Cyient Ltd Management Discussions

Annexure – 4

Global Economic and ER&D Outlook

The global ER&D industry is expected to grow from US$ 1.8 trillion today to US$ 3.3 trillion by 2030 translating to a healthy 8-9% CAGR through this period. India is expected to play a pivotal role and will remain a major destination in this growth journey leapfrogging ca. 4 times its current share to about US$ 170B by 2030. However, the recent challenges arising from the geo-politcal tensions along with macro economic factors such as inflation and high interest rates do pose a check to the above ER&D spend patterns in the near-term.

Despite the challenges in the global economy and many other concerns that exerted a significant influence on enterprise decision-making, enterprises displayed adaptability and strategic responsiveness to newer trends. They are also actively pursuing a reduction in time to market and technology infusion in products, enabling new customer experience, improving profitable revenue growth, and optimizing costs. The ER&D industry is expected to witness continued healthy growth led by the key drivers of digitization, softwarization, platformization, and sustainability. Investments in Cloud, AI, IoT, and Industry 4.0 solutions are expected to be higher to cater to rapidly evolving customer preferences and to remain competitive in dynamic markets.

With its strong and balanced portfolio of focus industries and offerings around engineering and technology solutions, Cyient remains optimistic to mitigate the above economic risks while equally equipped to address the challenges our customers face in these evolving environments.

Business Performance Outlook

Despite the challenges in the global economy and many Below is a high level summary outlook for the year across the key industry verticals, Cyient operates through our balanced portfolio.

Transportation

In 2023, the Aerospace industry witnessed a revival in product demand. Industry indicators such as revenue per passenger per mile have surpassed the pre-pandemic levels. The order book of aircraft manufacturers is healthy for the next couple of years. The surge in air travel is indicative of increased demand for new aircraft and aftermarket products and services. Also,

given the existing geopolitical challenges, the defense market is expected to be resilient.

Companies would have to deal with supply chain challenges, shortage of talent, longer lead times, etc., for this increase in demand. This is expected to drive companies to embrace digitalization and adopt emerging, advanced technologies that could achieve profitability, create a more resilient supply chain, mitigate logistical issues, attract new talent, and rapidly create new products.

Cyients Transportation Business Unit delivered a 14.5% YoY growth at the end of FY24, which is a testament to our strategy for growth for this business. For 2024, we are optimistic about our play in Aerospace - given our diversified footprint across the engineering value chain, i.e., design, manufacturing support, MRO and aftermarket, etc., and across the aircraft ecosystem. Our technology-led engineering solutions resonate very well with our customers looking for increased throughput and reduced turn around time across the value chain. We have won significant deals in the last couple of quarters, furthering our competitive advantage in this space. The FY25 outlook remains positive, with a continued focus on driving growth in the areas mentioned above, as well as a renewed focus on areas of technology led manufacturing and MRO, sustainability-led aircraft electrification, Urban Air Mobility (UAM), drones and defense, and Industry 4.0.

The Rail Industry is expected to increase its spending on signaling and rail infrastructure modernization in Europe in Medium term

Sustainability

Energy and energy transition received much attention throughout 2023, and many countries made significant gains in their energy transition journey. By 2030, clean power generation is likely to increase three times, and global investment in clean energy needs to be proportional. As the economy moves towards sustainable energy solutions, the timely expansion and upgrade of transmission and distributed networks are required demanding the need for grid digitalization and modernization. Electrification is another important factor in the transition journey. Decarbonization and achieving net-zero emissions are becoming the key priorities; hence, the demand for minerals that assist in key emissions reduction technologies is expected to increase.

Energy, mining, and utility sectors will see significant growth in the coming years, and some of the disruptors for this growth momentum may be prevailing geopolitical uncertainty, the macroeconomic environment, high interest rates, and increases in material and capital costs.

