Tech Mahindra Ltd Management Discussions.


Tech Mahindra Limited is a leading provider of digital transformation, consulting and business re-engineering services and solutions and is a part of the USD 19.4 Billion Mahindra Group; a global federation of companies divided into 11 business sectors. The Mahindra Group operates in 22 industries, providing insightful and ingenious solutions at a global scale. The companies act as a federation, with an optimum balance of entrepreneurial independence and synergy. From Mobility to Rural Prosperity and Information Technology (IT), from Financial Services to Clean Energy and Business Productivity, they are empowering enterprise everywhere. Headquartered in Mumbai, India, the Group has an operational presence in over 100 countries and employs more than 256,000 people. The Group operates across vast geographies and the governing spirit of "Rise" binds it as one Mahindra.

Tech Mahindra offers innovative and customer-centric digital experiences, enabling enterprises, associates and the society to Rise™. We are a USD 5.1 billion organization with 121,000+ professionals across 90 countries helping 1007 global customers, including many Fortune 500 companies.

We are focused on leveraging next-generation technologies including 5G, Blockchain, Cybersecurity, Artificial Intelligence, and more, to enable end to end digital transformation for global customers. Tech Mahindra is one of the fastest growing brands and amongst the top 15 IT service providers globally. Tech Mahindra has consistently emerged as a leader in sustainability and is recognized amongst the ‘2021 Global 100 Most sustainable corporations in the World by Corporate Knights. With the NXT.NOW framework, Tech Mahindra aims to enhance ‘Human Centric Experience for our ecosystem and drive collaborative disruption with synergies arising from a robust portfolio of companies. The company aims at delivering tomorrows experiences today and believe that the ‘Future is Now.

Tech Mahindra is a Public Listed Company, incorporated and domiciled in India and has its registered office in Mumbai, Maharashtra, India. It has a primary listing on the National Stock Exchange of India Limited (NSE) and BSE Limited.


FY21 was a year most frequently described as "unprecedented". It generated an extraordinary set of challenges for the global economy. From lockdowns that crippled small businesses and supply chains, putting Millions out of work, to shrinking budgets and worsening economic growth rates, the pandemic has tested the resilience of the businesses across the globe.

While the intensity of the impact differs from sector to sector, there are few sectors like Aviation, travel & tourism, automobile, hospitality that have been hit the most and might continue to suffer until life turns back to normal. The major setback was to the informal sector, which is a major employment provider in India and globally. All the major economies except for China, saw a decline in GDP in 2020.

Surviving from the pandemic, we are seeing enterprise strategies been aligned in line with 4 major goals

• Digital Transformation: Whilst behaviors and spend levels have already changed dramatically, it is the evolution of customer needs, attitudes and values that will most disrupt how businesses compete. The contact-less nature of this pandemic brings to the fore the importance of adopting digital channels

• Cost efficiency: Organizations are identifying areas to get leaner and more efficient, while investing in newer business models. Companies are redesigning their organizational structure to be cost-efficient, resilient and flexible.

• Employee Safety: Employers have navigated dramatic changes to their workplaces, business processes and workforces. Work from Home continues to be a preferred operating model globally.

• ESG Focus: The pandemic has brought forward the need for companies to assess their impact on Ecosystem. Companies have reinforced their commitment to ESG.

Performance During the Year

Tech Mahindras consolidated revenue was at Rs 378,551 Million (USD 5,111.1 Million) for the Financial Year ending March 31, 2021, registering a growth of 2.7% (de-growth of 1.4% in USD terms) on a YoY basis. The companys Profit After Tax (PAT) was at Rs 44,280 Million (USD 598 Million) for Financial Year 2020-21, registering a growth of 9.8% (growth of 5.5% in USD terms).

The Company transitioned to Remote operations for the whole of Financial Year 2020-21. With our operations controlled through Integrated Command Centre backed by policies around Employee wellness & Safety and a collaborative approach with Customers, Partners and Government, the Company was able to navigate successfully through the Pandemic. We witnessed strong revival in demand in the second half of the year and signed large transformation contracts with several customers. The Companys focus on cost transformation helped to improve profitability significantly this year.

