Cyient Ltd Directors Report.

Dear Members,

Your directors have pleasure in presenting the 30th Directors Report on the business and operations of your company, for the financial year ended 31 March 2021.

1. FINANCIAL HIGHLIGHTS

(Amount in Rs Million)

Consolidated

Standalone

Particulars 2020-21 2019-20 2020-21 2019-20
Revenue 41,324 44,274 13,799 15,231
Other Income 1,399 1,583 1,198 1,267
Total Income 42,723 45,857 14,997 16,498
Expenses Operating Expenditure 35,300 38,381 10,255 11,706
Depreciation and amortization expense 1,945 1,878 962 990
Impairment of non-current assets 274 404 114 311
Total Expenses 37,519 40,663 11,331 13,007
Profit before finance cost, tax and share of profit from Joint Venture 5,204 5,194 3,666 3,491
Finance Cost 433 486 146 148
Share of (loss) / profit from joint venture - (26 ) - -
Exceptional item - - - -
Profit before tax (PBT) 4,771 4,682 3,520 3,343
Current tax 1,351 1,181 755 743
Deferred tax (218) 89 (16) 120
Profit after Tax (PAT) 3,638 3,412 2,781 2,480
Non- controlling Interest - (13) - -
Profit attributable to Shareholders of the Company 3,638 3,425 2,781 2,480
Other Comprehensive Income attributable to owners of the Company 231 133 120 (328)
Non-Controlling Interest - - - -
Basic EPS 33.08 31.14 25.29 22.56
Diluted EPS 33.06 31.14 25.27 22.56
Paid up share capital 550 550 550 550
Retained Earnings 28,991 25,027 23,429 20,433

2. STATE OF AFFAIRS / COMPANYS PERFORMANCE

Your company is a global engineering and technology solutions company. It engages with customers across their value chain helping to design, build, operate and maintain the products and services that make them leaders and respected brands in their industries and markets. Customers draw on the companys expertise in engineering, manufacturing, and digital technology to deliver and support their next-generation solutions that meet the highest standards of safety, reliability and performance.

Your Company provides engineering, manufacturing, geospatial, network and operations management services to global industry leaders. It delivers innovative solutions that add value to businesses through the deployment of robust processes and state-of-the-art technology. The Companys high quality products and services help clients leverage market opportunities and gain competitive advantage.

On a consolidated basis, the revenue from operations for FY 2021 stood at Rs. 41,324 Mn against Rs. 44,274 Mn over the last year. The profit for the year attributable to shareholders and non-controlling interests was Rs. 3,638 Mn, recording an

increase of Rs. 213 Mn over FY 2020, 6.2% higher than that of the previous year.

On a standalone basis, the revenue from operations for FY 2021 at Rs. 13,799 Mn, was lower by 9.40% over the last year Rs. 15,231 Mn in FY 2020. The profit for the year was Rs. 2,781 Mn, registering a growth of 12.15% over the previous year.

3. DIVIDEND

In terms of regulation 43A of SEBI (Listing Obligations & Disclosure requirements) Regulations, 2015, the Company has formulated and uploaded dividend policy on the corporate website (www.cyient. com/investors/ corporate-governance). Details of dividend declared and paid by the company during FY 2021 are as follows:

Fiscal 2021

Fiscal 2020

Dividend per share (in Rs) Dividend % Dividend per share (in Rs) Dividend %
Interim dividend - I Nil Nil 6 120
Interim dividend- II Nil Nil 9 180
Final dividend 17 340 Nil Nil
Total dividend 17 340 15 300

4. EARNINGS PER SHARE (EPS)

The Basic EPS of our Company stood at Rs. 25.29 at standalone level and Rs. 33.08 at the consolidated level.

The Diluted EPS of our Company stood at Rs. 25.27 at standalone level and Rs. 33.06 at the consolidated level.

5. TRANSFER TO RESERVES

The Company has not transferred any amount to reserves during the year under review.