Cyients Sustainability Business Unit delivered 45.6% YoY growth in FY24. The outlook is promising, given the current requirements across industries and the growing pipeline. Our end-end value proposition across consulting, plant engineering, asset management, grid modernization, and digitalization covers conventional and unconventional energy sources to help customers address their immediate and medium-term priorities effectively.

Connectivity

The year gone by has been a challenging one for the Communications industry. After accelerated investments post-pandemic, there is further rationalization of spending toward fiber, wireless, 5G, and private networks. The unprecedented spike in interest rates in most parts of the world arising due to macro and geo-political factors has been a key point for the industrys cautious and muted approach to spending over the FY24 period. The U.S. governments programs like BEAD (Broadband Equity, Access, and Deployment) and RDOF (Rural Digital Opportunity Fund) will likely increase communication infrastructure across semi- urban and rural areas.

The Connectivity Business Unit in Cyient registered a de- growth of 7.1% as most customers were impacted and cautious about their spending. Based on the deals we won during the last quarter (early 2024), we are optimistic about the industrys recovery, which in turn will set us on a growth path.

The key growth driver will be the rising demand for data, driven by a massive increase in video consumption. Fiber penetration, Premium Customer Experience, Cloud, and IoT will be the other growth drivers. We also expect to see momentum in 5G and Private Network adoption over the next few years.

New Growth Areas

Last year was a challenging one for the Semiconductor industry. Chip sales decline, weak end-market electronics demand, and higher inventory were the key contributors to the decrease in spending by customers. A positive outlook is expected in 2024 as we see chip sales gaining momentum along with an increase in demand for high-performance computing, data centers, AI, and automotive chips that power connected products and vehicles. Cyient has experienced a minor degrowth in the Semicon Business Unit for FY24 after a remarkable growth of ~48% in the previous financial year. The outlook for the year ahead is positive, and we are witnessing growth momentum from different customer accounts.

The Automotive industry experienced a surge in 2023 and capitalized on the demand for EVs. The shift toward electrification, SDV, autonomous, and connected vehicles will continue to bring more engineering services opportunities. The growth drivers for the sector are expected to be increased R&D spending from OEMs (rather than Tier 1s) on SDV, connected cars, and customer experience. Cyient delivered strong growth in FY24, and the outlook for FY25 is positive. The focus areas for FY25 will be the key growth drivers like SDV, Digital and Connected Cockpit, and Zonal architecture.

The Healthcare and Life Sciences industry observed a slowdown in investments in FY24. Despite losing steam in the number of investments in the digital health sector, applications such as telemedicine, remote monitoring, digital platforms, and QARA have been promising. Cyient delivered a minor degrowth in FY24 in this sector, with the outlook for FY25 being positive. Cyient, with its in-house tools, developed capabilities to address the industry challenges, such as accelerating the NPD process and reducing the time to market. Addressing these challenges has enabled us to ensure that our products are future-ready, technologically fresh, connected, and capable of accelerating product regulatory processes, implementing QMS, etc.Key Risks and Opportunities

Risk description	Risk impact	Risk mitigation
Geo-political Risks	The USA & China trade conflict has the potential to threaten internal security and defense. The risk of conflict in Taiwan poses a risk to certain industries, such as semiconductors.	Monitoring and review at management council levels. We will continue to evaluate the situation of our semiconductor business.
Recessions	The Companys operations may be adversely affected due to increased interest rates, inflation, increased energy and labor costs, supply chain delays, and geo-political instability.	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. Setting up rigorous and innovative talent acquisition plans to mitigate talent hiring challenges. Mandating appropriate health and safety norms and advisories.
Technology Disruption	The advancement of generative AI solutions such as Chat GPT.	Monitoring and review at management council levels. Evaluating investments in generative AI to address the disruption.
Currency Risk	Exchange rate volatility in various currencies could ma-terially and adversely impact the results of operations.	Long-term cash flow hedges are tak-en 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	The 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 ini-tiatives. Actions around talent development, retention, and compensation corrections. Focus on acquiring on next-generation hiring.