Technology Adoption to remain at the forefront of the business

The pandemic served as a dramatic backdrop for a year of innovation and digitalization in businesses around the globe. Almost all organizations went through rapid digital transformation efforts in 2020, which is expected to continue even in 2021 and beyond.

Gartner projects worldwide IT spending to reach a total USD 4.1 trillion in 2021, an increase of 8.4% from 2020.

Tablel. Worldwide IT Spending Forecast (Millions of U.S. Dollars)

2020 Spending 2020 Growth (%) 2021 Spending 2021 Growth (%) 2022 Spending 2022 Growth (%)
Data Center Systems 219,940 2.3 236,806 7.7 247,513 4.5
Enterprise Software 466,647 -2.1 516,872 10.8 571,725 10.6
Devices 663,223 -6.9 755,798 14.0 778,949 3.1
IT Services 1,021,187 -1.8 1,112,626 9.0 1,193,461 7.3
Communications Services 1,386,471 -0.7 1,450,444 4.6 1,504,743 3.7
Overall IT 3,757,468 -2.2 4,072,547 8.4 4,296,391 5.5

• The highest growth will come from devices (14 per cent) and enterprise software (10.8 per cent) as organizations shift their focus to provide a more comfortable, innovative and productive environment for their workforce.

• Gartner projects IT spending in India to touch USD 93 billion in 2021, driven by digitization of businesses outside of technology, an increase of 7.3% compared to last year, also led by the government relaxation of foreign investment in certain sectors such as insurance, infrastructure, telecommunications that will provide additional funds for business and IT leaders to accelerate their digital transformation journey

IT spending will recover and surpass 2019 levels at varying rates based on the industry.

• Within banks and financial services IT spending will eclipse 2019 levels in 2021.

• Whereas, IT spends within Manufacturing and Natural resources are projected to remain below 2019 levels in 2021 mostly due to stress within the Automotive sub-vertical.

• Insurance sector is expected to see an increase in IT spending with the growth in Health insurance space.

• Communications, media and entertainment is another industry sector driving IT spends in 2021 on the back of Mobile network services segment.

Second wave of COVID or second wave of disruption?

Markets began 2021 with an optimistic tone, boosted by the outcome of U.S. elections, positive news around COVID-19 vaccine effectiveness, and the start of vaccination campaigns around the world for the most vulnerable population segments. The industry has learnt some very hard lessons from one of the most challenging years in decades and built resilience.

• On the supply chain side, the industry is richer from the experience of the first few months of the pandemic. Companies are identifying alternative vendors should the need arise. There is also an effort at greater cost control, be it in the purchase of raw materials, managing supply chains or running day-to-day operations.

• Retails firms are also developing online business strategies to see them through the impending crisis.

• The informal sector has already been using social media, such as WhatsApp, to take orders and deliver directly to homes.

Its too early to gauge how the second wave of COVID will impact the economy but being prepared for new lockdowns or outbreaks will be a prerequisite to thrive. The fresh restrictions being imposed by states in the wake of rising COVID cases are bound to test the business resilience yet again.


The digital transformation that enterprises had planned for the next 3-5yrs has now become a priority for each of them and we saw notable acceleration in adoption of new age technologies by these enterprises. Over the past few months, we witnessed

• accelerated digitization of customer interactions,

• Increased migration of assets to cloud,

• increased share of digital products in customers portfolio, and

• operations being run remotely at a large scale.

And we believe most of these shifts are here to stay. To align with these shifts, we have evolved our strategy to Nxt.Now.

The 3-4-3 approach continues to be the core of our strategy, where we identify the top most game-changing industry trends and our 4 big bets that will enable us to attain our 3 objectives as a company which will enable Tech Mahindra and its Customers to Run better, Change faster and Grow greater. TechM has been working for a decade in shaping the experiences of our clients. We are responding to the urgency in transformation which customers are experiencing through NXT.NOW. We believe Nxt.Now allow us to Imagine our Customers business of Future, build it for them and eventually run it.

The strategic focus is executed through these 5 task forces:

• Growth transformation towards sustained growth and profitability at account level, Competency Business Units (CBUs) and Vertical Business Units (VBUs) as our engines for growth, enabled by M&A and alliances.

• People transformation through injection of fresh talent and disciplined performance management.

