cyient ltd share price Management discussions

Global Economic Outlook

The global economy is still recovering from the challenges caused by the COVID-19 pandemic. Though the larger population is now vaccinated, travel restrictions have eased, and businesses are returning to normalcy, the risks loom large for another wave with new variants emerging and governments imposing restrictions like partial/complete lockdown and renewed travel restrictions. The emergence of new COVID-19 variants could prolong the pandemic and induce renewed economic disruptions. The Ukraine - Russia war makes the economic recovery even more challenging.

The global economy is forecasted to grow at around 4.7% this year. The post-Covid-19 pandemic recovery is hit by potentially huge global supply chain disruption leading to slow growth and pushing up inflation. High energy prices are likely to add to industry costs. With most countries lifting policy rates, risks to financial stability, emerging market and developing economies capital flows, currencies, and fiscal positions, especially with debt levels increased significantly in the past two years, may emerge.

Engineering and R&D (ER&D) Outlook

The ER&D industry is expected to grow at a healthy rate of 6.7% in the year 2022. All industry verticals are projected to exhibit growth despite macro-level challenges such as chip shortage, supply chain disruptions, and talent shortage. Some industries like Aerospace and Defense, Industrial, and Utility which were severely impacted by the pandemic, are also likely to recover with an increase in demand.

The pandemic accelerated enterprises digital journeys in unprecedented new ways and this is likely to continue with software products. The industry will lead the growth on the back of digital technologies such as the Internet of Things (IoT), Artificial Intelligence (AI) / Machine Learning (ML), Augmented Reality / Virtual Reality (AR/VR), and simulation (digital twins) for R&D processes and products across other verticals for cloud enablement, remote connectivity, operations improvement, products and services innovation, and improving user experience.

Additionally, Environment, Sustainability, Inclusiveness, and Governance (ESIG) continue to gain significant emphasis from companies across all the industries, with more and more companies becoming conscious of reducing their environmental impact and carbon footprint.

Business Performance Outlook

Cyient as a company is focused on multiple industries, and below is the outlook across each industry vertical for the year.

Aerospace and Defense

The global Aerospace & Defense (A&D) industry is in much better shape than earlier post-pandemic expectations, which is a positive sign. The commercial aerospace sector has been recovering slowly, as travel demand is expected to return to pre-COVID levels by 2024, led by domestic travel and narrow- body planes. The defense sector has been stable as military programs continue to be critical to national defense, especially considering the intensifying geopolitical tensions.

The Aerospace & Defense Business Unit (BU) witnessed marginal growth YoY, indicating a turnaround in the aerospace business. The growth was led by a significant increase in business in some of the key accounts. Cyient also saw some large wins related to digital technology, aftermarket, and design & manufacturing of embedded systems. The business also won many awards and recognitions from customers and major industry bodies. Key among these are Pratt & Whitney supplier awards for "Highest Productivity / Cost Avoidance" and "Technology and Innovation". We were also awarded "Engineered in India Product of the Year" at the NASSCOM Engineering and Innovation Excellence Awards for two of our products - Software Defined Radio (communication solution for the Indian army) and Smart Power Distribution Panel (efficient and reliable power distribution).

We expect growth driven by newer wins in digital and embedded space, indicating a double-digit growth rate in the coming fiscal. The commercial aerospace market recovery will be led by aftermarket revenues and growth in the defense / ITAR business. Another focus area for FY23 is urban air mobility, where significant investments are being made, and we expect good business growth in the segment. The BU is also bringing a special focus on airline operators led by digital and aftermarket offerings.


Rail transportation is expected to grow significantly over the year. Advanced driver assistance system (ADAS) technology is becoming popular in the rail transportation industry to optimize energy usage, enhance operational management, and safety aid in cost reduction. These systems provide automatic warning, protection, operation, supervision, and control arrangement.

The Rail transportation industry was also impacted by the pandemic but also showed increased investments across all geographies in rail infrastructure and modernization projects. This has resulted in healthy order books across most of our rail customers. At the same time, the year also saw major mergers and consolidations across the industry. This consolidation and cost concerns resulted in the reduction of engineering spending and insourcing of work. Some of the major projects were also impacted by delayed start.

Cyient?s revenue was impacted by consolidation, cost reduction measures, and insourcing measures in some of our large customers. Consequently, the rail transportation business witnessed a de-growth YoY. The rail business did see significant growth in areas as digital technology and embedded systems.

The outlook for FY23 and beyond continues to be positive. The merger and consolidation are rapidly stabilizing, and a very healthy order book of our customers is likely to translate to increased business. We are confident of increased order intake and revenue from digital and embedded service areas. We are confident in getting back to the growth trajectory for the rail business in the coming fiscal.


The outlook for the industry continues to be robust. Given that several regions, especially in remote areas across the world, have still not experienced high-speed connectivity, demand for fiber and 5G will continue to increase.

The telecom sector continued to make progress in augmenting its network capacity with additional fiber and wireless deployments to meet the constant demand for higher-speed networks in 2021. Investments in 5G deployments continued to drive ER&D spending, with the technology proving to be a critical enabler for Industry 4.0 and Digital Transformation use cases. Network densification and Public 5G is continuing to expand in several countries, and B2B offerings enabled through Private Wireless Networks are also on the rise. We continue to see increased business opportunities on the back of these industry tailwinds.