6. LIQUIDITY

Your company continues to be debt-free and maintains sufficient cash reserves to meet its operations and strategic objectives. As at 31 March 2021, Your Company had liquid assets of Rs.11,54Rs Million as against Rs.5,837 million at the previous year end. These funds have been invested in short term deposits with scheduled banks, financial institutions.

7. COVID-19

The Company has considered internal and external sources of information up to date of approval of these financial statements in evaluating possible effects that may result from the pandemic relating to Covid-19 on the carrying amounts of trade and unbilled receivables, investments, goodwill and intangible assets. The Company is confident about the recoverability of these assets.

8. PUBLIC DEPOSITS

The company has not accepted any deposits falling within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review.

9. SHARE CAPITAL

Your company has allotted 58,591 equity shares of Rs5.00 each to the associates of the company and its subsidiaries upon exercise of an equal number of stock options vested in them pursuant to the extant Stock Option Schemes of the company.

Pursuant to the allotment of shares as above, as on 31 March 2021, the paid up capital of the Company was Rs. 550,149, 060/- consisting of 110,029,812 equity shares of Rs.5.00 each.

10. SUBSIDIARIES

The details of the subsidiaries and joint venture company have been provided as part of the financial statements. During the year, there has been no material change in the nature of the business of the subsidiaries and JV. Further, effective December 01, 2020, Cyient Engineering (Beijing) Limited (CEBL), a wholly owned subsidiary has been deregistered.

11. QUALITY

Cyient is committed to creating and delivering engineering services and solutions that exceed customer expectations and enhance the level ofbusiness profitability. Our quality implementation efforts are all pervasive, beginning with a stated goal.

True to our image as a global player, we have developed a reputation for providing our clients with world- class quality. Our clients trust the strength of quality processes that have always assured them of timely defect-free deliverables. The quality management system (QMS) is a testimony derived and optimized with experiences and best practices that are aligned with the internationally renowned quality standards and models like ISO 9001:2015, ISO 27001:2013, AS 9100 D, ISO 13485:2016, ISO 22163: 2017 (IRIS), TL 9000 R 6.2/R 5.7 V, ISO 14001:2015, ISO 45001-2015, ISO 20000-1: 2011 and CMMI-DEV Version 2.0 Level 5. Cyient is the 8th company in India and 12th company in the world to have been appraised at Level 5 on CMMI DEV 2.0 Version.

12. BUSINESS RESPONSIBILITY REPORT

In pursuance of Regulation 34 of the SEBI (LODR) Regulations, 2015, the company is publishing the Business Responsibility Statement. The same is enclosed as Annexure A.

13. CORPORATE SOCIAL RESPONSIBILITY

Your company believes in giving back to society in some measure that is proportionate to its success in business. Corporate Social Responsibility (CSR) aims at balancing the needs of all stakeholders. The companys

CSR initiative goes beyond charity and believes that as a responsible company it should take into account its impact on society as much as creating business impact. The CSR initiatives are conducted through Cyient Foundation. An elaborate report on CSR is published elsewhere in this annual report. The CSR Annual Report is enclosed as Annexure B.

14. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

None of the directors of the company is disqualified under the provisions of the Companies Act, 2013 (Act) or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. All Independent Directors have provided confirmations as contemplated under section 149(7) of the Act. The Certificate of NonDisqualification of Directors pursuant to Regulation 34(3) and Schedule V Para C clause 10 (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is published elsewhere in the Annual Report.

Appointments/Re-appointments

Inductions

Based on the recommendations of the Leadership, Nomination and Remuneration (LNR) Committee, the Board appointed Mr. Ramesh Abhishek, as an additional director on 12 August 2020. He is being appointed as Director of the Company in the ensuing AGM. He would be categorised as an Independent Director.

Mr. Karthikeyan Natarajan, Chief Operating Officer and Mr. Ajay Aggarwal, Chief Financial Officer were appointed as additional directors on 22 April 2021. Further, each of them were also appointed as Whole Time Director at the said meeting subject to approval of the shareholders in the ensuing AGM.

