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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