Cyient?s Communication Business has delivered a strong sequential growth throughout the year with major deal wins in the areas of fiber rollouts, network densification, and 5G rollouts. During the year, Cyient was recognized as a Major Contender in the inaugural Everest Group PEAK Matrix? for 5G Engineering Services. Cyient?s focused investments in partnerships and solutions to strengthen capabilities in public and private 5G networks were cited as key strengths. We were also conferred with the Service Delivery Excellence of the Year Award by NASSCOM for harnessing the power of 5G to connect 20 million individuals across urban, semiurban, and rural Australia. Additionally, with the launch of the Private 5G Networks Center of Excellence in collaboration with IIT-Hyderabad, Cyient reaffirmed its commitment to technological innovation and strengthening its collaboration with academia

Our outlook for the year is positive and strong ahead as we will see significant activity on the enterprise front as network equipment providers and telecom carriers work with businesses to install and deploy private networks.


The Utilities industry has recovered from the pandemic as electricity demand has crossed the pre-pandemic levels with new highs across major markets. The segment is poised to grow in the coming year, with investments in renewable and carbon-free technologies continuing to increase due to in emphasis on carbon emissions by governments and international agencies. Solar and Natural Gas are likely to lead the demand for renewable and carbon-free technologies. Digital technologies continue making their way into the power generation, transmission, and distribution industry to enhance productivity, efficiency, safety, compliance, and reliability.

The Utilities industry delivered a balanced growth by making required investments in improving infrastructure, enhancing grid reliability, and increasing the share of clean energy while addressing the operational and eco-system challenges. Cyient?s Utilities growth strategy, Project? Volt?, is well aligned with the areas of investment by the Utilities and hence the general medium to long-term outlook for the sector remains positive. Our value proposition continues to resonate well with the key industry trends of clean energy, infrastructure upgrade, digitalization, and democratization.

Our investments into point-specific solutions, UN-Bridge and CyiOPS, in the areas of system implementation and renewables are well received by our customers and have become part of our standard implementation framework(s) and processes. Synergy benefits of our acquisition of WorkForce Delta, a leading consulting firm in field services management, have started in the form of an expanded customer base and extended offerings by leveraging Cyient?s broader Utilities domain and digital capabilities.

Our outlook for FY23 and beyond continues to be positive. This is driven by industry growth in our focus segments of smart utility, infrastructure upgrade, and clean energy, our strong long-term client relationships, a robust opportunity pipeline, and the increasing momentum in strategy execution.


The Geospatial market has grown in line with expectations in FY22. The industry overall has gone through a rapid modernization process with rapid increases in the quantity and veracity of data which has led to enormous opportunities in the industry. The business had several key wins in FY22, including in the navigation, telecommunications, utilities, and mining sectors. With these segments being our core focus areas, the general long-term outlook for the BU remains positive. Our value proposition continues to resonate well with the key industry trends of imagery analytics, automation, AI, and intelligent mapping operations.

We strengthened our key enterprise partnerships with Xerox and Esri in 2022, which enhanced our offerings across multiple domains. The business continued to invest in key areas of map editing, building automated lidar processing pipelines, tools for telecommunications network planning, imagery analytics, and Earth intelligence.

Our outlook for FY23 and beyond continues to be positive. This is driven by industry growth in our focus across Cyient horizontals but also last mile navigation, mobility, Earth intelligence, and sensor data analytics. This, in addition to our strong long-term client relationships, a robust opportunity pipeline, and the increasing momentum in strategy execution, will deliver positive results throughout the year.


The semiconductor industry has seen an extremely strong demand driven by a rebound from the post-Covid scenario and increasing demand for applications. With our complete value chain offering, we are well-positioned to service this demand, and our short, medium and long-term outlooks remain positive.

The demand for Turnkey ASIC solutions was strong throughout the year, with positive growth in this business area. This level is expected to sustain for the next year.

This year saw the successful introduction of a dedicated Integrated Circuit design service offering, and this is expected to expand rapidly in the coming years in line with the global demand for semiconductors and continued global capacity constraints.

It was a challenging year for the Semiconductor Engineering Services business, driven by talent supply constraints. Whilst this challenge will persist for the foreseeable future, significant investments have been made to overcome this, and a rebound is expected in the next financial year.

With strong growth in the last year, our strategy of focusing on the aforementioned business areas and selective key clients has proved successful, and this approach will continue in the next years.

Our outlook for FY23 and beyond continues to be positive.

Energy, Industrial, and Plant Engineering (EIP)

The energy industry has recovered from the effects of the pandemic and is expected to grow at an accelerated rate in the coming year. With an increase in sales and margins, the companies are likely to increase their Capex across all the streams creating new business opportunities. Investments in new technologies like remote monitoring in oil fields, drilling operations analytics, and logistics monitoring using IoT are expected to continue in the coming year. Companies are also investing in expensive green energy solutions, such as carbon capture, utilization, and storage (CCUS), to reduce carbon footprints.

The Energy, Industrial Plant Engineering (EIP) sector provides end-to-end capabilities across the energy value chain for oil and gas, industrial portfolio, and plant engineering. The energy industry withstood adversity in 2021 with the continued strain placed upon us by the COVID-19 pandemic. Much of 2021 was about the recovery of the Oil & Gas market. We saw an unprecedented spike in prices in the second half of 2021 and will continue through much of 2022. The industrial portfolio faced historical supply chain and labor headwinds.

As we forge ahead this year in The Energy, Industrial Plant Engineering (EIP) industries we will focus on key initiatives which are to accelerate digital transformation, bringing resources and conscientiousness to redefine and shape environmental, social, and governance (ESG) practices in the workplace, attract, train, and retain employees in a fiercely competitive labor market. Staying ahead of labor shortages, focusing on supply chain vulnerability through digital technologies, and Mergers and Acquisitions (M&A) shifting and incorporating business models to enable new green energy demands.

