niit ltd Management discussions

Company Overview

NIIT is a leading Global Talent Development Corporation that is engaged in building skilled human capital and enhancing workforce talent worldwide. Set up in 1981 to help the nascent IT industry overcome its human resource challenges, the Company ranks among the worlds leading training companies today. With a footprint in over 30 nations, NIIT offers training and development solutions to enterprises and individuals. NIIT addresses these customer categories through its two distinct business groups — Corporate Learning Group (CLG) and Skills & Careers Group (SNC)._

Table 1: NIIT - Business Groups

	Corporate Learning Group (CLG)	Skills & Careers Group (SNC)
FY22 Revenue	Rs. 11,310 Mn	Rs. 2,465 Mn
Contribution to Consolidated Revenue	82%	18%
Focus Geography Offerings	North America, Europe, Oceania	India, China, Africa
	• Managed Training Services	• Deep skilling in Technology covers RPS offerings as well and Others Service Sector Skills
	• L&D Transformation Services	• Talent Pipeline as a Service
	• Application Rollout Training	• Sales Enablement
	• Consulting & Advisory	• Professional Life Skills
	• Talent Transformation Solutions

> Corporate Learning: This business offers Managed Training Services (MTS), which includes outsourcing of Learning & Development (L&D) and Talent Transformation Services to market-leading companies and institutions in North America, Europe, Asia, and Oceania. The comprehensive suite of MTS includes custom curriculum design and content development, learning administration, learning delivery, strategic sourcing, learning technology, and advisory services. L&D Transformation Services include augmented reality / virtual rea l ity-based learning solutions, curriculum transformation, and portfolio optimization. With a team of some of the worlds finest learning professionals, CLG helps customers run training like a business by improving the efficiency and effectiveness of their L&D and Talent Management functions.

Skills & Careers: This business offers a diverse range of training programs, certifications, and solutions to career seekers and working professionals. Its curricular offerings include software and product engineering, data sciences & analytics, cloud computing, cybersecurity, banking, insurance & finance, digital marketing, content design, UI/UX, project/product/ program management, sales & service excellence, professional life skills, business process excellence, and multi-sectoral vocational & professional skills. The comprehensive program catalog includes over 2,000 courses on emerging technologies from 30 global technology partners including Microsoft, Red Hat, VMWare, Citrix, Dell EMC, Google, AWS and ISC2 among others. SNC offers these programs predominantly in India and emerging economies. The programs are delivered through robust digital and hybrid learning models, which connect corporate and individual learners seamlessly. With its comprehensive set of offerings, SNC helps in building multi-skilled full stack professionals at scale.

NIIT Learning Systems Limited (NLSL): NLSL, formerly known as MindChampion Learning Systems Limited, is NIITs wholly owned subsidiary. The company provides technology- based solutions for learning and education management to institutions across India. The focus here is on improving the effectiveness of school education and the academic performance of students.

Environment and State of the Industry After a sharp decline in calender year 2020, the global economy rebounded sharply in 2021. This was driven by the success of vaccination drives, which have covered substantial parts of the population globally, a pick-up in economic activity and international trade as severe lockdowns were lifted, as well as supportive fiscal and monetary policies across major economies despite multiple waves of the pandemic that disrupted economies from time to time. However, as the world enters the third year of the pandemic, the world is going through a phase of exceptional uncertainty caused by new variants of the virus, unprecedented supply chain bottlenecks leading to high inflation in labor, food, and commodity prices, even as major economies are forced to roll back stimulus measures, tighten money supply, and increase interest rates to counter the imbalances during the previous two years. This is further compounded by the war in Europe.

The Russia-Ukraine conflict has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict is expected to contribute to a significant slowdown in global growth and also add to inflation. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are the key areas to be looked upon.

The International Monetary Fund (IMF) expects growth to slow from an estimated 6.1% in 2021 to 3.6% in calendar years 2022 and 2023. The forecasted global growth is expected to decline about 3.3% beyond 2023 over the medium term. War-induced commodity price increases and broadening price pressures have led to inflation projections of 5.7% in advanced economies and 8.7% in emerging markets and developing economies for 2022.

Over the last two years, Covid-19 resulted in the compression of digital adoption expected over the next several years into a few months. Businesses accelerated their digital transformation not only to ensure continuity but also to take advantage of this trend. As economies emerge from lockdowns, hybrid models are emerging as the new normal.

Overall consumption of corporate training, which had seen a sharp declining trend in FY21, stabilized during FY22. The prevailing economic uncertainty may impact the recovery of spends in the near term and slow down decision-making. However, increasing complexity, demand for new skills, and demand for greater accountability on spends are expected to continue to drive companies to partner with specialist learning services providers to achieve greater efficiency and effectiveness of spends.

Indias GDP growth rebounded to 8.7% in FY22, after contracting 6.6% in FY21. The RBI expects growth to remain robust at 7.2% in FY23 despite global economic headwinds. FY22 witnessed record hiring by the IT/ITES industry as the demand for digitalization resulted in strong volume growth for the industry, leading to a war for talent. Net hiring for FY22 is estimated to be about 445 thousand. The Banking industry also saw robust demand with an estimated addition of about hundred thousand employees during the year. The demand for new age skills is expected to lead to a continued requirement for upskilling and retraining for new entrants as well as working professionals, though there may be some volatility in new hiring due to the expected economic slowdown.

Buyback of Shares

NIIT completed the second buyback from the proceeds of the divestment of its holding in NIIT Technologies Limited as per the schedule in May 2021. The buyback was announced

in December 2020 at the earliest possible opportunity, after the completion of the regulatory waiting period of 12 months following the completion of the previous buyback. The second buyback was for 9,875,000 shares (representing approximately 6.97% of the outstanding shares) of NIIT at a price of Rs. 240 per share (the price for this buyback was at a 92% premium to the previous buyback price of Rs. 125 per share) and saw over 5x subscription from the shareholders.

Utilization of Proceeds from Divestment of NIIT Technologies:

Transaction Proceeds	Rs. 20,204 million
LESS: Transaction-Related Costs	Rs. 365 million
LESS: Transaction Tax	Rs. 1,512 million
LESS: Debt Repayment	Rs. 1,777 million
LESS: Prudent Reserve for Indemnity	Rs. 2,222 million (11% of Transaction Proceeds)
Net Cash Available from the Transaction	Rs. 14,328 million

Cash Utilization for Rewarding Shareholders:

Rewarding Shareholders
Dividends (including applicable taxes)	Rs. 2,648 million
Buyback 1 (including applicable tax)	Rs. 4,130 million
Buyback 2 (including applicable tax)	Rs. 2,954 million
Total Amount Utilized for Rewarding Shareholders	Rs. 9,732 million

With this, the Company has utilized about 68% of the Net Cash Available from the Transaction for Rewarding Shareholders.

The above does not include the amount utilized in total dividend of Rs. 5.50 per share paid during FY22. This includes a Final dividend of Rs. 2.50 per share out of the profits of the Company for FY21 paid in September 2021, and Rs. 3.00 per share paid as Interim dividend paid in February 2022.

The balance cash gives NIIT a strong balance sheet and ample liquidity for building new capabilities and expanding its reach to help the Company move up to global leadership in the education and training market.

NIIT continues to evaluate all options to make judicious use of this liquidity. This includes various organic and inorganic investment opportunities, the liquidity required on the balance sheet to de-risk operations, especially given the disruption caused by Covid-19, as well as efficient ways to further reward the shareholders, along with steps to maximize growth potential to create bandwidth for growth.

