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    Qualitative Analysis: Annual Report of Tech Mahindra Ltd.

    Qualitative Analysis of Annual

    Report Of

    Tech Mahindra Ltd.

    Assignment - 3

    MANAC: GMP 2014-15

    Prepared by:

    Bhupathireddy Oruganti G14014!

    Ni"adri #e$har #ar$ar G14031!Pu"asta Mahapatra G1403%!

    #udip B&se G14053!

    #&ham Gh&sh G14051!

    'tsa( Cha$ra(&rty G1405%!

    #") *tem +es,ripti&n Page

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    N&) n&

    1 ./11: e,utie #ummary 3

    2 ./11: Ana"ysis & ,urrent gr&th trend and uture &ut"&&$ 3

    ./11: Ana"ysis & ,urrent set & ris$s and uture ris$ pr&(a(i"ity 4

    !./11: Ana"ysis & ,urrent *ndustry nir&nment and uture

    &ut"&&$5

    "./11: Ana"ysis & ,urrent pr&ta(i"ity and uture pr&ta(i"ity

    driers5

    # ./12: e,utie #ummary 6

    $ ./12: Ana"ysis & ,urrent gr&th trend and uture &ut"&&$ %

    % ./12: Ana"ysis & ,urrent set & ris$s and uture ris$ pr&(a(i"ity 7

    &./12: Ana"ysis & ,urrent *ndustry nir&nment and uture

    &ut"&&$7

    1'./12: Ana"ysis & ,urrent pr&ta(i"ity and uture pr&ta(i"ity

    driers8

    11 ./13: e,utie #ummary 10

    12 ./13: Ana"ysis & ,urrent gr&th trend and uture &ut"&&$ 10

    1 ./13: Ana"ysis & ,urrent set & ris$s and uture ris$ pr&(a(i"ity 11

    1!./13: Ana"ysis & ,urrent *ndustry nir&nment and uture

    &ut"&&$12

    1"./13: Ana"ysis & ,urrent pr&ta(i"ity and uture pr&ta(i"ity

    driers 12

    1#Predi,ti&n &r ./14 &n Gr&th9 ris$9 industry and pr&ta(i"ity

    r&nts13

    Table of (ontents:

    2'1')2'11

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    *+ecutive su,,ary: G"&(a" re,essi&n and redu,ed * spending has

    ta$en a t&"" &n ,&mpany/s reenue) & &;set that9 it has ta$en seera"

    steps t& redu,e &perating epenses) he ,&mpany is a"s& trying t& redu,e

    its dependen,y &n dee"&ped mar$ets and ,&n,entrating &n emergingmar$ets espe,ia""y &n erti,a" d&main ,&nsu"tan,y thr&ugh superi&r

    te,hn&"&gy) C&nsidering the upard industry trends and signs & e,&n&mi,

    re,&ery9 the ,&mpany is epe,ted t& sh& (etter pr&ta(i"ity) Being an

    *ndian ,&mpany9 it is a"s& (etter p"a,ed t& tap the &pp&rtunities as it is

    predi,ted that *ndia is g&ing t& ,&ntri(ute highest in the &r$ing

    p&pu"ati&n) But9 the ,&mpany may (e ep&sed t& "ia(i"ities in ,ase & any

    aderse &ut,&me due t& pending "itigati&n9 any undete,ted nan,ia"

    irregu"arities and the negatie sentiment ass&,iated ith the ersthi"e

    #atyam ,&mputers)

    -roth:

    1! ue retai"

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    eperien,e!9 uti"ities smart grid G*# (ased aut&mati, metering &r

    inrastru,ture9 * (ased ide& se,urity ana"ysis!9 manua,turing

    me,hatr&ni,s in aut&-m&tie industry9 te,hni,a" ,&nsu"tan,y in aer&

    spa,e! and B#*)6! he ,&mpany rea"ies the &pp&rtunities in emerging mar$ets) he

    ,&mpany has heai"y inested in ?@+ in &rder t& dee"&p "& ,&st

    s&"uti&ns ,ust&mied &r emerging mar$ets) he ,&mpany is epe,ted

    t& (e in a (etter stride t& tap the &pp&rtunities in emerging mar$ets)

    Ris/:

    1! As the ,&mpany/s (a"an,e sheet ,arried inated (a"an,e in ,ash and

    (an$ (a"an,e9 n&n-eistent a,,rued interest et,) &n an20089 the

    C&mpany may (e ep&sed t& "ia(i"ities in ,ase & any aderse &ut,&me

    & inestigati&ns & these)2! he ,&mpany a"s& runs the ris$ & unidentied ?is$ & nan,ia"

    irregu"arities in ie & the signi,ant "imitati&ns in inestigati&n there

    is a ris$ that materia" err&rs9 raud and &ther i""ega" a,ts may eist that

    remain undete,ted)3! he ,&mpany/s (usiness is heai"y dependent &n '# and ur&pean

    mar$et) Any e,&n&mi, s"&d&n &r aderse "egis"ati&n might impa,t

    reenue)4! *t is a"ays a ,ha""enge t& $eep pa,e ith rapid te,hn&"&gi,a"

    dee"&pment)5! Negatie sentiment ass&,iated ith ersthi"e #atyam ,&mputer (rand

    may hae an aderse impa,t &n the uture (usiness gr&th)

    6! As * industry &perates a,r&ss many ,&untries9 n&n ,&mp"ian,e t& the

    "ega" me,hanism & the &reign ,&untries may a;e,t (usiness)

    0ndustry:

    1! NA##COM predi,ts that *ndian * D *# industry may gr& t& '#+ 225

    (i""i&n (y 2020) A,,&rding t& the NA##COM #trategi, ?eie 20119 the

    *ndian * D *# industry is estimated t& aggregate reenues & '#+

    77)2 (i""i&n in .2011)

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    2! he &pp&rtunity in * industry "ies ith emerging mar$ets as it is

    epe,ted t& pr&ide (etter return in spending ,&mpared t& dee"&ped

    mar$ets)3! he d&mesti, * D *# reenues are a"s& estimated t& gr& at 21

    per,ent t& '#+ 27)7 (i""i&n in .2011)4! *ndia is pr&=e,ted t& ,&ntri(ute the "argest num(er & pe&p"e t& the

    &r$ing p&pu"ati&n &er the net 10 years9 a a,t&r that a&urs

    Mahindra E#atyam/s ?ight #&ur,ing M/ m&de" &r de"iery & seri,es)5! +ue t& ragmented nature & * industry here seera" *ndian and

    g"&(a" ,&mpanies are ,&mpeting ea,h &ther9 it is ery diF,u"t t&

    di;erentiate pr&du,ts and seri,es "eading t& "& margin)

    Protability:

    1! One & the imp&rtant driers & pr&ta(i"ity is the ta in,enties gien

    t& the #Ps #&tare e,hn&"&gy Par$! hi,h is a"id &r 10 years sin,e

    in,epti&n and s& it is sustaina("e in the sh&rt t& medium term)2! *n,&me r&m &perati&n has de,reased ,&mpared that & the prei&us

    year (y ar&und 6)59 yet the &perating pr&t has in,reased (y 25)

    he in,rease in pr&t is due t& in,rease in &ther in,&me) he in,rease

    in &ther in,&me is &n a,,&unt & &reign e,hange gain9 hen,e it ,ann&t

    (e deemed as sustaina("e in the "&ng run)3! he &perating epense has in,reased (y 16 and this in,rease is

    primari"y due t& &uts&ur,ing in ,ust&mer dep"&yment and "ega" a;airs)

    C&nsidering the "ega" ,ases pending and simi"ar (usiness enir&nment9

    it is un"i$e"y that the &perating ependiture i"" de,rease in uture) his

    i"" hae negatie impa,t &n pr&ta(i"ity in near uture)4! he ,&mpany has ta$en ari&us green initiaties (y e;e,tie

    management & energy9 ater9 paper and trae") Hith these initiaties

    ,&mpany epe,ts t& redu,e their &perating epenses)

    2'11)2'12

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    *+ecutive u,,ary: Gr&th is drien (y in,reased ep&rts &r the

    ,urrent year) he ,&mpany/s r&(ust gr&th epe,tati&n in the ,&ming

    years is str&ng &unded due t& in,reased demand in neer se,t&rs and

    neer segments & the mar$et) & gra( the &pp&rtunity9 the ,&mpany hasinested in ?@+9 ne pr&du,t dee"&pment and in,reasing d&main

    epertise) Pr&(a("e ris$s may arise r&m ,hanging "egis"ati&n in &reign

    mar$ets9 e,&n&mi, s"&-d&n in '# @ ur&pe9 undete,ted nan,ia"

    irregu"arities r&m ersthi"e #atyam C&mputers et,) he pr&ta(i"ity & the

    ,&mpany in the near t& mid-term uture may get a;e,ted due t& a

    pr&(a("e aderse &ut,&me & the su(-=udi,e ,&urt ,ases) he ,&mpany i""

    (e a("e t& sustain the pr&ta(i"ity in (u""ish industry &ut"&&$ &n"y i it ,an

    $eep pa,e ith te,hn&"&gy t& etra,t a higher margin r&m the ,ust&mer)

    he pr&ta(i"ity a,hieed in the ,urrent year is n&t sustaina("e as a

    signi,ant p&rti&n is r&m &ther in,&me) he sh&rt term pr&ta(i"ity may

    get a;e,ted due t& the ta in,entie peri&d and in,reased spending &n

    "ega" a;airs) his may (e ,&mpensated th&ugh t& ,ertain etent (y the

    gains r&m di;erent green initiaties)

    -roth:

    1) he reenue &r 2011-2012 has in,reased (y appr&) 25 )r)t the

    prei&us year) he in,rease in ?eenue is main"y ,&ntri(uted (y

    Business Operati&ns) Besides9 there is a su(stantia" ,&ntri(uti&n r&m

    the interest &n the Ban$ +ep&sits)2) he gr&th in reenue may (e attri(uted t& the su(stantia" in,rease in

    *ndian p&rts hi,h stands at 25 as &n .-20129 ,&mpared t& "ess

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    than 4 in .-1887) Besides this the *-BPO industry re,&ered r&m

    un,ertainties in the G"&(a" Business nir&nment)3) he ,&mpany i"" inest in g"&(a" de"iery ,entres t& sere the

    ,ust&mers (etter and t& pr&ide ariety & res&ur,es and epertise

    a,r&ss the g"&(e t& th&se ,&mpanies hi,h i"" n&t hae presen,e in

    these emerging e,&n&mies)4) he ,&mpany enisages gr&th &pp&rtunities in e,hn&"&gy9 Media @

    ntertainment and semi,&ndu,t&rs9 enterprise (usiness s&"uti&n9 ,"&ud

    ,&mputing and #aa# s&tare as a seri,e! (usiness) & tap the

    mar$et9 the ,&mpany is dee"&ping pr&du,ts and seri,es ith

    esta("ished end&rs)5) Ma=&r gr&th driers in the near uture i"" (e r&m d&main epertise

    su,h as B#*9 '# and "arge ,&rp&rati&ns and emerging segments su,h

    as retai"9 hea"th,are and uti"ities9 #MBs9 Asia Pa,i, and ?est & the

    H&r"d)6) he ,&mpany rea"ies the &pp&rtunities in emerging mar$ets) he

    ,&mpany has heai"y inested in ?@+ in &rder t& dee"&p "& ,&st

    s&"uti&ns ,ust&mied &r emerging mar$ets) he ,&mpany is epe,ted

    t& (e in a (etter stride t& tap the &pp&rtunities in emerging mar$ets)

    %) C&mpany is a"s& "&&$ing &r high end seri,es-,&nsu"ting9 system-integrati&n and it is a"s& p"anning t& ,reate *P? ith ?@+ se,t&r and

    a,ademi, instituti&ns &r uture (enet t& the ,ust&mer9 "eading t&

    gr&th)

    Ris/:

    1) As the C&nsumer demand @ spending in the emerging e,&n&mies

    in,reases9 the ,&mpanies i"" hae a ider ariety & ge&graphi,

    "&,ati&ns hi,h i"" in turn spread the ris$ & &uts&ur,ing)2) Appr&priate ,&ntingen,ies are (eing earmar$ed against regu"at&ry n&n-

    ,&mp"ian,esD(rea,hes a,ed (y the ,&mpany9 (esides &ther ari&us

    ,"aims)3) he ,&mpany ,&ntemp"ates that it is &u"d (e ery t&ugh t& $eep pa,e

    ith the rapid te,hn&"&gi,a" dee"&pment)

