Tech Mahindra Management Discussions

As a heritage brand established over 35 years ago, Tech Mahindra has built pioneering systems, processes, and solutions for enterprise clients across the globe. Sitting at the intersection of business transformations, we combine automation, micro service reusable components, domain knowledge and processes to deliver technologies of the future. We help companies imagine a future, build solutions, and run them, to deliver tangible value and outcomes, while creating a more stable, secure, and sustainable future for everyone.

The year 2022 turned out to be the year of global volatility. The lingering effects of the pandemic, supply chain disruptions and geo-political instability caused inflation to surge to its highest level in 40 years and the central banks to tighten aggressively, resulting in unprecedented increase in interest rates in US and Europe. Even as a slowdown in global economy is inevitable in the year 2023, most of developed economies are poised for a ‘soft landing given that the labor market conditions alone provide a lot of support. Inflation remains a concern, but much less compared to a year ago since the central banks have indicated that interest rates have potentially peaked out.

Amidst heightened geo-economic fragmentation, financial sector vulnerabilities, and climate crisis, enterprises lean towards digital technology to drive innovation and enable a new operating model for agile and customer-centric businesses. To adopt to the fast evolving and a ‘never normal future, organizations have accelerated their digital transformation plans.

Businesses view technology as means to reshape their value proposition and gain competitive advantage and thus are likely to continue to spend on digital initiatives.


Going forward the focus for enterprises must be on becoming relevant for the next decade that will see an increased adoption of secure artificial intelligence (AI) technologies across multiverses, sustainable business practices, and workforce dynamics. At Tech Mahindra, we have been steering this sustainable transformation momentum ahead, strengthening our digital capabilities, and creating solutions that leverage next-generation technologies to enable resilient industries of the future. We are charging ahead strong on our transformation journey in line with our NXT.NOW™ strategy – that focusses on key technologies like 5G, Cloud, AI, Web3.0, Digital engineering; CX, and Sustainability. We are strongly focused on responsible and momentous growth for our customers to become competitively dominant for decades to come.