Investing in Growth

The strong balance sheet and liquidity position give NIIT an opportunity to invest in accelerating growth of the Corporate

Learning business given the large opportunity ahead, as well as addressing the opportunity created by digital disruption in the SNC business. NIIT is actively seeking to invest in both organic and inorganic initiatives to add new capabilities relevant for its customers and to deepen its penetration into select customer segments/geographies.

The Company continued to invest in identified organic growth areas to accelerate growth by:

a) Continuing to invest in S&M for CLG, including investments for large deals

b) Investing in a dedicated team to enter the Higher Education sector for CLG

c) Ramping up S&M and Delivery teams for StackRoute and NIIT Digital

d) Creating and launching new products in digital skills Inorganic:

In addition to the above, the Company remains in active engagement with bankers in the US, Europe, and India to actively search and build a pipeline for inorganic opportunities. During the year, the Company acquired RPS Consulting to grow and strengthen its business. The Company continues to look for further opportunities to build new capabilities and expand access to desired market segments and geographies.

Acquisition of RPS Consulting

During the year, NIIT acquired a 70% stake in Bengaluru- based RPS Consulting Private Limited (RPS Consulting) for a consideration of Rs. 827 million (including post-closing adjustments). The transaction was closed on October 1, 2021. The remaining 30% shareholding will be acquired by NIIT from the promoters of RPS Consulting in subsequent two tranches based on the achievement of certain financial milestones and closing adjustments in terms of the transaction documents.

RPS Consulting is a leading provider of training programs on emerging digital technologies for experienced technology professionals, specifically addressing the needs of Global Systems Integrators (GSIs) and Capability Centers (GCCs) of large multinational companies.

RPS Consulting offers:

• Advanced technology training to experienced technology professionals for over 260 companies across key IT hubs in India, including Bengaluru, NCR, Hyderabad, Chennai, Pune, and Mumbai

• A comprehensive program catalog with over 2,000 courses on emerging technologies from 23 global technology partners (including Microsoft, Red Hat, VMware, Citrix, Dell EMC, Google, AWS, ISC², among others)

• Specialized training solutions on emerging digital technologies such as Artificial Intelligence / Machine Learning, Data Science, DevOps, Automation, and Cybersecurity

• A digital platform that enables real-world, hands-on virtual labs on a multitude of emerging technologies, supported by an extensive pool of over 700 certified mentors

The acquisition creates new opportunities for NIIT and RPS Consulting to deliver innovative learning solutions in emerging digital technologies, including Architecting and Engineering, Data Science, Cloud, Automation, and DevOps, to both working professionals and new hires. This acquisition will also help NIIT expand its Managed Training Services portfolio to include technology training as a Managed Service for its global customers.

Composite Scheme of Arrangement

FY22 has been a landmark year for the Company. Both CLG and SNC businesses have not only recovered from the pandemic but also emerged as leading players in their respective markets. The Company sees huge headroom for growth in both of these markets.

To address the next phase of growth in CLG and SNC, it is imperative that:

• Target customers get undivided attention and benefit of focus and clear positioning

• Businesses need greater agility, independent decisionmaking, and capital allocation tied to value creation for all its stakeholders

• NIIT has the necessary capital to support the growth ambitions of both businesses

NIIT believes that the creation of two independent companies can help the CLG and SNC businesses maximize and realize their true potential.

Based on the recommendations of the Special Committee, appointed by the Board, and advice from the experts engaged in the process, the Board of Directors approved the Composite Scheme of Arrangement which would result in CLG Business and SNC Business to be reorganized as separate publicly listed companies. The proposed scheme is subject to necessary statutory and regulatory approvals including the approval of the NCLT, SEBI, Stock Exchanges, shareholders and creditors. The proposed reorganization is under Section 230—232 and other applicable provisions of the Companies Act.

Under the Composite Scheme of Arrangement, all assets, resources, contracts and investments, including the subsidiary companies that form part of the CLG Business Undertaking, shall be transferred and vested into NI ITs wholly owned subsidiary NIIT Learning Systems Limited (NLSL). Further, the entire shareholding of NLSL held by NIIT shall be cancelled and every shareholder of NIIT shall receive one share of NLSL for each share of NIIT held by them. The shareholding of NLSL will be an exact mirror image for all shareholders of NIIT. Post the reorganization, NLSL shares would also be listed on NSE/BSE.

The demerger is expected to:

a) Help the leadership team to provide undivided attention to their respective customers

b) Simplify decision-making, capital allocation, and benchmarking with respective peers

c) Create further speed & agility to deal with competition and take actions that are in the best interest of their respective stakeholders

The planned Appointed Date for this reorganization is April 1, 2022. Post the approval by NCLT, the reorganization would be deemed to have happened from the Appointed Date. Both the companies would be adequately funded to pursue their growth agenda post the demerger. The process for the demerger is underway and expected to be completed in H1 of FY24.

Company Performance

The consolidated financials for FY22 are provided in Table 2. Table 2: Profit & Loss Statement

Rs. Million	FY22	FY21	YoY
Net Revenue	13,775	9,597	44%
Operating expenses	10,775	7,945	36%
EBITDA	2,999	1,652	82%
EBITDA%	21.8%	17.2%	456 bps
Depreciation & Amortization	577	595	(3)%
EBIT	2,423	1,057	129%
Net Interest Cost	33	79	(46) mn
Other Expenses/(Income)	(483)	(878)	395 mn
Forex Loss/(Income)	(12)	(3)	(9) mn
Exceptional Expenses/ (Income)	29	54	(25) mn
Profit before Tax	2,855	1,805	58%
Tax (Operational)	518	337	181 mn
Operational Profit after Tax	2,338	1,468	870 mn
Profit/(Loss) from Discontinued Operations	(39)	(31)	(8) mn
Non-Controlling Interests	(37)	(6)	(30 mn
Profit After Tax	2,262	1,430	58%
Basic EPS (Rs.)	16.8	10.1	67%

Net Revenue in FY22 was Rs. 13,775 million vs Rs. 9,597 million in FY21. Revenue was up 44% YoY. NIITs growth was driven by strong growth in both CLG and SNC businesses. CLG grew 35% YoY and contributed 82% to consolidated revenue for the year. The SNC business recovered smartly during the year. Financials of RPS Consulting acquired during the year have been consolidated from October 1, 2021. SNC grew 99% YoY with organic growth of 51% YoY. SNC contributed 18% to the total revenue for FY22.

NIITs recovery over the last two years has been driven by the transition to Digital, a strong addition of new customers,

and an increase in wallet share from existing accounts, which have offset reduced consumption of training by existing customers in CLG and exit from legacy business models in the SNC business.

The Operating Profit (EBITDA) for FY22 was 2,999 million, up 82% versus Rs. 1,652 million in FY21. The EBTIDA margin was 21.8% in FY22 versus 17.2% in FY21, an improvement of 456 basis points YoY. The improvement in margin was driven by a better product mix, higher productivity, savings due to shifting to digital, continuing work from home, improved leverage of fixed costs, as well as the impact of cost optimizations achieved during the year. Some of the savings in costs, including premise and travel-related expenses, are expected to normalize going forward.

The Company recorded a PAT of Rs. 2,262 million, leading to an EPS of 16.8 in FY22 versus Rs. 1,430 million in FY21.

A detailed discussion of NIITs business and performance is given in the subsequent paragraphs.