Risk description	Risk impact	Risk mitigation
Developing and Marketing Newer Solutions	In a fast-paced economy, there is constant pressure for innovation on all clients, including the integration of solution capabilities.	Accelerate building next generation competencies and capability building by investing in our current and future associates. Continue to review our investments in our technology practices to develop next- generation services and solutions.
Intellectual Property Risk	The risk of inadequate protection of the 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 customers	Pressure on margins due to volume discounts.	Improve efficiency for better economies of scale.
Competition risks	In this highly competitive en-vironment, there may be a severe impact on margins due to pricing pressures.	There is a focus on providing higher value and differentiated services and 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 com-pliance team that monitors global compliance. 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 cyberattacks, 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 Companys 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 of its 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 the 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 2023-2024. KPMG has carried out the internal audit based on an internal audit plan, which is reviewed each year and approved by the Audit Committee. The internal audit process is designed to review the adequacy of internal control checks and covers all significant areas of the Companys 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 Companys 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, 2024. 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 regularly and in a structured manner. We believe that periodic communication and engagement with the investor community is as important as timely and reliable financial performance. We engage with the investors through multiple communication channels. The Companys dedicated investor relations department and the Companys senior management team regularly participate in various roadshows and investor conferences in India and across the world. The Company hosted its annual Investor Day in December 2023 at its Hyderabad campus, which also coincided with the inauguration of Cyients world-class innovation and experience center – CyientifiQ Experience Center.

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. 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 has doubled from ? 110,050 Mn at the end of FY23 to

? 221,375 Mn at the end of FY24.

The dividend payout has substantially improved from 25% in FY14 to 45% in FY 24.

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 ? 6,479 Mn in FY24.

Revenue Growth

During the year, revenue has witnessed a growth of 15.6 % in US $ constant currency terms and 18.8% in rupee terms.

The Digital, Engineering & Technology (DET) segment has witnessed a growth of 12.6% in US $ constant currency terms and 16% in rupee terms, primarily led by growth in transportation and sustainability business units.

DLM segment has witnessed a growth of 39.7% in US $ constant currency terms and 43.2% in rupee terms.

Over the last eight years, the Company has sustained robust revenue growth momentum with annual growth rate (CAGR) of 10.3%. The revenue growth for the Company is driven by a focus on a well-diversified business and geography portfolio.

Revenue by Geography

During FY24, the Company delivered a de-growth of 3% in the North America region, a growth of 29.3% in the EMEA region, and 38.8% growth in the Asia Pacific, including the India region in $ terms.

Revenue by Operating Segments

Segment information is presented for the

“consolidated

Better Customer 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 five financial years in the services segment:

financial statements” as permitted under the Ind AS 108 “Operating Segments”. The Chief Operating Decision Maker (“CODM”) reviews the business as three operating segments

- “Digital, Engineering & Technology” (hitherto referred to as “Services”), “Design led Manufacturing” (DLM) and “Others”.

Effective April 1, 2023, considering the IPO of Cyient DLM Limited, the Group has re-organised its business units. Consequent to such change, the Aerospace Parts division of Cyient Defense Services Inc., USA, which hitherto was reported in the DLM segment is now included in the Digital, Engineering & Technology segment and Cyient Solutions and Systems Private Limited and Aerospace Tooling division of Cyient Defense Services Inc., USA, which hitherto were reported in the DLM segment are now included in the Others, consistent to the manner in which the CODM reviews the business.

The Digital, Engineering & Technology segment includes Transportation, Connectivity, Sustainability and NGA (New Growth Areas such as HiTech, Automotive, Semicon and Medical Technologies).

The DLM segment includes Cyient DLM Limited. The DLM segment is engaged in the business of manufacturing and providing “Electronic Manufacturing Services”.

Others include Cyient Solutions and Systems Private Limited and Aerospace Tooling division of Cyient Defense Services Inc., USA.

During the year, the DET segment has witnessed a growth of 16% in rupee terms, and the DLM segment has seen a growth of 43.2% in rupee terms.