Our Outlook for FY23 is positive as global production levels are in high demand. Continued investments in resources and a strong focus on key initiatives have the EIP segment well- positioned to take advantage of market demands through our capabilities and focus on digital technology transformation across our portfolio of customers.

Medical Technology and Healthcare (MTH)

The Medical Device market has seen robust growth in 2021, primarily driven by the response to the COVID-19 pandemic and the expansion of healthcare beyond traditional care pathways. While the Medical Device Industry focused on fast- track approval of emergency use medical devices, the new care pathways increased the deployment of technological advances such as Edge Computing, 5G, 3D Printing, Medical Robots, and Augmented & Mixed Realities. Further to this, clinical advancements, an emerging need for remote care & telehealth, value-based care, and immersive patient engagement are required to fast-track platform consolidation imperatives to deliver value-based care in an integrated healthcare eco-system, thereby pushing the envelope on technology enablers.

The Internet of Medical Things (IoMT), Software as a Medical Device (SaMD), Robotics, Regulatory compliance needs, and Cybersecurity present new opportunities for medical device companies. Additionally, digital technologies are expected to play a substantial role in medical technology as the global health system becomes more consumer-centric and wellness- oriented with increasing AR/VR and AI deployment. Medical Technology and Healthcare (MTH) business unit experienced significant growth Y-o-Y led services business primarily fueled by the global supply chain crisis. The outlook for this sector for FY23 remains positive as we continue to execute and ramp up on recent contracts while strengthening our pipeline focused on digital transformation, product platforms, embedded software, and design-led manufacturing services.

Automotive and Mobility

The global Automotive industry outlook for 2022, moderate growth is expected to hike sales to 83 million, with global sales expected to reach pre-pandemic levels in 2023 before a big upswing in 2024 and 2025. Cars are rapidly becoming the smartphones of the future; hence, the relevance of electronics & software components is continuously rising. The COVID-19 pandemic cut the 2020 global off-highway equipment growth to 2.6%, but a recovery in 2021 & growth in 2022 is projected.

The Automotive & Mobility Business Unit (BU) is pacing itself for a year of exponential growth in 2023. Infotainment & Connected, ADAS & Autonomous, Hybrid & Electric Mobility are three sectors that are expected to spearhead this growth. The A&M BU is very well poised to tap into this growth trajectory due to its current footprint of services portfolio with key players in the Automotive and Mobility space. From helping our Top customer with business process transformation to expanding into Smart Factory? & Application Development?.

We also won many awards and accolades and were recognized by major industry analysts. Key among these being recognized by John Deere as "Strategic Partner". We were also offered the "Customer Value Leadership Award" by Frost & Sullivan for the European Automotive Engineering Service Industry Excellence in Best Practices.

Mining and Natural Resources (MNR)

The global mining industry is enjoying high demand and a high price environment across all major commodities. This is expected to continue to absent a large economic shock and driven by two factors first the higher intensity of materials required in renewable energy generation sources and electrical vehicles; and the $75 trillion infrastructure investment required globally to support economic stimulus policies, green energy, and digital infrastructure.

The Mining and Natural Resources Sector enjoyed strong growth in existing accounts and added 12 new logos. This translated to an increase in services order intake, an increase in Revenue EBIT.

Over the year, the Sector adjusted the service delivery model to a hybrid approach where our off-shore teams are augmented by onshore subject matter experts. This has increased delivery pace and ability to add additional value to customer businesses which were formally recognized through Cyient receiving two customer extraordinary contribution awards.

Whilst the mining industry is growing, ESG compliance is becoming a major driver of investor sentiment. To support customers in meeting these obligations, we are investing in technology solutions that solve issues around the monitoring and management of activities with environmental and community impacts.

With the successful completion of the IG Partners integration, we established Cyient Consulting, which is now operating as a stand-alone group enabling consulting-led growth across all of our industry segments.

Looking ahead, we expect further growth in FY23 and will continue investing in technology solutions that solve customer problems that matter.


Digital Transformation continues to be the top priority for every company in every industry - global leaders are constantly thinking about creating or managing the disruptions created by Digital and increasing investments to transform customer experiences, launch new products/platforms, adapting to a post-pandemic talent environment, building resilience and scale to their supply chain, etc.

Cyient?s deep understanding of our customer?s business combined with robust Digital capabilities make us an ideal partner for our customer?s Digital Transformation initiatives, and we have seen explosive growth in demand for our Digital services. Having clocked a 50%+ growth in FY22, we are forecasting a similar growth in the forthcoming year driven by our Key Accounts. Our investments in the IntelliCyient platforms are yielding significant results as we can bring the best of eco-system partners, solution accelerators, and industry-specific reference architecture to help shape our customer?s thinking and realize the business benefits of Digital.

We are working on multiple transformation initiatives across industries for Transformative Asset Management, Connected Factories, Intelligent Supply Chain, Smart Operations, and Smart Infrastructure. Our Asset Tracking solution received the Aegis Graham Bell award for Innovation in IoT. Industry Analysts like ISG and Everest group have recognized Cyient for multiple capabilities in Digital Transformation and Digital Engineering.

We will continue our focused investments to make Cyient the preferred part for Digital Transformation for Asset Intensive market.

Design Led Manufacturing

The DLM industry is expected to grow at a faster growth rate, driven by the push from global companies to diversify their supply chain and the incentives offered by the Indian government. The growth is projected to be led by an increase in demand for semiconductors, communications, consumer, medical, industrial, and transportation industries. Growing demand for consumer electronics, wearable health devices, hybrid EVs, and automotive electronics are expected to drive growth in the coming year.

