labor, a high technology-driven population, and many enterprises are the significant elements that have led to such huge demand in the region.

Europe accounted for the second-largest share of 27.30% by revenue in 2020 due to the high penetration of the hospitality sector.

The primary reason for the growth in demand in the APAC region is the presence of small-scale industries whose focus is to make their business process cost-efficient.



Global Internet Data Centers Market

The global market for Internet Data Centers estimated at US$59.3 Billion in the year 2020, is projected to reach a revised size of US$143.4 Billion by 2027, growing at a CAGR of 13.4% over the period 2020-2027.

The Internet Data Centers market in the U.S. is estimated at US$16 Billion in the year 2020. China, the worlds second largest economy, is forecast to reach a projected market size of US$32 Billion by the year 2027 trailing a CAGR of 17.5% over the analysis period 2020 to 2027.

Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 9.5% and 11.8% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 10.6% CAGR.



Global Cyber Security Market

Amid the COVID-19 crisis, the global market for Cyber Security estimated at US$162.9 Billion in the year 2020, is projected to reach a revised size of US$296.5 Billion by 2027, growing at a CAGR of 8.9% over the analysis period 2020-2027.

Endpoint Security is projected to record a 10.4% CAGR and reach US$100.2 Billion by the end of the 2027.

The Cyber Security market in the U.S. is estimated at US$44 Billion in the year 2020. China, the worlds second largest economy, is forecast to reach a projected market size of US$70 Billion by the year 2027 trailing a CAGR of 13.6% over 2020 to 2027.

Among the other noteworthy geographic markets are Japan and Canada, each forecast to grow at 4.8% and 7.9% respectively over the 2020-2027 period. Within Europe, Germany is forecast to grow at approximately 5.8% CAGR.

In the global Cloud Security segment, USA, Canada, Japan, China and Europe will drive the 7.7% CAGR estimated for this segment.

China will remain among the fastest growing in this cluster of regional markets. Led by countries such as Australia, India, and South Korea, the market in Asia-Pacific is forecast to reach US$41.4 Billion by the year 2027, while Latin America will expand at a 9.8% CAGR by 2027.



Global Managed Edge Services Market

Managed edge services promises to be a high-growth market as enterprises look to low-latency edge services to address process efficiencies, support new consumer applications, comply with data sovereignty, and deal with security threats. IDC predicts worldwide revenues for managed edge services will reach $445.3 million in 2021, an increase of 43.5% over 2020. Over the 2021-2025 forecast period, the compound annual growth rate (CAGR) for managed edge services is expected to be 55.1%.

Given the nascent demand for managed edge services, a wide range of service providers and technology vendors are looking at this market as the next big revenue opportunity. IDC believes public cloud providers, or hyperscalers, will be key enablers of edge services through the partnerships they are establishing with 5G service providers. Some service providers are considering edge services as the catalyst for the fourth industrial revolution while CDN providers are already shifting their investments toward edge applications.

IDC projects the on-premises edge to be the fastest growing segment with a five-year CAGR of 74.5%. The service provider edge will be the second-fastest growing segment with a CAGR of 59.2%, which will enable it to become the largest market segment by 2022.



Global AI Services Market

The global artificial intelligence (AI) services market is expected to reach US$50 billion by 2025, which will make it the fastest growing AI subsegment over a five-year period. For the five years through to 2025, the market segment is expected to grow at a CAGR of 21%, surpassing that of the software and hardware market segments. Its also predicted to grow faster than the overall market CAGR of 15.2 % during the period, to US $500 billion, in 2025.

AI has emerged as an essential component of the future enterprise, fuelling demand for services partners to help organisations clear the many hurdles standing between pilot projects and enterprise AI.

Overall, the competitive landscape in both services markets for AI remains highly fragmented where many players from across the services value chain continue to invest in technology assets, innovation resources and expertise in applying AI to solve industry- and domain-specific problems for clients.

Client demand for expertise in developing production-grade AI solutions and establishing the right organisation, platform, governance, business process, and talent strategies to ensure sustainable AI adoption at scale drives expansion across both IT services and business services segments.

Breaking down the two subsegments of IT services and business services, the IT services market is larger, making up nearly 80 % of all AI services revenue. Like the overall AI services market segment, both these subsegments also have CAGRs for the period of 21%.