Risk and Impact Mitigation Strategy
Risk: Risk of economic slowdown or recession in key global economies The Company is closely monitoring any effect this could have on revenues and is preparing to deploy suitable strategies to align variable costs to the revenue outlook. The Company is also evaluating the possible opportunities that may arise from this economic situation.
Impact: Macroeconomic headwinds viz., muted GDP projections, unrelenting inflation, high interest rates, and instability in the financial systems caused uncertainty which in turn may cause customers to proceed with caution, adversely impact business sentiments.
Risk: Revenue Risk - Slackness in demand from existing customers impacting revenue growth To offset the possibility of lower spend, newer offerings and tech solutions, along with clients-focused solutions to either optimize costs or promote customers digital initiatives, are being pursued.
Impact: Reduction in customers spend or share of wallet may adversely impact our revenue growth.
Risk: Price Pressure / Margin Risk Cost optimization strategies like cloud deployment, higher automation, offshoring and changing resource profile may need to be adopted, in consultation with the customer.
Impact: Customers facing business and cost challenges may potentially negotiate for greater competitive pricing, adding further pressure on margins.
Risk: Cyber Security and Privacy Risks - Risk of data theft, deviation to information security requirement and cyber attacks Data protection controls (encryption, data leakage prevention etc) and Cyber security tools (firewalls, antivirus, etc) are deployed to prevent cyber-attacks and data exfiltration.
Impact: Unauthorized use or disclosure of employee or company or customer data may lead to either breach of customer contract or fines/penalties from regulators and/or damage companys reputation. User awareness and supplier risk management is rigorously implemented to ensure effective deployment of data security controls.
Security controls are continuously monitored and rigorously assessed through Annual Privacy Audit, IT Audits, External Health Check Audits and Customer Audits.
Risk: Impairment Risk A dedicated team monitors the business performance of the acquired companies and corrective actions are initiated as required. Synergy benefits of large customer network, competencies, or cost optimization possibilities of TechM are leveraged upon, to the extent possible.
Impact: Possibility of declining business performance of acquired companies, due to weak economic environment or other strategic or operational factors, leading to impairment.
Risk: Human Capital Risks - High attrition levels, Involuntary churn, and employee productivity due to Work From Home (WFH) The Company effectively managed attrition last year by implementing a slew of measures.
A command center for monitoring productivity issues and security concerns, arising from WFH, is in force.
Impact: High attrition levels adversely impact resource deployment on new and existing projects.
Partial work from home carries the risk of loss of productivity and associated cyber security and data protection risks
Risk: Statutory Compliance Risk - Tracking changing compliance requirements across geographies Applicable statutory compliances are tracked through our Global Compliance Management System (GCMS) with a bottoms-up process and dashboarding prior to compliance certification.
Impact: Tracking the changing compliance requirements in multiple countries and adhering to the same for multiple entities is a challenge, and non-compliances could hurt our reputation as well as result in penal action by the concerned authorities.
A refresh of the laws and compliances in the tool is underway to ensure that all requirement in the tool as updated and relevant.
Risk: M&A Integration Risk The M&A Team updates the Leadership and the Investment Committee on the aspects of performance, impairment, consolidation, and integration, etc.
Impact: Inability, delay, or failure to integrate with the acquired portfolio companies to achieve the desired strategic synergies may result in either financial losses, damage to reputation, decreased productivity, loss of employee morale or legal matters.
While we are actively engaged in reducing the number of subsidiaries and branch offices, for the unmerged entities, we are focusing extensively on back-office integration to drive synergies and economies of scale.
Risk: Technology Risk - Risk of deficiencies in emerging competencies Investment in the right technological competencies is key to maintaining our competitive edge. Our strategy of NXT.NOW drives us towards embracing newer technologies that have the potential for being adopted by enterprise at scale. Investment in new-age technological skills, including carefully curated training programs for upskilling the existing workforce, are underway.
Impact: Inability to timely adopt and invest in emerging competencies may result in a competitive disadvantage. Further, developing or acquiring new technologies or capabilities and organization-wide adoption has significant cost implications.
Risk: Delivery Capability / Capacity Risk A robust physical and digital infrastructure is maintained to adhere to the highest quality standards.
Impact: The risk of not being able to deliver on time, or within budget or not meeting customer specifications is an inherent project-level risk in our industry. Inability to surmount these challenges could lead to penalties and/or loss of business and loss of reputation.
From a program governance perspective, a dedicated ‘Program Office monitors and reports on various parameters of each engagement. Large engagements undergo additional review by ‘Delivery Heads. Additional ‘Steering Committee reviews are undertaken by leadership each month for critical engagements.
Risk: Legal and Contractual risks Contract-level risks are managed by our in-house legal team who thoroughly review each contract to ensure appropriate contractual liabilities are assumed and necessary approvals are obtained as per the defined authority matrix. A contract management system has been deployed to digitize the contract lifecycle and effectively manage the authoring, obligation management and risk management aspects of contracting. Additional oversight at the executive and board level is exercised through discussion on high-risk contracts at the Risk Management Committee meeting.
Impact: Legal, litigation and contractual risk arising out of contract execution and matters arising out of IPR, tax, regulations, employment contracts, adverse rulings, mergers, etc. The legal team provides necessary support on matters relating to compliance, local in-country laws, taxation, etc. and seeks external counsel wherever required. We also have a robust mechanism for appropriately dealing with litigations.



The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and as per Indian Accounting Standards (IND AS) for the year ended March 31, 2023.

The financial statements of Tech M and its subsidiaries have been consolidated on a line-by-line basis by adding together like items of assets, liabilities, income, expenses, after eliminating intra-group transactions and any unrealized gains or losses in accordance with the Indian Accounting Standard - 110 on "Consolidated Financial Statements" (IND AS 110).