The Opportunities for DLM business continue to be driven by the Make in India initiative and growth in A&D, Medical, and Industrial sectors. Hyderabad SEZ is being positioned as an attractive Manufacturing facility with Zero Tax on Export business, thereby reducing the overall cost. Increased Military spending by a key client is expected to drive growth for the business. However, the challenges in component procurement are expected to continue in FY23, and we are expecting to work on the PPV model with our customers until the market is eased out.

The outlook for FY23 remains strong, backed by strong growth in the Transportation and EIP business. Key Opportunities for FY23 include increased visibility of orders from Key customers.

Business Outlook

India continues to be the preferred hub of global companies setting their engineering centers across a wide range of industries due to the availability of a wide range of engineering talent spread across multiple capabilities and low costs. India has become the innovation partner of many global companies due to its unique value proposition. India continues to offer innovative business models to lessen the impact of the economic downturn. This ensures the market is in a strong position to perform throughout the year.

Our outlook for the market continues to remain strong with a focus on developing skills to address the growing digital technologies demand across industries. We expect strong growth across the mining and off-highway, Medical technology, and Automotive sectors, along with the mature segments of Communications. We are confident of developing a doubledigit growth throughout the year.

Enterprise Risk Management (ERM)

The company has an organization-wide ERM framework based on best-in-class standards. It covers various company operations and key criteria such as strategic risks, reputation risks, operational risks, financial risks, and compliance/ litigation risks. The ERM framework is reviewed periodically by KPMG, the company?s internal auditor, and a report on the mitigation status of risks is presented to the Risk Committee. The company also has an internal risk committee that periodically reviews the risk management process.

Key Risks and Opportunities

Risk description Risk impact Risk mitigation
Geopolitical Risks The Ukraine Russia war could impact business in Europe and have an impact on key industries we operate in. Monitoring and review at management council levels. We do not have a presence in either of the countries, so immediate risks are minimized
Business disruption due to Covid-19 pandemic The company?s operations may be adversely affected due to incapacitation of the workforce due to the pandemic and stress due to lockdowns. Demand for services may also be impacted in select industries. Monitoring and review at management council levels. Rigorous implementation of Business Continuity Plans. Regular communication with customers and vendors. Setting up of work from home infrastructure. Mandating appropriate health and safety norms and advisories.
Travel restrictions Restrictions in key markets and legislations that restrict the movement of professionals may lead to delays in projects and an increase in costs. The Covid-19 situation may further restrict such movement. Monitoring of global environment. Focusing on strengthening onsite readiness-local hiring and increased customer interface.
Innovation Risk Inability to innovate and develop new services and solutions to keep up with customer expectations and evolving technologies could result in lower growth traction. Continuous competency and capability building in new- age technologies prepares the company to address changing customer requirements. Focus on innovation and development of solutions and accelerators to reduce time-to-market for customers.
Currency Risk Exchange rate volatility in various currencies could materially and adversely impact the results of operations. Long-term cash flow hedges are taken to minimize the impact of exchange volatility on Net profit. Regular evaluation of hedging policy by internal Risk Management to assess the effectiveness.
Inflation Risk Inability of the future real value of investments, assets, and income to be reduced by unanticipated inflation To add inflation premium to the rates in which we sign contracts with our customers and vendors. Adjust cash flows for inflation to prevent changes in purchasing power
Attrition Risk Risk of losing talent across levels in the Organization. Focus on employee engagement initiatives. Actions around retention and salary corrections. Focus on hiring.
Developing and Marketing Newer Solutions In a fast-paced economy, there is a constant pressure for innovation on all clients, including the integration of solution capabilities Create competencies and capability building by investing in skilled resources
Global Delivery Need to strengthen global delivery to have sizable delivery closer to a client base. Strengthen onsite presence with nearshore centers.
Intellectual Property Risk The risk of inadequate protection of intellectual property rights of our customers can lead to reputational damage and litigation. Robust data security protection and controls to prevent unauthorized access and/or transfer. Strict physical access controls for employees across customer delivery centers and secure areas. Regular internal audits to comply with customer requirements of confidentiality and data protection.
Vendor consolidation Demand for discounts and volume discounts across clients Pressure on margins due to volume discounts. Improve efficiency/larger pie for better economies of scale.
Competition risks In this highly competitive environment, there may be a severe impact on margins due to pricing pressures. There is a focus on providing higher value and differentiated services and also venturing into new business models.
Compliance risks Being a global company, we are exposed to the laws and regulations of multiple countries. The company has an in-house compliance team that monitors global compliances. The team receives updates on changes in regulations from specialist consultants and circulates the same internally.
Data privacy and Cybersecurity In a connected world, businesses are highly vulnerable to cyber-attacks, leading to loss of data and damage to reputation. The company has a stringent cybersecurity policy that ensures the timely resolution of incidents.

Internal Controls and Adequacy

The company?s global presence across multiple countries and sizeable associate strength make it imperative for us to have a robust internal controls framework. The company has adequate systems of internal control commensurate with its size and the nature ofits operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization, and ensuring compliance with corporate policies. The company has a well-defined manual for delegation of authority for approving revenue and expenditure. The company uses the SAP system globally to record data for accounting, consolidation, and management information purposes, connecting to different locations to exchange information.

Cyient has appointed M/s KPMG as internal auditors for the financial year 2021-2022. KPMG carried out the internal audit based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors (M/s S.R. Batliboi & Associates LLP) and the Audit Committee. The internal audit process is designed to review the adequacy of internal control checks and covers all significant areas of the company?s global operations.

The company has an Audit Committee of the Board of Directors, the details of which have been provided in the corporate governance report.

The Audit Committee reviews audit reports submitted by the internal auditors. Suggestions for improvement are considered, and the audit committee follows up on the implementation of corrective actions. The committee also meets the company?s statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems in the company and keeps the board of directors informed of its key observations from time to time.