Global IT industry Outlook

The global information technology market is expected to grow at a CAGR of 6.6% for 2021. The growth is mainly due to companies rearranging their operations and recovering from the COVID-19 impact, which had earlier led to restrictive containment measures involving social distancing, remote working, and the closure of commercial activities that resulted in operational challenges. The market is expected to reach $11866.34 billion in 2025 at a CAGR of 9%.

North America was the largest region in the global information technology market, accounting for 34% of the market in 2020. Asia Pacific was the second largest region accounting for 32% of the global market.

Through all the confusion, Digital operations are more important than ever, with many transformative changes accelerating over the past year.




Nurturing a sustainable performance culture in an organisation is essential to remain competitive in an ever-changing world. The COVID-19 had called for rapid crises responses and emphasises on keeping the workforce engaged, productive and resilient. While the world was focussing on the pandemic, AGC was channelling all its energy and efforts to acquire more brands under its feathers. During FY2021, the integration of Fujisoft in UAE and Pyrios in Australia & New Zealand was concluded to strengthen our global network hence being culturally diverse and building a more inclusive work environment.

Various HR interventions were driven to serve as an important roadmap to guide the workforce re-integration into the new normal. HR Systems and People Processes were streamlined to ensure they contribute to the achievement of organisational goals and the development of organisational culture. With a more dispersed workforce, it became all the more crucial to present a single platform for all the processes which will be managed and optimized to its best capacity globally. The objective was also to draw data-driven insights, which will be important to maintain oversight of employees performance, engagement and well-being.

In Talent Acquisition, people diversity was the cornerstone for our success. In FY2021, the Company has hired around 500 employees in upcoming technology quadrants across the globe. The focus has been to build internal talent pool in business priorities technologies such as Application Development, Uni_ed Communications, Cyber Security, Sales, SAP, etc.

In the attempt to enhance organisation productivity and building a learning culture that contributes to overall development. The training landscape consists of Avaya Interaction Centre, WFH CC Solutions with Cisco and Genesys, Cloud Computing Overview & Fundamentals, Conversational BoT- Avaya imparted round the clock. A shift from a fixed to liquid workforce and increased remote working has created pressing need for innovative learning strategies which gives employees access to content anywhere and anytime. In todays scenarios reskilling plays a key role in helping close talent gaps while keeping employees engaged to their jobs. Employees extensively were engaged with trainings & certifications this year to keep them relevant in the market and business requirements.

Talent Management & Employee Engagement – Employee branding, enhancing employees experience and connectivity have taken on whole new meanings this year. Communication is key to managing uncertainty and formulating action. It also keep workforce engaged and motivated in order to enable them to remain productive. Diverse Engagement programs are scheduled round the year towards building & sustaining a superior employee connect and a high level of engagement in the organization. Companys robust Reward and Recognition Program focuses on building a healthy competitive environment and a rich performance driven culture throughout the Organisation.


a) Geographical Concentration:

The world economy today is deeply interconnected with any surprises or shocks in one region quickly ricocheting to other economies. Though the Company has spread its portfolio worldwide with large focus in the United States of America, it still has to penetrate its existing clients globally and source for more and newer pools of clients to shield itself from the impact of a downturn in connected regions.

b) Competition:

The threat of competition is persistent and serious in the lucrative IT industry. The Company is motivated to stay ahead of competitors through continued research and innovation. Furthermore, it is key to stay updated on latest technology advancements and offerings to ensure the business model of the Company stays relevant with customer needs.

c) Financing Activities:

There is a requirement for steady cash flow in sufficient quantum in order to support the Companys operations and operate its business model with efficiency. Thus, the Company has over the years extensively evaluated various funding options provided by the banking as well as non-banking segments. After studying the available options using updated analytical tools, the Company has successfully tapped financial resources, which demand comparatively favourable servicing and capital structure as well as are best suited to the Companys need from time to time.

d) Foreign Currency Fluctuation:

The spread of revenues around the globe increases the Companys exposure to currency risk. The Company performs due diligence by keeping up-to-date with current affairs in the regional and global economy. This enables the Company to take steadfast measures in hedging against currency volatility and protecting its revenues.

e) Employee Retention:

The Company values its employees as its key capital and asset. Skilled employees who feel valued are better engaged with the goals of the Company and will deliver better performance. The Company thus emphasizes on skills upgradation through regular trainings and certifications to align employees skillsets keeping your Companys customers ahead of the technology curve. Furthermore, the Company monitors the Employee Engagement Score to ensure all employees are constantly motivated and delivering performance.