Profits Trend

During the year, profits have increased due to:

The increase in DET PAT, driven by volume increase and expansion in margin.

The increase in DLM PAT, driven by volume increase and other income.

Net Worth

The net worth of the Company has grown at 12.2% CAGR in the last six years from ?25,622 Mn to ?45,569 Mn. It is mainly attributed to the profitable growth over the years, driven by organic and inorganic initiatives.

Free Cash Flow (FCF) Generation

The Company has achieved significant improvement in the free cash flow (FCF) generation.

In FY24, the Company generated FCF of ? 6,479 Mn as against FCF generated in FY23 at ? 4,887 Mn. The Companys FCF to PAT conversion is 92% in FY 24 to 95% in FY 23.

Days Sales Outstanding

The Company has delivered Days Sales Outstanding (DSO) of 83 days as of March 31, 2024 and 78 days with March 31, 2023.

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

Tax Rate

The effective tax rate has decreased from 24.5% in FY23 to 23.5% in FY24, due to efficient tax planning.

Capital Expenditure

The Company incurred capital expenditure of ? 782 Mn in FY 24 (1.1% of the total revenue), as compared to ? 652 Mn in FY

23. (1.1% of the total revenue).

Return to investors

The dividend payment trend for the Company has improved

substantially in the last five years.

The highest-ever dividend of ? 30 per share was declared in FY24. A dividend of ? 26 per share was declared in FY23.

The dividend payout for the Company stands at 45% in FY24 (FY23: 56%)

Market Capitalization

The Companys market capitalization has grown from ? 71,747 Mn in FY19 to ? 221,375 Mn in FY24.

Market capitalization has increased from ?110,050 Mn as of March 31, 2023, to ?221,375 Mn as of March 31, 2024.

Financial Performance for the Year 2023-24 (Consolidated)

The financial results of Cyient Limited under Indian Accounting Standards discussed below are for the consolidated results of Cyient Limited and its subsidiaries. This part of the Management Discussion and Analysis refers to the consolidated financial statements of Cyient (“the Company”) and its subsidiaries

Consolidated Financial Results 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 ending March 31, 2024.

Particulars	31-Mar-24		31-Mar-23
	? Mn	% of Revenue	? Mn	% of Revenue
Income
Revenue from contracts with customers	71,472	100%	60,159	100%
Other income	659	0.9%	814	1.4%
Total income	72,131		60,973
Expenses
Employee benefits expense	35,120	49.1%	30,260	50.3%
Cost of materials consumed	9,893	13.8%	6,839	11.4%
Changes in inventories of finished goods, stock-in-trade and work in progress	(235)	(0.3%)	125	0.2%
Operating, administration and other expenses	14,342	20.1%	13,371	22.2%
Finance costs	1,160	1.6%	1,000	1.7%
Depreciation and amortization expense	2,667	3.7%	2,566	4.3%
Total expenses	62,947	88.1%	54,161	90.0%
Profit before tax, share of profit from joint venture and non-controlling interest	9,184	12.8%	6,812	11.3%
Tax expense	2,156	3%	1,668	2.8%
Profit before share of profit from joint venture and non- controlling interest	7,028	9.8%	5,114	8.6%
Share of loss from Joint Venture	-	-	-	-
Share of non-controlling interest	200	0.3%	-	-
Net Profit attributable to the share-holders of the Company	6,828	9.6%	5,144	8.6%

ANALYSIS

Revenue

Revenue has grown by 18.8% in rupee terms and by 15.6% in US $ constant currency terms.

The Digital, Engineering & Technology segment has witnessed a growth of 16% in rupee terms and 12.6% in US $ constant currency terms.

The DLM segment has witnessed a growth of 43.2% in rupee terms and 39.7% in US $ constant currency terms.

Other income

Other income for FY24 was ?659 Mn as compared to ? 814 Mn

in FY23. Decrease is due to following reasons:

Treasury income is higher by ? 233 Mn due to effective

utlisation of surplus cash.