The discussion on financial performance in the Management Discussion and Analysis relate primarily to the standalone accounts of Tech Mahindra Limited. Wherever it is appropriate, information pertaining to consolidated accounts for Tech Mahindra Limited & its subsidiaries is provided for the current year and previous year. For purpose of comparison with other firms in this industry as well as to see the positioning and impact that Tech Mahindra Limited has in the marketplace, it is essential to take the figures as reflected in the Consolidated Financial Statements.


1. Equity Share Capital

The authorized share capital of the Company increased to 9,093 Million divided into 1,818,600,000 equity shares of 5/- each from

8,337 Million, divided into 1,667,300,000 equity shares of 5/- each consequent to amalgamation of Tech Mahindra Business Services Limited and Born Commerce Private Limited with the Company. The paid-up share capital stood at

4,871 Million as on March 31, 2023 compared to 4,859 Million as on March 31, 2022. The increase in paid-up capital during the year is due to the issue of 2,313,996 shares on account of conversion of options into shares by employees under the Employee Stock Option Plans.

2. Other Equity

a) Securities premium account

The addition to the securities premium account of 1,449 Million during the year is due to the amount transferred from share option outstanding account on exercise of stock options to the tune of 1,011 Million, transfer from Share Application money pending allotment 438 Million.

b) Retained Earnings

The surplus in the Statement of Profit and Loss as on March 31, 2023 was 214,462 Million compared to 216,090 Million as on March 31, 2022.

3. Right of Use Liabilities

In compliance with the accounting standard IND AS 116 Lease accounting, Right of Use ("ROU") liability has been recognised with effect from April 1, 2019. Balance of ROU Liability as on March 31, 2023 is shown in the table below:

Rs in million

ROU Lease liabilities As at March 31
2023 2022
Long Term 3,708 4,150
Short Term 2,083 2,019
Total 5,791 6,169

4. Property, Plant and Equiptment

The movement in Property, Plant and Equipment is shown in the table below:

Rs in million
Property, Plant and As at 31st March
Equipment 2023 2022
Gross Book Value
Land – Freehold 459 459
Buildings 22,773 21,774
Leasehold Improvements 1,169 1,079
Plant & Equipments 16,225 15,254
Computer equipments 26,295 23,343
Office Equipments 2,204 2,104
Furniture and fixtures 7,426 7,156
Vehicles 169 180
Intangible assets 14,311 13,482
Total 91,031 84,831
Less: Accumulated depreciation & amortization 64,090 58,089
Net block 26,941 26,742
Add: Capital work- inprogress 476 1,361
Net fixed assets 27,417 28,103

The Net Block of Fixed Assets and Capital Work in Progress stood at 27,417 Million as on March 31, 2023 as against 28,103 Million as on March 31, 2022. During the year, the Company incurred capital expenditure (gross) of 5,555 Million (previous year 6,305 Million). The major items of Capital Expenditure include addition to Computers 3,244 Million & Software 829 Million.

Right of Use Assets

In compliance with the accounting standard IND AS 116 Lease accounting, Right of Use ("ROU") Assets has been recognised with effect from April 1, 2019. Balance of ROU Assets as on March 31, 2023 is 5,521 Million as against 5,553 Million on March 31, 2022.

5. Financial Assets

The summary of Companys investments are given below

Rs in million

INVESTMENTS As at March 31
2023 2022
Non Current Investments
Investment in Subsidiaries 121,664 115,865
Investment in Term Deposits with Financial Institutions, Associates & others (treasury bonds & bills) 4,259 6,226
Total Investments 125,921 122,091
Less : Provision for diminution of value 17,697 12,188
Net Non Current 108,226 109,903
Investment Property 748 797
Total Non Current 108,974 110,700
Current Investments
Investment in mutual funds 21,566 29,154
Term Deposits with Financial 2,192 2,500
Investment in non-convertible debentures and commercial papers 1,219 3,763
Total Current Investments 24,977 35,417
Total Investment 133,951 146,117

Total investments (non-current) as on March 31, 2023 stood at 108,974 Million as against

110,700 Million, as on March 31, 2022. During the year, Non-Current Investment in Term deposit with financial institutions is NIL as on March 31, 2023 as against 2,000 Million as on March 31, 2022. Investment in Subsidiaries amounted to 119,252 Million as on March 31, 2023 as against 115,865 Million as on March 31, 2022. Diminution in value of investments in subsidiaries increased by 5,509 Million during the year.