• Process transformation to integrate and streamline our systems, while adopting a strong data backbone to the performance management system.

• Delivery transformation through margin optimization, improvement in forecast to fulfilment and service delivery excellence.

• Innovation transformation to fundamentally re - invent the way we work, collaborate and incubate new ideas. RISKS

Some of Tech Mahindras key risks and their corresponding mitigation strategies have been highlighted below.

Key Risk Impact of Risk Mitigation Strategy
COVID-19 Pandemic Risk Pandemic had resulted in sharp reduction of economic activity. The world economy is now recovering at varying rates. Impacted by the pandemic, customers across the globe continue to look for savings from RUN business and are considering aggressive vendor consolidation programs. This may pose risk to our existing annuity business. New areas of spends have been created due to this pandemic as enterprises are digitally transforming themselves. Cloud revenues will also increase as customers try to be more agile and save cost. Tech Mahindra keeps on investing and collaborating to remain well positioned to capture these opportunities to transform them into meaningful revenues.
Employee risks in terms of their safety and mental health is a major concern for organizations as backbone of every organization lies in its people. TechM has platforms like CARE and Freevoice and programs like EAP (Employee Assistance Program) to track mental health issues and provide counselling services round the clock pan India.
For more details, refer to page no. 223.
Key Risk Impact of Risk Mitigation Strategy
Cyber Security Risks Exfiltration of either customers or TechMs personal data intentionally or unintentionally by associates while moving out of organization project for personal gain or as victim of social engineering attack Exfiltration of either customers or TechMs personal data from TechM systems or TechM managed customer environments. Large scale cyber-attack due to social engineering attacks such as ransomware or phishing. Risk mitigation through implementation of data protection and privacy controls such as encryption, data leakage prevention and supplier risk management Risk mitigation through cyber security tools and controls such as firewall, antivirus, encryption, user awareness, etc.
Geopolitical Risks Tech Mahindras export revenues are over 93% and it derives 47.5% revenue from Americas, 26.0% from Europe and 26.5% from the Rest of the World. One aspect of the companys growth strategy is to continue to expand in key markets around the world. Any major event impacting the growth in these markets could directly or indirectly affect Tech Mahindra customers IT spend. Tech Mahindra has been operating in volatile business environment for over three decades, and its business model has evolved to deal with these changes in the business environment and IT spend outlook of its clients. However, severe adverse Global Economic activities risks and any recessionary trends can impact any Company including Tech Mahindra and remains a business risk, akin to any other IT services business.
Immigration Risks The Company has operations in over 90 countries and its employees work onsite at client facilities and locations on visas granted for extended or short term work. Protectionism is rising in few economies like USA, UK, Australia, Singapore, etc. Any changes in immigration laws or any local regulations can impact the profitability and growth. The Company has delivery centres in overseas geographies including USA and has been focusing on increasing the localization levels in these geographies from time to time. Tech Mahindra has been engaging with its clients on a regular basis to discuss and deal with any critical regulatory issues, which might have an impact on its business. The Company has adequate and well defined internal processes, including contingency plans to deal with the changing regulatory environment.
Competitive Industry Risk The global IT services industry is highly competitive with competition arising from Indian IT companies, MNC IT companies and startups having sizable presence in low cost geographies, deep pockets, strong client relationships, In house and Captive services companies etc. Competitors have increased focus on key demand areas like cloud, cybersecurity, workforce transformation. Tech Mahindra has been delivering enhanced solutions around new technologies, especially on the current demand areas like cloud, cybersecurity workforce transformation. The company is also exploring untouched verticals as well as geographies with continued focus on collaboration, investment acquisition in order to improve the service portfolio.
Communication - High concentration and cyclicality Risk FY 2020-21 Communication vertical revenue share was 39.7% of the total business. This is higher compared to leading Indian and global IT peers of Tech Mahindra. As such the impact of the investment and spend pattern by the constituent businesses in the verticals could have significant impact on the business performance of the organisation. The Communication industry is one of the largest spenders on the IT and Network services and the nature of these spends keeps evolving and changing. The Company is one of the few Global IT Company, which has a complete end-to-end span of services in the Communications Industry and has been able to leverage its expertise and unique positioning in the vertical helping it grow faster.
However, the concentration of the communication vertical has been coming down gradually over years and stands at 39.7% for FY21 versus 52% in FY16, despite of registering growth in the vertical itself.
