Company Analysis of Tech Mahindra Ltd

8/12/2019 Company Analysis of Tech Mahindra Ltd

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Company analysis of Tech Mahindra Ltd

By Rekha Mohanty

CONTENTS

4.2. Target customer 5

4.3. Distribution channel 5

4.4. Promotion 5

4.5. Revenue Streams 6

4.6. Core capabilities 6

4.7. Value configuration 6

4.8. Partners network 6

4.9. Cost Structure: 7

Business Analysis 9

5.3. Segmental Analysis 9

5.5. Issues & Concerns 10
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6. Operational Performance 11

6.1. Sales & Sales Growth : 11

6.2. PBDIT and OPM 11

6.3. Net Profit & Net Profit Margin 12

6.4. Cost Structure : write up 12

6.5 Operating Matrics: 13

7.Financial Performance 15

8.Capital Market Performance 16

9.Recent Strategy 16

10. Outlook 16

Template of Company Scan

1. Preamble: Commitment to excellence over the past year has earned Tech mahindra Ltd recognition as

a 2010 AT & T supplier award winner for its support of affiliates of AT & T, one of the worlds leading

data, voice, wireless and internet services providers. Tech mahindra Ltd the best system integrator by

CMAI and INFOCOMs national telecom awards 2010.It also wonLeap vault Change Leadership Award

2010 for Game Changing M&ADomestic Category.

2. Background:The year of incorporation

was 1986 in Pune. The major promoters of

Tech mahindra are Mahindra & Mahindra

Ltd & BT Group plc with holding 44% and

39% of the equity respectively. Tech

Mahindra is a global systems integrator and

business transformation consulting firm

focused on the communications industry.

With the Convergence of media and

telecom, the changing landscape of the

telecom industry is becoming extremely

Competitive.Tech Mahindra is the

leading provider of IT solutions to the

telecom industry. For over two decades, Tech Mahindra has been the chosen transformation partner for

wireline, wireless and broadband operators in Europe, Asia-Pacific and North America.

Write current revenue of the company.. and listing
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3. Products & services:

Tech Mahindra provides IT services, R&D services and BPO services

.

IT services Details

Solution Integration Tech Mahindra's SI services enable clients to identify, develop,

and implement the best-fit solutions which are equipped to

meet their changing business requirements.

Application Development

& Management

Tech Mahindra offers scalable end-to-end application

development and management solutions from requirement

analysis to deployment and rollout.

Consulting Tech Mahindra offers a full range of Consulting services to help

analyze the business requirements for effective

implementation of software solutions.

Managed services With a core focus on Telecom, Tech Mahindra has the expertise

and experience to manage an enabling infrastructure and

applications and run outsourced operations for large telecom

operators smoothly.

Infrastructure

management services

Tech Mahindra has demonstrated ability to deliver

Infrastructure Management Services to its clients more

efficiently and cost effectively than their internal IT

departments or other managed service providers.

R&D services Details

Service offerings Product life cycle management

Testing

NMS/EMS Software development

Hardware board development

Network offerings

Technology transformation

Other services

Domain practices Tech Mahindra's expertise has yielded a multitude of

outstanding achievements, thus gaining customer confidence in

the domain capabilities.


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BPO As organizations look to streamline businesses by focusing their

resources and technology spending on core competencies, Tech

mahindrasBPO and Business Process Management (BPM)

expertise can help them achieve their corporate objectives and

attain exponential benefits.

4. Business Model Analysis:

4.1. Value proposition:

To compete in the modern world, the company produces different products and services to cater their

different customers. Tech mahindra provides IT services, R&D services & BPO.

i) IT services:Solution Integration

Application Development & Management

Consulting

Managed ServicesInfrastructure Management Services

ii) R&D services

iii)BPO

4.2. Target customer

For over two decades, Tech Mahindra has been the chosen transformation partner for wireline, wireless

and broadband operators in Europe, Asia-Pacific and North America. Over 30,000 professionals service

clients across the telecom eco-system, from the global network of development centres and salesoffices across Americas, Europe, Middle-East, Africaand Asia-Pacific.Tech mahindras targeted

customers are mostly the Telecom industry.

4.3. Distribution channel

There are different forms of distribution channels like agents, dealers, franchisees, internets and own

outlets. Distribution channels are very much important for any organisation for its growth. In some

cases, distribution channel plays two important roles, one as a selling point and another as after sales

services point. Through this, the organisation will be in direct contact with their customers.