Investment in liquid mutual funds as at March 31, 2023 was 21,566 Million (previous year 29,154 Million), decrease of 7,588 Million, decrease in Term Deposits with Financial Institutions is 308 Million and decrease in Current Investment in non-convertible debentures and commercial papers is 2,544 Million.

Investment in Acquisitions

The Company invested in the following subsidiaries during the FY 2022-23

Acquisitions undertaken in FY 2022-23:

Pursuant to a share purchase agreement, the Company acquired 100% stake in Thirdware Solution Limited on June 3, 2022 for a consideration of 7,838 Million_ out of which 6,708 Million was paid upfront and an earn out obligation linked to revenue of 1,130 Million. Out of the contractual obligation 395 Million has been paid during the year. As at March 31, 2023, contractual obligation towards the said acquisition amounts to 735 Million.

6. Deferred Tax Asset

Deferred tax asset as of March 31, 2023 was at 4,358 Million as compared to 2,743 Million as of March 31, 2022. Deferred tax assets represent timing differences in the financial and tax books arising from depreciation of assets, provision for doubtful debts and leave encashment & gratuity. The Company assesses the likelihood that the deferred tax asset will be recovered from future taxable income before carrying it as an asset.

7. Trade Receivables

Trade Receivables (includes unbilled, contract assets, contractually reimbursable expenses) at 117,527 Million (net of provision for doubtful debts of 5,314 Million) as of March 31, 2023 as compared to 107,081 Million (net of provision for doubtful debts of 4,444 Million) as of March 31, 2022. Debtor days as of March 31, 2023 (calculated based on per-day sales in the last quarter) were 97 days as compared to 101 days as of March 31, 2022.

8. Cash and cash equivalents

The bank balances include both Rupee accounts and foreign currency accounts. The bank balances in overseas current accounts are maintained to meet the expenditure of the overseas branches and overseas project-related expenditure.

Rs in million

As at 31st March
Cash and cash equivalents 2023 2022
Bank balances in India & Overseas
Current accounts 7,797 6,458
Deposit accounts 4,241 7,161
Total cash and bank balances* 12,038 13,619

* Including unrealised (gain) / loss on foreign currency.

9. Other financial assets, Other assets and Loans

Other financial assets, other assets & Loans as on March 31, 2023 were 74,705 Million compared to 59,990 Million as on March 31, 2022. Other financial assets include foreign currency derivative assets, security deposits, advances to related parties, interest receivable, lease receivable. Other assets include prepaid expenses, balance with government authorities, contract asset, advance income tax, capital advances.

10. Provisions, Financial Liabilities & Other liabilities

Liabilities and provisions were 90,218 Million as of March 31, 2023 including long-term liabilities and provision of 8,650 Million and short-term/ current liabilities and provisions of

81,568 Million compared to 75,024 Million as of March 31, 2022 including long-term liabilities and provision of 9,839 Million and short-term/ current liabilities and provisions of 65,185 Million as of March 31, 2022.


The following table sets forth certain income statement items as well as these items as a percentage of our total income for the periods indicated:

Particulars Fiscal 2023 Fiscal 2022
(In Million) % of Total Income (In Million) % of Total Income
Revenue from Services 426,573 357,611
Other Income 11,283 14,468
Total Income 437,856 100% 372,079 100%
Personnel Cost 149,693 117,298
Subcontracting Expenses 170,368 137,957
Operating and Other Expenses 53,309 39,772
Depreciation 8,129 7,403
Interest 1,808 689
Impairment of non-current investments 5,508 4,669
Total Expenditure 388,815 88.8% 307,788 82.7%
Profit before tax and exceptional items 49,041 64,291
Provision for Taxation 11,266 2.6% 14,058 3.8%
Net profit for the year 37,775 8.6% 50,233 13.5%

1. Revenue

The Company derives revenue principally from technology services provided to clients from various industries.