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    4) he ,&mpany a"s& runs the ris$ & unidentied ?is$ & nan,ia"

    irregu"arities in ie & the signi,ant "imitati&ns in inestigati&n there

    is a ris$ that materia" err&rs9 raud and &ther i""ega" a,ts may eist that

    remain undete,ted)5) As the ,&mpany is spreading its &perati&ns in many ,&untries9 it a,es

    ris$ & n&n-,&mpanies & any sudden ,hange in the regu"at&ry

    re>uirement)6) he ,&mpany enisages high attriti&n due t& attra,tie &reign

    &pp&rtunities)%) he ,&mpany/s (usiness is heai"y dependent &n '# and ur&pean

    mar$et) Any e,&n&mi, s"&d&n &r aderse "egis"ati&n might impa,t

    the reenue)7) +e"ay in ,&mp"eti&n & ed-pri,e9 ed-time rame ,&ntra,ts ithin

    the (udgeted time @ ,&st)

    0ndustry:

    1) A,,&rding t& NA##COM/s strategi, rep&rt &n 2011-20129 *ndian *D*#

    *ndustry is the astest gr&ing segment and is in,reasing (y 18 and

    estimated gr&th t&I 40 Bi""i&n in 2012)2) he &pp&rtunity in * industry "ies ith emerging mar$ets as it is

    epe,ted t& pr&ide (etter return in spending ,&mpared t& dee"&ped

    mar$ets)3) A,,&rding t& 'N9 the dee"&ping e,&n&mies are gr&ing thri,e as ast

    as t& that & dee"&ped e,&n&mies "eading t& a (etter e,&n&mi,

    enir&nment) he return & ,&nsumer ,&nden,e and re,&ery &

    (usiness gr&th are epe,ted t& drie *D*# spending t&ards

    m&ing &rard)4) +ue t& ragmented nature & * industry here seera" *ndian and

    g"&(a" ,&mpanies are ,&mpeting ea,h &ther9 it is ery diF,u"t t&

    di;erentiate pr&du,ts and seri,es "eading t& "& margin)

    Protability:

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    1) *n,&me r&m &perati&n has in,reased ,&mpared that & the prei&us

    year (y ar&und 259 yet the &perating pr&t has in,reased (y appr&)

    85) he in,rease in pr&t is due t& in,rease in in,&me r&m

    Operati&ns) he in,rease in &ther in,&me is &n a,,&unt & &reigne,hange gain9 hen,e it ,ann&t (e deemed as sustaina("e in the "&ng

    run)2) A"s&9 &ne & the imp&rtant a,t&rs & driing pr&t is the ta in,enties

    gien t& the #Ps #&tare e,hn&"&gy Par$! hi,h is a"id &r 10 years

    sin,e in,epti&n and s& it is sustaina("e in the sh&rt term &n"y)3) he &perating epense has in,reased (y 32 and this in,rease is

    primari"y due t& &uts&ur,ing in ,ust&mer dep"&yment and "ega" a;airs)

    C&nsidering the "ega" ,ases pending and simi"ar (usiness enir&nment9

    it is un"i$e"y that the &perating ependiture i"" de,rease in uture) his

    i"" hae negatie impa,t &n pr&ta(i"ity in near uture)4) he ,&mpany has ta$en ari&us green initiaties (y e;e,tie

    management & energy9 ater9 paper and trae") Hith these initiaties

    ,&mpany epe,ts t& redu,e their &perating epenses)

    2'12)1

    *+ecutive su,,ary: he C&mpany is &n a gr&th path and is epe,ted

    t& gr& (e,ause & many a,t&rs name"y its "eadership p&siti&n as a

    seri,e pr&ider t& te"e,&m se,t&rs9 (etter e,&n&mi, s,enari&9

    ge&graphi,a""y diersied (usiness p&rt&"i&9 &,us &n ne te,hn&"&gy and

    ?@+ and strategi, a,>uisiti&ns &r ,apa(i"ity augmentati&n) & ,&ntinue &n

    the gr&th path the ,&mpany need t& guard against ,ertain ris$s name"y

    u,tuati&n in &reign e,hange-rate9 in,reased d&mesti, ,&mpetiti&n r&m

    g"&(a" * giants9 the pr&(a("e redu,ti&n in reenue due t& the imminent

    '# *mmigrati&n Bi""9 ast ,hanging te,hn&"&gy et,) On the pr&ta(i"ity

    r&nt9 PA gr&th is n&t ,&mmensurate ith the reenue gr&th) h&ugh

    M< is haing a ,&mpetitie adantage in the *ndustry due t& its "eading

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    p&siti&n as seri,e pr&ider t& e"e,&m #e,t&r and adan,ed te,hn&"&gy9

    the reenue gr&th rate may (e su(dued due t& u,tuating e,&n&my and

    "&er dea" sie (y the ,"ients due t& (udgetary ,&nstraints)

    -RO3T4:

    1! ?eenue r&m &perati&n has in,reased (y 25 ,&mpared t& the

    prei&us year) his is (e,ause & (etter e,&n&mi, ,&nditi&n9 m&re *

    spending and (etter mar$eting e;&rt) ?eenue r&m * ,&nsu"ting has

    a"s& in,reased)2! Am&ng the *ndian * ,&mpanies9 M< is a mar$et "eader in te"e,&m

    industry) *t seres

    segments su,h as e"e,&m seri,e pr&iders9

    e"e,&m e>uipment manua,turers and *ndependent s&tare end&rs)

    As the emerging e,&n&mies inest m&re in te"e,&m se,t&r9 the "eading

    p&siti&n in this se,t&r is a ma=&r gr&th drier &r the ,&mpany) he

    ,&mpany is a("e t& add "&t & ne ,ust&mers in this d&main in the

    ,urrent year)3! he ,&mpanyJs a,>uisiti&n & Kut,his&n G"&(a" #eri,es and C&mia

    gies it ,&mpetitie adantage in C?M and in M-,&mmer,e segment)4! he ge&graphi,a" sp"it & reenue is (a"an,ed ith 45 share r&m

    ur&pe9 33 r&m Ameri,a and 22)7 r&m rest & the &r"d) his

    means the ,&mpany has (een a("e t& redu,e its dependen,y &n '#

    mar$ets and has &,ussed m&re in ur&pe and emerging mar$ets) his

    "eaes ,&mpany "ess sus,epti("e t& '# e,&n&my (ut m&re t&ards

    ur&pean e,&n&my)5! he ,&mpany is inesting in ne te,hn&"&gies "i$e smart ,&mputing

    pr&du,ts9 ,"&ud9 ana"yti,s and m&(i"ity) hat means it anti,ipates

    gr&ths in these areas) *ts ear"ier inestment in ?@+ has earned it a

    ni,he p&siti&n in te"e,&m s&tare seri,e pr&ider)6! he ,&mpanyJs merger ith #atyam i"" redu,e the ,ust&mer

    ,&n,entrati&n and i"" he"p it t& redu,e ris$)

    R05:

    1! he a,>uisiti&ns (y nature in&"e ris$s re"ating t& ai"ure t& a,hiee

    strategi, &(=e,ties9 ,u"tura" and nan,ia" integrati&n et,)

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    2! he e,hange rate (eteen the *ndian rupee and the British p&und and

    the rupee and the ')#) d&""ar has u,tuated ide"y in "ast year and

    may ,&ntinue t& u,tuate signi,ant"y in the uture)3! Any strengthening & the *ndian rupee against the British p&und9 the

    ')#) d&""ar &r &ther &reign ,urren,ies9 as itnessed in the "ast year9

    ,&u"d aderse"y a;e,t &ur pr&ta(i"ity)4! G"&(a" * giants9 as they are epanding their (usiness in *ndia9 may

    p&se a threat t& the ,&mpany due t& their (etter d&main $n&"edge

    and ,ust&mer re"ati&nship and higher reenue (ase)5! he immigrati&n (i"" hi,h may ,&me int& e;e,t s&&n i"" hae a

    negatie impa,t &n *ndian &;sh&re Lend&rs "i$e M

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    3! &r Mahindra #atyam9 th&ugh reenue in,reased (y m&re than 209

    PA margins redu,ed r&m (y m&re than 5