4.4. Promotion

Tech Mahindras proven expertise and experience in providing Business Support Service (BSS) solutions

can help reduce operating costs. Its in-depth understanding of the operational and financial challenges

faced by various telecommunication and media companies has helped them achieve operational

excellence.

4.5. Revenue Streams

Tech Mahindra partners with clients, building an ongoing relationship that delivers not only

an appropriate BSS, but also one that is fully supported in terms of roadmap and resources over time. Its

singular focus on telecom, and a comprehensive BSS Practice with proven consulting and delivery skills


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in all major BSS products, has made us a partner of choice for the delivery of major IT transformation

programmes for telecom service providers worldwide.

Mention from which areas the revenue are coming

4.6. Core capabilities

Tech mahindras core capabilities are well trained and highly skilled professionals

4.7. Value configuration

Tech Mahindras in-depth understanding of the operational and financial challenges faced by various

telecommunication and media companies has helped them achieve operational excellence. Through

their coherent and evolving portfolio of offerings, they have enabled their clients to improve their long-

term performance. Tech Mahindras BSS infrastructure consolidation and rationalization has made it

possible to remain competitive in the Next Generation market place.

4.8. Partners network

The Partner Program at Tech Mahindra represents their innovative concept in building partner

relationships. Some of the recent partnerships company entered in are

i. Engaged with Microsoftto build Sandbox Framework Product Development. Development of

communication sector Products / Frameworks Support for RFI, RFP & Joint GTM in progress,Staff Augmentation and fixed price projects.

ii. Tied up with HP to Openview, Opencall, Hardware& Storage.

iii. Engaged with Sun Microsystems for IPTV, JCAPS, SeeBeyond, Hardware, Storage.

iv. Tied up with IBM for Websphere, Rational, and Tivoli including Micromuse, DB2, Lotus,

Hardware and Storage.

v. Tech Mahindra is a Platinum certified partner in the Oracle Partner Networkin Technology, EAI,

Portal Development, Metasolv, and Siebel.

vi.

Tech Mahindra has a strategic partnership with Siebel.

vii. TechMahindra has a reseller Partnership with SubexAzure.

viii. Tech Mahindra has a global Premier partnership with BEA Systems Inc. BEA Systems Inc. is a

world leader in enterprise infrastructure software, delivering powerful standards-ased platformsfor building enterprise applications and managing Service-Oriented Architectures even in

heterogeneous IT environments.

4.9. Cost Structure:

Q4 2009-10

Rs in

Million

Total Sales Revenue 44,269

Cost

% of total

Revenue

Personnel Expenditure 18.556 41.91

Operating & other expenses 13,266 29.96

Depreciation 1097 2.47


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Interest 25 0.056

Mention write up and compare totalcost as a percent of sales against previous years.


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5.


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Business Analysis

5.1. Growth Drivers: Tech Mahindra helps companies innovate and transform by leveraging its unique

insights, differentiated services and flexible partnering models.

i. Diversify across customers vertical, geographical and technology offerings

ii. Minimal overlaps in terms of target industry segments and clients

iii. Likely syner5gy benefits.

iv.

Ability to sell a wide range of services to the companys existing customers.

v.

Common support and control systems-reduction in operating expenses.

5.2. Value Drivers: Tech Mahindra is focused on creating sustainable value growth through innovative

solutions and unique partnership

i. Customer first

ii.

Good Corporate Citizenshipiii. Professionalism

iv. Commitment to quality

v. Dignity of the individual

5.3. Segmental Analysis

Vertical segmentation

Geographical Segmentation


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5.4. Competition:Competitive position is

low to moderate for large player.

company

name

Market

Share (%)

TCS 32.13

WIPRO 24.80

INFOSYS 22.62

HCL 5.24

TECH MAHIN. 4.95

5.5. Issues & Concerns

i.

High Volatility in Currency Rates (Specially $)

ii. High Degree of Competition

iii.

Lack of Skilled human knowledge leading to execution riskiv. Absence of strict regulations

v. Low level of R&D expenditure by Indian companies

vi. Uncertainty in International market

vii.