Re-appointments

Mr. Alain De Taeye retires by rotation and being eligible, offers himself for re-appointment. Mr. Vikas Sehgal was appointed as Independent Director until 16 October 2021. Taking into account his performance and considering the substantial value add provided by him during his first term, the LNR Committee has recommended his appointment for a second term of five years until 16 October 2026. A special resolution proposing the re-appointment is included in the Notice of the 30th AGM.

Effective 22 April 2021, Mr. B.V.R. Mohan Reddy stepped down as Executive Chairman and would continue as NonExecutive Director. Mr. M.M. Murugappan was appointed as Non-Executive Chairman.

Pursuant to the provisions of regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2 on General Meetings issued by ICSI, brief particulars of the director

proposed to be appointed/ re-appointed are provided as an annexure to the notice convening the AGM.

Key Managerial Personnel

Mr. B.V.R. Mohan Reddy, Executive Chairman; Mr. Krishna Bodanapu, Managing Director & CEO; Mr. Ajay Aggarwal, President & CFO and Mr. Sudheendhra Putty, Company Secretary are Key Managerial Personnel of the Company in accordance with the provisions of Section(s) 2(51), and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. There has been no change in the Key Managerial Personnel during the Financial Year under review.

15. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION AND OTHER DETAILS

The Companys policy on directors appointment and remuneration and other matters provided in section 178(3) of the Act have been disclosed in the corporate governance report, which forms part of the directors report.

16. NUMBER OF BOARD MEETINGS DURING THE YEAR

During the year, six meetings of the board were held, the details of which form part of the report on corporate governance.

17. BOARD EVALUATION AND ASSESSMENT

The company believes that formal evaluation of the board and of the individual directors, on an annual basis, is a potentially effective way to respond to the demand for greater board accountability and effectiveness. For the company, evaluations provide an ongoing means for directors to assess their individual and collective performance and effectiveness. In addition to greater board accountability, evaluation of board members helps in:

• More effective board processes

• Better collaboration and communication

• Greater clarity with regard to members roles and responsibilities and

• Improved Chairman - Managing Director - Board relations

By focusing on the board as a team and on its overall performance, the company ensures that communication and overall level of participation and engagement also improves.

In order to facilitate the same, the board undertook a formal board assessment and evaluation process during 2020-21. The board evaluation was performed after seeking inputs from all the directors and included criteria such as the board composition and structure, effectiveness of board processes, information and functioning as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5 January 2017. The Leadership, Nomination & Remuneration Committee has overall stewardship for the process. The evaluation process covers the following aspects:

• Peer and self-evaluation of Directors

• Evaluation of the performance and effectiveness of the board

• Evaluation of the performance and effectiveness of Board Committees

• Evaluation of the performance of the Executive Chairman and the Managing Director & CEO

• Feedback on management support to the Board

The evaluation process elicits responses from the directors in a judicious manner - ranging from composition and induction of the board to effectiveness and governance. It also sought feedback on board and committee charters, strategy, risk management and quality of discussion and deliberations at the board. The evaluation process also ensures the fulfilment of independence criteria as specified in the applicable regulations and that the latter are independent of the management. The independent directors concerned do not participate in the evaluation process.

18. AUDIT COMMITTEE

The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the rules made thereunder and Regulation 18 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. The details relating to the same are given in the Report on Corporate Governance forming part of this Board Report.

19. ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Internal Financial Controls are part of risk management process addressing financial and financial reporting risks. They ensure the orderly and efficient conduct of business, including adherence to Company policies, safeguarding of its assets, prevention and detection of fraud, error reporting mechanisms, accuracy and completeness of the accounting records. They aid in the timely preparation of financial statements. The Internal Financial Controls have been documented, digitised and embedded in the business process.

20. AUDITORS

A) Statutory Auditors

At the 28th AGM held on 6 June 2019, the members approved the appointment of S.R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W/E-300004) as Statutory Auditors of the company to hold office for a period

of five years from the conclusion of that AGM till the conclusion of the 33rd AGM, subject to ratification of their appointment by Members at every AGM, if so required under the Act. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the ensuing AGM.

