Cyient Ltd Management Discussions.

Global Economic Outlook

The COVID-19 pandemic continues to have significant implications on the global economy. Industry estimates suggest that the global economy contracted by more than 3% in 2020 but is expected to see a growth of more than 5% this year. Despite this, the growth projections are far short of pre-pandemic levels. However, this growth depends heavily on how rapidly countries can manage further waves of the pandemic through wide scale vaccination programs and continued adherence to COVID-19 guidelines.

Nations worldwide were forced to inject significant stimulus packages, including favorable fiscal policies, to keep their economies afloat. If nations fall short on the promise to curb the pandemic by vaccinating large portions of their population or contain waves and slow down COVID-19 transmission, the impact on the economy could be severe with increased financial stress and much slower growth.

Engineering and R&D (ER&D) Outlook

While the ER&D industry registered a 4% drop in 2020, global spend on ER&D is expected to touch pre-pandemic levels by the end of 2021. However, this recovery is not expected to be broad based. Industries such as Semiconductor, Communications, Medical Devices, and Consumer Electronics are expected to recover faster than sectors such as Aerospace, Industrial, Energy, and Automotive.

The pandemic accelerated the digital journeys of enterprises in unprecedented new ways. Digital engineering will continue to drive ER&D spending as enterprises across verticals focus on developing new-age digital products and services. The key themes for digital transformation will continue to be cloud enablement, remote connectivity, operations improvement, products and services innovation, and improving user experience.

Additionally, Environment, Sustainability, Inclusiveness, and Governance (ESIG) is emerging as an area of focus across the industry as more and more companies become conscious about reducing their environmental impact and carbon footprint and building a circular economy.

Accelerating S3 Execution

Over the years, we have crafted our S3 strategy that has allowed us to expand beyond the core and across multiple industries, build deeper client engagements and realize synergy through acquisitions. However, our next leap of growth will require us to go beyond to succeed through the disruption. We have an immense opportunity in front of us to use this as an inflection point to reimagine our vision and pivot our business. To advance our strategy we restructured our business to take advantage of the changing business scenario.

The new business structure will allow us to achieve the below key points:

• Growth: Accelerate growth across key growth industries

• Agility: Transformation of execution process with an integrated delivery structure

• Focus: Enhance our focus on key growth vectors such as Digital and Design led Manufacturing

As part of the new organization we realigned ourselves into two vertical business units - Transportation and Communications & Utilities (C&U); six growth industries - Automotive & Off- Highway, Energy, Industrial & Plant Engineering (EIP), Mining & Natural Resources (MNR), Medical Technology & Healthcare (MTH), Geospatial and Semiconductor; Two horizontal business units - Design Led Manufacturing and Digital.

Our vertical BUs are our large BUs where we have sizable presence and strong capabilities and work with some of the leading clients across the industries. As part of our vertical BUs we focus on four key industries: Aerospace & Defense, Rail, and Communications & Utilities. Our outlook across each of these is as follows:


The Transportation business at Cyient focuses on two key industries Aerospace & Defense and Rail Transportation. Both the industries witnessed considerable impact due to the pandemic.

Aerospace and Defense

The Aerospace and Defense industry is expected to be on a slow recovery mode in 2021 with global air travel expected to recover to 2019 levels by 2024. The commercial aerospace sector has been significantly affected by the COVID-19 pandemic, which has led to a dramatic reduction in passenger traffic, in turn affecting aircraft demand. This sector will remains challenged in FY 22. While the defense sector is expected to remain stable in 2021, as most countries have not significantly reduced defense budgets and remain committed to sustaining their military capabilities. The Industry is focussing on transforming supply chains into more resilient and dynamic networks. The aftermarket parts and services market could remain muted with lower expected aircraft utilization rates. The technological developments, such as advanced air mobility, electric propulsions, hypersonic and hydrogen powered aircraft are likely to drive future growth.

The Aerospace & Defense (A&D) sector witnessed a decline YoY, we witnessed a marginally increase of 3.9% QoQ in the last quarter of the year. This was the first quarter to witness a sequential growth led by growth in some of our key customers. The recovery in commercial aviation should commence with the increase in air traffic. We expect demand to improve in the latter half of the year with aftermarket expected to show the

fastest recovery. We are focusing on digital and automation investments and expect growth to be led by these two segments.