The statutory auditors have also independently audited the internal financial controls over financial reporting as of March 31, 2022. They have opined that adequate internal controls over financial reporting exist and that such controls were operating effectively.

Investor Engagement

The company communicates the business outlook, strategies, and new initiatives to its investors in a regular and structured manner. We believe that communication with the investor community is as important as timely and reliable financial performance. We engage multiple communication channels for this purpose. The company?s dedicated investor relations department and the company?s senior management team participate in various roadshows and investor conferences. The company will also host an Investor Day in FY23. The company also engaged an external agency to carry out an independent Investor Satisfaction Survey in FY22. The survey results have been analyzed, and improvements and suggestions have been implemented.

Whistleblower Policy

Cyient firmly believes in Values FIRST (FIRST = Fairness, Integrity, Respect, Sincerity, Transparency), and the organization-wide Whistleblower policy is a step toward ensuring transparency and accountability. The company believes in the conduct of the affairs of its constituents fairly and transparently by adopting the highest standards of professionalism, honesty, integrity, and ethical behavior. This allows stakeholders to expose any kind of information or activity deemed illegal, unethical, or not correct within the company that is either private or public. The stakeholder can approach the Ombudsman without fear to report any wrongdoing, impropriety, or malpractice within the company.

Shareholder Value Creation

As a result of our significant growth in revenue and profit over the last five years:

• The market capitalization witnessed significant growth and increased from Rs 71,239 Mn at the end of FY21 to Rs 102,347 Mn at the end of FY22.

• The dividend payout has substantially improved from 25% in FY14 to 51% in FY21 and 51% in FY22.

• The company has achieved significant growth in the free cash flow (FCF) generation capabilities of the business with an increased focus on receivables management, working capital management, and tax optimization and generated the FCF at Rs5,719 Mn in FY22.

Revenue Growth

During the year, revenue has grown up by 9.2% in US $ terms and 9.7% in Rupee terms. The services segment has witnessed a growth of 9.2% in US $ terms, primarily in C&U and Portfolio business units. DLM segment has witnessed a growth of 9.5% in US $ terms.

Over the last seven years, the company has sustained robust revenue growth momentum with an impressive compounded annual growth rate (CAGR) of 6.5%. The revenue for the company is driven by a focus on a well-diversified business and geography portfolio.

Revenue by Geography

During FY22, the company delivered 10% YoY growth in the North America region, a growth of 9.1% in the EMEA region, and 7.9% growth in the Asia Pacific, including the India region in $ terms. Growth was primarily driven by C&U and Portfolio business units. Over the years, Asia Pacific incl India witnessed significant revenue growth, whereas growth in business returned across N. America and EMEA region after the COVID-19 induced de-growth

Revenue by Operating Segments

The Company?s Chief Operating Decision Maker (CODM) reviews the business as two operating segments - Services? and Design-led Manufacturing? (DLM).

The Services? segment comprises the company?s service and solutions offerings across the Aerospace & Defense, Transportation, Semiconductor, Medical & Healthcare, Communications, Energy & Utilities, and Portfolio business units. The DLM segment is engaged in providing electronic manufacturing solutions in the fields of medical, industrial, automotive, telecommunications, defense, and aerospace applications, including the manufacture and machining of components for aerospace, automotive, and defense industries.

During the year, the Services segment has witnessed a growth of 9.2% in US $ terms, and the DLM segment has seen a growth of 9.5% in US $ terms.

Better Client Mining

The company continues to stress on improving revenue per customer by focusing on strategic customers and generating more up-sell and cross-sell opportunities.

The below chart depicts the contribution of revenue from the top 20 customers over the last four financial years in the services segment:

Profits Trend

During the year, profits have increased due to:

• Increase in Services EBIT primarily driven by improvement in operational metrics, changes in revenue mix, the positive impact of volume on SG&A, automation, and cease & cure partly offset by wage hikes and increase in SG&A spend.

• Increase in DLM margin driven by better revenue mix and higher volume.

Free Cash Flow (FCF) Generation

The company has achieved significant improvement in the free cash flow (FCF) generation business capabilities in the last three years.

In FY22, the company generated FCF of Rs5,719 Mn as against FCF generated in FY21 at Rs7,609 Mn. The Company?s FCF to EBITDA conversion decreased from 113% in FY21 to 65% in FY22 due to increase in working capital and higher taxes.

Days Sales Outstanding

The company has delivered consistent improvement in Days Sales Outstanding (DSO) owing to a focus on better collection cycle management. Total DSO stands at 78 days in FY22 compared to 84 days in FY21, a reduction of 6 days primarily due to increased efficiency in collections.

* DSO Calculation: Total receivables at the end of quarter/ (Quarterly Annualized Revenue*90)

Tax Rate

The effective tax rate has increased from 23.7% in FY21 to 25.2% in FY22, marginally increasing by 147 bps.


The company ended FY22 with a capital expenditure of Rs626 Mn, which is 1.4% of the total revenue.

Net Worth

The net worth of the company has grown at 7.4% CAGR in the last four years from Rs23,442 Mn to Rs31,134 Mn. It is mainly attributed to the profitable growth over the years, driven by organic and inorganic initiatives.

Return to investors

The dividend payment trend for the company has improved substantially in the last 5 years.

The highest ever dividend of Rs 24 per share was declared in FY22. A dividend of Rs 17 per share was declared in FY21.

The dividend payout for the company stands at 51% in FY22 (FY21: 51%)

Market Capitalization

The company?s market capitalization has grown from Rs78,237 Mn in FY18 to Rs102,347 Mn in FY22.