B) Secretarial Auditors

The Board has appointed Mr. S. Chidambaram as Secretarial Auditors for the financial year ended 31 March 2021. The Secretarial Audit Report for the financial year ended 31 March 2021 is annexed as Annexure C to this report.

21. AUDITORS REPORT AND SECRETARIAL AUDITORS REPORT

The statutory auditors report and secretarial auditors report do not contain any qualifications, reservations or adverse remarks.

During the year, the statutory auditors and secretarial auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act.

22. VIGIL MECHANISM

The Company has put in place a Whistle Blower Policy and has established the necessary vigil mechanism as defined under Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements), 2015 for employees and others to report concerns about unethical behaviour. It also provides for adequate safeguards against the victimisation of employees who avail of mechanism. No person has been denied access to the Chairman of the audit committee. The Whistle blower Policy is available on the website of the company i.e. (http://www.cyient. com/investors/corporate-governance). The company implemented a web based/online mechanism under the whistle blower policy. This mechanism encompasses the entire trail from the login of a complaint to its eventual redressal. The system also affords a dial-in facility to associates in various languages across the countries where the company has its operations.

23. EMPLOYEE STOCK OPTION PLANS

During the year, the company had granted options to the associates of the company and its subsidiaries, in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014. Disclosure pursuant to the said regulations is enclosed as Annexure D.

24. CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure E to the report.

25. MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to the provisions of Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a report on Management Discussion & Analysis is enclosed as Annexure F.

26. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the company for that period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the company and such internal financial controls are adequate and operating effectively;

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

27. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Particulars ofloans given, investments made, guarantees given and securities provided along with the purpose for which the loan, guarantee, or security is proposed to be utilised by the recipient are provided in the Standalone Financial Statements. (Refer Note No. 5, 6, 23 and 24 to the Standalone Financial Statements).

28. RELATED PARTY TRANSACTIONS

The company has complied with the provisions of section 188(1) of the Act dealing with related party transactions. Information on transactions with related parties pursuant to section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Form AOC-2 and is enclosed as Annexure G.

29. EXTRACT OF ANNUAL RETURN (MGT 9)

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available on the Companys website - www.cyient.com/ investors

30. PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

a. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Executive Directors Ratio to Median remuneration
B V R Mohan Reddy 84.00
Krishna Bodanapu 159.86
Non - Executive / Independent Directors
M.M. Murugappan 2.03
Som Mittal 2.03
Ramesh Abhishek (effective 12 August 2020) 1.35
Vikas Seghal 5.02
Vivek Gour 2.03
Matangi Gowrishankar 2.03
Vinai Thummalapally 5.02

b. The percentage increase in remuneration of each director, chief executive officer, chief financial officer, company secretary in the financial year:

Directors, Chief Executive Officer, Chief Financial Officer and Company Secretary % increase in remuneration in the financial year
B.V.R Mohan Reddy 3.3%
Krishna Bodanapu 42.2%
Ajay Aggarwal -14.3%
Sudheendhra Putty 14.13%

c. The percentage increase in the median remuneration of employees in the financial year:

4.01%

d. The number of permanent employees on the rolls of Company: 9,325

e. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

The average annual increase was around 4.47% and the average annual increase managerial personnel 0%.

f. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms remuneration is as per the remuneration policy of the Company.

g. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

31. PARTICULARS RELATING TO THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (POSH)

The year 2020 -21 has been challenging for many with lot of changes in policies and practices based on the prevailing situations. With majority ofworkforce Working from home , Organization had reworked on the POSH connect initiatives and ensured Virtual connects every month with associates to build awareness among them.

List of Initiatives under POSH for 2020-21

1. Posh Panel connect every quarter to ensure all the complaints registered are duly discussed with improved approach on building awareness.

2. Digital compliance of POSH-100% in the portal

3. Awareness sessions to associates through Virtual platforms and also through other business monthly meetings

4. Awareness worked out creatively through "Theater Play" and Musical Platforms making it more interesting for associates to watch and understand in the digitally

5. POSH panel have been nominated for training in various national and state level forums (NHRD , NASSCOM and CM)

During the year, no cases were registered. There are no pending complaints either at the beginning or at end of the financial year.