NIIT Business Highlights

^ In CLG, the Company signed 16 new global customers in FY22 for its Managed Training Services versus 9 added in FY21.

^ During the year, the company expanded 6 MTS contracts and renewed its contracts with 4 customers. The company has maintained a record of 100% renewals over the last two years.

^ NIIT ended FY22 with 66 MTS customers and a Revenue Visibility of USD 328 million (as compared to USD 287 million last year).

^ In SNC, the flagship offerings, StackRoute and TPaaS, continue to deliver strong growth. In FY22, they grew 137% YoY and contributed 41% to the overall revenue. ^ NIIT expanded its B2C digital learning program portfolio to address the deep skilling demand in digital skills. The new programs cover Full Stack Product Engineering, Big Data, Data Science and Analytics, Cloud Computing and DevOps, Cybersecurity and SecOps, 5G, and Game Development.

^ NIIT-trained professionals constituted about a 9% share of the estimated net hiring by the IT/ITES industry in FY22 through its B2C and B2B offerings.

^ In addition, NIIT trained about a hundred thousand technology professionals through its B2B offerings for working professionals.

Covid-19 Impact:

The spread of Covid-19 had caused a global economic slowdown during FY21. The disruption due to the pandemic had led to a sharp decline in the consumption of L&D through FY21. As economies recovered in FY22, driven by stimulus measures and the rollout of vaccinations, spend levels stabilized, albeit at lower levels, with pockets of recovery as companies started to focus on investing for growth.

The Company expects that as the economic activity picks up, there would be a normalization of consumption of L&D as well, although near-term economic uncertainty may prolong the recovery timeline. As companies scale back activity levels, the propensity to outsource is also expected to increase instead of adding fixed internal capacity.

Covid-19 restrictions compressed the adoption cycle for Digital products and services across industries, including Digital Learning. While learning delivery moved to 100% online over the last couple of years, it is likely to remain prominent even post Covid-19. A partial return to in-person trainings and hybrid work is expected to lead to some increase in travel and premise costs.

NIITs Response and Decisive Strategic Actions

NIIT responded to the crisis with agility and took decisive strategic actions, which prioritized safety and health for all stakeholders and ensured continuity of services for its customers. During the year, the Company took the following actions:

• Enabled 100% of the workforce to shift to work-from- home protocol ahead of lockdowns in respective countries

• Prioritized support for customers in ensuring the continuity of operations, as well as rapid transformation to meet the changing customer requirements

• Transitioned to digital delivery of learning on the NIIT Digital platform and ramped up digital customer acquisition

• Worked with focus and determination to launch new innovative offerings for existing customers, as well as aggressively approach new customer segments with emerging requirements due to the crisis

• Took strong steps for cash conservation, which is visible in strong collections and improvement in DSO

• Implemented strategies for cost rationalization across its businesses, which contributed to the expansion of margins

• Adopted strong and decisive measures for portfolio and cost rationalization

These actions ensured that NIIT was not only able to ensure continuity for its customers but also exceeded customer expectations, resulting in greater brand trust and strengthening of relationships with existing customers. The result of this is reflected in a 100% renewal rate over the last two years in the MTS accounts, as well as an increase in wallet share across both CLG and SNC businesses.

Corporate Learning Group

NIITs Corporate Learning Group provides Managed Training Services to Global Multinational Companies headquartered in North America and Europe.

Global spending on corporate training is estimated to be USD 370 billion per annum (Training Industry: 2019). Companies typically spend over 1% of their revenue on employee training (excluding the cost of employees in training). This represents over a thousand dollars per employee each year. About 70% of the spend is toward proprietary training so that employees can do their specific job or customers can adopt their products. This includes areas such as training on proprietary products, processes, and systems of respective companies. The majority of this spending is on the salaries of internal L&D staff. Balance spending is on buying off-the- shelf or standardized training from third parties.

All this training needs to be created, maintained, updated frequently for changes, and delivered to internal employees or customers. Companies employ dedicated L&D staff to do this, which is often underutilized. While training demand fluctuates, the cost is largely fixed. Training is not their core activity, and therefore their efficiency and effectiveness are not consistent.

CLG operates in this space and is an established leader in Managed Learning Services. NIIT can do this work significantly faster, better, and more efficiently compared to internal training organizations. In addition, NIIT brings unique capabilities that internal training organizations do not have and are not viable for them to invest in for captive use.

CLG helps its Corporate customers achieve strong benefits of reduction in cost and fixed head count for training, as well as move to a variable model (pay per use) while achieving substantial improvement in learning outcomes (including reduced time spent for upskilling, improved productivity, improved business results, including increase in sales).

Outsourcing of proprietary training is underpenetrated, with external spending on Learning Services at about $10 billion per annum which is less than 5% of the overall L&D spends. Currently, less than 250 out of the Fortune 1000 companies outsource training in any substantial way. This represents a large opportunity for your Company with significant headroom for growth.

The market for Managed Training Services is expected to grow substantially as companies focus on their core business, and training specialist companies demonstrate reliability and improvement in both efficiency and effectiveness of learning.

Learning and Development (L&D) is increasingly seen as a key enabler for business success. Therefore, global corporations are not only demanding greater accountability and efficiency on spending from their L&D function, but are also expecting L&D investments to lead to a measurable improvement in employee productivity and business outcomes.

NIIT offers innovative solutions under its Managed Training Services that help clients accelerate the business impact. NIITs team of learning professionals is helping the worlds leading companies transform their training function through training outsourcing services that reduce costs, add a measurable value, and increase the business impact, while allowing customers to redirect resources and energy into core business functions.

Global companies are increasing the use of technology, especially around augmented reality (AR) and virtual reality (VR), to drive L&D transformation. NIIT is taking the lead in helping companies in this area.

NIIT provides the following services to its customers:

• Custom Content and Curriculum Design

• Learning Delivery

• Learning Administration

• Strategic Sourcing

• Learning Technology

• Advisory Services

• Application Rollout Training

• L&D Transformation Services

• Talent Transformation Solutions

The strong value proposition, innovation, and excellence in customer service continue to be widely recognized. This is also reflected in the large number of industry recognitions and awards that NIIT received during the year.

NIITs Corporate Learning Business is focused on the following sectors:

• Technology & Telecom

• Energy & Commodities

• Life Sciences

• Banking, Financial Services, and Insurance

• Aerospace

• Higher Education (Market Entry)

Companies in the selected sectors are amongst the highest consumers of training in terms of amount spent on training per employee per annum. Also, a significant portion of the training spend is driven by regulation or high rate of change in the sector, making these training spends nondiscretionary.

The uncertainty and disruption caused by the pandemic led to a reduction in consumption of L&D by organizations, including some of NI ITs large customers. However, continuous investments in S&M and new capabilities helped CLG recover from the impact. Growth has been driven by new customer addition and an increasing share of wallet from existing customers.

CLG added a record 16 new logos in FY22. In addition, the Company secured 4 customer renewals and 6 scope expansions during the year. NIIT has been investing in building new capabilities. The increased velocity in contract wins and strong renewals are a vindication of this strategy. The year saw a further acceleration of new MTS contracts in Life Sciences, with the integration of Eagle Productivity continuing to help CLG make further inroads in the segment. CLG ended the year with 66 MTS customers. These are among the leading organizations across sectors.

NIIT further ramped up learning delivery for its real estate training contract in North America. NI ITs investments in digital learning and the digital platform ensured continued access to the program for aspirants wanting to be part of the real estate industry. A strong real estate market, the convenience of digital learning with proven outcomes, and investments in second careers led to strong uptake of these courses in FY22. Learner volume is expected to normalize in the coming year.