This is offset by loss on fair valuation of financial liabilities by ? 135 Mn.

Loss on maturity of forward contracts in FY 24 is ? (5) Mn, as compared to gain of ? 159 Mn in FY 23 due to loss in EUR & GBP contracts, partially offset by higher gains in other currencies like AUD, CAD and USD.

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

Particulars	YE March 2024		YE March 2023
	Closing	Average	Closing	Average
USD	83.35	82.77	82.09	80.31
EUR	90.14	89.81	89.57	83.65
GBP	105.18	104.05	101.73	96.80
AUD	54.40	54.47	55.13	54.97

Employee benefits expense

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

Employee benefits expense as a percentage of the revenue from operations stands at 49.1% for FY24 compared to 50.3% in FY23. In value terms, employee benefits expense has increased by ? 4,860 Mn in FY24 compared to FY23 due to an increase in headcount globally (from 15,172 on March 31, 2023, to 15,461 on March 31, 2024) and annual salary hikes.

Operating, Administration, and Other Expenses

Particulars	YE March 2024		YE March 2023
	Mn	% of revenue	Mn	% of revenue
Rent	189	0.3%	194	e=margin-top:3.0pt;margin-right:0cm; margin-bottom:3.0pt;margin-left:0cm;text-align:right;tab-stops:34.75pt>0.3%
Travelling & Conveyance	1,410	2.0%	1,029	1.7%
Subcon- tracting charges	5,668	7.9%	4,023	6.7%
Repairs and mainte- nance	2,458	3.4%	2,074	3.4%
Others	4,617	6.5%	6,051	10.1%
Total	14,342	20.1%	13,371	22.2%

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

Repairs and maintenance expense and Travel expenses are in line with the business requirements.

‘Others decreased mainly due to decrease in legal and professional charges by ? 1,243 Mn and reduction in the ECL provision for trade receivables by ? 329 Mn.

Finance costs

Finance costs have marginally decreased from 1.7% in FY 23 to 1.6% in FY 24 as a percentage of revenue. Decrease in finance costs is primarily on account of repayment of loans during the financial year.

Depreciation and amortization expense

Depreciation and amortization expense for FY24 was ? 2,667 Mn (3.7% of revenue) compared to ? 2,566 Mn (4.3% of revenue) in FY23. Increase in depreciation and amortization in FY 24 by ? 101 Mn is on account of additions to property, plant and equipment and other intangible assets of ? 793 Mn towards computers, buildings, plant and equipment, computer software and others and additions to right-of-use assets by

? 1,661 Mn towards buildings and computers.

Tax expense

The effective tax rate has decreased from 24.5% in FY23 to 23.5% in FY24, marginally decreased by 1% due to effective tax planning.

Net profit attributable to the shareholders

The net profit stands at ? 6,828 Mn for FY24 as compared to ? 5,144 Mn in FY23. Reasons for the increase in the net profit during the year are:

The increase in DET PAT is driven by volume increase and expansion in margin.

The increase in DLM PAT is driven by volume increase and other income.

Consolidated Balance Sheet as of March 31, 2024

	As of March 31, 2024	As of March 31, 2023
EQUITY AND LIABILITIES
Shareholders funds
- Share capital	555	553
- Reserves and surplus	45,014	34,082
Total - Shareholders funds (including non-controlling interest)	45,569	34,635
Non-current liabilities
- Long-term borrowings	2,783	4,939
- Lease and Other financial liabilities	2,469	3,230
- Long-term provisions	1,795	1,616
- Deferred tax liabilities (net)	839	830
Total - Non-current liabilities	7,886	10,615
Current liabilities
- Short-term borrowings	1,743	4,397
- Lease liabilities	885	882
- Trade payables	6,878	7,142
- Other current liabilities	5,931	6,673
- Short-term provisions	1,144	1,137
Total - Current liabilities	16,581	20,231
TOTAL - EQUITY AND LIABILITIES	70,036	65,481
ASSETS
Non-current assets
- Property, plant and equipment (including right-of-use assets and intangible assets)	12,146	12,328
- Goodwill	16,692	16,363
- Non-current investments	3,598	3,463
- Deferred tax assets (net)	752	482
- Other non-current assets	1,257	932
Total - Non-current assets	34,445	33,568
Current assets
- Inventories	4,676	4,358
- Current investments	758	1,718
- Trade receivables	12,617	11,271
- Cash and bank balances	9,835	7,194
- Other current assets	7,705	7,372
Total - Current assets (including unbilled revenue)	35,591	31,913
TOTAL ASSETS	70,036	65,481