Key Risk Impact of Risk Mitigation Strategy
Supply side Risk With the evolving IT industry, right skillset and talent is required to respond quickly to the ongoing changes and ramp ups happening in the business. Tech Mahindra has been diversifying its fresher talent pools by recruiting science graduates, diploma holders and certified skilled undergrads, while increasing hiring of local people in onsite locations.
Tech Mahindra has a comparable remuneration structure, matured HR process and various employee friendly incentives.
Cost effective hiring and retaining increased number of professionals with the required skillset is a challenge. The Company focuses on reskilling and redeploying employees runs various programs for employee enhancement and growth like the Global Leadership Cadre (GLC), Young CEO program, Shadow board, 1000 Leaders program etc. The Company has also invested in various learning platforms to provide training to the employees on the new and digital technologies.
While ensuring adequate skillsets in the system, company is also moving towards automation and lean operations to deliver more with less.
Loss in revenues due to lockdowns and travel restrictions as a result of the global pandemic Close engagement with customers to get approvals for work from home wherever required. Extended support to associates to relocate/ continue work from their current locations.
Currency Risk The exchange rate of Tech Mahindras major billing currencies like GBP, USD, EUR and AUD has fluctuated widely in the recent past and may continue to fluctuate significantly in the future thus resulting in wide fluctuation in not only revenues but also Foreign Exchange losses and gains. Adverse currency movements could also lead to impact on Companys profitability being hit. Tech Mahindra has a well-established hedging policy which has been followed consistently over the past years. Hedging is undertaken to protect the Company from unfavorable currency movements & the Company does not undertake any speculative hedging. More than half of Companys revenue is contributed by its onsite activities and a substantial portion of overall cost is incurred is onsite, which provides as a natural hedge.
The Company has a dedicated Treasury Department, which seeks advice from expert professionals and banks for its hedging decisions.
Litigation Risk The Company has been working with over 1000 customers across 90 countries and is prone to risk of litigation arising out of contract execution, Intellectual Property related, regulatory compliances, employment related, adverse rulings, mergers etc. Businesses carry an inherent risk of litigations. To mitigate the same, the company has an in house legal team, spread across regions and catering to all the kinds of risks relevant to the IT business. The company also seeks expertise from external Global Law firms, Taxation and Compliance experts in the relevant areas wherever required.
Further, the company has a robust process and framework for dealing appropriately and in a timely manner, to all the litigation related risks arising either external or internal to the company.
M&A and Integration risk The Company has a focused M&A strategy. The Company has acquired multiple companies in the past several years. M&As and its integrations by nature involve risks relating to failure to achieve strategic objectives, financial loss, cultural and financial integration etc. Acquisitions and M&As have not been new to the Company. The Company has well laid out and defined plans and acquisition policy. It uses M&A to fill up gaps in its portfolio of competency / services, verticals and client / geography access.
Tech Mahindra has a dedicated and professional M&A team led by the executive Leadership.
To avoid integration risks and drive synergies, company focuses extensively on back office integration.
The Company undertakes extensive due diligence and deals are evaluated by the Board. Company also engages with Investment bankers, subject matter experts and advisors in the required areas.
Managements experience with most of the acquisitions done until now has been quite satisfactory and in-line with its expectations.
Climate change risk Water scarcity, high water prices, water and air pollution may impact associate health & wellbeing, leading to loss of work continuity (attendance). Regular scenario/sensitivity analysis and stress testing done, implemented water & environment policies along with initiatives and campaigns to combat climate change.
Shift in sea level rise, precipitation patterns and air pollution will affect assets and compromise operations, eventually making an economic impact. Regular disaster drills, water & air quality checks and data backups are conducted. The company has business continuity and disaster recovery plans, and ensures backup of all data
Increased or mandated Carbon price, shift in customer preferences to be eco-conscious customers and their demand for only sustainable solutions could impact revenue. An internal Carbon price is already implemented . Focus on sustainability measures, actions, platforms and solutions to cater and enable customers achieve their sustainability goals.
High cost of transition to lower emission technology. Increased prices/taxes on fossil fuels (petrol & diesel) Increased energy cost. Tech Mahindra believes in circular economy with our focus on reduce, reuse, recycle and recover. Committed to reduce our carbon footprint and achieve science based targets. Investments in low carbon technology are being funded by internal Carbon Price.