The ramp-up in new customers and expansion of scope for existing customers helped the Company achieve industryleading performance for its Corporate Learning business in FY22. Revenue in CLG grew by 35% YOY despite the continuing impact of Covid-19. The growth was 33% YoY in constant currency terms. The top 10 customers contributed about 61% of the CLG revenue in FY22, compared to 59% last year. The business achieved an EBITDA of Rs. 2,989 million, up 68% YoY. EBITDA margin expanded by 508 basis points to 26%.

Table 3: Financials for Corporate Learning Group

Rs. Million	FY22	FY21	YoY
Net Revenue	11,310	8,356	35%
Operating Expenses	8,321	6,572	27%
EBITDA	2,989	1,784	68%
EBITDA%	26%	21%	508 bps

Skills & Careers Group

NIITs Skills & Careers group provides a wide range of programs that deliver digital talent transformation for individuals and corporate customers. The Company provides these programs in India and selected emerging economies. NIIT leverages its presence in these markets to offer professional courses for young individuals and corporate learners, preparing them for careers in different industries, and for working professionals, who wish to upgrade their skills for career advancement. The business has transitioned to digital learning over the last two years.

Between StackRoute, RPS, and the enterprise business, NIIT has strong coverage of Global System Integrators (GSIs) - which are enablers of digital transformation, Global Capability Centers (GCCs) - which are early adopters of digital, and other leading organizations in India that have started on the path of digital transformation.

We now have a range of offerings for digital skills, including programs for 5G, Cloud Technologies, Cyber Security, Game Development, Data Science, and Full Stack Product Engineering, as well as programs in Digital Marketing, Business Development, and Virtual Relationship Management for the Digital Enterprise.

NIITs Skills & Careers business offers these programs to college students, fresh graduates, and working professionals in the Technology and BFSI industries. Even with a Gross Enrollment Ratio in higher education of 27.1%, India has over 38 million learners enrolled in over 40,000 colleges and 1,000+ universities. The enrollment is expected to cross 50 million by the assessment year 2025 (AY25). During the year, the IT/ITES industry witnessed strong hiring with a net addition of 445 thousand taking the total employment to 5.1 million. Banks witnessed a strong hiring demand, with over 1 00K employees added to the workforce in FY22. Banks in India have close to 1.5 million employees, with similar numbers in the Insurance and other Financial Services industries. Together, they represent a multi-billion market for technical and professional skills training per annum.

NIIT also provides innovative solutions to corporates in India to transform their talent, including deep skilling programs in technology, through its StackRoute initiative, and its new offering to provide companies with just-in-time, day-one ready professionals through its Talent Pipeline as a Service (TPaaS).

StackRoute

NIITs deep skilling initiative, StackRoute, which helps companies transform their existing talent, continues to receive a sustained and enthusiastic response from IT companies. StackRoute has now been adopted by several corporate customers to develop their top talent, including a leading global systems integrator and 2 of the top 5 IT services companies in India. StackRoute has achieved industryleading completion rates (over 10x of the industry average) and strong outcomes for its learners, resulting in improved recognition from employers and increased bill rates. During the year, NIIT strengthened its Digital transformation portfolio by adding programs in Data Sciences, AI/ML, Cloud Computing, Cybersecurity, and Digital Marketing to meet the accelerating employment growth at GSIs and GCCs, in addition to the Digital Startup Ecosystem.

RPS Consulting

NIIT acquired RPS consulting during the year. RPS offers upskilling programs in emerging digital technologies to working professionals, a segment that is seeing a strong demand due to digital transformation across businesses. RPS services over 250 customers and offers a portfolio of over 2000+ programs, including programs in partnership with leading technology OEMs such as Microsoft, AWS, Google Cloud, VMWare, RedHat, Citrix, Veritas, Symantec, (ISC)², etc. Financials from RPS were consolidated with NIIT from October 1,2021.

Talent Pipeline as a Service (TPaaS)

TPaaS is NIITs strategic initiative to address the changing talent requirements for the industry with a new model of delivering just-in-time, job-ready talent with an integrated offering of talent sourcing, training, and onboarding. NIIT offers TPaaS to leading companies in the BFSI and technology sectors.

Volumes were impacted in FY21 due to a sharp reduction in hiring in the first half of the year. However, there has been a sharp recovery in hiring by the IT/ITES industry as well as a resumption of hiring by BFSI during FY22. StackRoute and TPaaS grew 137% YoY in FY22 and contributed 41% to the SNC revenue.

NIIT has transitioned from its traditional learning delivery model in physical learning centers to digital learning. During FY22, the Company ramped up its investments in digital learning with a dedicated team and the rollout of new programs, which achieved tremendous outcomes for its learners. The average remuneration level of NIITs graduates from its new-age digital programs has been more than twice that of college graduates who get placed directly from college campuses.

SNC reported a revenue of Rs. 2,465 million versus Rs. 1,241 million last year. Revenue was up 99% YoY. Excluding inorganic initiatives, revenue was up 51% YoY with strong growth across its offerings. NIIT ramped up investments in digital learning during the year. Despite these investments, the Company was able to get back in the black, driven by growth. Margin improved 1,107 bps YoY.

Table 4: Financials for Skills & Careers Group

Rs. Million	FY22	FY21	YoY
Net Revenue	2,465	1,241	99%
Operating Expenses	2,455	1,373	79%
EBITDA	10	(132)	+ 142 mn
EBITDA%	0%	(11)%	1,107 bps

Key Awards and Acknowledgments

• NIIT earned 72 Brandon Hall Awards, including 51 awards for Excellence in Human Capital Management and 19 Excellence in Technology awards jointly with customers.

• NIIT was ranked #2 overall among the prestigious HRO Today Bakers Dozen for Learning and Development and named a Leader in the Nelson Hall Learning BPS 2021.

• NIIT won the "Best Skill Learning Company" award at the 11th Annual Indian Education Awards 2021.

• NIIT earned 3 Learning Technologies awards and 2 LPI Learning awards, including the Gold Learning Giveback award.

• NIIT was featured as a Training Industry Top 20 Company for Learning Services, Custom Content, IT Training, and Experiential Learning in 2021.

• NIIT IFBI won the "Training & Education Excellence Award" at Quantic India 3rd Annual BFSI Excellence Awards 2021.

• NIIT Limited won the ASSOCHAM Award for Building Sales and Service Capability Enabling Business at EduMeet 2021, the flagship event which honors excellence in the education and skills industry.

Consolidated Financials of the Company

The consolidated financial summary for FY22 is provided in

Table 5 below:

Table 5: Consolidated Statement of P&L for FY22

Rs. Million	FY22	FY21	YoY
Net Revenue	13,775	9,597	44%
Operating Expenses	10,775	7,945	36%
Personnel Cost	6,908	5,421	27%
Professional and Technical Outsourcing Expenses	2,319	1,502	54%
Purchase of Stock in Trade	131	109	20%
Other Expenses excluding Finance Costs	1,416	913	55%
EBITDA	2,999	1,652	82%
EBITDA%	21.8%	17.2%	456 bps
Depreciation & Amortization	577	595	(3)%
EBIT	2,423	1,057	129%
Net Interest Cost	33	79	(46) mn
Other Expenses/(Income)	(483)	(878)	395 mn
Forex Loss/(Income)	(12)	(3)	(9) mn
Exceptional Expenses/ (Income)	29	54	(25) mn
Profit Before Taxes	2,855	1,805	58%
Tax (Operational)	518	337	181 mn
Profit/(Loss) from Discontinued Operations	(39)	(31)	(8) mn
>Non-Controlling Interest	(37)	(6)	(30) mn
Profit After Tax Attributable to Equity Holders	2,262	1,430	58%
Basic EPS (Rs.)	16.83	10.09	67%
PAT %	16%	15%	152 bps

Pursuant to the Composite Scheme of Arrangement approved by the Board in January 2022, NLSL has been reclassified as continuing operations. As a result, the financials of NLSL have been restated as continuing operations with corresponding restatement in the previous financial year for like for like comparison.