f) Staff Attrition:

Over the past few years, the IT Industry has particularly faced a high attrition rate mainly attributable to the highly volatile nature of this industry and the resultant demand for constant skill updation & development from the employees by companies belonging to this industry. The Company being no stranger to this risk, has over the years taken appropriate measures to facilitate cultivation of long-standing relation and loyalty amongst talented and highly competitive employees contributing majorly to the performance of the Company over the years.

g) Talent Acquisition:

The Company is engaged in such a business which highly depends on the capabilities of its workforce for its performance. Like numerous other companies engaged in the IT industry, the Company has been facing the long standing challenge of refreshing and hiring skilled and talented employees compatible with the constantly changing landscape of the IT industry and commensurate with the nature, size and global presence of the Companys business. Over the years, the Company has undertaken meticulous planning to attract, recruit & select exceptional talents and has taken strategic and holistic approach to build its talent pool. In the current year, the Company has hired employees in upcoming technology quadrants. Also, the Company has especially emphasized on promoting a culture of inclusivity and diversity at workplace, as the experience and engagement of employees plays an important role in forging a lasting association.


AGC has an adequate system of internal controls to ensure that the assets are safeguarded and protected against loss from unauthorized use or disposition, and that transactions are authorized, recorded and reported correctly.

The Company engages a detailed process of internal audits, reviews by management, and documented policies, guidelines and procedures to ensure that the financial records are relevant and reliable.

The Company has implemented an integrated SAP and SFDC business management system for AGC entities including Black Box Corporation US, providing system-based checks and controls. This results in increased efficiency and effectiveness of AGCs internal control systems. Implementation of ERP project to have SAP for rest of the Black Box entities is currently underway and we expect to go live with SAP by end of FY2022 with integration of SFDC, Oracle and Service now. This newly implemented SAP would be integrated with overall AGC SAP to have one platform as planned for FY2022.

The Company management assessed the effectiveness of the Companys internal control over financial reporting (as defined in Regulation 17 of SEBI LODR Regulations 2015) as on March 31, 2021.

M/s. Walker Chandiok & Co LLP, the Statutory Auditors of the Company, has audited the financial statements included in this Annual Report and has issued a report on our internal control over financial reporting (as defined under section 143 of the Companies Act 2013).

The Companys internal audit systems independently oversees the operations of the organization regularly.

The top management and the Audit Committee of the Board reviews internal audit findings and recommendations. The Audit Committee is authorized by the Board to investigate any matter pertaining to the internal control and audit. The Committee also ensures compliance of internal control systems in addition to the quarterly, half-yearly and annual financial statements before submission to the Board.


The Company responded to the situation swiftly and activated business continuity plans focusing primarily on employee safety, mitigation of operational and financial impact and sustaining normal operations. AGC took various initiatives related to awareness of all stakeholders including tools for work-for-home (WFH), guidance on masks and other personal protective equipment as per requirements of customer and local jurisdiction guidelines. By activating WFH, providing tools to its employees to perform the work which can be done remotely in consultation with our customers, AGC continued to serve its customers as best as possible. The Company hasnt seen significant or material impact of COVID-19 on its operations and financial results for the year ended March 31, 2021. The Company continues to monitor opening of various countries as per respective guidelines and relevant changes in evolving economic situation across the geographies it operates in.


The segment-wise break-up of revenue is given below:

Rs. in Crores

Business Segments FY2021 FY2020
System Integration 3,879 4,067
Technology Product Solution 729 821
Consulting 66 106
Total 4,674 4,994

Offerings under the System Integration include Uni_ed Communication, Data Center & Edge IT, Cyber Security, Digital Solutions & Applications and Seamless Customer Support and managed services.

Offerings under the Technology Product Solution include IT infrastructure, specialty networking, multimedia and keyboard/video/mouse ("KVM") switching.

Consulting business is related to providing consulting services for performance improvement and customer experience.


As on March 31, 2021, the Issued, Subscribed and Paid-up Equity Share Capital of the Company is Rs. 32,52,88,300/- divided into 3,25,28,830 Equity Shares having face value of Rs. 10/- each. The Company has not issued any other class of shares.