The revenue increased to 426,573 Million in fiscal 2023 from 357,611 Million in fiscal 2022. The increase in revenue is due to increase in number of clients served & increase in business from these clients.

Consolidated Revenue

Consolidated Revenue for fiscal 2023 was 532,902 Million compared to 446,460 Million in fiscal 2022, growth of 19.4%.

Consolidated revenue by Geography

Revenue from Americas was 49.9% in fiscal 2023 compared to 47.9% in fiscal 2022 while the share of revenue attributable to Europe was 24.9% in fiscal 2023 compared to 26.2% in the previous year. Revenue from Rest of the World (including India) as a percentage of total revenue was 25.2% in fiscal 2023 compared to 25.9% in fiscal 2022.

Consolidated revenue by Vertical

For fiscal 2023, revenue from Communications, media & entertainment was 40% compared to 40.4% in previous year. Revenue from Manufacturing was 15.7% in fiscal 2023 compared to 15.8% in fiscal 2022. Revenue from Technology was 10.1% in fiscal 2023 compared to 8.9% in fiscal 2022. Revenue from Banking, financial services & insurance was 16.2% in fiscal 2023 compared to 16.4% in fiscal 2022. Revenue from Retail Transport & Logistics was 8% in fiscal 2023 compared to 7.9% in fiscal 2022. Revenue from Others was 10% in fiscal 2023 compared to 10.6% in previous year.

Consolidated Revenue by Segment

For fiscal 2023, 86.5% of revenue came from IT services, whereas 13.5% of revenue came from BPO services. The revenue share for fiscal 2022 from IT & BPO services was 87.8% and 12.2% respectively.

2. Other Income (Standalone)

Other income includes interest income, dividend income, foreign exchange gain/loss, rental income and net gain on disposal of assets & miscellaneous income.

Interest income mainly consists of interest received on bank deposits. Dividend income includes dividend received on long-term investments as well as that received on current investments. Exchange gain/loss consists of mark to market gain/loss on ineffective hedges, realized gain/loss and revaluation gain/loss on translation of foreign currency assets and liabilities. Other income is 11,283 Million in fiscal 2023 compared to 14,468 Million in fiscal 2022. Decrease in other income was mainly due to lower Foreign exchange gain in current fiscal year.

3. Expenditure (Standalone)

PARTICULARS Fiscal 2023 Fiscal 2022
(In Million) % of Total (In Million) % of Total
Expenditure Expenditure
Personnel Cost 149,693 38.5% 117,298 38.1%
Subcontracting Expenses 170,368 43.8% 137,957 44.8%
Operating and Other Expenses 53,309 13.7% 39,772 12.9%
Depreciation 8,129 2.1% 7,403 2.4%
Interest 1,808 0.5% 689 0.2%
Impairment of investment in subsidiaries 5,508 1.4% 4,669 1.5%
Total Expenses 388,815 100.0% 307,788 100.0%

Personnel cost includes salaries, wages and bonus, contribution to provident fund and other funds, share based payment to employees and staff welfare costs. The increase in personnel cost in absolute value is due to headcount increase.

Subcontracting expenses include cost of direct contractors and agency contractors to support current and future business growth.

Operating and other expenses mainly include travelling expenses, rent, repairs and maintenance, communication expenses, office establishment costs, software packages and professional fees.

Impairment of Investment in subsidiaries

The Company owns investments in subsidiaries and associates, which are accounted at cost less any provision for impairment. The Management assesses the operations of the subsidiaries/ entities, including future projections, to identify indications of diminution in the value of the investments recorded in the books of accounts. Based on the performance of subsidiaries and relevant economic and market indicators, the Companyhasreassessedtherecoverableamount in below subsidiaries as on March 31, 2023.

