Cyient Ltd Management Discussions.


Global Economic Outlook

Due to the Covid-19 pandemic the world is going through its toughest phase, in terms of peoples safety and economic challenges which is not expected to end soon. The world is under unpredictable crisis and looking at the ways to recover. Most of the nations are going through recession and collapse of their economic structure. The crisis is likely to have a major impact on globalization and global value chains.

The Covid-19 pandemic has delivered an economic shock of a magnitude to be seen since the end of Second World War. The World Bank report forecast predicts a 5.2% contraction in the global GDP. This will be the deepest global recession in eight decades, despite the unprecedented policy support. The recession would be deeper if brining the pandemic under control took longer than predicted, or the financial stress triggered cascading defaults. Global trade could also fall by 13% to 32%, depending on the depth and extent of the global economic downturn. The advanced economies are expected to contract by 7% in 2020 as wide spread social distancing measures, a sharp tightening of financial conditions and a collapse in external demand depress activity. The emerging market and developing economies will be impacted by shrinking per capita incomes tipping many millions back into poverty.

The Engineering Services industry is also expected to be impacted by the Covid-19 pandemic, which will experience downward pressures in the short term with 2%-8% decline across the industry. However, the growth is expected to rebound faster than GDP recovery with 80% spend expected to come back in two years. The impact across the various industries will vary with some industries impacted severely in the short term to some which will see minimal impact.

The outlook across the industry and our outlook for the business is as follows:

Aerospace & Defense (A&D)

In the wake of the Covid-19 pandemic, Aerospace industry is facing an unprecedented international crisis. This scenario is directly impacting the demand for new aircrafts, MRO services and replacement of scheduled aircrafts. New orders which are due for replacement are kept on hold for an indefinite period and cash crunch is impacting airlines globally.

The industry will see heightened M&A activity at the Tier 3 & 4 level due to weakening financial positions and bleak outlook. OEMs are expected to reduce outsourcing spend 10%-20% in view of cost pressures. However, the outlook is promising for the defense industry majorly contributed by U.S, China, Russia, and India, as they seek to strengthen and modernize their military capabilities in the face of growing security threats.

For FY 20, the A&D BU witnessed a decline driven predominantly by a decline in the services business across a few key clients in the North America (NAM) region. However, our Design Led Manufacturing (DLM) business for the industry witnessed growth through the year, driven by strong growth with one of our key clients. This year we focused on many new initiatives, we signed an MOU with QinetiQ a leading science and engineering company operating primarily in the defense, security products in India. This agreement allows Cyient to provide advanced manufacturing and electronics engineering solutions.

Through the year we also focused on a new client solution, "War on Cost". Through this solution we were able to achieve large savings for one of our key client. This also led us to be recognized with a "Supplier Innovation Award" for the seventh consecutive year and the "Supplier Highest Productivity Award" for the fourth year in a row by our client. These awards are a testament to a long standing relationship with our client and our commitment to drive innovation and productivity.

For FY 21, we expect Covid-19 pandemic to continue to impact the industry through the year. To drive business our focus will be to look at creating new business models, drive changes in supply chain and rigor on cost optimization. We will continue to work with clients to drive cost optimization through focus on digitization and data analytics. We will also continue to focus on the defense segment.


The outlook for Communications industry stands positive through the year. The crisis elevated the need for remote working, online learning, and streaming in-home entertainment. This is expected to open up huge investments for 5G rollouts and the advancement of the internet of things (loT) based services. Increasing investments in smart cities and Al based predictive analytics solutions are in high demand. Also, the pandemic has accelerated cloud deployment & need for cyber security for the telecom network functions.

For FY 20, the BU witnessed a decline driven predominantly by a drop in revenue from a key client. However, we also witnessed a significant growth through new client additions and new revenue from 5G rollouts. Through the year we rolled out services and solutions focused on CSPs to expedite 5G network rollouts globally. The services will not only help in defining the migration roadmap towards the 5G NSA standard, but also helps in planning smarter and faster rollouts, including site verification and benchmarking in postdeployment operations. We continue to be preferred partners for CSPs in their journey towards a connected world. We take pride in connecting 40% of telecom end-customers and businesses worldwide.

Our outlook for the year stands positive, we expect the momentum to return from the second half of the year with investments in 5G technology rollout and Robotic Process Automation (RPA) and network automation tools.


The Transportation industry is expected to be impacted in the short term with lesser people accessing public transport and delay in project execution. The mass transit, commuter and high speed segments are expected to be more impacted as compared to freight and signalling segments. As countries invest in infrastructure, in the long run industry is expected to grow considerably.