Market capitalization has significantly increased over the last financial year from Rs71,239 Mn to Rs102,347 Mn.

Financial Performance for the Year 2021-22 (Consolidated)

The financial results of Cyient Limited under Indian AS discussed below are for the consolidated results of Cyient Limited and its subsidiaries, which includes the performance of its subsidiaries and joint venture. This part of the Management Discussion and Analysis refers to the consolidated financial statements of Cyient ("the Company") and its subsidiaries and joint venture referred to as "the Group." The discussion should be read in conjunction with the consolidated financial statements and related notes to the consolidated accounts of Cyient for the year ended March 31, 2022.

Consolidated Financial Results

31-Mar-22 31-Mar-21
Particulars Rs Mn % of Revenue Rs Mn % of Revenue
Revenue from operations 45,344 100% 41,324 100%
Other income 1,121 2.7% 1,399 3.4%
Total income 46,465 42,723
Employee benefits expense 22,665 54.8% 21,611 52.3%
Cost of materials consumed 5,881 14.2% 5,165 12.5%
Changes in inventories of finished goods, stock-intrade and work in progress -175 -0.4% 98 0.2%
Operating, administration and other expenses 8,795 21.3% 8,426 20.4%
Impairment of non-current assets - - 274 0.7%
Finance costs 393 1.0% 433 1.0%
Depreciation and amortisation expense 1,922 4.7% 1,945 4.7%
Total expenses 39,481 95.5% 37,952 91.8%
Profit before tax and share of profit from joint venture 6,984 16.9% 4,771 11.5%
Tax expense 1,761 4.3% 1,133 2.7%
Profit before share of profit from JV and non-controlling interest 5,223 12.6% 3,638 8.8%
Share of loss from Joint Venture - - - -
Share of non-controlling interest - - - -
Net Profit attributable to the shareholders 5,223 12.6% 3,638 8.8%



Revenue has grown by 9.2% in rupee terms and by 11.5% in US $ terms. The services segment has witnessed a growth of 9.2% in US $ terms, and the DLM segment has witnessed a growth of 9.5% in US $ terms.

Other income

Other income for FY22 was Rs1,121 Mn as compared to Rs1,399 Mn in FY21. The decrease in other income is due to a one-time higher SEIS receipt in FY 21.

Treasury income is higher by 28 Mn, driven by higher invested cash and investment in a wider portfolio of products.

Forward contract gain is INR 388 Mn, favorable YoY movement of INR 568 Mn mainly from USD, EUR, and AUD contracts.

Unrealized Fx Gain is INR 27 Mn, lower YoY by INR 125 Mn, mainly from lower restatement impact.

The movement of the Rupee against major currencies was as follows:

YE March 2022 YE March 2021
Closing Average Closing Average
USD 75.84 74.50 73.43 74.31
EUR 84.63 86.62 86.10 86.68
GBP 99.58 101.82 100.95 97.15
AUD 56.89 55.09 55.89 53.37

Employee benefits expense

Employee benefits expense includes salaries that have fixed and variable components, contribution to retirement and other funds, and staff welfare expenses.

Employee benefits expense as a percentage of the revenue from operations stands at 54.8% for FY22 compared to 52.3% in FY21. On value terms, employee benefits expense has increased in FY22 compared to FY21 due to an increase in headcount globally.

Operating, Administration, and other Expenses

YE March 2022 YE March 2021
3 Million % of Revenue 3 Million % of Revenue
Rent 130 0.3% 170 0.4%
Travel 529 1.2% 416 1.0%
Subcontracting charges 3,139 6.9% 3,286 8.0%
Repairs and maintenance 1,412 3.1% 1,298 3.1%
Others 3,585 7.9% 3,256 7.8%
Total 8,795 19.4% 8,426 20.3%

Subcontracting charges marginally decreased as a percentage of revenue, in line with the change in the revenue mix during the year.

Travel expenses marginally increased as a percentage of revenue due to relaxation in the Covid-19 pandemic.

Repairs and maintenance expense is in line with business requirements.

Finance costs

Finance costs are constant at 1% as a percentage of Revenue in FY22 and FY21. A decrease in value terms is on account of a decrease in the finance cost of borrowings due to repayments of borrowings.

Depreciation and amortization expense

Depreciation and amortization expense for FY22 was Rs1,922 Mn (4.7% of revenue) compared to Rs1,945 Mn (4.7% of revenue) in FY21. The marginal decrease in depreciation is on account of additional capital expenditure incurred during the year of Rs626 Mn.

Tax expense

The effective tax rate has increased from 23.7% in FY21 to 25.2% in FY22, marginally increasing by 147 bps.

Net profit attributable to the shareholders

The net profit stands at Rs5,223 Mn for FY22 as compared to Rs3,638 Mn. Reasons for the increase in the net profit during the year are:

• Increase in Services EBIT primarily driven by improvement in operational metrics, positive fx impact, the positive impact of volume on SG&A partly offset by wage hikes, changes in revenue mix, and depreciation impact.

• Increase in DLM margin driven by better revenue mix and higher volume.