Discussion on Financial Performance with respect to Operational Performance


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, 2021.

The financial statements of TechM 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. Share Capital

The authorized share capital of the Company is Rs 8,337 Million, divided into 1,667,300,000 equity shares of Rs 5 each. The paid-up share capital stood at Rs 4,841 Million as on March 31, 2021 compared to Rs 4,829 Million as on March 31, 2020. The increase in paid up capital during the year is due to issue of 2,407,703 shares on account of conversion of options into shares (Rs 12 Million) by employees under the Employee Stock Option Plans.

2. Reserves and Surplus

a) Securities premium account

The addition to the securities premium account of Rs 1,362 Million during the year is due to amount transferred from share option outstanding account on exercise of stock options to the tune of Rs 849 Million, transfer on allotment of equity shares Rs 513 Million.

b) Retained Earnings

The surplus in the Statement of Profit and Loss as on March 31, 2021 was Rs 200,874 Million compared to Rs 184,021 Million as on March 31, 2020.

3. Right Of Use Liabilities

In compliance with the new 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, 2021 is shown in table below:

ROU Lease liabilities

As at March 31

2021 2020
Long Term 3,497 3,424
Short Term 1,691 1,385
Total 5,188 4,809

4. Fixed Assets

The movement in Fixed Assets is shown in the table below:


As at March 31

2021 2020
Gross Book Value Land - Freehold 459 459
Buildings 21,757 21,737
Leasehold Improvements 714 854
Plant & Equipments 14,958 14,881
Computer equipments 17,424 15,785
Office Equipments 1,894 1,854
Furniture and fixtures 6,933 6,898
Vehicles 173 187
Intangible assets 11,055 15,218
Total 75,367 77,873
Less: Accumulated 50,628 50,896
depreciation & amortization Net block 24,739 26,977
Add: Capital 1,114 352
work-in-progress Net fixed assets 25,853 27,329

The Net Block of Fixed Assets and Capital Work in Progress stood at Rs 25,853 Million as on March 31, 2021 as against Rs 27,329 Million as on March 31, 2020. During the year, the Company incurred capital expenditure (gross) of Rs 2,577 Million (previous year Rs 5,588 Million). The major items of Capital Expenditure include addition to Computers Rs 1,894 Million & Software Rs 336 Million.

5. Right Of Use Assets

In compliance with the new 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, 2021 is Rs 4,680 Million as against Rs 5,383 Million on March 31, 2020.

6. Investments

The summary of Companys investments are given below


As at March 31

2021 2020
Current Investments
Investment in Subsidiaries 78,575 66,077
Investment in Non convertible debentures, Associates & others (treasury bonds & bills) 5,233 278
Total Investments 83,808 66,355
Less : Provision for diminution in value of Investments 8,826 7,472
Net Non Current Investments 74,982 58,883
Investment in property 891 997
Total Non Current Investments Current Investments 75,873 59,880
Investment in mutual funds 80,794 25,029
Term Deposits with Financial Institutions 8,000 7,500
Investment in nonconvertible debentures and commercial papers 1,748 15,074
Current Investments 90,542 47,603
Total Investments 166,415 107,483

Total investments (non-current) as on March 31, 2021 stood at Rs 75,873 Million as against Rs 59,880 Million, as on March 31, 2020. During the year, Non-Current Investment in NonConvertible Debentures & Perpetual Bonds increased to Rs 4,989 Million as on March 31, 2021 as against NIL as on March 31, 2020. Investment in Subsidiaries increased to Rs 78,575 Million as on March 31, 2021 as against Rs 66,077 Million as on March 31, 2020. Diminution in value of Investment in subsidiaries increased by Rs 1,439 Million during the year.

Investment in liquid mutual funds as at March 31, 2021 was Rs 80,794 Million (previous year Rs 25,029 Million), increase of Rs 55,765 Million, increase in Term Deposits with Financial Institutions is Rs 500 Million and decrease in Current Investment in non-convertible debentures and commercial papers is Rs 13,326 Million.