Since the recoverable amount was lower than the carrying value of investments, the Company has recognised impairment loss of 5,508 Million for FY 2022-23, in Tech Mahindra Fintech Holdings Limited.

Profit before tax

Profit before tax was 49,041 Million in fiscal 2023 compared to 64,291 Million in fiscal 2022. Profit before tax as a percentage of total revenue is 11.5% in fiscal 2023 compared to 18% in fiscal 2022.

4. Income taxes

The provision for income tax for the year ended March 31, 2023 was 11,266 Million as compared to 14,058 Million in the previous year. The effective tax rate in these years was 23% and 21.9% respectively.

5. Profit after tax

Profit after tax was 37,775 Million in fiscal 2023 as compared to 50,233 Million in fiscal 2022. Profit after tax as a percentage of revenue is 8.9% in fiscal 2023 and 14 % in fiscal 2022.

Consolidated PAT

Consolidated PAT for fiscal 2023 is 48,313 Million as compared to 55,661 Million last fiscal 2022. PAT as a percentage of revenue is 9.1% in fiscal 2023 & 12.5 % in fiscal year 2022.


_Particulars Fiscal Year
2023 2022
Net cash generated from operating activities 41,021 32,128
Net cash generated from/(used in) investing activities 6,768 15,549
Net cash from/(used in) financing activities (49,915) (46,073)
Net increase/(decrease) in cash and cash equivalents during the period (2,126) 1,604
Effect of exchange rate changes on cash and cash equivalents 571 210
Cash and Cash Equivalents at the beginning of the year 12,495 10,681
Cash and Cash Equivalents at the end of the year 10,940 12,495


Sr. No Key Financial Ratios * Fiscal 2023 Fiscal 2022 % Change
1 Debtors Turnover 4.21 4.12 2%
2 Inventory Turnover NA NA
3 Interest Coverage Ratio 15.7 28.8 -46%
4 Current Ratio 2.1 2.6 -21%
5 Debt Equity Ratio # 0.02 0.02 0
6 Operating Profit 10.6% 15.4% -32%
Margin (%)
7 Net Profit Margin (%) 8.9% 14.0% -37%
8 Return on Net worth 14.7% 19.6% -25%

*Ratios are based on Standalone Financials

# Debts include lease liability

Reasons for movement in ratios greater than 25 %

Sr. No. 3. Decrease on account of decrease in profit after tax and increase in finance cost. Sr. No. 6. Decrease on account of increase in operating expenses and depreciation.

Sr. No. 7. Decrease on account of lower operating profit margin.

Sr No. 8. Decrease on account of lower PAT.


The Company maintains an adequate internal control system, which provides, among other things, reasonable assurance of recording the transactions of its operations in all material aspects and of providing protection against significant misuse or loss of Companys assets. The Company uses an Enterprise Resource Planning (ERP) package, Business Intelligence and Analytics package, which enhances the internal control mechanism. The Company also has a Chief Information Risk Officer (CIRO) and Chief Information Officer (CIO) for overseeing the Internal Control and Systems.


Being an organization that focuses on staying on the cutting edge of technology, through our people, we strive to attract the best talent through intensive recruitment drives in premier engineering and management institutes. During the year, TechM saw increase of 1,227 professionals. The global headcount of the Company as on March 31, 2023 was 152,400 as compared to 151,173 as on March 31, 2022.

The IT attrition was 14.8% during the year as compared to 23.5% in the previous year. The Company has been working towards retaining talent by investing in career development programs, talent engagement initiatives, employee well-being (personal and professional), rewards and recognition as well as an empowered work environment.

Cautionary Statement

Certain statements made in the Management Discussion and Analysis report relating to the Companys objectives, projections, outlook, expectations, estimates and others may constitute ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections and so on, whether express or implied. Several factors could make a significant difference to the Companys operations. These include economic conditions affecting demand and supply, government regulations and taxation, natural calamities and so on, over which the Company does not have any direct control.