The Rail Transportation industry continues to grow despite a drop in transportation volumes due to the pandemic. Investments by governments are expected to enable growth in Asia and Europe. Rail control and infrastructure are forecasted to show the strongest growth while rolling stock and services are likely to remain the most significant segments. Adoption of technologies such as autonomous trains, IoT, AI, decarbonization, digital communication platforms, automatic train controls, drones, and sensors for inspecting tracks are expected to gain traction in the coming years.

Rail Transportation BU witnessed a de-growth as a result of the COVID-19 pandemic that led to restrictive containment measures and closure of commercial activities resulting in operational challenges, delayed discussions with prospective customers and delayed project deliveries for key accounts especially in the services segment. Right shift of key rail programs and delays in new project awards/ commencements further accentuated this de-growth. New client wins in the signaling business partially compensated for the drop in the revenues. Additionally, the BU witnessed a strong growth momentum across some of its key emerging customers and continued to partner with one of its strategic customers on a multi-year cost reduction initiative In FY22, strategy execution will continue to be a key focus area with investments earmarked to exploit opportunities across segments.


The communications industry was a key factor in enabling the response to the pandemic including work from home, ecommerce adoption and digital payments. The industry has performed well during this time and we continue to see increased opportunities. 5G rollout is seen as a big growth focus for telecom providers and device manufacturers in the coming years. Telecom capex is expected to remain high in 2021 to support 5G roll-outs and FTTH (Fiber-to-the-home). Investments in digital technologies with focus on analytics, AI and ML will continue and companies will invest in areas such as fiber-network expansion and network virtualization to meet new demands.

Our Communications segment delivered a strong growth through the year with key wins across six major deals in the areas of fiber, wireless, system integration, and 5G rollout. We continue to benefit from the accelerated deployment of 5G networks which account for close to 10% of our business. We rolled out a strategic transformation program that includes a conscious choice to invest and develop capabilities in growth hotspots such as digital transformation of network design and deployment, network virtualization and cloudification, and enterprise network transformation. These areas have started to contribute significantly to our growth momentum. The outlook for this segment in FY22 remains positive, supported by favorable industry trends, and enabled by our strategic transformation program.


The Utilities industry was significantly affected by the pandemic. The global energy demand is expected to rebound to its pre-crisis levels by only early 2023. Investments in renewable and carbon-free technologies is likely to accelerate, as a part of global efforts towards climate change. Additional investments are set to increase in 2021 for implementation of technologies like digitization and smart grids, batteries, energy storage and green hydrogen networks.

The Utility segment, was impacted due to the pandemic and witnessed a decline through the year. Some of our key clients projects slowed down impacting our outlook for the BU. We witnessed growth through the year with robust deal pipeline that provides good growth visibility for FY22. Our approach to focus on technology-led transformational programs has helped us build a strong pipeline of deals along with our partners, which we believe will translate into a differentiated positioning for our Utility segment.

Apart from two vertical BUs we focus on growth sectors across six industries. The sectors are our growth hotspots for the future and we will continue to make significant investments in these sectors to drive growth through organic and inorganic investments.

The sectors that we focus on are as follows:


The global geospatial market is expected to double over the next five years, with growth driven by the increased adoption of geospatial services in commercial sectors and the advancement in geospatial-specific technologies. The commercial sector growth will specifically be driven by increased adoption and applications of satellite imagery, geo-enabled mobile applications, and location analytics in the commercial sector. North America is set to witness the highest growth, with geospatial technology-focused countries such as the USA and Canada holding the maximum market share, followed by Europe and APAC.

In FY 21, we witnessed a drop in the demand driven by reduction in customer requirements and de growth across our key clients business. Our outlook for FY22 is positive, with expected growth across industries like Mining, Communications, Utilities, and Automotive. Our horizontal strategy continues to evolve with the development of six new solutions (Pipeline Monitoring, 5GIP, Vegetation Management System, Virtual Assets Management System, Virtual Walkout, and Road Health Analytics) to drive growth across the Utilities, Communications, and Energy industries.


Advancements across the semiconductor industry are continuously evolving along with increased investments in devices and associated semiconductor components. The continued development of loT and artificial intelligence (AI), along with the proliferation of advanced electronics, are driving the high-end application segment across the industrial, medical, and automotive industries. The market growth for AI chips will drive evolutionary features for some companies and enable disruption for others. Companies are expected to offer more comprehensive solutions based on their chips as a go-to-market strategy.

In FY 21, the Semiconductor industry was significantly impacted by the pandemic with reduced spend in consumer electronics and automotive impacting the outlook for the industry in the first half of FY 21.We witnessed a modest decline in the semiconductor segment driven by delay in ASIC projects and uncertainty in the engineering services business. However, we are witnessing signs of recovery across both ASIC solutions and engineering design capabilities and we expect the trend to continue through the year. Our outlook for FY22 remains strong with growth expected across key clients. We will continue to strengthen our capabilities in ASIC solutions and focus on talent acquisition to meet future demands.

Energy, Industrial and Plant Engineering (EIP)

The Energy, Industrial Plant Engineering (EIP) sector provides end-to-end capabilities across the energy value chain for oil and gas, industrial systems, and plant engineering.

The energy industry is expected to witness recovery with oil prices rising to a sustainable level and margin pressures finally seeing some relief after a historically low market in 2020. Normalcy is expected to return as upstream oil production returns to $60 per barrel mark. However, it will take some time for the off-shore operators to stabilize and recover from the liquidity challenges faced in 2020. The capital investments in new technologies such as intelligent remote maintenance in oil fields, drilling operations analytics, and logistics monitoring has expanded through the year and is expected to have a significant impact on the operating environment.

Our Outlook for FY22 is positive as production levels in the largest markets of North America, EU, and China continue to meet or exceed pre-pandemic levels. Pending investment by the US government in much-needed infrastructure repairs, replacement, and improvement will drive growth for the business. EIP segment is well-positioned to take advantage of the long-term transition to a decarbonized future for energy and manufacturing through our capabilities in renewable energy, broader scale electrification, and environmentally aligned plant design and construction.

Medical Technology and Healthcare (MTH)

The Medical Devices market is expected to rebound in 2021, after a contraction in 2020. Technological advances such as wireless technology, miniaturization, and increased computing power used in connected medical devices are revolutionizing the medical technology industry. The Internet of Medical Things (IoMT), Software as a Medical Device (SaMD), Robotics, 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 consumercentric and wellness-oriented with increasing AR/VR and AI deployment.

Medical Technology and Healthcare (MTH) business unit experienced a marginal de-growth was driven by the right shifting of recently won services projects and a slowdown in manufacturing production for one of our top DLM clients due to supply chain impact during the pandemic. The outlook for this sector for FY22 remains positive as we continue to execute and ramp up on recent contracts while strengthening our pipeline focused on digital transformation, embedded software, and design-led manufacturing services.

Automotive and Off-highway

The Automotive and the off-highway segment was significantly impacted due to the pandemic. The automotive segment faced significant short-term impact with a sudden steep decline in demand and significant challenges on the supply chain side. The midterm outlook for the automotive segment from a demand perspective looks positive, although significantly changed spent pattern with respect to volume, technologies, and the geographic split is expected.

The Off-Highway segment faced significant uncertainties in the global demand and supply chain throughout the year and, to a certain extent, continues to experience that in FY22. As an outcome, investments across Industry 4.0 and digitalization initiatives have accelerated and are expected to reduce some of the impacts and provide new business opportunities for this segment.

The business sector witnessed a decline driven by low revenue contribution in the off highway segment, especially in North America. However, the automotive segment witnessed growth primarily in the second half of FY21, which we expect will continue in FY22. We won several new projects across areas like digitalization & embedded systems. We remain committed to developing long-term collaboration with our customers and strengthening our capability across the segment.

Our outlook for FY22 remains positive. We expect growth to be driven by increase demand for software and digital capabilities in the automotive segment. Focus on digitization in the Off highway segment will continue to drive growth through the coming year. We will continue to focus on acquiring new clients and strengthening our capabilities and offering in embedded software.

Mining and Natural Resources (MNR)

There is a growing consensus that the mining sector globally sits on the cusp of a super cycle return. The recovered buoyancy is sustained by coincident large-scale government spending on infrastructure and new pools of demand for minerals and metals driven by the intensifying pace of energy transition to mitigate climate change through decarburization. All of this has been positive in markets for copper, steel, nickel, a suite of specialist battery materials, and increasingly, the products of rare earths.

The balance of supply and demand in most materials has reached the tipping point of sensitivity, which means any interruption to normal production flows will drive material price increases. Conversely, we are seeing a focus on containing cost pressures due to shortage of skilled labor and stressed logistics and supply chains.

We witnessed a positive growth in the segment with growth in key clients. Our recent acquisition of IG Partners in Australia has significantly strengthening our capabilities in the segment. IG partner come with a strong suite of consulting capability in digital for energy and mining clients. The acquisition will enable Cyient take advantage of synergies between our proven capabilities in operational efficiency, asset optimization and IG partners capabilities in value creation and digital transformation. Our outlook for the segment remains positive we expect growth to be driven by growth across key clients.

Our horizontal BUs are the capabilities that we will leverage across the Industries and sectors to drive growth. The two horizontal BUs we focus on are Digital and Design Led Manufacturing (DLM).


Digital operations have become more critical than ever, with many transformative changes accelerating over the past year. Emerging technologies such as IoT, AR, VR, AI, and cybersecurity are expected to find their place within business solutions. Consumer data platforms, analytics platforms, data warehouses, and visualization tools are experiencing an explosion aided by investments from global tech giants. These digital technologies are likely to be widely adopted by governments and industries such as Automotive, Manufacturing, E-Commerce, Semiconductor, ICT, and Medical technology.

Digital technologies will be strategic to our growth focus across industries we operate. We will continue to make disproportionate amount of investment in the segment to drive growth for the future. We recently introduced INTELLICYIENT, our digital solutions platform. The INTELLICYIENT suite of Industry 4.0 solutions drives digital transformation for asset-heavy industries, including manufacturing, industrial, aerospace, automotive and off- highway, utilities, and mining and natural resources. We

leveraged our investments in advanced digital tech and our nearly 30 years of engineering and geospatial experience to enable asset-intensive industries to design the solution portfolio. With six digital solutions, powered by the interplay of nine technology studios, and our robust partner ecosystem, INTELLICYIENT will help enterprises globally achieve the full potential of digital transformation with IT-OT convergence. Our focus initially will be on the four key themes of smart automation, intelligent supply chain, end-to-end visibility of workflows and assets, and next-gen workforce solutions driving Industry 4.0 adoption.

Design Led Manufacturing

The Indian EMS industry is projected to record robust growth of 45% in the next five years. This is driven largely by two factors; one, the governments measures to boost domestic manufacturing: production linked incentives

(PLI) scheme, scheme for promotion of manufacturing of electronic components and semiconductors (SPECS) and modified electronic manufacturing cluster (EMC) are some of the policy changes coming into effect. Secondly, the push of many global companies to diversify supply chains from China will lead to increased interest and investment into India. With our Design to Build strategy, Cyient is specifically well positioned to address the build requirements of customers across sectors, including transportation, medical, industrial, and communications.

The Design Led Manufacturing (DLM) business saw a significant growth through the year. We recorded our highest ever revenue this year. The growth in the business was driven by our efforts in localizing parts, inventory management, material cost reductions, and automation that has led to a significant improvement in overall business metrics. A strong order pipeline coupled with an order backlog gives us good visibility for growth in FY22. We continue to see opportunities as more and more businesses move out of China and the focus on "Make in India." Additionally, the automobile sector driven by increased electrification of vehicles is expected to drive growth. The Energy sector, too, will contribute to DLMs growth riding on steady fuel prices. We also expect to attract new customers in the Communication and MTH industries for new technologies.

Business Outlook

The outlook for the market continues to be strong driven by increased demand for integrating the latest technologies in the product and solutions offerings, and the growing need to shorten product lifecycles and cutting costs. The growth in the future will be largely driven by spend on innovation and adoption of digital technologies. With focus on new delivery models and broader engagement portfolio, the role of outsourcing partners is expected to increase in the future.

In this environment, we are very well positioned to deliver accelerated growth with an integrated portfolio that enables us to address the design, build and maintain value chains for clients across industries. While the company has faced certain internal and external headwinds in the last 2 years, we have significantly enhanced our ability to address new opportunities that are now emerging. This has happened through investments in people, technology, training, and innovation.

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 financial risks, reputation risks, regulatory risks, employee risks, and customer risks. The audit of ERM is periodically carried out by KPMG, the companys internal auditor, and a report is presented to the Audit Committee.

The company also has an internal risk committee that reviews the risk management process on a periodic basis.

Risk description Risk impact Risk mitigation
Business disruption due to Covid-19 pandemic Companys operations may be adversely affected due to incapacitation of the workforce due to the pandemic, stress due to lockdowns, and transition to work-from-home mode. 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.
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
Global Delivery Need to strengthen global delivery with a view to have sizable delivery closer to client base Strengthen onsite presence with nearshore centers
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 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 delegation of authority, for approving revenue and expenditure. The company uses SAP system globally to record data for accounting, consolidation, and management information purposes, connecting to different locations for the exchange of information.

Cyient has appointed M/s KPMG as internal auditors for the financial year 2020-2021. 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 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, 2021. 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 companys dedicated investor relations department and the companys senior management team participate in various roadshows and investor conferences. The company hosts an annual Investor Day. The company also engages an external agency to carry out an independent Investor Satisfaction Survey, and the results of the survey are analyzed and improvements implemented.

Whistleblower Policy

Cyient firmly believes in Values FIRST (FIRST = Fairness, Integrity, Respect, Sincerity, Transparency), and the organization-wide Whistleblower policy is a step towards 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 25,216 Mn at the end of FY 20 to Rs 71,239 Mn at the end of FY21.

• Dividend payout has substantially improved from 25% in FY 14 to 58% in FY 20 and 51% in FY 21.

• The company has achieved significant growth in 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 highest ever FCF at Rs7,609 Mn in FY 21.

Revenue Growth

During the year, revenue declined by 10.9% in US $ terms. The services segment has witnessed de-growth of 16.2% in US $ terms, primarily in A&D and Energy and Utilities business units. DLM segment has seen a growth of 28.3% 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 7%. The revenue for the company is driven by focus on a well-diversified business and geography portfolio.

Revenue by Geography

During FY21, the company delivered 23.6% YoY growth in the Asia Pacific incl India region, with a de-growth of 21% in the North America region and a de-growth of 13% in the EMEA region in $ terms. De-growth was primarily driven by A&D and Energy and Utilities business units. Over the years, Asia Pacific incl India witnessed significant revenue growth.

Revenue by Operating Segments

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

The Services segment comprises the companys 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 manufacture and machining of components for aerospace, automotive, and defense industries.

During the year, the Services segment has witnessed a degrowth of 16.2% in US $ terms. DLM segment has seen a growth of 28.3% 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.

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, 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.

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 FY21, the company generated the highest ever FCF at Rs 7,609 Mn as against FCF generated in FY20 at Rs 3,686 Mn. The Companys FCF to EBITDA conversion increased from 55% in FY20 to 113% in FY21, due to improved working capital management, optimizing the capital expenditure, and efficient tax management.

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 84 days in FY21 compared to 95 days in FY20, a reduction of 11 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 decreased from 27% in FY20 to 23.7% in FY21.

FY20 had a one-time charge arising out of the estimated impact of the Taxation Laws (Amendment) Ordinance 2019 of Rs56 Mn and other adjustments of Rs 92 Mn, including the expected impact of the settlement of past litigations under the Vivad Se Vishwas Scheme 2020.

Excluding this one-off impact, the effective tax rate is 22.8% in FY20, marginally increased by 90 bps in FY21.


The company ended FY21 with a capital expenditure of Rs 949 mn, which is 2.3% of the total revenue.

Net Worth

The net worth of the Company has grown at 9% CAGR in the last five years from Rs 21,199 Mn to Rs 29,541 Mn. It is mainly attributed to the profitable growth over the years, driven by organic and inorganic initiatives.

Return to investors

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

Highest ever dividend of Rs 17 per share was declared in FY 21. Dividend of Rs 15 per share was declared in FY 20.

The dividend payout for the company stands at 51% in FY21 (FY 20: 58%)

Market Capitalization

The companys market capitalization has grown from Rs 52,625 Mn in FY17 to Rs 71,239 Mn in FY21.

Market capitalization has significantly increased over the last financial year from Rs 25,216 Mn to Rs 71,239 Mn.

Financial Performance for the Year 2020-21 (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, 2021.

Consolidated Financial Results



Particulars Rs Mn % of Revenue Rs Mn % of Revenue
Revenue from operations 41,324 100% 44,274 100%
Other income 1,399 3.4% 1,583 3.6%
Total income 42,723 45,857
Employee benefits expense 21,611 52.3% 24,776 56%
Cost of materials consumed 5,165 12.5% 4,066 9.2%
Changes in inventories of finished goods, stock-intrade and work in progress 98 0.2% (144) (0.3)%
Operating, administration and other expenses 8,426 20.4% 9,683 21.9%
Impairment of non-current assets 274 0.7% 404 0.9%
Finance costs 433 1.0% 486 1.1%
Depreciation and amortisation expense 1,945 4.7% 1,878 4.2%
Total expenses 37,952 91.8% 41,149 92.9%
Profit before tax and share of profit from joint venture 4,771 11.5% 4,708 10.6%
Tax expense 1,133 2.7% 1,270 2.9%
Profit before share of profit from JV and non-controlling interest 3,638 8.8% 3,438 7.7%
Share of loss from Joint Venture - - (26) (0.06)%
Share of non-controlling interest - - 13 0.03%
Net Profit attributable to the shareholders 3,638 8.8% 3,425 7.7%



Revenue declined by 6.7% in rupee terms and by 10.9% in US $ terms. The services segment has witnessed a de-growth of 16.2% in US $ terms. DLM segment has witnessed a growth of 28.3% in US $ terms.

Other income

Other income for FY21 was Rs1,399 Mn as compared to Rs1,583 Mn in FY20.

Decrease in other income is primarily on account of forward contract loss of Rs180 Mn on EUR, GBP, and AUD contracts compensated with an increase in export incentives recognized during the year of Rs566 Mn.

Gain of Rs343 Mn was recognized on reversal of contingent consideration payable on past acquisitions which are not contractually payable.

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

YE March 2021

YE March 2020

Closing Average Closing Average
USD 73.43 74.31 75.39 70.97
EUR 86.1 86.68 83.18 78.89
GBP 100.95 97.15 93.35 90.23
AUD 55.89 53.37 46.59 48.37

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 52.3% for FY21 compared to 56% in FY20. On value terms, employee benefits expense has decreased in FY21 compared to FY20 due to operational efficiencies and a decrease in headcount globally.

Operating, Administration, and other Expenses

YE March 2021

YE March 2020

Rs Million % of Revenue Rs Million % of Revenue
Rent 170 0.4% 233 0.5%
Travel 416 1.0% 1,195 2.7%
Subcontracting charges 3,286 8.0% 3,348 7.6%
Repairs and maintenance 1,298 3.1% 1,271 2.9%
Others 3,256 7.9% 3,636 8.2%
Total 8,426 20.4% 9,683 21.9%

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

Travel expense significantly reduced as a percentage of revenue due to Covid-19 pandemic and cost operational measures.

Repairs and maintenance expense is in line with business requirements.

Finance costs

Finance costs is constant at 1% as a percentage of revenue in FY21 and FY20. 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 FY21 was 31,945 Mn (4.7% of revenue) compared to 31,878 Mn (4.2% of revenue) in FY20. Marginal increase in depreciation is on account of additional capital expenditure incurred during the year of 3949 Mn.

Tax expense

The effective tax rate has decreased from 27% in FY20 to 23.7% in FY21.

FY 20 had a one-time charge arising out of the estimated impact of the Taxation Laws (Amendment) Ordinance 2019 of 356 Mn and other adjustments of 392 Mn, including the expected impact of the settlement of past litigations under the Vivad Se Vishwas Scheme 2020.

Excluding this one-off impact, the effective tax rate is 22.8% in FY20, marginally increased by 90 bps in FY21.

Net profit attributable to the shareholders

The net profit stands at 33,638 Mn for FY21 as compared to 33,425 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, 2021

Rs Million
31 Mar 21 31 Mar 20
- Share capital 550 550
- Reserves and surplus 28,991 25,027
Total - Shareholders funds 29,541 25,577
Non-current liabilities
- Long-term borrowings and liabilities 2,827 3,556
- Long-term provisions 1,288 1,151
- Deferred tax liabilities (net) 182 378
Total - Non-current liabilities 4,297 5,085
Current liabilities
- Short-term borrowings 2,302 2,879
- Trade payables 4,532 3,729
- Other current liabilities 3,576 3,822
- Short-term provisions 680 705
Total - Current liabilities 11,090 11,135
Non-current assets
- Property, plant and equipment 8,655 9,135

Rs Million

31 Mar 21 31 Mar 20
- Goodwill 5,830 5,374
- Non-current investments 344 414
- Deferred tax assets (net) 319 396
- Other non-current assets 1,262 1,560
Total - Non-current assets 16,410 16,879
Current assets
- Inventories 1,586 2,267
- Trade receivables 8,026 7,262
- Cash and cash equivalents 14,650 9,518
- Other current assets 4,256 5,871
Total - Current assets 28,518 24,918
TOTAL ASSETS 44,928 41,797

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 Rs25,027 Mn as of March 31, 2020, to Rs28,991 Mn as of March 31, 2021, primarily due to profit generated during the FY21 of Rs3,638 Mn.


The long-term borrowings decreased from Rs1,270 Mn as of March 31, 2020, to Rs882 Mn as of March 31, 2021, due to repayment of the borrowings.

The short-term borrowings decreased from Rs2,879 Mn as of March 31, 2020, to Rs2,302 Mn as of March 31, 2021, due to repayment of the borrowings.

Trade payables

Trade payables consist of payables towards the purchase of goods and services and stood at Rs4,532 Mn as of March 31, 2021, (Rs3,729 Mn as of March 31, 2020).

Property, plant, and equipment

Decrease of Rs480 Mn in property, plant, and equipment in FY21 is primarily attributable to the following:

• Capital expenditure incurred during FY21 of Rs949 Mn

• Intangible assets recognized on the acquisition of Integrated Global Partners Pty Limited of Rs163 Mn

• Depreciation and amortization of Rs1,945 Mn Goodwill

Goodwill represents the excess of purchase consideration over net assets of acquired subsidiaries. Increase in Goodwill of Rs456 Mn during FY21 is attributable to the following reasons:

• Rs603 Mn recognized on Integrated Global Partners Pty Limited acquisition.

• One-time charge of Rs309 Mn of goodwill relating to semiconductor business considering the business forecasts and long term outlook of the business

Non-current investments

Non-current investments have decreased from Rs414 Mn as of March 31, 2020 to Rs344 Mn as of March 31, 2021, due to loss of Rs110 Mn recognized on a decrease in fair value of an investment.

Cash and bank balances

Total cash and bank balances consists of:

As at March 31, 2021 As at March 31, 2020
Cash and bank balances 14,650 9,518
Total 14,650 9,518

During the year, the company generated FCF from operations of Rs7,609 Mn, comprising Services FCF of Rs7,526 Mn and DLM FCF of Rs84 Mn. The company deploys its surplus funds in fixed deposits in line with an approved policy.

Trade receivables

The trade receivables have increased from Rs7,262 Mn as of March 31, 2020, to Rs 8,026 Mn as of March 31, 2021. The company regularly monitors unbilled revenue, separately as well as collectively, along with trade receivables. DSO (accounts receivables in days) has decreased from 95 days as of March 31, 2020 to 84 days as of March 31, 2021.

Other current assets

Other current assets have decreased from Rs5,871 Mn as of March 31, 2020 from Rs4,256 Mn as of March 31, 2021, primarily due to a decrease in unbilled receivables by Rs1,756 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, 2021 March 31, 2020 Variance Explanation
1 turnover (in days) 84 95 (12)%
2 turnover (in days) 83 159 (48)% Note (i)
3 Interest coverage ratio 12 10.7 13%
4 Current ratio 2.57 2.21 16%
5 Debt equity ratio 0.11 0.16 (33)% Note (ii)
6 Operating margin (%) 14.8% 13.5% 9%
7 Net profit margin (%) 9% 8% 14%
8 Return on net worth (%) 13.2% 13.4% (1.2)%

(i) Decrease in inventory turnover days is primarily attributable to revenue growth in DLM business of 28.3% in US $ terms and significant reduction of inventory.

(ii) Decrease in debt equity ratio is due to a reduction in borrowings compared to the previous financial year.

People function

As an organization, we constantly strive to be the employer of choice for our associates. Cyients people function is very closely aligned to our Vision and the S3 strategy and work towards talent acquisition, talent retention and developing next line of leaders. We constantly try to incorporate healthy and innovative HR practices that provide us an edge over our competition.

Last year has been a challenging year due to the Covid 19 Pandemic. Associates safety, enablement and engagement have been our top priority. We have ensured that all through the different phases of this pandemic our associates are safe. We also adapted our processes and policies to enable various activities from hiring, on boarding, developing & engaging our associates. We will continue to focus on driving initiatives across the talent acquisition, talent development and retention value chain. Our focus will continue to be on strengthening our HR practices and leverage strategic initiatives to drive our objectives.

We also have made good progress on our strategic initiative actions and are well aligned to achieve them. Some of the key initiatives we embarked on over the year are as follows:


DIEL (Diversity, Inclusion, and Equity Leadership) is a structured mentorship program to support high potential midlevel managers work towards their career goals. In DIEL 1.0, we focused on female high potential associates, and in DIEL 2.0 we have included both genders. The program is structured over 10 months and gives the mentees opportunities to explore their career goals, leverage the experience of their mentor, and gain extended visibility in the company and amongst the leadership team, and to network and share with other mentees. Since DIEL 1.0, we have had multiple mentees who grabbed new opportunities. We will be tracking the progress of the mentees as they move throughout their careers and will continue to evolve the program to adjust to the changing business environment. One of the unexpected benefits of the program is that the mentors have also learned a lot from the mentees. It has opened their minds to newer perspectives and helped them become better leaders.