The transportation BU witnessed a decline through the year, driven by weak performance in the signalling segment and a decline in revenue from a key client. However, this year we also extended our Multi- Service Agreement (MSA) with a key client in signalling segment, won new clients and initiated a strategic DLM project for a signalling client thereby strengthening our outlook for the next fiscal year. Aside from this, we also ventured into a strategic investment in rail cybersecurity company Cylus, a global leader in cyber security solutions for the rail industry. Our value proposition continues to resonate well with the key industry trends of multimodality, standardization, digitization, and internationalization.

Our outlook for FY 21 remains optimistic with more focus on the mobility business. We expect the business to gain momentum post first half of the year. We will continue to invest in building our capabilities to focus on building a strong digital portfolio.

Energy and Utilities (E&U)

The Energy and Utilities (E&U) BU provides end to end capabilities across the energy value chain for oil and gas, mining and utilities industries.

The energy industry is expected to be impacted with low oil prices leading to decline in production and margin pressures across the oil and gas value chain. The industry is dependent on government across countries for operations and survival. Normalcy will be dependent on the control of the pandemic and resolution of supply chain challenges. New age digital technologies like intelligent remote maintenance in oil fields, advanced statistical models of drilling operations and real time monitoring of logistics will drive the industry operations.

The mining industry is impacted in the short term as projects have either slowed down or put on hold across multiple geographies. The industry esp. the Australia mining segment is expected to recover slowly as China comes back to normal. Post recovery the penetration of advanced technologies like IIOT and advanced data analytics, automation, block chain, artificial intelligence, 3D viewing and smart sensors in the industry are expected to gain momentum. Unlike Energy and Mining industry, Utilities industry is impacted the least by the pandemic and industry outlook continues to be positive. The growth in the Utilities is expected from investments in grid modernization, IT based services, cyber security & renewable energy.

The BU performance for the year remained flat with marginal growth in the services segment and decline across the DLM segment. The ENR business witnessed strong growth through the year, while Utilities business showed growth across EMEA and NAM region. This year we also partnered with UK based Clear Horizon, a company specialized in solutions for quality asset data management through its mobile product, CHIME.

This Collaboration will allow utility customers to benefit from advanced asset management and decision support products, solutions, and services.

Our outlook for FY 21 for E&U stands positive, in Utilities Business, increasing demand in operational processes to manage huge volumes of data, grid modernization, field mobility and smart metering solutions, predictive analytics are expected to create more opportunities. For ENR Business, the Covid-19 related challenges are expected to extend and impact opportunities. We will focus on key strategic offerings around connected equipment, asset management, and plant engineering and digital solutions to drive growth.


The Geospatial industry is expected to have minimal impact in the medium term due to shutdowns, lower demand and delayed investments. The Covid-19 pandemic has increased the need for GIS enabled decision making to map changing supply chain structures and understand the spread. However, the long term outlook continues to remain strong as growing use of GIS solutions in the transportation sector and smart cities investments are likely to boost in the near future. Along with this, geospatial analytics and earth observation are expected to hold a larger market share in the future.

The business witnessed a decline driven by a decline in revenue from the Europe region. However, our margins remained strong and we have seen growth in LiDAR process and mobile mapping data services through the year.

We expect FY 21 to be a positive year with strong focus on digital engineering services. Increasing integration of geospatial technologies into mainline technologies is likely to be a key component driving the market in North America & Asia pacific region in the near future.

Industrial and heavy Equipment segment

The Industrial and Heavy Equipment industry are expected to face strong headwinds due to decreased demand from end- industries and consumers. Uncertainties in global supply chain will lead to challenges in production planning. Expected to double down on investments across Industry 4.0 and automation initiatives will insulate against future concerns.

For FY 20, the BU witnessed a flat growth driven by a decline in key client engagement. To strengthen our offerings, we have opened a wire harness facility in Peoria Heights, Illinois to support customers in harness prototyping by increasing design process speed and iterative development for electrical systems. The 1,100 sq ft, restricted-access lab is equipped with pneumatic crimping tools, including an ultrasonic splicer and broader, to facilitate quality production and prototypes for electrical wire harnesses. The Industrial and Heavy Equipment industry are expected to witness flat growth through the year as the market will continue to face major contraction due to down cycle, while global production shutdowns will continue.

Semiconductor, loT and Analytics

Cyient Semiconductor, IoT, and Analytics (SIA) BU focuses on building capabilities in semiconductor services and digital solutions for our clients across industries.

From the industry outlook, perspective, Semiconductor business has been impacted significantly by Covid-19, this reflected across the electronics value chain. Reduced consumer spends in industries such as consumer electronics, automotive and industrial are expected to contribute to the business decline. However, increased demand for enhanced compute, automation, and connectivity will translate to a higher semiconductor consumption across areas such as data centers, 5G, and cloud. IT based services across multiple Industries is on the rise. Digital and analytical services also expected to drive growth as there is increased demand for the services across industries.

At BU level, Semiconductor IoT & Analytics witnessed a decline driven by a drop in services business from key clients and Integrate chip (IC) delivery issues due to disruptions in the supply chain due to Covid-19. The Ansem acquisition contributed to a significant business from the Europe region and is expected to grow in the future. We also received the ISO 13485:2016 certification for design and supply of integrated circuits to the Medtech market. Asides this, we have signed a statement of intent with Emergent Alliance, to use their combined data knowledge to provide new insights and practical applications to the global Covid-19 response. As part of this alliance, the client is working with some of the worlds largest organizations, data specialists and governments to support future decision-making on regional and global economic challenges.

Our outlook for FY 21 and beyond continues to be positive. This is driven by our focus on design services for large compute digital chips, embedded systems and software for automotive and new turnkey silicon solutions.

Medical Technology and Healthcare (MTH)

The Medical Technology and Healthcare (MTH) industry will be impacted by decrease in demand, as OEMs are diverting their spend on products and areas focused on Covid-19 response. There is increased focus on building intelligent devices with capabilities around predictive diagnostics and early detection to enable remote monitoring.

The future of MTH will be primarily driven by digital technologies such as artificial intelligence, robotics, 3D printing, augmented and virtual reality. Digitization is expected to bring increased efficiency and accessibility to the health care services.

The MTH BU witnessed a growth through the year, driven by growth in key client engagement. This year we partnered with Molbio Diagnostics to manufacture Covid-19

testing devices and chips that will help diagnose the disease and enable faster prognosis. Molbio developed the worlds first portable real-time qPCR platform to detect infectious diseases.

For FY 21, our outlook stands positive with multiple business opportunities from new and existing customers across the business lines (Product Design, Lifecycle Management and DLM) expected to drive the growth in the second half of the fiscal year.

Business Outlook

While the industry continues to struggle through the Covid-19 pandemic, we expect to witness a short term decline in revenues across the industries. We will focus on streamlining our operations that are impacted by the lockdown and continue to focus on meeting our clients changing needs in the short term. From a long term perspective, our focus will be on strengthening our digital capabilities across the industries and strengthening our business model to serve our clients better.

Enterprise Risk Management (ERM)

Cyient has an organization-wide ERM framework. The framework is based on best-in-class standards and covers various operations of the organization as well as key criteria like financial risks, reputation risks, regulatory risks, employee risks and Customer risks. The audit of ERM is periodically carried out by KPMG, the organizations internal auditors and a report are presented to the Audit Committee.

Cyient also has an internal risk committee, which reviews the risk management process on a periodic basis.

Risk description Risk impact Risk mitiqation
Business disruption due to Covid-19 pandemic Companys operations may be adversely affected due to incapacitation of workforce due to pandemic, stress due to lockdown and transition to work from home mode. Monitoring and review at management council levels.
Rigorous implementation of Business Continuity Plans.
Demand for services may also be impacted in select industries. 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 movement of professionals may lead to delays in projects and increase in costs. Covid-19 situation may further restrict such movement. Monitoring of global environment. Need focus on strengthening onsite readiness - local hiring, customer interface
Customers under severe financial strain/ bankruptcy Customer constraints could led to bad debts Focus on revenue realization and cash management
Insourcing - Focus to move business closer to home country/ HQ Loss of engagement. Reduced outsourcing Strengthen onsite presence And focus on rebadging and variablising costs for clients
Vendor consolidation Demand for discounts and volume reductions 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 severe impact on margins due to pricing pressures There is a focus on providing higher value and differentiated services
We are also getting into new business models.
Compliance risks Being a global company, we are exposed to laws and regulations of multiple countries The Company has an in-house compliance team which monitors global compliances.
The team receives updates on changes in regulations from specialist consultants and circulates the same internally.
Data privacy and cyber security In a connected world, businesses are extremely vulnerable to cyber-attacks, leading to loss of data and damage to reputation. The Company has a stringent Cyber Security policy which ensures timely resolution of incidents.

Internal Controls and adequacy

Cyients global presence and large associate strength make it imperative for us to have a robust internal controls framework.

We have in place adequate systems of internal control commensurate with our size and the nature of our 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. We also have a well-defined manual for delegation of authority for approving revenue and expenditure. We use SAP system, globally, to record data for accounting, consolidation and management information purposes, which connects two different locations for exchange of information.

Cyient has appointed M/s KPMG as internal auditors for the financial year 2019-20. KPMG carried out the internal audit based on an internal audit plan, which is reviewed each year in consultation with 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.

Cyient 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 the 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 organizations statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems in the organization and keeps the board of directors informed of its key observations from time to time.

The statutory auditors also independently audited the internal financial controls over financial reporting as on March 31, 2020 and have opined that adequate internal controls over financial reporting are existing and that such controls were operating effectively.

Investor Engagement

Cyient 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 to provide timely and reliable financial performance. We engage multiple communication channels for this purpose. Cyients dedicated investor relations department, along with the senior management team, participates in various road shows and investor conferences. We also host an annual Investor Day at its premises and also engage an external agency to carry out an independent Investor Satisfaction Survey. The results of the survey are analyzed internally and improvements are implemented.

Whistle-blower policy

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

Shareholder Value Creation

As a result of our significant growth in revenue and profit over the last 5 years, dividend payout has substantially improved over last 7 years from 25% in FY 14 to 58% in FY 20. We have achieved improvement in free cash flow (FCF) generation capabilities of the business with an increased focus on receivables management and tax optimization. The market capitalization witnessed a significant decline and stood at Rs.25,216 Mn at the end of FY20 mainly due to the de-growth in the services segment. Given our focus on cost optimization initiatives and improving profitability, we remain confident of recovery in our business fundamentals.

Revenue Growth

Cyient witnessed de-growth in revenue of 5.3% Y-o-Y in $ terms and de-growth of 4% in constant currency basis. A&D and Communication business units witnessed a de-growth of 4.7% and 8.1% respectively.

Over the last 5 years, the Company has sustained robust revenue growth momentum with an impressive compounded annual growth rate (CAGR) of 9% in rupee terms. The revenue for the organization is driven by the focus on a well-diversified business and geography portfolio.


Revenue by Geography

During the year FY 20, we delivered 5% YoY growth in EMEA region with a de-growth of 0.5% in NAM region and de-growth of 27% in APAC including India in $ terms. Over the last 3 years, NAM has witnessed significant growth.

Revenue by Operating Segments

Cyients Chief Executive Officer (CEO) reviews the business as two operating segments - Services and Design led Manufacturing (DLM).

Better Client Mining

Cyient continues to focus on improving revenue per client by focusing on strategic clients and generating more up-sell and cross-sell opportunities.

Chart below depicts the contribution of revenue from top 20 customers over the last three financial years:

Profits Trend

During the year, profits have declined due to de-growth in services segment and recognition of one-time impairment charge of non-current assets.

Free Cash Flow (FCF) Generation

Cyient has achieved significant improvement in free cash flow (FCF) generation capabilities in last 3 years. In FY20, we generated highest ever Free Cash Flow (FCF) at Rs. 4,102 Mn against FCF generated in FY19 at Rs.3,770 Mn. Cyients FCF to EBITDA conversion increased from 48% in FY19 to 57% in FY20, due to improved working capital management, optimizing the capital expenditure and efficient tax management.

Days Sales Outstanding (DSO)

Cyient has delivered a consistent improvement in Days Sales Outstanding (DSO) in recent past owing to focus on better collection cycle management. Total DSO stands at 95 days in FY 20 as compared to 88 days in FY 19. The Increase is primarily attributable to the increase in unbilled revenue. We are confident of continued improvement in DSO and is taking steps to reduce the DSO further.

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

Tax Rate

The effective tax rate since the organization has increased by 400 bps from 23% in FY19 to 27% in FY20, due to recognition of one-time charge arising out of the estimated impact of the Taxation Laws (Amendment) Ordinance 2019 and other onetime adjustments.


Cyient ended FY20 with capital expenditure of Rs.961 Mn, which is 2.2% of total revenue.

Net worth

The net worth of the company grew by 9% CAGR in last 5 years from Rs.18,372 Mn to Rs.25,577 Mn. It is mainly attributed to the profitable growth over the years, driven by both organic and inorganic initiatives.

Return to investors

The dividend payment trend for Cyient has improved substantially in last 5 years. The dividend payout for the company stands at 58% in FY20. The dividend for the full year stood at 15/-share, which is the same as last year despite a drop in profitability. Cyient has also bought back equity shares at an average price of Rs.640.21 per share between 1st February 2019 to 11th April 2019.

Market Capitalization

The market capitalization of Cyient has grown from Rs.56,660 Mn in FY 2015 to Rs.71,747 Mn in FY 2019. However, the market capitalization in FY 2020 has declined to Rs.25,216 Mn due to a de-growth in the services segment.

Adoption of IND AS 116 - Leases

Effective April 1, 2019, Cyient has adopted Ind AS 116 Leases which sets out the principles for recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model. Cyient has applied modified retrospective approach for all leases existing at the date of initial application and the cumulative effect of applying Ind AS 116 has been recognized as an adjustment to the opening balance of retained earnings. As at April 1, 2019,

• Right-of-use assets were recognized and presented separately in the balance sheet;

• Lease liabilities were recognized and included under financial liabilities;

• Retained earnings decreased due to the net impact of these adjustments.

On transition, the adoption of this standard resulted in the recognition of Right of Use (ROU) asset of Rs.3,206 Mn (Standalone- Rs.1,517 Mn) and a lease liability of Rs.3,408 Mn (Standalone- Rs.1,591 Mn) and a net adjustment to opening balance of retained earnings of Rs.137 Mn (Standalone- Rs.81 Mn) (net of deferred tax). The effect of adopting this standard is not material on the profit for the year.

For the year ended March 31, 2020:

• Depreciation expense increased because of the depreciation of additional assets by Rs.786 Mn. (Standalone: Rs.446 Mn)

• Rent expense included in Other expenses decreased by Rs.947 Mn. (Standalone: 528 Mn)

• Finance costs increased by Rs.182 Mn. (Standalone: Rs.135 Mn)

• Cash outflows from operating activities decreased by Rs.947 Mn (Standalone: Rs.509 Mn) and cash outflows from financing activities increased by the same amount, relating to decreasing in operating lease payments and increase in principal and interest payments of lease liabilities.


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. Preparation and presentation of such consolidated financial statements depict comprehensively the performance of the Cyient group of companies and is more relevant for understanding the overall performance of Cyient. Standalone results of Cyient exclude the performance of its subsidiaries and joint venture. This part of the Management Discussion and Analysis refer 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, 2020.




Particulars Rs.Mn % of Revenue Rs.Mn % of Revenue
Revenue from operations 44,274 100% 46,175 100%
Other income 1,583 3.6% 1,340 2.9%
Total income 45,857 47,515




Particulars Rs.Mn % of Revenue Rs.Mn % of Revenue
Employee benefits expense 24,776 56% 25,469 55.2%
Cost of materials consumed 4,066 9.2% 3,936 8.5%
Purchases of stock- in-trade - - 108 0.2%
Changes in inventories of finished goods, stock-in-trade and work in progress (144) (0.3)% 141 0.3%
Operating, administration and other expenses 9,683 21.9% 10,193 22.1%
Impairment of noncurrent assets 404 0.9% - -
Finance costs 486 1.1% 326 0.7%
Depreciation and amortisation expense 1,878 4.2% 1,114 2.4%
Total expenses 41,149 92.9% 41,287 89.4%
Profit before exceptional item, tax and share of profit from joint venture 4,708 10.6% 6,228 13.5%
Exceptional Item - - 35 0.1%
Profit before tax and share of profit from joint venture 4,708 10.6% 6,193 13.4%
Tax expense 1,270 2.9% 1,427 3.1%
Profit before share of profit from associate company & JV and noncontrolling interest 3,438 7.7% 4,766 10.3%
Share of (loss)/ profit from Joint Venture (26) (0.06)% 5 0%
Share of noncontrolling interest 13 0.03% 14 0.03%
Net Profit attributable to the shareholders 3,425 7.7% 4,785 10.4%



Revenue declined by 4.1% in rupee terms and by 5.3% in US $ terms. Services segment has witnessed de-growth of 5.1% in US $ terms and 3.7% in rupee terms. DLM segment has witnessed de-growth of 6.6% in US $ terms and 5.4% in rupee terms.

Other income

Other income for FY 20 was Rs.1,583 Mn as compared to Rs.1,340 Mn in FY 19. Increase in other income is primarily on account of forward contract gain on USD and EUR contracts and Rs.333 Mn reversal of contingent consideration payable on past acquisitions which are not contractually payable, compensated with a decrease in export incentives recognized during the year by Rs.452 Mn.

The movement of Rupee against major currencies was as follows:

YE March 2020

YE March 2019

Closing Average Closing Average
USD 75.39 70.97 69.22 69.93
EUR 83.18 78.89 77.77 80.97
GBP 93.35 90.23 90.42 91.81
AUD 46.59 48.37 49.06 50.98

Employee benefits expense

Employee benefits expense includes salaries, which have fixed and variable components, contributing to retirement and other funds and staff welfare expenses. Employee benefits expense as a percentage of revenue from operations stands at 56% for FY20 as compared to 55% in FY19. In value terms, employee benefit expense has decreased in FY 20 as compared to FY 19, due to operational efficiencies and decrease in headcount on a global basis.

Operating, administration and other expenses

YE March 2020

YE March 2019

Rs.Million % of Revenue Rs.Million % of Revenue
Rent 233 0.5% 1,051 2.3%
Travel 1,195 2.7% 1,501 3.3%


3,348 7.6% 3,539 7.7%
Repairs and maintenance 1,271 2.9% 1,184 2.6%
Others 3,636 8.2% 2,918 6.1%
Total 9,683 21.9% 10,193 22.1%

Decrease in rent expense is on account of adoption of In AS 116 Leases, wherein certain leases were capitalizing on the balance sheet as right-of-use assets and corresponding lease liability was recognized. Accordingly, there is an increase in depreciation of the right-of-use and finance costs representing the leased assets cost amortization and interest cost on the lease liability over the term of the lease.

Subcontracting charges have remained flat as a percentage of revenue, as directly related.

Travel expense reduced as a percentage of revenue due to cost operational measures.

Repairs and maintenance expense has marginally increased in line with business requirements.

Finance costs

Finance costs are at 1.1% as a percentage of revenue as compared to 0.7% in FY 19, giving an increase of 0.4% on account of adoption of Ind AS 116, leases resulting in an increased interest cost on the lease liability over the term of the lease.

Depreciation and amortization expense

Depreciation and amortization expense for FY 20 was Rs.1,878 Mn (4.2% of revenue) as compared to Rs.1,114 Mn in FY 19 (2.4% of revenue). Increase in depreciation and amortization expense is on account of adoption of Ind AS 116 Leases, wherein certain leases were capitalizing on the balance sheet as right-of-use assets and corresponding lease liability was recognized.

Exceptional item

There are no exceptional items in FY 20.

Exceptional item for FY 19 relates to net impact of Rs.35 Mn on dissolution of Cyient Insights LLC, wholly owned subsidiary of Cyient Insights Private Limited.

Tax expense

The effective tax rate has increased from 23% in FY 19 to 27% in FY 20 due to recognition of one-time charges arising out of the estimated impact of the Taxation Laws (Amendment) Ordinance 2019 of Rs.56 Mn and other adjustments of Rs.92 Mn, including expected impact of settlement of past litigations under the Vivad Se Vishwas Scheme 2020.

Share of profit from Joint Venture

FY 20, the Company has recognised loss from joint venture of Rs.(26) Mn, as compared to profit of Rs.5 Mn in FY 19.

Net Profit attributable to the shareholders

The net profit stands at Rs.3,425 Mn for FY 20 as compared to Rs.4,785 Mn for FY 19.

Reason for the decrease in the net profit during the year are:

• Revenue declined by 4.1% in rupee terms and by 5.3% in US $ terms.

• Impairment of non-current assets includes a onetime charge of Rs.222 Mn relating to costs incurred on development of customized UAV systems in a subsidiary in view of the potential delays in materialization of orders and Rs.182 Mn towards certain other intangibles and intangible assets under development in subsidiaries based on forecasts of the underlying contracts.

• One-time charge arising out of the estimated impact of the Taxation Laws (Amendment) Ordinance 2019 of Rs.56 Mn and other adjustments of Rs.92 Mn, including the expected impact of settlement of past litigations under the Vivad Se Vishwas Scheme 2020.


5 Million
31-Mar-20 31-Mar-19
Shareholders funds
- Share capital 550 552
- Reserves and surplus 25,027 25,070
Total - Shareholders funds 25,577 25,622
Non-current liabilities
- Long-term borrowings and liabilities 3,556 1,813
- Long-term provisions 1,151 1,157
- Deferred tax liabilities (net) 378 405
Total - Non-current liabilities 5,085 3,375
Current liabilities
- Short-term borrowings 2,879 2,137
- Trade payables 3,729 3,700
- Other current liabilities 3,822 3,345
- Short-term provisions 705 713
Total - Current liabilities 11,135 9,895
Non-current assets
- Property, plant and equipment 9,135 5,563
- Goodwill 5,374 5,257
- Non-current investments 414 270
- Deferred tax assets (net) 396 294
- Other non-current assets 1,828 1,658
Total - Non-current assets 17,147 13,042
Current assets
- Inventories 2,267 1,833
- Current investments - 278
- Trade receivables 7,262 8,137
- Cash and cash equivalents 9,518 9,705
- Other current assets 5,603 5,897
Total - Current assets 24,650 25,850
TOTAL ASSETS 41,797 38,892


Share capital

Cyient has only one class of shares - equity shares of par value of Rs.5 each. The Authorized share capital of the company was 280,000,000 equity shares.

Buyback of equity shares:

The Board of Directors, at its meeting held on February 1,2019, approved the Buyback of the Cyients fully paid-up equity shares of face value of Rs.5 each, at a price not exceeding Rs.700 per equity share, for an aggregate amount not exceeding Rs.2,000 Mn. The Buyback was closed on April 11, 2019 and the company bought back an aggregate of 3,123,963 equity shares resulting in a total cash consideration of Rs.1,999 Mn (excluding the transaction costs) and has completely extinguished such equity shares.

Reserves and Surplus

Reserves and surplus as at March 31, 2020 stood at Rs.25,027 Mn as compared to Rs.25,070 Mn as at March 31, 2019.

• Securities premium account decreased by Rs.328 Mn majorly on account of utilization for buyback of equity shares.

• Balance in profit and loss, after appropriation of dividend of Rs.3,181, stood at Rs.16,652 Mn ( Rs.16,515 Mn as at March 31, 2019).

• Foreign currency translation reserve increased from Rs.640 Mn as at March 31, 2019 to Rs.1,111 Mn as at March 31, 2020, due to movement in foreign exchange rates during the year.


The long term borrowings decreased from Rs.1,547 Mn as at March 31, 2019 to Rs.1,270 Mn as at March 31, 2020, due to repayment of the borrowings. The short-term borrowings increased from Rs.2,137 Mn as at March 31, 2019 to Rs.2,879 Mn as at March 31, 2020 due to working capital requirements in subsidiary companies.

Trade payables

Trade payables consist of payables towards purchase of goods and services and stood at Rs.3,729 Mn as at March 31, 2020 ( Rs.3,700 Mn as at March 31, 2019).

Lease liabilities

Effective April 1, 2019, Cyient has adopted Ind AS 116 Leases which sets out the principles for recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model. We have applied modified retrospective approach for all leases existing at the date of initial application and the cumulative effect of applying Ind AS 116 has been recognized as an adjustment to the opening balance of retained earnings.

On transition, the adoption of this standard resulted in the recognition of Right of Use (ROU) asset of Rs.3,206 Mn and a lease liability of Rs.3,408 Mn and a net adjustment to opening

balance of retained earnings of Rs.137 Mn (net of deferred tax). As at March 31, 2020, closing balance of the lease liability was Rs.2,965 Mn and right-of-use assets were Rs.2,704 Mn.

Property, plant and equipment

Increase of Rs.3,572 Mn in property, plant and equipment in FY 20 is primarily attributable to the following:

• Right-of-use assets of Rs.2,704 Mn on adoption of Ind-AS 116, Leases.

• Cyient has entered into an agreement with a third party, wherein it was granted technology license to develop, test and commercially utilize the benefits from such testing and development activity. Development costs incurred during the year FY 20 was Rs.145 Mn.

• Balance increase is attributable towards the additions of computer software and long term infrastructure facilities.


Goodwill represents the excess of the purchase consideration over net assets of acquired subsidiaries.

Movement in Goodwill of Rs.117 Mn during FY 20 is attributable to translation of goodwill denominated in foreign currency at closing exchange rates.

Non-current investments

Non-current investments have increased from Rs.270 Mn as at March 31, 2019 to Rs.414 Mn as at March 31, 2020 due to an investment of Rs.106 Mn in Class A units of a Partnership Fund, Vasuki 2019 and investment in preferred instruments of Cylus Cyber Security Limited of Rs.75 Mn.

Cash and bank balances

Total cash and bank balances consists of:

(Rs. Million)
As at March 31, 2020 As at March 31, 2019
Cash and bank balances 9,518 9,705
Investment in Mutual funds - 278
Total 9,518 9,983

Cash generated from operations during FY 20 was Rs.4,102 Mn which were compensated by the dividend pay-out of Rs.3,181 Mn, investment in capital long-term infrastructure facilities Rs.1,045 Mn and non-current investments of Rs.176 Mn.

Cyient deploys its surplus funds in investments in fixed deposits and in debt-based mutual funds in line with an approved policy. Trade receivables

The trade receivables has decreased to Rs.7,262 Mn as at March 31, 2020 from Rs.8,137 Mn as at March 31, 2019 mainly due to improved collections. Cyient regularly monitors unbilled revenue, separately as well as collectively, along with trade receivables.

Other current assets

Other current assets have decreased to Rs.5,603 Mn as at March 31, 2020 from Rs.5,897 Mn as at March 31, 2019, primarily due to monetization of export incentives of Rs.370 Mn during the year.

Financial Ratios

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

Sl. No Ratio description March 31, 2020 March 31, 2019 Variance Explanation
1 Debtors turnover (in days) 95 88 8%
2 Inventory turnover (in days) 159 121 31% Note (i)
3 Interest coverage ratio 10.7 20.1 (47)% Note (ii)
4 Current ratio 2.21 2.61 (15)%
5 Debt equity ratio 0.16 0.15 8%
6 Operating margin (%) 13.5% 14% (3.5)%
7 Net profit margin (%) 8% 10% (25)% Note (iii)
8 Return on net worth (%) 13% 20% (31)% Note (iii)

1. Increase in inventory turnover days is primarily attributable to de-growth in the DLM segment by 6.6% ($ terms)

2. Decrease in interest coverage ratio is due to increase in interest expense due to finance component of leased assets and decrease in EBIT in comparison with the previous financial year.