Net Revenue

In FY22, the Company recorded revenue of Rs. 13,775 million, up 44% as compared to last year, despite the impact of the pandemic on the business. This was driven by 99% growth YoY in the SNC business and 35% YoY growth in the CLG business. Excluding the acquisition of RPS Consulting, SNC grew 51% YoY and overall revenue grew 37% YoY.

Operating Expenses

Operating expenses for FY22 were Rs. 10,775 million, up 36% YoY. Growth in expenses was lower than growth in revenue due to change in product mix, transition to digital learning, strong focus on costs, and continuing savings in premise & travel expenses.

Depreciation

For the year, the Depreciation and Amortization was Rs. 577 million compared to Rs. 595 million last year. This includes an amortization charge of Rs. 376 million on intangibles of Rs. 620 million recorded in consolidated accounts on purchase price allocation out of investment in RPS Consulting during the year. Depreciation has reduced over the last few years due to shift to an asset-light business model. Please see Notes 3, 5 & 6(ii) for details.

Net Other Income

The Net Other Income for FY22 was Rs. 433 million compared to Rs. 748 million in FY21. The details are given in Table 6 below:

Table 6: Other Income

Rs. Million	FY22	FY21
Treasury Income	427	796
Foreign Exchange Gain/(Loss)	12	3
Net Interest Income/(Expenses)	(33)	(79)
Other Exceptional Income/(Expenses)	(29)	(54)
Gain on Sale of Fixed Assets	1	12
Income from Interest on Tax Refunds	18	34
Miscellaneous Income	37	36
Net Other Income	433	748

Treasury income was down YoY due to the utilization of cash in rewarding shareholders during the year, leading to lower income, as well as a mark-to-market impact on fixed income investments due to rising interest yields.

Interest expenses of Rs. 33 million in FY22 include interest expense on loans of Rs. 6 million, interest expense on Right- of-Use Assets as per IND-AS 116 of Rs. 14 million, Bank & Other Financial charges of Rs. 13 million (net of interest income on other deposits).

Other Exceptional Expenses include expenses related to the Composite Scheme of Arrangement and inorganic initiatives during the year.

Profit/(Loss) from Discontinued Operations and Asset Held for Sale

The net result of operations from the skilling business of NI IT Yuva Jyoti Limited (NYJL), which is being serviced by NI IT Limited, has been reported as a separate line item in pursuance of IND-AS 105. The process for voluntary liquidation of NYJL has been completed. During the financial year 2021—22, NCLT vide its order dated February 25, 2022, read with the rectification order dated March 23, 2022, approved the dissolution of NYJL with effect from February 25, 2022. Consequent to the above, all the shares held by the Company in NYJL were canceled.

Taxes

The Company has provided for an amount of Rs. 518 million towards income tax at consolidated level as compared to Rs. 337 million in FY21. The provision for current year tax is net of Deferred Tax Asset (DTA) of Rs. 179.51 million, arising on completion of voluntary liquidation of NYJL. Accordingly, the effective tax rate for the year was 18.1%. Please see Note 23 for details.

Table 7: Detailed Analysis of Consolidated Balance Sheet at the End of the Financial Year 2021-22

Rs. Million	31-Mar-22	31-Mar-21
Sources of Funds
Share Capital	268	285
Reserves & Surplus	14,885	16,120
Shareholders Funds	15,153	16,404
Non-Controlling Interests	40	34
Secured Loans	49	210
Unsecured Loans	42	70
Loan Funds	91	280
Total Sources of Funds	15,283	16,717
Application of Funds
Net Fixed Assets (with CWIP)	3,615	2,864
Right-of-Use Assets	152	283
Deferred Tax Assets Net of Liabilities	293	152
Inventory	21	18
Cash & Equivalents	12,525	13,965
Trade Receivables	1,886	1,456
Other Assets	2,577	2,771
Other Liabilities	(5,623)	(4,491)
Lease Liabilities	(162)	(300)
Total Application of Funds	15,283	16,717

The analysis in this MD&A does not conform specifically to the Schedule III format. Numbers have been regrouped for analysis.

Share Capital

The Share Capital of the Company stood at Rs. 268 million, as compared to Rs. 285 million in FY21. The decrease is due to the buyback of 9,875,000 shares, which is partially offset by the issuance of 1,397,263 shares during the year on the exercise of Employee Stock Options.

Non-Controlling Interests

Non-Controlling Interests reflect the book value of equity owned by third parties in subsidiary companies. This increased from Rs. 34 million in FY21 to Rs. 40 million in FY22.

Reserves and Surplus

Reserves and Surplus stood at Rs. 14,885 million in FY22 compared to Rs. 16,120 million last year. Reserve & Surplus decreased primarily due to the impact of the buyback completed (Rs. 2,937 million) and the dividends paid (Rs. 734 million) during the year, net of the profit after tax for the year attributable to NIITs shareholders. Please see Note 12 for further information on changes during the year.

Loan Funds

As on March 31, 2022, the Gross Debt of the Company stood at Rs. 91 million versus Rs. 280 million in FY21. The Debt to Equity ratio of the Company was 0.02 as on March 31, 2022. The Company has Net Cash of Rs. 12,434 million compared to Rs. 13,685 million in FY21. Net cash decreased primarily due to the cash utilized for the buyback (Rs. 2,937 million), dividend payout (Rs. 735 million), and inorganic initiatives (Rs. 751 million net of cash received) during the year.

Fixed Assets

During the year, the Company had a total capital expenditure (including Capital Work in Progress) of Rs. 226 million.

The category-wise addition in fixed assets is given below:

a) New initiatives and products: Rs. 104 million

b) Project-related capital expenditure: Rs. 57 million

c) Normal capital expenditure: Rs. 65 million

The Capital Work in Progress as on March 31,2022, was Rs. 61 million, as compared to Rs. 50 million last year. This includes intangible assets under development.

Capital expenditure related to premise and other infrastructure has been lower than normal over the last two years due to work from home, strong focus leveraging existing infrastructure, higher adoption of cloud and transition to digital learning.

The Net Block stood at Rs. 3,615 million as on March 31, 2022, as compared to Rs. 2,864 million last year. The increase over last year includes the impact of acquisition of RPS Consulting during the year (primarily in Goodwill and Other Intangible Assets on purchase price allocation) and the capital expenditure net of depreciation and amortization.

Rs. Million	As on Mar22	As on Mar21
Property, plant, and equipment	1,471	1,448
Intangible assets under development	61	50
Investment property	1	1
Goodwill	1,179	355
Other intangible assets	902	1,010
Net Block	3,615	2,864

Right-of-Use Assets

Right-of-Use Assets as on March 31, 2022, stood at Rs. 152 million, as compared to Rs. 283 million last year. The amount has reduced due to rationalization of leased premises over the last two years owing to work from home and transition to digital learning.