Total Other Equity stands at Rs. 174.17 Crores which mainly comprises of Capital Reserve of Rs. 38.04 Crores, Security Premium Reserves of Rs. 220.36 Crores, General Reserves of Rs. 100.59 Crores, accumulated losses of Rs. 207.60 Crores and other item of Rs. 22.76 Crores as at March 31, 2021.

An overview of the Net Worth movement of the consolidated financial statement from FY2020 and FY2021


The Borrowings of the Company stands at Rs. 176.20 Crores as on March 31, 2021 against Rs. 462.38 Crores as on March 31, 2020. The Company has done repayment of Rs. 286 Crores in FY2021 to its lenders from its internal accruals and equity infusion by promoters.


The fixed assets (net block including PPE and intangible) is at Rs. 207.42 Crores as on March 31, 2021. The total Goodwill stands at Rs. 269.18 Crores. In addition, during the current year ended March 31, 2021, the Company has recognized Right of use assets for Rs. 145.65 Crores.


On Consolidated basis, the Company for the year ended March 31, 2021, recorded gross turnover of Rs. 4,674.02 Crores as against Rs. 4,993.92 Crores for the period ended March 31, 2020 registering reduction of 7% over previous year, primarily reflecting impact of COVID-19.

On Consolidated basis, the Company has incurred a net profit of Rs. 78.09 Crores for FY2021 against a net loss of Rs. 79.96 Crores for the FY 2019-20, reflecting the impact of transformation measures taken by the Company.

On Consolidated basis, Gross Margin has improved from 30.4% in FY2020 to 32.0% in FY2021 which is mainly attributable for better realizations and better traction in the market. This improvement is in spite of Covid situation continuing throughout the year FY2021.

Finance Cost stood at Rs. 97.91 Crore for the FY2021 as against Rs. 131.72 Crores in the previous year due to significant reduction of debt by Rs. 286 Crores.


Particulars FY2021 FY2020 % Change
Revenue from Operations (Rs. in Crores) 4,674.02 4,993.92 -6.4%
EBITDA (%) 7.53% 6.58% 0.9%
EBITDA (excluding lease) (%) 6.07% 5.68% 0.4%
Operating Profit Margin (%) 4.15% 1.18% 3.0%
Net Profit Margin before exceptional item (%) 3.24% 2.11% 1.1%
Return on Net Worth (%) 37.78% -45.41% 83.2%
Return on Net worth (Excluding re-measurement of defined benefit obligation) (%) 37.15% -83.79% 120.9%
Interest Coverage Ratio 1.98 0.45 344.1%
Debtors Turnover 3.89 2.04 90.6%
Inventory Turnover 2.70 2.62 3.1%
Current Ratio 0.92 0.78 18.2%
Debt Equity Ratio 0.85 -2.63 132.5%
Debt Equity Ratio (Excluding re-measurement of defined benefit obligation) 0.84 -4.84 117.30%

Details / reason of significant changes:

On a consolidated basis, EBITDA has improved by 0.9% mainly on account of better cost Management i.e. reduction in employee cost, finance cost and depreciation. Further, Return on Net Worth saw drastic improvement of 83.2% as compared to previous year due to better profitability and margin improvement.


On January 8, 2021, the Company issued and allotted 33,33,334 (Thirty Three Lakh Thirty Three Thousand Three Hundred and Thirty Four) Convertible Warrants ("Warrants") to Promoter shareholders on Preferential basis, at a price of Rs. 675/- (Rupees Six Hundred and Seventy Five Only) per Warrant with a right to the Warrant holders to apply for and be allotted 1 (One) Equity Share of the face value of Rs. 10/- (Rupees Ten only) each of the Company ("Equity Shares") at a Premium of Rs. 665/- (Rupees Six Hundred and Sixty Five Only) per share, for each Warrant, within a period of 18 (Eighteen) months from the date of allotment of the Warrants.

On March 02, 2021 and March 20, 2021 the Company allotted 16,34,828 and 9,63,823 Equity Shares of Rs. 10/- (Rupees Ten only) each respectively on conversion of equal no. of Warrants.

The funds raised through Preferential Issue have been utilised to meet the growth requirements of the company, reduction in liabilities and general corporate purposes.


Z Services HQ is a Cyber security cloud services provider, having presence in the Middle East region. Black Box has acquired 86% equity for a cash consideration of US$ 3.44 Million.


This report contains forward looking statements that involve risks and uncertainties including, but not limited to, risk inherent in the Companys growth strategy, acquisition plans, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto.