eclerx services ltd Management discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>

I. Industry Overview

As per NASSCOM’s Annual CXO Outlook Survey, the year 2023 has offered us a preview of a ‘No Normal Future’ in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world. In this financial year, the industry recorded revenue of over $245 Bn, of which almost 34% came from digital avenues. The workforce strength stood at 5.4 Mn, with 36% women employees.

In addition, the survey revealed that cost takeout and optimization requirements were in high demand in the prevailing macro environment. Digital transformation continued to be a priority, along with more integrated use of cybersecurity, cloud, AI and analytics. Business development has now been enhanced by the use of hyper-automation and virtual experiences as the new strategies for optimization.

 

II. BUSINESS PERFORMANCE

Financial Markets

Our continued focus on key areas of high domain competence propelled us through FY 2022-23 as our business model provided our clients with a resilient and effective partner. Business growth continued at a torrid pace as the team closed new opportunities throughout our core, mid-sized, and new clients. Across our mid-size and core clients, we saw outsized growth in several clients as our offerings resonated deeply with their roadmap and business requirements. New clients acquired in the prior year saw additional growth driven by the successful delivery of the initial functions outsourced to us. Onshore delivery grew significantly as our domain strength created regional opportunities to provide onshore talent in functional areas where we provide BPO services. Our finance and accounting group provided exceptional growth through expansions with current clients and new logos. Our technology footprint across automation and analytics continued to expand and often led sales as clients found benefit in our technology offerings throughout our key areas of domain strength.

 

Digital

Our Digital clients experienced a more traditional trading environment this year and continue to prioritize their direct channels as customer have normalized to these purchase preferences. The fashion and luxury industry sector experienced high growth in this fiscal year and drove increased demand in creative production and CGI service lines. Business-to-business client demand was strong as the Industrial & Manufacturer sector continued to be over-invested in their marketing technology and digital customer experience. The digital divisions of our BFSI clients placed more investment in their digital channels as they move away traditional branch network model post Covid. The high technology sector experienced a conservative outlook as the demand for technology products were down YoY. Overall, there was enough industry tailwinds to deliver moderate growth for the Digital division.

 

Customer Operations

FY23 continued to see high demand for solutions, services and automation across many industries as macroeconomic financial pressures impacted both prospective and existing clients. Given our robust capabilities in providing services to meet these demands, we have maintained our strong growth. Most of the growth came from North America, which has a dominant share of our business, and Emerging clients. We saw very good traction for our services around Field Tech Operations and Customer experience. Over the course of the fiscal year, we were recognized by one of our key clients, winning Most Insightful Partner and Most Valuable Partner. This was a huge achievement given the level of competition we faced and a strong testament to the value we provide one of our longest-standing partners. Additionally, we also gained new clients in the pharmaceutical, streaming, and telecom industries, helping ensure that we maintain a strong and diverse portfolio as we look forward to the future.

 

Technology absorption and Research and Development Centre

We continue to invest in developing technology solutions that enrich the value of our services and enable new service delivery. Our R&D centre is helping us to keep up with the evolving technology landscape and also to incorporate the capabilities of cutting-edge technologies into our products and services.

Our domain-specific applications help us to provide differentiated services to our clients, strengthening our position as a specialized service provider. While Robotic Process Automation and AI/ML based automation focus continues to be relevant, we increased usage of on low-code/ no-code platforms in delivering solutions. We now have partnerships with multiple platform providers to build capabilities and capacity to operate on these platforms. Launching a major initiative on Generative AI, the company has developed an orchestration platform that brings together the capabilities of various Generative AI models into a single framework that can be accessed by all internal platforms and users. This platform gives the company a major capability to use Generative AI for all the work that we deliver on Content, Conversational AI, Image and driving productivity in code automation. With all these capabilities, we are adding innovative features into all our platforms, including Compliance Manager, Market360, Fluiid4, DocIntel, Merchandiser+ and Workforce Manager. Our products continue to win accolades in national and international forums such as NASSCOM, CIO, CSO and leading industry publications. We continue to work with IIT Delhi’s Technology Innovation Hub (IHFC) on join research and development initiatives, and with industry forums like NASSCOM to share our experience and to learn from peer firms.

 

Infrastructure

The Infrastructure team continues to invest and continuously upgrade our perimeter and internal security infrastructure so that we can support the growing headcount in the ongoing hybrid delivery model. At the end of March 2023, the Company’s offshore facilities had a total capacity of around 11,500 seats across India and Philippines. With the hybrid model of work from home and office, the company’s growth has decoupled from seat capacity to a certain extent.

We continue to invest in newer technologies to improve our security posture, which included rollout of WAF, Cyber threat intelligence tools, Deep Security and Vulnerability Management for Servers, IAM/PAM and web proxy and application security tools.

Today, the Company runs a Secure Anywhere Anytime (SAA) model which complies with our MSA commitments and gives employees a flexibility to switch from Work from Office to Work from Home.

Harnessing Talent

We on-boarded Oracle’s HRMS platform – a massive global change management exercise involving new HR Technology and transformation in areas of recruitment, leave and attendance, learning, skill repository, HR AI and Analytics, chatbot, surveys, R&R and communities integration – which is supported by a new mobile experience for employees. The firm-wide scope of this deployment ensures seamless flow of information and tool integration / plug-ins, in partnership with eClerx’s Tech team.

To drive engagement, we leveraged people analytics to re-imagine our careers program – with emphasis on cultivating domain expertise across prioritized industry horizontals. Through our lateral careers framework, we offered our people the opportunity to expand their roles and responsibilities, enabling for growth within their current positions. Our new online platform transparently showcases opportunities available across the firm that one could prepare for and apply. We have had 500+ such lateral career movements within the firm, along with a slew of other growth opportunities to take on leadership roles.

The overall representation of women in eClerx’s global workforce increased from 30% to 37% over the past 5 years – on the back of a number of custom program for our women employees. In 2022-23 specifically, we launched a program on ‘Tech Learning for Women’ – to introduce our non-tech women employees upskill on fundamental technical domains, and accelerate the expertise of women already in tech roles, to take on even more complex assignments in areas like AI, ML and RPA.

On talent acquisition front, we strengthened partnership with campuses across the country via MOUs. In 2022-23, as we onboarded employees in areas of technology, analytics and industry domain for our digital, customer operations and financial markets businesses.

High NPS for our learning programs was testimony to the quality of learning opportunities we offered to our people. We partnered with the University of Toronto for a certification program on Low Code/ No Code and had 2000+ employees upskill on this emerging new technology. We extended our partnerships with leading online learning platforms and created digital learning paths on our learning systems for several niche technologies.

 

III. OUTLOOK

Financial Markets

Although the financial markets environment has shifted in the past twelve months, we continue to see significant market opportunities. Adding new logos over the past two years has provided fertile ground for growth within our current client base, and our deep legacy clients continue to look to us for additional areas to partner with them. Our finance and accounting group enters the new fiscal year with phenomenal momentum, showing no slowdown in acquiring and providing the highest level of service to new clients, which should support their continued aggressive growth trajectory. Onshore delivery work continues to power forward and should offer another solid engine for the financial markets group for the coming fiscal year. Our investments in technology to provide clients with greater efficiencies have built a steady pipeline of opportunities, which we expect to produce new revenue streams. Continuing our hyper-focus on delivery across the complex book of work we manage for our clients will provide the confidence our clients require to expand their relationship with eClerx.

Digital

The outlook remains strong for digital services as we enter this next fiscal year. Client demand in our fashion and luxury sectors continues and our increased presence in Milan and Paris will follow the industry growth. In the Industrial & Manufacturer sector, product data enrichment and marketplace analytics are expected to see continued demand. The high technology sector should see recovery after a challenging down budget cycle in 2023. Geography wise, we see APAC as an outperforming market with expansion into ANZ and increased capacity in Bangkok and Manila. Generative AI enabled solutions will advance from proof of concepts to core parts of our digital solutions and will usher in a new era of how we deliver services to our global clients.