Deferred Tax Assets/Liabilities

As of March 31 , 2022, the Deferred Tax Assets stood at Rs. 308 million. This is primarily due to the timing difference in the amount of provisions carried in the financial statements and allowed on actual write-off as per the income tax provisions.

Deferred Tax Liabilities increased from Rs. 13 million in FY21 to Rs. 15 million in FY22.

Rs. Million	As on Mar22	As on Mar21
Deferred tax liabilities	(15)	(13)
Deferred tax assets	308	165
Net Deferred Tax	293	152

Other Assets & Liabilities

The elements of Net Current Assets were as follows:

> Inventories

Inventories mainly comprise training materials including educational software and examination vouchers used by the Company for imparting training and certifications. The value of the inventory held by the Company is Rs. 21 million in FY22 versus Rs. 18 million in FY21.

> Trade Receivables

The total receivables of the Company as on March 31, 2022, were Rs. 1,886 million, as compared to Rs. 1,456 million as on March 31,2021. Days Sales Outstanding (DSO) improved from 55 last year to 48 as of March 31 , 2022. Your Company continues to lay strong emphasis on managing and optimizing the working capital cycle.

> Cash and Bank

The Cash and Bank Balances as on March 31, 2022, stood at Rs. 12,525 million compared to Rs. 13,965 million as on March 31,2021. During the year:

• Net Cash from Operations for FY22 was Rs. 2,898 million vs Rs. 2,261 million for FY21. The improvement is due to an increase in operating margins as well as increased efficiency in working capital.

• Net Cash from Investing activities for FY22 was Rs. (476) million vs Rs. 575 million for FY21. This is mainly due to the investment in RPS acquisition (Rs. 823) Mn in Q3 FY22 which offset the cash generated from treasury investments.

• Net Cash from Financing activities in FY22 was Rs. (3,861) million vs Rs. (979) million for FY21. This is primarily due to the buyback of 9.875 million shares in Q1 FY22, payment of dividends during the year and repayment of debt of Rs. 161 million. This was partially offset by the issuance of shares on exercise of ESOPs during the year.

Rs. Million	As on Mar22	As on Mar21
Investments	7,224	8,585
Bank Deposits	5,290	5,367
Checks and Drafts in Hand	-	1
Unclaimed Dividend	10	11
Cash & Equivalents	12,525	13,965

Other Assets

Other Assets include Capital Advance (Rs. 60 million), Interest Receivable (Rs. 109 million), Unbilled Revenue (Rs. 991 million), Other Receivables (Rs. 751 million), Advance Recoverable in cash or in kind (Rs. 212 million), and Advance Income Tax (Rs. 454 million). These have decreased from Rs. 2,771 million in FY21 to Rs. 2,577 million in FY22. Other Receivables include the receivables related to the Strategic Sourcing services that are part of the MTS offering. The reduction in Other Assets YoY is primarily due to lower Other Receivables related to the above.

Other Liabilities

Other Liabilities include Trade Payables, Other Financial Liabilities, and Provisions. These have increased from Rs. 4,491 million in FY21 to Rs. 5,863 million in FY22.

The increase is driven by growth business, acquisition of RPS Consulting, and volume of strategic sourcing services provided to customers. Please see Notes 13(ii), 13(iii), 14, 8(ii), and 15 for details.

Rs. Million	As on Mar22	As on Mar21
Trade Payables	1,251	911
Provisions	418	414
Statutory Dues	338	311
Deferred Revenue	802	720
Advances from Customers	351	227
Other Payables*	1,950	1,907
Future Acquisition Liability	512	-
Other Liabilities	5,623	4,491

*Other Payables include capital creditors, amount payable to employees, income tax liability,, and payables on account of Strategic Sourcing for customers.

Key Financial Ratios

The Company has identified the following as Key Financial Ratios:

Particulars	FY22	FY21	YoY
Revenue Growth (%)	44%	5%	3,850 bps
Operating Profit Margin (%)	22%	17%	456 bps
Net Profit Margin (%)	16%	15%	152 bps
Basic EPS (Rs)	16.8	10.1	67%
Operating ROCE	81.13%	34.62%	4,651 bps
Days Sales Outstanding (DSO) Days	48	55	(7) days
Debt to Equity Ratio	0.02	0.04	(53)%
Interest Coverage Ratio	68.74	18.18	278%
Current Ratio	2.94	3.70	(20)%

* Ratios may differ from reported ratios last year due to restatement of NLSL as continuing operations

Revenue growth has increased to 44% in FY22 as compared to 5% in FY21, driven by NI ITs 35% growth in ClG and 99% growth in SNC, which included the impact of inorganic initiatives. EBITDA Margin increased to 22% for the year vs 17% last year, driven by improved business mix, transition to digital, rationalization of costs, continuing savings in premise & travel expenses, inorganic investments, and improved leverage of fixed costs.

Net Profit Margin increased to 16% in FY22, as compared to 15% in FY21. The increase was primarily due to growth in the CLG business during the year as well as the return to profitability for the SNC business. Basic EPS, which is calculated by dividing net profit by the total number of shares outstanding, increased by 67% YoY. EPS growth was driven by an increase in profits as well as the reduction in the number of shares outstanding due to the completion of the buyback of shares during the year.

The operating ROCE of the business increased to 81% in FY22, as compared to 35% in FY21. Operating ROCE measures the efficiency of the net assets employed in the business, excluding cash balances. It is calculated as EBIT divided by capital employed in the business, excluding cash. Improvement in operating margins and continued control on capital expenditure and improved efficiency in working capital led to an increase in Operating ROCE for FY22, as compared to FY21. This is despite an increase in Goodwill due to the acquisition completed during the year. Your company continues to focus on remaining selective in capital allocation and investing in capital-efficient and asset-light business models.

Interest Coverage Ratio increased from 18.18 in FY21 to 68.74 in FY22, owing to an increase in EBIT in FY22 and a further reduction in outstanding gross debt compared to FY21. Current Ratio decreased to 2.94 versus 3.70 last year.

Current Ratio primarily decreased due to the utilization of cash toward inorganic growth and the return of excess cash to shareholders through the buyback and dividends during the year.

EBITDA margin, Debt to Equity ratio, and DSO have been explained in the relevant sections above.

The details of Return on Net Worth are mentioned below:

Particulars	FY22	FY21	YoY
Return on Net Worth (%)	24.55%	13.41%	1,114 bps

Return on Net Worth (RoNW) is computed as Profit after Tax divided by Net Worth. Net Worth represents the total of the Companys equity and reserves, excluding capital reserves, hedging reserves, and cumulative translation reserves. RoNW was 24.55% in FY22, as compared to 13.41% in FY21. While net profit increased by 58% to Rs. 2,262 million, Net Worth decreased to Rs. 9,215 million from Rs. 10,666 million in FY21. Net worth decreased primarily due to the utilization of cash for the buyback and the dividends paid during the year.

Accounting Policies

The Company has selected the accounting policies described in the Notes to Accounts, which have been consistently applied, and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31,2022, and of the Profit or Loss of the Company for the year. The significant accounting policies and practices followed by the Group are disclosed in Note 2 of the Consolidated Financial Statements for the year.

Related Party Transactions

Related Party transactions are defined as transactions of sale / purchase of goods / services made by the Company with Promoters, Directors, Key Managerial Personnel, Subsidiaries, Associates, or other parties in which Promotors or Director are having significant interest / control directly or indirectly, which may have potential conflict of interest with the Company. There were no material transactions during the year under review that were prejudicial to the interests of the Company.