3. The decrease in net profit margin and return on net worth is mainly attributable to decrease in net profit during the year due to de-growth in the Services segment by 5.1% ($ terms).

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. The headcount on 31 March 2020 was 13,859

We constantly try to incorporate healthy and innovative HR practices that provide us an edge over our competition. Over the last year we 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:

Early Career Initiatives

As part of early career initiative our focus has been on innovative ways to recruit fresh talent into the organization that gives us an edge over our competition. Key actions initiated as part of this program are as follows:


National Apprenticeship Promotion Scheme:

Under the National Apprenticeship Promotion Scheme, which Cyient incorporated in 2019, we have recruited 213 apprentices. This program enables graduates to upskill through basic training and on-the-job training/ practical training while being a part of live projects.

Fresher Campus Hiring:

Each year Cyient approaches select colleges across India for its campus hiring program. However, this year, we moved to a different model to expand the talent pool. We launched a digital campaign for hiring campus freshers for the year. As part of this we received 30,000 profiles. As a next step all the profiles were scrutinized and shortlisted candidates were put through an online assessment, which was conducted across India at nodal centers identified by Cyient. Currently, shortlisted candidates are going through the interview process. This initiative helped us expand our reach beyond the colleges.

North America

In FY20, we launched the Early Career Program initiative with focus on developing industry- ready engineers through the "Train to Hire" model. The program is custom-designed in partnership with educational institutions to create a path to employment for students, helping them gain the skills and knowledge that Cyient require.

As part of this initiative we collaborated with North East Mississippi Community College at Tupelo, Mississippi and Asnuntuck Community College at Hartford, Connecticut and explored couple of other community colleges across North America to help us drive the Train+ Hire model of recruitment. The on-the-job interns recruited through this program go through customized curriculum through classroom training, shadowing and learning from current employees and finally live production and delivery.

Leadership Accelerator Programme (LEAP)

As a part of the Leadership Development Framework, the global Leadership Accelerator Programme was launched in FY20. In phase 1, Cyient has approached Top I tier institutes across the globe and selected three management trainees in India. Phase 2 of the hiring will continue to hire across geographies from the Top I Tier universities /institutes. The role of these Analysts will focus on the design and execution of strategic initiatives in the organization working in close collaboration with leadership and cross functional team members.

Leadership Development

Diversity Inclusivity Equity driven Leadership (DIEL) Series 1:

Diversity, Inclusivity, and Equity driven leadership (DIEL) program is designed and developed as part of promoting Diversity and Inclusion (D&I). The DIEL provides intensive development opportunities combined with mentoring by Cyient leaders focused towards translating ideas and goals into reality. The DIEL Series 1 focused on womens leadership covering 50 employees globally. All the employees have been trained in leadership development and in leveraging mentoring support. Internal leaders were trained as mentors who engaged with the participants for about a year. This participants part of the program expressed that the program helped them widened their perspectives and look at the business in a holistic manner.

The conversations helped them to channelize their efforts in a concerted manner and sharpen their focus on leadership positions across the organization.

Global Leadership Program (GLP)

To strengthen the leadership multiple initiatives are being undertaken based on the leadership talent review. GLP is one such initiative which was rolled out in partnership with Wharton Business School, Pennsylvania University. Select Cyient leadership team across the globe visited Wharton campus in Philadelphia to undergo the training. A wide range of leadership and business aspects were covered during the program which include managing innovation and navigating disruption, customer insights, creating and sustaining competitive advantage, value creation, and connected strategy. Eminent faculty of Wharton conducted sessions during which some of the business heads also participated and engaged with the participants. The feedback from the participants is that the program is insightful, thought provoking, and helped in challenging assumptions on the practices for business growth.

ManagingCyient (M@C)

In addition to our leadership programs we have added Managing@Cyient a global training program for all our managers. It was conducted over five months and includes learning challenges where participants put into practice what they have learnt. We have trained 422 managers globally during the year, ensuring representation from all our business units and markets.

Career and Competency Progression Program

As we continue to strengthen our HR processes, we implemented a global job structure framework. This Job Structure will ensure that we have a consistent and transparent methodology, across all our locations. The framework is derived from Mercers International Position Evaluation (IPE) methodology and builds on three guiding principles of Consistency, Clarity and Empowerment for our associates.

Development of Cyients Job Structure spanned 18 months and helped standardize the roles across the organization into 20 job family group, 106 job families and 557 unique job roles. Also, as a result the Management Levels (20 nos) were replaced by Management Bands (8 nos).This will provide the basis for mobility, career progression and differentiate policies.

The career & competency progression framework piloted last year is now expanded to 14 IPE roles which constitute 70% of the associates. This framework would define the technical career paths for associates and define the critical competencies for career progression. The framework would allow us to identify competency gaps and build individual development plans.

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.