Share capital

The Company has only one class of shares – equity shares with a par value of ?5 each. The Authorized share capital of the Company was 280,000,000 equity shares. Movement in share capital is on account of exercise of the stock options by the associates of the Group under the Associate Stock Option Plan.

Reserves and Surplus

Reserves and surplus increased from ? 34,082 Mn as of March 31, 2023, to ? 45,014 Mn as of March 31, 2024, primarily due to profit generated during FY24 of ? 6,828 Mn and DLM IPO proceeds of ?6,590 Mn attributable to the Company and non- controlling interest.

IPO of Cyient DLM Limited

During the year ended March 31, 2024, “Cyient DLM Limited” a wholly owned subsidiary has completed its Initial Public Offering (“IPO”) by way of fresh issue of 22,364,653 equity shares of face value of ? 10 each for at an issue price of ? 265 per equity share aggregating to ? 5,920 Mn. The equity shares of Cyient DLM Limited were listed on National Stock Exchange of India Limited and BSE Limited on July 10, 2023. Further, Cyient DLM Limited has undertaken a pre-IPO placement by way of private placement of 4,075,471 equity shares aggregating to ? 1,080 Mn at an issue price of ? 265 per equity share on June 6, 2023. Consequently, shareholding of the Parent has reduced by 33.33% in Cyient DLM Limited due to which it has become material partly-owned subsidiary. This reduction has not resulted in loss of control for the Group. Non-controlling interest share in Cyient DLM Limited as at March 31, 2024 was ? 3,020 Mn.

Borrowings

The long-term borrowings decreased from ?4,939 Mn as of March 31, 2023, to ? 2,783 Mn as of March 31, 2024, due to repayment of ?2,156 during the year. Repayment includes both scheduled repayment and pre-closure of loans.

The short-term borrowings decreased from ?4,397 Mn as of March 31, 2023, to ?1,743 Mn as of March 31, 2024, due to repayment of ?2,654 during the year.

Trade payables

Trade payables consist of payables toward the purchase of goods and services and stood at ?6,878 Mn as of March 31, 2024 (?7,142 Mn as of March 31, 2023).

Property, plant, and equipment (including intangible assets)

Mn

Particulars	As of March 31, 2024	As of March 31, 2023
Property, plant and equipment	4,462	4,481
Other intangible assets	3,839	4,632
Intangible assets under development	558	418
Right-of-use assets	3,271	2,770
Capital work-in-prog- ress	16	27
Total	12,146	12,328

Movement in Property, plant and equipment is explained

below:

Additions to property, plant and equipment and other intangible assets of ? 793 Mn towards computers, buildings, plant and equipment, computer software and others.

Additions to right-of-use assets by ? 1,661 Mn towards

buildings and computers.

Intangible assets under development pertain to the development cost of software dedicated to the automation, management, and monitoring of mobile networks.

Depreciation and amortization expense for FY 24 was

? 2,667 Mn.

Goodwill

Goodwill represents the excess of purchase consideration over the net assets of acquired subsidiaries. The increase in Goodwill of ? 329 Mn during FY24 represents foreign currency translation adjustments. The Group tests goodwill for impairment on an annual basis. Based on the evaluation of cash flow projections for DET business and market capitalization of DLM, there were no indicators for impairment in FY 24.