All transactions covered under related party transactions were regularly ratified and/or approved by the Board, the guiding principles being arms length, fairness, and transparency. Please refer to Note 35 of the standalone financial statements and Note 33 of the consolidated financial statements for details of related party transactions during the year.

Human Resources

Across the pandemic-ridden landscape of FY22, which was still reeling from the impact of the second wave of COVID, NIIT was able to weather the challenges posed by the changed playing field. Human Resources (HR) leaders worked around the clock, taking the necessary measures to

keep NIITians safe while focusing on acquiring quality talent, infusing new talent immersion in the virtual set-up, equipping sales professionals to boost competence and drive sales outcomes, along with enhancing customer experience, tailoring learning journeys for NIITians to succeed in the new-found environment of virtual business continuity, and keeping the workforce engaged and enthused in the distributed, remote working model.

NIITs Vision Statement states that each one of us contributes to the process of organization building and thus derives pride and emotional ownership. During the year, HR continued to facilitate by empowering NIITians to trust, learn, innovate, excel, and overachieve even as the pandemic called the shots.

Significant spadework went into designing interventions that were key to an individuals success. From enabling managers to lead their teams virtually even as they built social capital and maintained cohesion in the stark absence of the informal corridor exchanges to strengthening the emotional skills and the adaptability and resilience of NIITians, all found their way into the agenda. Input sessions led by senior medical practitioners toward domestic caregiving, using medical accessories, unraveling the lines of treatment against the virulent COVID strains, handling grief and bereavement, et al. helped NIITians wade through the COVID onslaught and come out victorious. Leadership training for all managers and Service Excellence workshops for overseas geographies were the other hallmarks of the year.

In FY22, HR clocked in record-breaking hiring numbers, catering to the talent needs of the increasing digital learning engagements and the new logos that were signed up. The Company witnessed an interplay of continuous efforts to iterate strategic workforce planning to determine the right skills to fit into roles, processes to facilitate lateral growth, and succession planning.

HR continues to drive a high-performance culture throu gh data-driven, multi-dimensional performance evaluation and decision-making. The first half-year reviews were focused on developmental intervention with an exhaustive learning plan section introduced to ensure upskilling. Succession planning was added to AGILER, which is NIITs performance management system, and potential assessment was extended to the middle-level Managers in order to catalyze internal growth.

The Talent Readiness program crafted to support learning agility and fast-tracking growth into leadership assignments brought many more NIITians into its fold in FY22. About 40% of NIITians from the largest Business segment became a part of this Accelerated Career Progression program. Many of them are now ready to move into their next role.

NIIT has an integrated and preventive "Health and Wellness program" in place. The program addresses dimensions of physical, mental, and emotional health. A robust online wellness portal, expert consultations, online EAP counseling, online digital gym sessions, and live and interactive webinars all form an integral part of the program offerings. The wellness initiatives went on overdrive to mitigate the impact of the prevailing ecosystem.

An expert series consisting of Medical, Yoga, Pranayama, Proning, Nutrition, Art expression therapy, Fitness dance, and Emotional well-being webinars and workshops were organized during the year. NIIT registered the participation of over 3,500 NIITians (including family members) across the various programs. A micro-site was designed that serves as a rich repository for the videos of all the webinars to cater to "on-demand" learning and recapitulation.

NIITs digital employee engagement initiative is designed to interact with NIITians at pre-defined milestones of their tenure with NIIT to gather sentiments on important parameters of the work environment and work relationships, which influence their experience at a workplace. The initiative enlisted an overall Engagement score of 88 on a 100-point scale, a 2-percentage point jump over FY21, and a Mood score of 4.3 on a 5-point scale in FY22, as against 4.2 in FY21.

NIIT recorded its highest-ever Employee Satisfaction Survey score across the past 20 years of 89% in FY22, a 4-percentage point jump from 85% in FY21.

The Higher Education Scheme and "NIIT Lifelong Learning" program continued to inspire professional and personal development among NIITians. The Company continued to focus on training in the areas of "Gender Sensitivity," "Prevention of Sexual Harassment (POSH)," "General Data Protection Regulation (GDPR)," and "NIIT Code of Conduct" as mandatory trainings. The Internal Committee for dealing with POSH cases was further strengthened. The "Diversity, Equity, Inclusion, and Integrity" (DEII) committee built upon the existing culture and practices of the company and several trainings were conducted, including introducing a portal dedicated to DEII activities.

NIITians reciprocated by demonstrating resolute will to overcome personal challenges posed by the pandemic and continuing to deliver on commitments while adhering to timelines and collaborating closely with each other to ensure defect-free, value-added assignments. These synergies prove that we live out NIITs Vision statement: "The growth of NIIT is the derivative of the growth of each one of us in letter and spirit each day as always."

At NIIT, several best practices were implemented to prepare for and ameliorate the me of the key ones are as below:

• Keeping all NIITians updated: Connect sessions and communication initiatives continued through the year to give employees guidelines on how to keep safe during the pandemic and contain its spread. Further, regular information updates and advisories were provided to NIITians on the Companys intranet (iNIITian.com). This acted as a repository for all the Companys directives on the subject.

• Enabling work from home: The Company continued enabling NIITians to seamlessly work remotely in an organized manner. This support included appropriate computing hardware, software licenses, data connectivity, implementation measures for data access and security, reimbursement of internet expenses, and one-time reimbursement of WFH accessories or attire.

• Enabling digital processes: People-focused initiatives such as goal setting and performance review, learning delivery, induction, along with core operational processes have been enabled through digital mode.

• Keeping connected: The CEO and senior leaders maintained regular virtual connect sessions with all NIITians. All people processes, including e-induction, were conducted virtually and seamlessly. The Company conducted fun events, including gaming contests, fitness challenges, and music and dance shows, virtually. NIITians also used social media platforms to connect across locations. The Company carried a special newsletter capturing all the stories of "NIITians in COVID Times." A series of "COVID Warrior sessions" were conducted, wherein NIITians shared their personal experiences of triumphs over COVID. Virtual Fire-side Wellness chats with CEO were conducted both in India and overseas. Amber, the AI-powered CEOs assistant, reached out to NIITians to gather the "mood score," enabling an agile management response.

• Vaccination Camps:

vaccination camps were conducted Pan-India to enable NIITians and their families to get inoculated safely in a systematic and organized setting, eluding long queues and non-availability of vaccines outside.

• COVID care leave: A special paid COVID medical leave was introduced for self-care and family care to support the recovery of NIITians and their family members.

• Special Take5break leave: A special 5-day paid break was introduced to allow NIITians to spend quality time with family and relax, refresh, and rejuvenate.

• Financial Assistance: A "COVID Additional Financial Assistance" program was launched to support NIITians financially for expenses incurred over and above the Mediclaim coverage for self or dependent members.

• Bereavement support guideline: A bereavement support guideline was drawn up that outlined education support for the children and continued financial assistance over and above the existing financial dues in the event of an unfortunate demise of an NIITian. It also entails employment opportunities for the spouse, if not employed already.

Future Outlook

> Corporate Learning: With over USD 370 billion in annual spends and less than 5% penetration, global corporate training represents a large, multi-year growth opportunity. About two-thirds of the training spends are toward proprietary learning, with salaries of inhouse staff constituting the majority of the spends. NIIT, being a top 2 global training specialist firm and top 5 overall, including general outsourcing firms, is uniquely positioned to address growing demand as companies seek greater efficiency and effectiveness from their L&D spends.