Investment in Subsidiaries

The Company invested in the following subsidiaries during the FY 2020-21:

i. Pursuant to a share purchase agreement, the Company acquired 100% stake in Zen3 Infosolutions Private Limited on April 9, 2020 for a consideration of Rs 141 Million. Further, the Company through its wholly owned subsidiary, Tech Mahindra (Americas) Inc., acquired 100% stake in Zen3 Infosolutions (America) Inc. for a consideration of USD 51.34 Million (Rs 3,882 Million) out of which USD 34.57 Million (Rs 2,614 Million) was paid upfront. The agreement also provides for guaranteed payment of USD 3.85 Million (Rs 292 Million) and contingent consideration linked to the financial performance of financial year ending 2021 to 2023. As at March 31, 2021, contractual obligation towards the said acquisition amounts to USD 16.77 Million (Rs 1,226 Million). Zen3 Group is a software solution group with expertise in software product engineering, DevOps testing, machine learning and AI & Analytics.

ii. Pursuant to a share purchase agreement, the Company acquired 51% stake in Cerium Systems Private Limited ("Cerium") on April 9, 2020 for a total consideration of Rs 1,454 Million, out of which Rs 1,354 Million was paid. Further, the Company has entered into an agreement to purchase the balance 49% stake over a period of three years, ending March 31, 2023, as per which the Company acquired 6% stake at Rs 164 Million. Cerium is engaged in an integrated circuit and embedded software design services.

iii. Pursuant to a share purchase agreement, the Company acquired 100% stake in Tenzing Limited and Tenzing Australia Limited (together known as Tenzing Group) through its wholly owned subsidiary, Tech Mahindra Singapore Pte. Limited on December 1, 2020 for a consideration of

NZD 39.57 Million (Rs 2,083 Million) out of

which NZD 30.05 Million (Rs 1,581 Million) was paid upfront. The initial accounting for the business combination has been determined provisionally. As at March 31, 2021, the contractual obligation towards the said acquisition amounts to NZD 9.52 Million (Rs 487 Million). Tenzing Limited is a Management and Technology consulting Company, serving clients in financial services, commercial services and regulatory sector.

iv. Pursuant to a share purchase agreement, the Company through its wholly owned subsidiary, Tech Mahindra Singapore Pte. Limited acquired 100% stake in Momenton Pty Ltd on February 12, 2021 for a consideration of AUD 9.01 Million (Rs 508 Million). The initial accounting for the business combination has been determined provisionally. Momenton Pty Ltd is a service provider in Software and Cloud Engineering based out of Melbourne, Australia.

v. Pursuant to a share purchase agreement, the Company acquired 100% stake in Perigord Data Solutions India Private Limited and Perigord Premedia India Limited on March 15, 2021 for a consideration of Rs 101 Million and Rs 133 Million respectively. Further, the Company, through its wholly owned subsidiary, Mahindra Engineering Services (Europe) Limited, acquired 70% stake in Perigord Asset Holding Limited for a consideration of EUR 20.92 Million (Rs 1,813 Million) which was paid upfront. The Company has also entered into agreement to purchase the remaining 30% stake based on the financial performance for the financial years ending March 31, 2021 to March 31, 2024 for which contractual obligation of EUR 18.48 Million (Rs 1,602 Million) is outstanding as of March 31, 2021. The initial accounting for the business combination has been determined provisionally. Perigord Group is in the business of providing digital supply chain services to clients in the pharmaceutical and life sciences sector by creating, designing and managing clients packaging, marcoms and digital assets to optimize their supply chain.

Acquisitions undertaken in FY 2021-22:

The Company through its wholly owned subsidiary Tech Mahindra (Americas) Inc. has entered into share purchase agreements to acquire 100% stake in DigitalOnUs, Inc. and Eventus Solutions Group, LLC for a consideration of USD 120 Million (Rs 8,773 Million) and USD 44 Million (Rs 3,217 Million) respectively, comprising of upfront, deferred and contingent consideration.

The above acquisitions have no effect on consolidated accounts during FY 2020-21.