The "TAKE 5" was born from the thought that diversity and inclusion is not just a human resources goal. We came up with a concept to distribute inclusive leader tips along with a self-engagement activity, in a non-intrusive self-determining manner, at a regular frequency. The goal of the TAKE 5 series is to drive inclusive behaviors along with a keen awareness to diversity through to the heart of the organization; while maintaining the leaders ability to choose the right time for them to absorb the content. To date, we have released 12 issues of the TAKE 5 series that explored the topics of burnout, biases, ally ship, psychological safety, and reflecting on and measuring your own inclusivity as a leader. Our series reaches 1000+ people leaders, across all of our global operations, at Cyient. Further, it is available to all of our associates so that they can read what their leaders are reading and engage them in challenging and thoughtful conversations. At Cyient, we become more inclusive by taking five.

Social Learning:

We are creating an inclusive workplace by leveraging our social learning platform to harness the collective knowledge of all of our associates to bring attention to a multitude of diversity and inclusion topics. Our social learning channel enables all of the associates at Cyient to participate and develop their individual understanding of D&I terms and concept in a safe and collaborative environment. We believe that by amplifying each individuals understanding of D&I we are contributing to the creation of a more diverse and inclusive Cyient, society, and world. To date, our D&I channel has 59 posts, over 200 views, and receives high traffic.


We all rose to the challenge of changing the way we work due to COVID-19 and delivering leadership programs is no different. The Emerging Leader Program was launched in the second week of October 2020 with a week-long virtual Leadership Immersion Workshop. The virtual program was designed to maximize interaction, participation, and to provide our managers with the environment to both learn and to collaborate with fellow managers across Cyient. We had 48 participants from various BUs and geographies. The workshop was divided in to two cohorts to accommodate all time zones. The program will conclude in July 21 and will enable them to gain leadership Skills and excel in their chosen field.


The Business Leader Program (BLP) was launched in the second week of March 2021 with a week-long virtual Leadership Immersion Workshop. The virtual program was designed to maximize interaction, participation, and collaboration. We had 25 participants from various BUs and geographies. The workshop was conducted across time zones. We explored various Leadership Styles needed to be a successful Leader, providing insights into their own leadership styles and how to flex their styles to engage, enable and empower our associates to drive performance. This was followed by Systems Thinking, where participants experienced how to explore and provide solutions to complex problems, and Strategic Thinking, understanding the strategic drivers, values and motivational factors that drive growth as well as the factors that can hinder it. It culminated by exploring influence and negotiations skills. An integral part of this program is the Action Learning Projects, where participants work on real problems by putting their skills into action that will benefit them in their roles and holistically. The results of these projects will be presented in the final workshop in November 2021.


Managing@Cyient is a globally consistent development program for all Managers. It builds an understanding of the role of a Manager and what it takes to excel as a Manager at Cyient. This program provides the skills needed for managing self, managing teams, delivering business value, and leading change. The workshops have been designed to be interactive and participatory. During the learning journey participants are given the opportunity to both develop and put your skills into practice both via the workshops and the learning challenges and coaching sessions. This year we trained 235 Managers Globally.

Career and Competency Progression Program

As an extension to a global job structure framework created in FY20, we worked on creating competency dictionary for 25 roles covering 75% of our associates. We have detailed the technical progression journey on each of the competencies. This framework would allow us to identify competency gaps and build individual development plans.

Parental Leave Policy

Cyient recognizes that it is important for our associates to care for our families and loved ones. In that spirit, the company has launched a new parental leave policy effective April 1, 2021. Cyient offers anyone (regardless of gender) who has been at Cyient for three months and completed a probationary period (if applicable) during the first year of parenthood up to 12 weeks of 100% paid time off for primary caregiver and 2 weeks of 100% paid time off for secondary caregiver.

This includes associate who becomes a parent through childbirth or adoption. The parental leave balance is per birth or adoption event. If associate lives in a country where a statutory parental leave benefit is available, then associate will be required to claim statutory parental leave pay and Cyient will supplement gaps if there is any.