Consolidated Balance Sheet as at March 31, 2022

3 Million

31 Mar 22 31 Mar 21
Shareholders funds
- Share capital 552 550
- Reserves and surplus 30,582 28,991
Total - Shareholders funds 31,134 29,541
Non-current liabilities
- Long-term borrowings and liabilities 2,424 2,808
- Long-term provisions 1,347 1,288
- Deferred tax liabilities (net) 345 182
Total - Non-current liabilities 4,116 4,278
Current liabilities
- Short-term borrowings 3,241 2,731
- Trade payables 5,259 4,532
- Other current liabilities 3,359 3,166
- Short-term provisions 764 680
Total - Current liabilities 12,623 11,109
31 Mar 21 31 Mar 20
Non-current assets
- Property, plant and equipment 7,398 8,655
- Goodwill 6,185 5,830
- Non-current investments 3,582 344
- Deferred tax assets (net) 248 319
- Other non-current assets 1,488 1,262
Total - Non-current assets 18,901 16,410
Current assets
- Inventories 2,790 1,586
- Current investments 866 -
- Trade receivables 7,333 8,026
- Cash and cash equivalents 12,666 14,650
- Other current assets 5,317 4,256
Total - Current assets 28,972 28,518
TOTAL ASSETS 47,873 44,928

Share capital

The company has only one class of shares - equity shares of par value of Rs5 each. The Authorized share capital of the company was 280,000,000 equity shares.

Reserves and Surplus

Reserves and surplus increased from Rs28,991 Mn as of March 31, 2021, to Rs30,582 Mn as of March 31, 2022, primarily due to profit generated during the FY22 of Rs5,223 Mn.


The long-term borrowings decreased from Rs2,808 Mn as of March 31, 2021, to Rs2,424 Mn as of March 31, 2022, due to repayment of the borrowings.

The short-term borrowings increased from Rs2,731 Mn as of March 31, 2021, to Rs3,241 Mn (including current maturities) as of March 31, 2022, due to new borrowings.

Trade payables

Trade payables consist of payables toward the purchase of goods and services and stood at Rs5,259 Mn as of March 31, 2022 (Rs4,532 Mn as of March 31, 2021).

Property, plant, and equipment

The decrease of Rs1,257 Mn in property, plant, and equipment in FY22 is primarily attributable to the following:

• Capital expenditure incurred during FY22 of Rs 626 Mn

• Intangible assets recognized on the acquisition of Workforce delta Pty Limited of Rs 124 Mn

• Depreciation and amortization of Rs1,922 Mn Goodwill

Goodwill represents the excess of purchase consideration over net assets of acquired subsidiaries. The increase in Goodwill of Rs355 Mn during FY22 is attributable to the following reasons:

• Rs 272 Mn recognized on Workforce delta Pty Limited acquisition.

Non-current investments

Non-current investments have increased from Rs 344 Mn as of March 31, 2021, to Rs3,582 Mn as of March 31, 2022, due to an increase in investments in tax-free bonds Rs 1,716 Mn, perpetual bonds Rs 603 Mn, mutual funds Rs 704 Mn, etc.

Cash and bank balances

Total cash and bank balances consists of:

Rs Million
As at March 31, 2022 As at March 31, 2021
Cash and bank balances 14,985 14,650
Investment in Mutual funds 704 -
Total 15,689 14,650

During the year, the company generated FCF from operations of Rs5,719 Mn, comprising Services FCF of Rs 5,220 Mn and DLM FCF of Rs 499 Mn. The company deploys its surplus funds in fixed deposits in line with an approved policy.

Trade receivables

The trade receivables have decreased from Rs8,026 Mn as of March 31, 2021, to Rs 7,333 Mn as of March 31, 2022. The company regularly monitors unbilled revenue, separately as well as collectively, along with trade receivables. DSO (accounts receivables in days) has decreased from 84 days as of March 31, 2021, to 78 days as of March 31, 2022.

Other current assets

Other current assets have increased from Rs4,256 Mn as of March 31, 2021, to Rs5,317 Mn as of March 31, 2022, primarily due to an increase in short-term investments by Rs 866 Mn.

Financial Ratios

Following are ratios for the current financial year and their comparison with the preceding financial year, along with explanations where the change has been 25% or more when compared to the immediately preceding financial year:

Sl. No Ratio description March 31, 2022 March 31, 2021 Variance Explanation
1 Debtors turnover (in days) 78 84 (6)%
2 Inventory turnover (in days) 125 83 51% Note (i)
3 Interest coverage ratio 18.8 12 56% Note (ii)
4 Current ratio 2.30 2.57 (11)%
5 Debt equity ratio 0.18 0.19 (3)%
6 Operating margin (%) 18.1% 14.8% 23%
7 Net profit margin (%) 12% 9% 31%
8 Return on net worth (%) 17.2% 13.2% 30%

(i) An increase in Inventory turnover days is attributable to cater Q1 FY23 Revenue.

(ii) An increase in the Interest coverage ratio is primarily attributable to the net profit growth in the current FY.

People function

Our associates are our most important assets. Their passion to solve complex business problems, a desire to innovate, and an urge to push boundaries have ensured that our clients are fully engaged. As an organization, we constantly strive toward making Cyient a great place to work. In FY22, we added 8,500+ associates to our workforce to meet our growing business needs - the highest ever additions in a financial year. Strengthening our social media campaigns and newly rolled out post-offer engagement frameworks have enabled this effort. Additionally, we have successfully built competencies around niche skills in embedded and digital streams, enriching our solutions capability. Apart from hiring and retaining associates, ensuring our associates well-being in the current post-COVID recovery period and competency development has been our top priorities and remains our key focus areas in the near term.

In FY22, we relaunched the Early Career Program in North America with a plan of hiring graduating students into our Communications and Transportation business units. To do this, we leveraged STEM partnerships with various colleges in North America.

Well-being & enablement for a resilient workforce

Associates safety, enablement, and engagement have been our primary considerations and remain our important focus areas in the near term. Taking steps toward the same, we ensured that our associates were safe throughout the different phases of the pandemic.