Non-current investments

Non-current investments have increased from ?3,463 Mn as of March 31, 2023, to ?3,598 Mn as of March 31, 2024, primarily due to the accrual of interest on perpetual bonds ?267 Mn and offset by reduction in other investments.

Cash and bank balances

Total cash and bank balances consist of following:

Particulars	As of March 31, 2024	As of March 31, 2023
Cash and cash equiv- alents	4,848	6,215
Bank balances	4,987	979
Cash and Bank balances	9,835	7,194

During the year, the Group generated free cash flow from operations of ? 6,479 Mn representing 92% conversion of PAT for FY 24.

Increase in closing balance of cash and bank balances is due to proceeds from IPO on listing of Cyient DLM Limited on National Stock Exchange of India Limited and BSE Limited on July 10, 2023 of ? 6,590 Mn and offset by the short term and long term loan repayments during the year.

The Company deploys its surplus funds in fixed deposits, bonds, mutual funds and other approved instruments in line with an approved policy.

Trade receivables

The trade receivables have increased from ?11,271 Mn as of March 31, 2023, to ? 12,617 Mn as of March 31, 2024.

The Group has DSO (Days sales outstanding) at 83 days as of March 31, 2024 and 78 days at March 31, 2023. {DSO is computed considering trade receivables and unbilled receivables}

The Company regularly monitors unbilled revenue, separately as well as collectively, along with trade receivables.

Other current assets

Other current assets have increased from ?7,372 Mn as of March 31, 2023, to ?7,705 Mn as of March 31, 2024, primarily due to an increase in unbilled receivables by ? 239 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, 2024	March 31, 2023	Vari- ance	Explana- tion
1	Debtors turnover (in days)	83	78	(6)%
2	Inventory turnover (in days)	138	177	22%
3	Interest coverage ratio	8.7	7.8	12%
4	Current ratio	2.15	1.58	57%	Note (i)
5	Debt equity ratio	0.10	0.27	63%	Note (ii)
6	Operating margin (%)	18.2%	16.7%	9.3%	Note (iii)
7	Net profit margin (%)	9.6%	8.6%	11.7%
8	Return on net worth (%)	17.0%	15.6%	9%

Current ratio has increased due to repayment of short-

term borrowings of ?2,654 Mn during the year.

Decrease in debt-equity ratio is due to repayment of both short term and long-term borrowings of ?4,810 Mn during the year.

Operating margin is arrived without considering the impact of exceptional items.

People Function

Our associates being key to our growth and progress continue to be the most valued asset. Continuous focus on associate well-being, growth and engagement led us to earn an all- time high associate satisfaction score proving our efforts to build a fully energized, competent and satisfied workforce.

Our committed efforts in valuing our associate engagement has also been recognized this year by the Economic Timess independent research, recognizing Cyient as one of the Most Progressive Places To Work in India in 2023-24.

Managerial and Leadership

Our focus this year has been to enhance and develop our Managerial and Leadership skills. Allowing us to continue to build a robust pipeline for the future. Managers and Senior Managers underwent Emerging Leader Program, and Director and Senior Directors completed the Business Leader Program. These programs were 11-months in duration and include workshops, leader talks, action learning projects all of which allows the participants to develop crucial skills and broaden their exposure to the business as well as give them the opportunity to work with colleagues from across Cyient. Managing@Cyient program is an ongoing initiative which is a global consistent program designed to build managerial skills to both new and existing managers.

We successfully completed the Women in Leadership program with 43 participants and have expanded this to 60 participants this year. The program includes workshops, mentoring and talks & Q&A sessions from inspirational women leaders within and outside of Cyient.

We have continued to develop competency across key elements to equip our Managers in Sales, Account Leadership, Project Management , Cultural Awareness and Management Development. Delivering Sales training to equip our sales force to build strong relationships with our customers enabling demand creation and sales.