NIIT has an established the right to win with a) proprietary learning methodologies that create predictable outcomes, b) leadership in the use of technology for education, including automation of learning processes, gamification, Augmented Reality and Virtual Reality (AR/VR) based simulations and learning analytics, c) end-end, multi-shore delivery capability, and d) strong balance sheet and availability of growth capital.

Investments in S&M and digital capabilities have helped the business achieve growth over the last two years, despite a near-term reduction in consumption of L&D by some of its large accounts. In the near-term, the prevailing economic headwinds may lead to continuing uncertainty and some delay in the recovery of spends. However, economic slowdowns typically drive companies to find ways to drive efficiency, including outsourcing non-core functions. As businesses stabilize and emerge from uncertainty, NIIT expects a big shift to outsourcing and stands to benefit from this opportunity by enabling customers to focus on their core for driving growth.

CLG plans to leverage this capability and experience to accelerate growth through large-sized annuity contracts. To achieve this, the Company plans to continue sustained investments in innovation to create customer delight, in advisory services to drive thought leadership, and in Sales & Marketing and building a global platform for large comprehensive deals to accelerate growth rates.

CLG would continue to explore inorganic opportunities to add new capabilities and penetrate desired markets and customer segments. The Company is actively engaged in the evaluation of such target companies.

Skills & Careers: Training for Digital Skills in India represents a multi-billion-dollar training opportunity:

• With a young population (about 600 million people less than 25 years old), large and growing enrollments in higher education (38+ million learners enrolled in Higher Education, ~27% GER), and proficiency in English, India is expected to be the hub of global demand for talent (hiring by GCCs, GSIs, etc.).

• In addition, a strong demand is expected for continuous skill upgrades for working professionals due to increasing digitalization across sectors (Technology, Fintech, Health-Tech, Logistics, EduTech, etc., as user industries and IT Services as an enabler).

• The acceleration of digital transformation is leading to a "war for talent," which is expected to continue over the next few years due to the increasing pace of change. This is expected to lead to a large demand for talent transformation.

NIIT plans to continue to focus on the IT and BFSI markets that offer significant growth opportunities due to the need for talent transformation. Over the years, NIIT has been a premium provider of technology training to individual and corporate learners in the country, serving as a bridge between colleges and rewarding corporate careers. With RPS Consulting, NIIT has made a strong entry into training for working professionals as well.

The business has transitioned to digital delivery of learning over the last two years. Strong adoption of digital learning, a trusted brand, strong pedagogy that creates superior learning outcomes, an industrial strength learning-delivery platform to enable scale, a strong balance sheet, and a strengthened leadership team create an opportunity to reestablish NIIT as the number one choice for career seekers and working professionals.

NIIT plans to continue to invest to accelerate the transformation and achieve scale, including investments in new products, ramping up of digital learner acquisition, and marketing automation tools.

Risks and Concerns

NIIT services customers in over 30 countries. As a global enterprise, the Company faces a variety of risks. Risk management is, therefore, an integral part of the Companys core process and involves recording, monitoring, independent testing, and controlling of the internal functions of the enterprise by way of establishing the Risk Control Matrix (RCM) to ensure process control, the Business Risk Management (BRM) framework for business objectives, and Entity Level Control (ELC) for comprehensive risk reporting. The rapid changes in technology across the globe have necessitated a dynamic change in the Companys business and delivery models.

NIIT has implemented an Enterprise Risk Management framework across the organization, strengthening the

existing risk management process and enhancing the risk culture across the Company. A robust structure based on global standards and best practices has been developed. The Companys Enterprise Risk Management (ERM) framework supports the achievement of strategic goals under the current disruptive environment by identifying, assessing, mitigating, monitoring, and reporting any risk to these goals thereof, enabling effective and timely decisions. Strategic decisions are taken after careful consideration of key risks and residual risks. The Companys risk framework encompasses strategic risks, operational risks, financial risks, governance risks, and information & technology risks.

Strategic Risk	Strategic risks are those risks that threaten to disrupt the assumptions at the core of business strategy and strategic objectives.
Financial Risk	Financial risks include areas such as financial reporting, valuation, treasury, liquidity, and credit risks.
Governance Risk	Threat posed to a companys financial or reputational standing resulting from violations of laws, regulations, codes of conduct, or organizational internal standards and practices.
Operational Risk	Risks affecting our internal practices, policies, people and systems which may impact on organizations ability to execute its strategic plan.
Information Technology Risk	IT risks include hardware and software failure, human error, and malicious attacks, as well as natural disasters such as fires, cyclones, floods or pandemic.

The Risk Management Committee reviews and provides inputs on the overall risk framework at regular intervals, in discussion with senior management.

As risk-taking is an intrinsic part of all businesses, it has been NIITs constant endeavor to balance risk appetite in each line of business to ensure that each of the businesses generates high risk-adjusted returns, with the underlying objective of maximizing value for the shareholders.

Enterprise Risk Management Framework

The ERM framework is developed by incorporating the best practices based on COSO & ISO 31000 and then tailored to suit NIITs business requirements. NIIT has taken proactive steps to identify and prioritize the risks upfront, document them in consultation with the business groups, and define the risk management framework. These risks include customer concentration, competition, people, cyber security and data protection, investments, and exchange rate. The Company has laid out internal controls over Financial Reporting to be followed by the Company. Such internal financial controls are adequate and operate effectively.

At the entity level, NI ITs risk management framework addresses all significant risks of the businesses as envisaged by the management from time to time, based on the experience, the environment surrounding each business activity, and future initiatives, to achieve the business groups objectives along with the relevant mitigation strategy. The mitigation strategy is simultaneously addressed by the respective business groups for each of the identified risks while finalizing the strategic and operational parameters of the business. The compliances and assurance of the risk mitigation strategies are addressed by the Internal Audit and Assurance Group. The Company has identified the major and significant risks into two broad categories, External Risks and Internal Risks, with mitigation strategies of each.

The Company is well diversified in terms of both its service offerings and geographic spread. While there is concentration risk in its Corporate Learning business, as the top 10 customers in CLG contributed 61% to the revenue of the CLG business, the Company has maintained a healthy contract renewal rate and strong velocity of adding new customers despite the pandemic. Also, the mix of revenue from the different geographies, sectors and diversified offerings ensures that the Company is well-positioned to manage a slowdown in a particular sector or in a specific geography. With the Enterprise Risk Management (ERM) process in place, the Company has a robust mechanism for risk management, and the strategies for risk management are reviewed at appropriate levels at regular intervals.

A strong balance sheet and liquidity position give the Company a strong ability to withstand external shocks and provide a lot of confidence to all the stakeholders, including its global customers as well as employees.

Internal Control Systems and Their Adequacy

The Company has adopted global practices for evaluating and reporting on internal controls based on its operational experience in multiple countries. It has also implemented one of the leading ERP solutions in its global operations to integrate various facets of business operations, including Human Resources, Finance, Logistics, and Sales. This has enabled the Company to control and monitor its worldwide operations and strengthen the ability of internal controls to function most optimally. The evaluation of internal controls is an integral part of the plan for the Audit & Assurance Organization.

Disclaimer

Statements in this management discussion and analysis describing the Companys views about the industry, objectives, projections, estimates, and expectations may be "forward-looking statements" within the meaning of applicable laws and regulations. The Company undertakes no obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances, or achievements could differ materially from those expressed or implied in such statements. Readers are cautioned as not to place undue reliance.