Mention in details

6. Operational Performance

6.1. Sales & Sales Growth :

Tech Mahindra derives revenue

Principally from technology servicesProvided to clients in the Telecomm-

unications industry. The overall revenue

increased in 2009-10 in comparison

to 2008-09.This reflected the increase

in the number of clients served during the

respective years as well as an increase in the

amount of business from these clients.


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Mention amount of recent quarter with

proper comparison and reasons.

6.2. PBDIT and OPM

The Operating Profit & its margin

is decreasing from Q2 of FY 2009 because

total expenditure is increasing continuously.

The major reasons behind this are

i) Due to increase in head counts &

annual increments.

ii) Due to increase in business Volumes,increase in number of office locations

in India & over seas and overall growth in

business activity.

6.3. Net Profit & Net Profit Margin

In the Q4 of FY 2009-10 the Net Profitis increasing because of increase in sales

& decrease in operating expenses. The

major reason behind increase in sales is

increase in the number of clients served &

the increase in the volume of business

from the existing clients.


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6.4. Cost Structure : write up

Qtrs Sales Personnel % Depreciation % Travelling %

Services

Of

BusinessAssociates %

OND2008 11024 3621.8 32.85 278 2.52 937.7 8.506 2311.3 20.966

JFM2009 10126.6 3260 32.19 276.5 2.73 838.2 8.2772 2377.9 23.482

AMJ2009 10602.3 3934 37.11 286.4 2.7 778.4 7.3418 2334.4 22.018

JAS2009 11098.4 4114.7 37.07 301.4 2.72 705.1 6.3532 2304.5 20.764

OND2009 11499 4116.2 35.8 321.2 2.79 669.7 5.824 2965.7 25.791

JFM2010 11638.7 3814.9 32.78 389.6 3.35 556.7 4.7832 3097.6 26.615

*

Source:BSE

% is calculated upon sales of the respective quarter.

* Figures are in Rs/mn.

6.5 Operating Matrics:

Business Per Employee For The last 6 quarters

Business per employee is decreasing because of

increasing number of employees in comparison tothe increase in the revenue.

In charts ..follow rules - 123

Profit Per Employee for the last 6 quarters

In the last quarter of 2010 the Net profit per


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employee is increasing because the net profit

increases more than the increase in the number

Of employees.

Vertical wise Revenue for the last 6 quarters

From the last 6 quarters the revenue coming

from

Telecom service Provider is increasing

because

Tech Mahindra is the Leader in Providing IT

solutions to Telecom Industry.

Geography wise Revenue Distribution of last

3 years

In the last two years the geography wise

revenue

distribution is more or less stagnant showing

the

Company is maintaining its stability inspite of

the

Economic up & down turns.


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Offshore & Onsite Revenue For the last 6

quarters

In the last 6 quarters a shift in onshore-

offshore

Ratio towards offshoring,meaning that

company is

Able to better leverage its centres in Pune

,Mumbai,Bengaluru,Noida

,Kolkata,Chandigarh,chennei,

Hyderabad Etc.

7.Financial Performance

ROCE & ROE

Through out the last three years

It has been observed that ROE is

Less than the ROCE,it indicates

the company will have to take on

further debt to grow.


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Debt-Equity Ratio

The Debt -equity ratio in the 2008

was more because of increase in Debt &

In 2009 it was zero because of no debt

burden .


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8.Capital Market Performance


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Relative Performance Analysis

In the last month 2010 ITSS is out performing

the performance of the company as well as

the performance of SENSEX.It signals we

shouldnt invest in the company ,rather we

should invest in ITSS Industry.

9.Recent Strategy

Tech Mahindra has continually demonstrated solutions for monitoring market changes and for

implementing superior market strategies.Those strategies are

i. Undertaken initiatives to deal with service specific security like IPTV, which is one of the killer

applications of NGN Telecom.

ii. Synergy, economies of scale, opportunities to acquire new technology to stay competitive.

and improve market reach are the reasons for M&A strategy.Tech Mahindra merged with Satyam to

reduce the dependence on British Telecom.

10. Outlook

i. As the ITSS industry will witness suatainable growth of 15 %, Tech Mahindra is also expected to

grow in future.

ii. The spending related global technologies is expected to grow from 2010 onwards.

iii. The company will continue to diversify in terms of geographies, verticals & service lines

iv. The growth in the telecommunication sector will help it expand its foot prints in the local

Information Technology outsourcing market.

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Company Analysis of Tech Mahindra Ltd

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