Project and Program Management capabilities, delivering a series of training and certification programs, PMI – PMP, PMI – AGILE and Certified Scrum Master have been under continued focus.

Technical Competency Development

Cyient prioritizes technical competency development to transition into a fully digital organization. The company has implemented new programs aligned with key MegaTrends and disruptive technologies, ensuring future readiness.

Investments in associates skills and capabilities in FY23 had established a solid foundation, with FY24 programs to continue this progress.

The Technology Leadership Program is a cornerstone of our efforts. This program equips our associates with the skills to navigate digital disruption and understand the drivers of the evolving technology landscape. By challenging conventional thinking, participants uncover the unspoken emotional needs of our customers, master co-diagnosis, and effectively communicate the business value we offer. This empowers us to strengthen existing accounts and win new customers while embodying our vision of creatively applying technology to solve meaningful problems. 100 SMEs/Technical managers have graduated from this intensive six-month program.

Several awareness sessions were organized to equip our associates at Cyient with cutting-edge knowledge of emerging megatrends and disruptive technologies. Participants in this program have completed various courses to earn certifications in areas such as Digital Healthcare, Industry 4.0 and Smart Operations, Intelligent and Meta- Mobility, and Sustainability.

We have skilled 5370+ associates in digital, emerging technologies, and traditional skills. These areas include Generative AI, Data Analytics, Cloud Computing, Software Development, Software Testing, Fiber Optics Design, Design and Drafting, Manufacturing, Analysis and Simulation, and Project Management, and ~550 associates were certifications in technical and project management areas. Our cross- skilling initiative has resulted in the redeployment of 1400+ associates. Also our Subject Matter Experts (SMEs) have curated an extensive suite of digital content to streamline the technical induction process. These investments in skill enhancement have significantly improved expertise, productivity, innovation, adaptability, customer engagement, and accelerated project timelines.

Diversity, Equity and Inclusion (DEI)

Diverse teams lead to improved creativity and problem- solving skills, enhancing productivity and better performance. Furthermore, an inclusive work culture can reduce employee turnover, lowering recruitment and training costs.

One of our DEI objectives has been to increase our gender ratios, especially in management and executive positions. In 2023, we launched our Women in Leadership program which was a combination of development workshops and mentoring. The program will now become a regular part of our development curriculum, and we will continue to increase the number of female associates that participate.

We also recognize that DEI is not just about gender, and it is critical to get participation and ownership across all Cyients business units and functions. Therefore, a DEI cross functional team as been established. The mission of the team is to create a collaborative workplace that supports diverse thinking and inspires talented people to reach their potential. It is to also create and sustain a workplace culture that values and promotes diversity, equity, and inclusion, ensuring that all associates feel welcomed, respected, and empowered to contribute their unique perspectives.

Retention, Benefits and Wellness for our workforce

Our Total Rewards philosophy is based on driving a high- performance culture focusing on the three Cs– Compensation & Benefits, Career Growth & Learning and, Culture.

Total Rewards framework is based on the principles of pay equity which includes competitive and fair pay, both fixed and variable. It promotes equality regardless of gender, age, or race, and is focused on driving differentiated performance. Weve offered a comprehensive range of inclusive benefits, that cater to individual needs and are industry aligned.

Wellness is ingrained in our culture, reaching associates through various channels.

Maintaining mental and physical fitness yields positive outcomes, and at Cyient, we prioritize the happiness of our associates. Providing such sessions demonstrates a commitment to supporting employees holistic health and can lead to improved morale, increased productivity, and a positive work culture overall

Wellbeing Wednesdays, a special series to ensure that medical guidance is available to all our associates. virtual series, which has now reached 175 episodes have associates unravel many unknown medical facts.

Wellness challenges such as yoga, zumba, cycling, walking, and running were launched and saw massive participation both at the Cyient campus and virtually.

The Mental Health series, in collaboration with 1 to 1 Help was launched to promote positive mental health programs and raise awareness about seeking assistance for depression and distress.