7. Deferred Tax Asset

Deferred tax asset as at March 31, 2021 was at Rs 4,054 Million as compared to Rs 4,364 Million as of March 31, 2020. 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.

8. Sundry Debtors

Sundry debtors at Rs 51,526 Million (net of provision for doubtful debts of Rs 6,041 Million) as of March 31, 2021 as compared to Rs 62,120 Million (net of provision for doubtful debts of Rs 4,703 Million) as of March 31, 2020. Debtor days as of March 31, 2021 (calculated based on per-day sales in the last quarter) were 92 days as compared to 112 days as of March 31, 2020.

9. Cash and Bank Balances

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.


As at March 31

& BANK BALANCES 2021 2020
Bank balances in India & Overseas Current accounts 4,643 5,913
Deposit accounts 5,858 12,667
Total cash and bank balances* 10,501 18,580

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

10. Other financial assets, Other assets and Loans

Other financial assets, other assets & Loans as on March 31, 2021 were Rs 70,551 Million compared to Rs 77,961 Million as on March 31, 2020. Other financial assets include foreign currency derivative assets, security deposits, advances to related parties, interest receivable, lease receivable and unbilled revenue. Other assets include prepaid expenses, balance with government authorities, contract asset, advance income tax, capital advances, amounts deposited and held in escrow accounts for settlement consideration of Aberdeen UK & US.

11. Provisions, Financial Liabilities & Other liabilities

Liabilities and provisions were Rs 66,097 Million as of March 31, 2021 including long term liabilities and provision of Rs 8,175 Million and short term / current liabilities and provisions of Rs 57,922 Million compared to Rs 63,373 Million including long term liabilities and provision of Rs 7,620 Million and short term / current liabilities and provisions of Rs 55,753 Million as of March 31, 2020.


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:


Fiscal 2021

Fiscal 2020

(Rs In Million) % of Total Income (Rs In Million) % of Total Income
Revenue from Services 296,409 292,254
Other Income 9,218 23,662
Total Income 305,627 100% 315,916 100%
Personnel Cost 91,626 92,827
Subcontracting Expenses 113,206 116,074
Operating and Other Expenses 36,835 40,798
Depreciation 6,623 6,674
Interest 632 667
Impairment of non-current investments 1,439 5,554
Total Expenditure 250,361 81.9% 262,594 83.1%
Profit before tax and exceptional items 55,266 53,322
Provision for Taxation 12,875 4.2% 7,977 2.5%
Net profit for the year 42,391 13.9% 45,345 14.4%

1. Revenue

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

The revenue increased to Rs 296,409 Million in fiscal 2021 from Rs 292,254 Million in fiscal 2020. 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 2021 was Rs 378,551 Million compared to Rs 368,677 Million in fiscal 2020, growth of 2.7%.

Consolidated revenue by Geography

Revenue from Americas was 47.5% in fiscal 2021 compared to 48.1% in fiscal 2020 while the share of revenue attributable to Europe was 26% in fiscal 2021 compared to 26.9% in the previous year. Revenue from Rest of the World (including India) as a percentage of total revenue was 26.5% in fiscal 2021 compared to 25% in fiscal 2020.

Consolidated revenue by Vertical

For fiscal 2021, revenue from Communications was 39.7% compared to 41.6% in previous year. Revenue from Manufacturing was 16.4% in fiscal 2021 compared to 18.1% in fiscal 2020. Revenue from Technology, Media & Entertainment was 9.4 % in fiscal 2021 compared to 7.7% in fiscal 2020. Revenue from Banking, financial services & insurance was 16.1% in fiscal 2021 compared to 13.6% in fiscal 2020. Revenue from Retail Transport & Logistics was 7.5% in fiscal 2021 compared to 6.9% in fiscal 2020. Revenue from Others was 10.9% in fiscal 2021 compared to 12.1% in previous year.

Consolidated Revenue by Segment

For fiscal 2021, 89.9% of revenue came from IT services, whereas 10.1% of revenue came from BPO services. The revenue share for fiscal 2020 from IT & BPO services was 90.7% and 9.3% 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 was Rs 9,218 Million in fiscal 2021 compared to Rs 23,662 Million in fiscal 2020. The decrease in other income was mainly due to lower dividend from investments, lower foreign exchange gain in current fiscal year.