32. RISK MANAGEMENT

The company pursues a comprehensive risk management programme as an essential element of sound corporate governance and is committed to continuously embedding risk management in its daily culture. This process is followed in five steps:

a) Identify risks and opportunities

b) assess risk and performance for key processes

c) evaluate the risk impactacross business operations

d) develop mitigation plan for the risks identified and

e) monitor the risks at regular intervals and report to the Risk Management Committee

The company has classified the risks into five categories:

1) Strategic 2) Reputational 3) Operational 4) Financial 5) Compliance/Litigation. Each identified risk is assessed according to its probability and impact on the company.

The Board of Directors has formed an internal risk management committee to identity, evaluate, mitigate and monitor the risk management in the company. The committee comprises cross-functional membership from the senior management of the company. The primary objectives of the Committee are to assist the Board in the following:

• To provide an oversight for all categories of risk and promulgate risk culture in the organization

• To adopt leading risk management practices in the industry and manage risk proactively at organizational level

• Help to develop a culture of the enterprise that all levels of people understand risks.

• Provide input to management of risk appetite and tolerance and monitor the organizations risk on an ongoing basis.

• Approve and review risk management plan which includes companys risk management structure, framework, methodologies adopted, guidelines and details of assurance and review of the risk management process.

80 Annual Report 2020-21

• Monitor risks and risk management capabilities and

mitigation plans.

More details on the risk management committee of the board can be found in the Report on Corporate Governance. Members may also refer to the Management Discussion & Analysis Report.

33. CORPORATE GOVERNANCE

The Company will continue to uphold the true spirit of Corporate Governance and implement the best governance practices. A report on Corporate Governance pursuant to the provisions of Corporate Governance Code stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report. Full details of the various board committees are also provided therein along with Auditors Certificate regarding compliance of conditions of corporate governance is enclosed as Annexure H.

34. DISCLOSURE REQUIREMENTS

Familiarization programme of the independent directors http://www.cyient.com/investors/corporategovernance

Policy for determining material subsidiaries of the Company http://www.cyient.com/investors/ corporategovernance.

Policy on dealing with related party transactions http:// www.cyient.com/investors/corporate- governance.

Prevention of sexual harassment policy http://www. cyient.com/investors/corporate- governance

Environment, health and safety policy http://www.cyient. com/investors/corporate- governance

Dividend Payment policy http://www.cyient.com/ investors/corporate- governance

Criteria of Payment of Remuneration to Non-Executive Directors of the Company http://www.cyient.com/ investors/corporate- governance

There are no orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.

35. CEOs DECLARATION

Pursuant to the provisions of Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a declaration by the Managing Director & CEO of the company declaring that all the members of the board and the senior management personnel of the company have affirmed compliance with the Code of Conduct of the company is enclosed as Annexure I.

The CEO/CFO certification to the board pursuant to Regulation 15 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is enclosed Annexure J.

36. ACKNOWLEDGMENTS

The board of directors expresses their thanks to the companys customers, shareholders, vendors and bankers for their support to the company during the year. We also express our sincere appreciation to the contribution made by employees at all levels. Our consistent growth was made possible by their hardwork, cooperation and support.

Your directors would like to make a special mention of the support extended by the various Departments of the Central and State Governments, particularly the Software Technology Parks of India, Development Commissioners - SEZ, Department of Communication and Information Technology, the Direct and Indirect tax authorities, the Ministry of Commerce, the Reserve Bank of India, Ministry of Corporate Affairs/Registrar of Companies, Securities and Exchange Board of India, the Stock Exchanges and others and look forward to their support in all future endeavours.

Note: Except as otherwise stated, all the numbers in the

Directors Report are on standalone basis.

For and on behalf of the Board

B.V.R. Mohan Reddy
Executive Chairman
(DIN-00058215)
Place: Hyderabad
Date: 22 April 2021