In addition to rigorous implementation of Business Continuity Plans, setting up work-from-home infrastructure, and mandating appropriate health and safety norms and advisories, among various other mitigation strategies implemented during FY 20-21, we further supported our associates by providing COVID-19 Benefit Policy, homecare treatment in addition to hospitalization through a medical insurance partner, and on-demand teleconsultation. Furthermore, a significant step towards navigating the challenges posed by the pandemic was the COVID Response Team (CRT) to support our associates and their family members in need of support during this period. The CRT reached out to 2,300+ associates & their family members, supporting them during Wave-2 and Wave-3 of the pandemic. The CRT also worked on emergency cases in terms of medication, oxygen cylinders, hospitals, ventilators, etc. We also conducted multiple vaccination drives across locations for associates and family whilst also introducing a policy to reimburse vaccination costs for associates and family members that are not at our base locations. To ensure that our associates coming to the office are safe, we conducted weekly Surveillance Testing (RT-PCR).

Additionally, we also enhanced communication around Employee Assistance Program (EAP) by proactively reaching out to certain parts of the population, especially women associates with their pregnancy, and the families of our associates working across the globe to comfort and ensure that their concerns are addressed. A specific page was created on our intranet to host toolkits that provide necessary information to navigate through COVID-19.

In terms of immigration, we achieved noteworthy progress in cross-country deployments to Australia, the UK, and the USA, along with newer countries, Poland, Denmark, Laos, Italy, and China.

Competency Development

Competency development continues to be a key area of strategic focus for us. We launched new programs aligned to our organizational needs & our digital solutions framework INTELLICYIENT. We enhanced our technology-led training efforts in multiple areas and introduced new programs to strengthen our middle management competencies as well as train our associates on newer technologies.

Strengthening our middle management competencies

The focus this year has been on building competency across key elements to equip our middle management on account mining and program management whilst also encouraging our Subject matter experts & Technical managers to be technology leaders & trusted advisors to their clients. This has been delivered through three new programs, namely - CYIONS, Customized Project Management Training, and Technology Leadership Program.

CYIONS is a development program that was designed for our Program Managers, Account Delivery Managers, and Project Leaders. This interactive and stimulating virtual learning program equips our leaders with a broad range of commercial skills. Working with Sales will allow them to grow their accounts. This program also provides a development/ career pathway from Delivery to Sales. CYIONS is a modular program with 4 workshops spread over 2 months and has been designed in a way that each workshop builds upon the last via a series of webinars, self-directed learning, and coaching. 53 Associates completed this program this year.

Project Management Training and Certification programs were launched to enhance the project management skills and maturity within Cyient. These programs are a customized version of the PMI Methodology, providing training on the latest practices, tools, and processes. We have trained 400 associates in our middle management. This training was augmented further with additional training to prepare for PMP (Project Management Professional) certification ACP (Agile Certified Professional) and Certified Scrum Master (CSM) from the Scrum Alliance. 200+ associates have been certified in one of these certification programs.

Technology Leadership Program aims at enabling our associates to understand digital disruption and drivers of the new technology eco-system, challenge the status quo, go beyond the stated rationale to uncover the unstated emotional needs of clients, master co-diagnosis, and articulate business value to fortify existing accounts and win new customers. In doing so, they deliver on our vision of Applying technology imaginatively to solve problems that matter.? 40 SMEs/ Technical managers are currently going through this rigorous 6-month long program.

New Competency Building programs

Cyient Career Advancement Bridge Program was launched this year. This program provides capability-building and career-building opportunities to our associates and will allow switching from one role to another role/technology. Through this, associates will have the opportunity to be trained in various high-level skills and moved to different roles, which demand high skill sets. There are multiple technology streams under this umbrella program - RPA Developer, Multiple cloud Streams, Full Stack Java developer, and ESRI, among others.

To strengthen our Sales workforce, we have also initiated a program in collaboration with a leading global sales training partner. This program is a hands-on sales training program that focuses on both capturing existing demand and creating demand to expand the sales funnel and deal size. This is done by increasing knowledge of strategy, buying decisions, and competitiveness. The program combines interactive workshops, sales tools, job aids, and a 1-1 coaching session on a current sales opportunity. Three waves of training have been completed for 76 associates this year.

Inclusion & Diversity

At Cyient, we are committed to promoting Inclusion & Diversity (I & D) as a critical part of our culture as we work towards our vision of creating a collaborative workplace that supports diverse thinking and inspires talented people to reach their potential. This bridges the gap in gender diversity while being free of discrimination, which in turn enhances professional growth and empowers employees to create a real change.

In FY22, we worked extensively towards inclusive leadership training and the DIEL mentorship program whilst also creating the D&I Sub-Committee of the Board of Directors and CXO Series on D&I. Furthermore, we engaged in the provision of unbiased job descriptions, No-Meeting Wednesdays?, and Inclusion ambassadors. The Thurgood Marshall Scholarship Fund partnership was also created, along with the Take 5 Series. The Inclusion Award was added as a part of Cyient?s Chairman Awards.

We also introduced a new Gender-Neutral Parental Leave Policy globally towards the end of FY21, taking a step towards challenging gender stereotypes and celebrating diversity. This policy applies to all Cyient employees, including birth and adoptive parents of any gender who can avail of 12 weeks of 100% paid time off at full pay following the birth or adoption of their child. This policy will make a significant difference in countries where mandated parental leave policies are not sufficient for new parents or they do not apply to primary and secondary caregivers. This policy was well received by our associates.

Moving forward, we aim at encompassing L&D as part of our ESG agenda whilst committing to gender balance and ensuring that the diversity metrics are shared publicly. In line with our Values FIRST philosophy, we keep innovating our practices and policies to foster an inclusive culture and empower our associates to deliver on our brand promise Designing Tomorrow Together.