3. Expenditure (Standalone)


Fiscal 2021

Fiscal 2020

(Rs In Million) % of Total Expenditure (Rs In Million) % of Total Expenditure
Personnel Cost 91,626 36.6% 92,827 35.4%
Subcontracting Expenses 113,206 45.2% 116,074 44.2%
Operating and Other Expenses 36,835 14.7% 40,798 15.5%
Depreciation 6,623 2.6% 6,674 2.5%
Interest 632 0.3% 667 0.3%
Impairment of investment in subsidiaries 1,439 0.6% 5,554 2.1%
Total Expenses 250,361 100.0% 262,594 100.0%

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

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 the 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 Company has reassessed the recoverable amount in below subsidiaries as on March 31, 2021.

Since the recoverable amount was lower than the carrying value of investments, the Company has recognised impairment loss of Rs 1,439 Million for FY 2020-21 in Subsidiaries Mahindra Engineering Services (Europe) Ltd, The Bio Agency Ltd and Sofgen Holding Ltd. The impairment loss for FY 2019-20 was Rs 5,554 in Subsidiaries Tech Mahindra Servicos De Informatics Ltda, The Bio Agency Ltd, Tech Mahindra Fintech Holdings Ltd, Sofgen Holding Ltd and PF Holding BV.

4. Profit before tax

Profit before tax and exceptional item was Rs 55,266 Million in fiscal 2021 compared to Rs 53,322 Million in fiscal 2020. Profit before tax as a percentage of total revenue was 18.6% in fiscal 2021 compared to 18.2% in fiscal 2020.

5. Income taxes

The provision for income tax for the year ended March 31, 2021 was Rs 12,875 Million as compared to Rs 7,977 Million in the previous year. The effective tax rate in these years was 23.3% and 15.0 % respectively. Lower Tax % for the year ended March 31, 2020 was due to reversal of excess tax provision of the earlier years no longer required.

6. Profit after tax

Profit after tax was Rs 42,391 Million in fiscal 2021 as compared to Rs 45,345 Million in fiscal 2020. Profit after tax as a percentage of revenue was 14.3% in fiscal 2021 and 15.5 % in fiscal 2020.

Consolidated PAT

Consolidated PAT for fiscal 2021 was Rs 44,280 Million as compared to Rs 40,330 Million last fiscal 2020. PAT as a percentage of revenue is 11.7 % in fiscal 2021 & 10.9 % in fiscal year 2020.




As at March 31

2021 2020
Net cash generated from operating activities 68,519 23,804
Net cash generated from/ (used in) investing activities (56,208) 32,521
Net cash from/(used in) financing activities (20,661) (48,424)
Net Increase/ (decrease) in cash and cash equivalents during the period (8,350) 7,901
Effect of exchange rate changes on cash and cash equivalents 192 538
Cash and Cash Equivalents at the beginning of the year 18,038 9,599
Cash and Cash Equivalents at the end of the year 9,880 18,038


Sr. No Key Financial Ratios* Fiscal 2021 Fiscal 2020 % Change
1 Debtors Turnover 3.5 3.3 5%
2 Inventory Turnover NA NA
3 Interest Coverage Ratio 161.7 104.3 55%
4 Current Ratio 3.4 3.2 6%
5 Debt Equity Ratio # - - -
6 Operating Profit Margin (%) 16.2% 12.3% 4%
7 Net Profit Margin (%) 14.3% 15.5% -1%
8 Return on Net worth 17.9% 21.1% -3%

*Ratios are based on Standalone Financials # Debts do not include operating leases

Movements in the above ratios are not greater than 25%, hence not material except for Interest Coverage Ratio. It is higher in FY 2020-21 due to higher EBIT & lower interest expense compared to FY 2019-20.


The Company maintains 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 at the cutting edge of technology, through our people, we strive at attracting the best talent through intensive recruitment drives in premier engineering and management institutes. During the year, Tech M saw a net reduction of 4,182 professionals. The global headcount of the Company as on March 31, 2021 was 121,054 as compared to 125,236 as on March 31, 2020.

The IT attrition was 13.3% during the year as compared to 19.1% 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.