Customer Operations

As we move into FY24, our strategy for Customer Operations is to continue diversifying our portfolio outside of cable, telecom, and broadband and drive growth in industries like pharma. We are seeing strong demand for our services and plan on expanding our client base, growing our current partnerships, introducing more productized services and managed solutions, and leveraging our technology and analytics to bring value to our clients and differentiate ourselves from the competition.

 

IV. OPPORTUNITIES, THREATS, RISK AND CONCERNS

Risk management is an integral part of the business. We have outlined the principal risks and uncertainties that could adversely impact the functioning of the Company through their effect on operating performance, financial performance, management performance and overall sustainability. The Company has an efficient Risk Management system in place to identify and address various risks that the Company may face. This system has made sure that the Company has an effective framework for identification, measurement, evaluation and mitigation of various risks. This Risk Management system is governed by the Risk Management Policy and monitored by Risk Management Committee. While our focus has been on highlighting likely adverse outcomes, many of these could also provide us opportunities if the outcomes happen to favour us. These risks include, but are not limited to:

Macro-economic risk	The Company derived over 91% of its revenues during FY 2022-23 from US and Western Europe. Challenging business and economic conditions including inflation, high interest rates, supply side challenges and geopolitical risks could impact business of our clients and thus may affect the Company adversely in a number of ways. The Company may witness loss of key projects or customers or a reduction in prices, in turn affecting financial performance.
Concentration risk	The Company derived 60% of its total revenues during FY 2022-23 from its top ten clients. Though the contribution of top clients has progressively reduced over the years, the concentration risk continues to be high. The Company’s profitability and revenues would be significantly affected in case of loss of any of these clients or a significant downsizing or insourcing. Further, any mergers or acquisition of or by any of such large clients could cause change in outsourcing strategy thus limiting our business with those clients.
Currency risk	The Company derived around 82% of its revenues in US Dollars, 10% in Euros, and 8% in Sterling and other currencies. Adverse movements in foreign exchange rates on account of global, regional or local events could have a negative impact on our financial performance.
Competition risk	New competitors may enter the markets the Company operates in. Likewise, current competitors could decide to focus more on these markets, and thereby intensify the competition. They could also offer new disruptive technologies or offer a different service model or offer similar services at reduced prices. Such developments could harm the Company’s business and results of operations.
Integration risks	The Company’s past or future acquisitions may pose challenges including financial, technological and people integration risks, which if not managed adequately, could result in failure to achieve the strategic and financial objectives of the transaction.
Key People risk	Our business is critically dependent on the quality of our workforce. Failure to attract, retain and motivate key employees would impair the Company’s ability to offer the right quality of service to clients.
Technological risk	With advancement of technology, artificial intelligence and robotics, the work volume for people-skill driven services might decrease or reshape significantly, and the Company might not be able to make transition to newer client demands or newer supply side models quickly.
Business disruption
	Business disruption following a major outage event or a failure of our IT systems could
due to IT system failure risk	cause a disruption in the Company’s services, thereby reducing client confidence.
Business disruption due to pandemic	Business disruption due to pandemic resulting in lockdowns, travel restrictions in specific regions, large absenteeism due to widespread infections could impact financial performance if our clients do not extend work from home approvals or decide to shift business to their own or competitor facilities that are still functional.
Legal and regulatory risk	The acquisition of Personiv has increased eClerx delivery locations both within and outside India, giving us additional options to strengthen business continuity plans to mitigate risk from business disruption events. Additionally, with pre-agreed strategies as work from home tied to MSAs, the option of business continuity during such an adverse event has been adequately managed.
Personal data and	There is increased sensitivity on the part of governments and regulators with
Privacy Risk	respect to personal data and privacy. Legislations like GDPR in Europe carry severe
	consequences for non-compliance or breach. Failure to comply with current and/
	or new regulations or inadequacy of privacy policies and procedures could result in
	substantive liabilities, penalties and reputational impact.
Risks from Work from home scenarios	Work from home scenarios could expose the company to additional risks related to security of network, data and endpoint devices and new employee health hazards. Any adverse event on this front could expose the company to reputational and financial risks. There could also be frequent power or internet disruptions at home without adequate redundancy, increasing the risk of missing client deliverables and SLAs, which could impact client business decisions vis-?-vis eClerx.
Business disruption due to Cyber	Business disruption following a Cyber security incident or targeted cyber-attack may render network, servers, storage and endpoints non-functional or partially functional.
Security Incident or	A cyber-attack denying an organization access to its electronic systems can cause
Cyber Attack	major disruption, with potentially serious financial and reputational consequences. Following a data breach, an organization can also suffer loss of production, sales and customers as networks and websites are taken offline and repaired; thereby reducing client confidence and organization may be subject to litigations. While the organization has beefed up security processes and have made significant investment in security technologies at network, server infrastructure and end- point level, any cyber incidents emanating due to inherent vulnerabilities, advanced ransomware, unknown/zero day exploits, targeted attacks, disgruntled employee, etc. may bypass cyber security defenses causing a disruption in the Company’s services, thereby reducing client confidence.

 

V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place an adequate system of Internal Controls which commensurate with the nature of business and size of its operations. The system is designed to adequately ensure that financial and other records are reliable for preparing financial statements and for maintaining accountability of assets. The Company has a strong and independent internal audit function which carries out regular internal audits to test the design, operations, adequacy and effectiveness of its internal control processes and also to suggest improvements and upgrades to the management. The Audit Committee reviews the adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of the recommendations.

 

VI. CONSOLIDATED FINANCIAL PERFORMANCE

The financial statements of your Company are prepared in compliance with the Companies Act, 2013 and Indian Accounting Standards (‘IndAS’). The Group’s consolidated financial statements have been prepared in accordance with the principles and procedures for the preparation and presentation of consolidated accounts as set out in the IndAS 110 on ‘Consolidated Financial Statements’.

The following discussion and analysis should be read together with the consolidated IndAS financial statements of the Company for the financial year ended March 31, 2023.

 

i. RESULTS OF OPERATIONS

The following table gives an overview of consolidated financial results of the Company:

Particulars	2022-23	%	2021-22	%
Revenue from	26,478.97	97.57	21,603.45	98.87
Operations
Other Income (net)	659.51	2.43	246.18	1.13
Total Revenue	27,138.48	100.00	21,849.63	100.00
Employee	15,095.25	55.62	11,955.37	54.72
benefits expense
Cost of technical	1,106.35	4.08	824.83	3.78
sub-contractors
Other expenses	3,055.22	11.26	2,217.43	10.15
Total Operating	19,256.82	70.96	14,997.63	68.65
Expenses
EBITDA	7,881.66	29.04	6,852.00	31.36
Finance Costs	211.62	0.78	215.20	0.98
Depreciation	1,140.14	4.20	1,031.93	4.72
and goodwill
amortisation
Profit before Tax	6,529.90	24.06	5,604.87	25.65
Taxes	1,638.09	6.04	1,427.29	6.53
Minority Interest	3.61	0.01	3.57	0.02
Net Profit	4,888.20	18.01	4,174.01	19.10
attributable to
shareholders

 

a. Income

Income from operations

Income from operations increased to Rs. 26,478.97 million in the year under review from Rs. 21,603.45 million in the previous year registering a growth of 22.57%.

 

Other income

Other income primarily comprises of foreign exchange gains, interest on bank deposits and dividend from debt oriented mutual funds. The total other income increased to Rs. 659.51 million in the year under review from Rs. 246.18 million in the previous year.

There was a Foreign exchange gain of Rs. 340.90 million due to revaluation and realisation of foreign currency denominated assets and liabilities in the year under review compared to gain of Rs 82.82 million in the previous year. The gain has been accounted in other Income.

Income from investments Increased to Rs. 230.39 million in the year under review from Rs. 134.94 million in the previous year primarily due to higher yields on investments and bank deposits.

 

b. Expenditure

Operating expenses comprises of employee costs, software product development expenses, cost of technical subcontractors and other general and administrative expenses. The total operating expenses increased to Rs. 19,256.82 million in the year under review from Rs. 14,997.63 million in the previous year.

Employee costs increased to Rs. 15,095.25 million in the year under review from Rs. 11,955.37 million in the previous year, primarily due to increase in head count, annual increment in salaries and higher sales linked incentives.

Other expenses increased to Rs. 3,055.22 million in the year under review from Rs. 2,217.43 million in the previous year. The Increase was primarily due to:

— Increase in travel expenses by Rs. 238.40 million since travel for the previous year was lower due to global pandemic.

— Increase in housekeeping, security costs, electricity, rent rates and taxes and office related expenses by Rs. 109.18 million, employee conveyance costs by Rs. 65.43 million, computer consumables and subscriptions by Rs. 186.18 million and business promotion and advertising costs by Rs. 228.83 million due to increase in operations as compared to previous year.

— Legal professional fees increase by Rs. 5.84 million during the year.

 

c. Depreciation

Depreciation charge has increased to Rs. 1,140.14 million in the year under review from Rs. 1,031.93 million. The depreciation on right of-use asset increased to Rs. 406.01 million from Rs. 383.94 million and on tangible and intangible assets increased to Rs. 734.13 million from Rs. 647.99 million in previous year primarily due to higher capital investment in work from home computer equipment.

 

d. Finance cost

Finance cost primarily on ROU assets has decreased marginally to Rs. 211.62 million in the year from Rs. 215.20 million in the previous year.

 

e. Income Tax Expense

The Company’s consolidated tax expense (including deferred taxes) increased to Rs. 1,638.09 million in the year under review from Rs. 1,427.29 million in the previous year due to higher profit before taxes.

 

ii. FINANCIAL CONDITION

a. Share Capital

The Company has authorised capital of Rs. 1,000.00 million as on March 31, 2023. The issued, subscribed and paid up capital was Rs. 480.34 million of equity shares of Rs. 10 each in the year under review as compared to Rs. 330.98 million in the previous year. The change in paid up capital was primarily due to bonus issue, buyback of shares and sale/ purchase of shares by eClerx Employee Welfare Trust which is eliminated from the share capital of the Company.

 

b. Other Equity

The reserves and surplus of the Company increased to Rs. 16,668.37 million in the year under review from Rs. 15,344.94 million in the previous year. Increase in other equity is primarily on account of:

— Addition of retained earnings and other comprehensive income by Rs. 4,874.16 million in the year under review.

— Decrease of Rs. 214.23 million in hedging reserve on account of negative movement in cash-flow hedges.

— Increase in foreign currency translation reserve from translation gains on assets of overseas subsidiaries by Rs. 483.81 million.

— Reduction in retained earnings on account of buy back of shares by Rs. 3,633.81 million and payment of dividend Rs. 33.11 million.

 

c. Right of Use Lease liabilities

Long term ROU lease Liabilities were Rs. 1,501.92 million as on March 31, 2023 (March 31, 2022 : Rs. 1,264.84 million) and short term ROU lease Liabilities were Rs. 423.81 million (March 31, 2022 : Rs. 364.99 million).

 

d. Derivative instruments

Company covers foreign exchange fluctuation risk through hedging instruments as per board approved policy. Derivative instrument fair valuation is accounted through Other Comprehensive Income. As at March 31, 2023 derivative instrument fair valuation liability was Rs. 123.42 million compared to fair valuation assets of Rs. 162.86 million as at March 31, 2022. The decrease is due to unfavourable marked to market movement against the hedged currency rates.

 

e. Borrowings

Borrowings by subsidiaries have increased to Rs. 9.85 million in the year under review from Rs. 1.41 million in previous year, due to additional working capital loan taken by subsidiary in Italy.

 

f. Employee Benefit Obligations

Employee Benefit Obligations which includes gratuity, leave encashment, sales incentives and other employee benefits, increased to Rs. 1915.66 million in the year under review from Rs. 1,831.75 million in previous year primarily due to increase in head count, higher sales incentives and additional employee retention bonus plans.

 

g. Trade Payables

Increase in trade payables to Rs. 180.47 million in the year under review from Rs. 116.55 million in the previous year primarily due to increase in creditors of overseas subsidiaries.

 

h. Other financial and current liabilities

Other financial and current liabilities include unpaid dividend, advance billing, accrued expenses and payables for capital expenditure and statutory dues, which have increased to Rs. 1,301.40 million in the year under review from Rs. 1,096.40 million in the previous year primarily on account of increase in accrued expense.

 

i. Fixed Assets

The net block of fixed assets and capital work in progress and other as at March 31, 2023 was Rs. 2,443.79 million as compared to Rs. 2,199.75 million as at March 31, 2022. During year under review, addition to gross block (net off disposals) was Rs. 578.98 million comprising of computer hardware and software, office equipment and addition to leasehold improvements.

Goodwill on consolidation on account of foreign subsidiaries was at Rs. 3,959.83 million as at March 31, 2023 as compared to Rs. 3,753.47 million as at March 31, 2022. The movement is on account of translation of foreign currency goodwill in subsidiaries to INR.

 

j. Right of Use Assets

ROU Assets as on March 31, 2023 is Rs. 1,529.60 million as compared to Rs. 1,194.08 million as on March 31, 2022.

 

k. Investment

Investment represent Non-Current investment of Rs. 123.27 million as at March 31, 2023 as compared to Rs. 19.58 million as on March 31, 2022.

Current Investment represent surplus funds of the Company parked with mutual fund schemes that can be recalled at very short notice.

The Company’s treasury practices call for investing only in highly rated debt oriented mutual funds. Investment in mutual funds increased to Rs. 2,621.79 million during the year under review from Rs. 1,939.21 million in the previous year due to higher investments made in mutual fund during the year under review.

 

l. Trade Receivables

Debtors increased to Rs. 4,404.87 million as at March 31, 2023 from Rs. 3,292.71 million as at March 31, 2022. These debts are considered good and realisable and provision for doubtful debts has been made based on expected credit loss model based on various factors, including collectability of specific dues, economic condition of the industry in which the customer operates and general economic factors that could affect the customer’s ability to settle. The Company monitors trade receivables closely.

 

m. Cash and Other Bank Balances

Cash and other bank balances mainly represent bank balances in current and fixed deposit accounts due to increase in short term deposits placed with the banks. The cash and other bank balances decreased to Rs. 4,279.29.43 million as on March 31, 2023 from Rs. 4,936.43 million as at March 31, 2022 due to increase in investments made in mutual funds.

 

n. Other financial assets

Other financial assets include unbilled revenue, premises and other deposits, recoverable expenses and other loans & advances. Other financial assets increased as at March 31, 2023 to Rs. 1,974.36 million from Rs. 1,760.35 million as at March 31, 2022.

 

o. Other current and non-current assets

Other current and non-current assets include capital advances and GST credits, duty benefit credits, prepaid expenses and other advances. Other current & non-current asset decreased as at March 31, 2023 to Rs. 465.45 million from Rs. 664.80 million as at March 31, 2022 due to realisation of Service Exports from India Scheme Licence_("SEIS") receivables.

 

p. Deferred Tax assets/liabilities

Deferred tax assets and liabilities represent timing differences in the financial and tax books arising from depreciation of property, plant and equipment, compensated absences, & gratuity and derivative financial instruments. The Company assesses the likelihood that the deferred tax will be adjusted from future taxable income before carrying it as an asset or liability. The Company has a net deferred tax asset of Rs. 402.97 million as at March 31, 2023 as compared to Rs. 232.58 million as at March 31, 2022. The increase is primarily on account of additional deferred tax asset created on loss in derivative financial instrument assets and liability for compensated absence in the current financial year.

 

q. Income Tax assets / liabilities

The Company’s profits are subject to tax in the various jurisdictions where the Group conducts business operations. The non-current tax assets primarily represent payments of tax demands which have been contested and under appeals and refunds receivable. Current tax labilities primarily comprise of tax provisions made in end of the year for which payment is not yet due.

Income tax assets (net) increased to Rs. 138.89 million in the current year from Rs. 41.26 million in the previous year.

 

iii. CASH FLOWS

The Company’s cash flows from operating, investing and financing activities, as reflected in the consolidated statement of cash flow, is summarised in the table below.

 

Summary of cash flow statement:

Particulars	2022-23	2021-22
Net cash generated by/ (used in)
Operating activities	4,925.74	4,439.61
Investing activities	(843.95)	379.83
Financing activities	(4,400.68)	(4,163.39)
Effect of Exchange fluctuation on
	295.94	56.77
Cash and Cash Equivalents
Net increase/decrease in cash
	(22.95)	712.82
and cash equivalents
Cash and cash equivalents at the
	4,203.02	3,490.20
beginning of the year
Cash and cash equivalents at the
	4,180.07	4,203.02
end of the year

 

Cash flow from operations improved due to increase in profit from operation and reduction in net working capital in current year compared to previous year.

The Company had net redemption of investments in the current year as compared to previous year.

Increase in Cash used in financing in current year was primarily towards buyback of Company’s shares as compared to previous year.

 

iv. KEY FINANCIAL RATIOS (BASED ON CONSOLIDATED FINANCIALS)

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment)

Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios.

Ratios	2022-23	2021-22	Change %
Market capitalisation to	2.40	3.71	-35.31%
revenues (times)
Price/Earnings (times)	13.15	12.75	3.13%
Days sales outstanding	80	75	7.96%
Liquid cash as a % of	30.17%	33.22%	-9.19%
total assets
Current Ratio (times)	3.92	4.21	-6.92%
Revenue growth (%)	22.57%	38.09%	-40.74%
Operating Profit Margin	22.17%	24.80%	-10.62%
Net Profit Margin	18.03%	19.12%	-5.72%
Return on net worth	28.50%	26.63%	7.02%
Diluted EPS (INR)	97.15	81.05	19.88%

 

Market capitalisation to revenues has decreased on account of increase in revenues for the current year by 23% combined with a reduction in share price of the Company by 18% due to general market conditions. Decrease in revenue growth rate in the current year is primarily on account of previous financial year having the impact of revenues from acquisition done during that year. Movements in the other ratios are not greater than 25% and have remained relatively stable.

 

VII. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS

The talent acquisition market has changed dramatically in a post-pandemic world. We mobilized diverse set of hiring channels and leveraged automation technologies and analytics to focus on quality of talent and velocity of hiring across our businesses. We reimagined application and on boarding processes into a single, holistic experience – one that integrates talent branding, recruiting, and on-boarding.

To bridge the skills gap, as part of our talent acquisition strategy, we launched the eClerx Talent Academy under which we hired professionals with strong fundamental and pre-requisite skills and upskilled them on core and advanced technologies. Our Talent Academy model has allowed us to keep a strong pipeline of ready-to-deploy resources for new business opportunities – whilst supplementing recruitment efforts with a higher level of control and predictability.

Talent engagement continues to address hybrid workforce through utilizing various digital platforms. Employees are regularly updated about their contributions through leadership connects. Immersive virtual and hybrid events enabled us to keep our organizational culture alive and team morale high, connecting our teams at scale via innovative and engaging platforms.

We are building synergies between HR platforms, wherein we invested heavily last year, and our processes to further enhance experience amongst our global workforce.

Employees Overall Wellbeing, being an area of focus had initiatives around employees mental and physical wellness, including 24x7 medical assistance and counselling support. Such employee reach-out initiatives were very well received by our employees.

On the learning front, keeping an eye on the future learning needs of our managers operating in a hybrid environment, we crafted a definitive people management learning journey that enabled contextualized application and reflection, whilst ensuring learning delivery is scalable and accessible. We facilitated technology learning on a slew of in-demand applications, from Python Web-Scrapping to Full Stack Development, Salesforce Marketing Cloud and Workfusion. Alteryx, a Low Code No Code platform, was the skill of the year, where employees were trained and certified.

 

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations may be ‘forward-looking statements’ within the meaning of applicable Securities Laws and Regulations. Actual results could defer materially from those expressed or implied. Important factors that could influence the Company’s operations include economic developments within the country, demand and supply conditions in the industry, changes in Government Regulations, Tax Laws and other factors such as litigation and labour relations.

Readers are advised to exercise their own judgment in assessing risks associated with the Company, inter-alia, in view of discussion on risk factors herein and disclosures in Regulatory filings, as applicable.