The Directors present their Twenty-fifth Annual Report together with
the audited accounts of your Company for the year ended 31st March,
(Rs. in Million)
For the year ended 31st March 2012 2011
Income 53,107 50,921
Profit before Interest, Depreciation,
exceptional items and tax 8,999 10,556
Interest (1,025) (1,113)
Profit before Depreciation and tax 7,974 9,443
Depreciation (1,505) (1,383)
Profit before tax 6,469 8,060
Provision for taxation (1,184) (1,093)
Profit after tax before non-recurring /
exceptional items 5,285 6,967
Non-recurring / exceptional items (679) -
Profit for the year after tax and
non-recurring / exceptional items 4,606 6,967
Balance brought forward from previous year 22,412 17,740
Profit available for appropriation 27,018 24,707
Transfer to Debenture Redemption Reserve (1,353) (702)
Dividend - Final Dividend* (4) (6)
- Dividend (Proposed) (510) (504)
Tax on dividend (83) (83)
Transfer to General Reserve (1,000) (1,000)
Balance carried forward 24,068 22,412
* In respect of equity shares issued pursuant to ESOPs issued after
31st March, 2011 but before book closure date, the Company paid
dividend of Rs. 4.3 Million for the year 2010-11 and tax on dividend of Rs.
0.7 Million as approved by the shareholders at the Annual General
Meeting held on August 12, 2011.
Your Directors are pleased to recommend a dividend of Rs. 4 per Equity
Share (40%), payable to those Shareholders whose names appear in the
Register of Members as on the Book Closure Date.
The equity dividend for the financial year 2011-12, inclusive of tax
on distributed Profits would absorb a sum of Rs. 593 Million (Rs. 587
Million for the previous year).
CHANGES IN SHARE CAPITAL
During the year under review, your Company allotted 1,531,060 equity
shares of face value Rs. 10 each on the exercise of stock options under
its various Employee Stock Option Plans and consequently the number of
issued, subscribed and paid-up equity shares has increased from
125,955,481 equity shares to 127,486,541 equity shares of Rs. 10 each
aggregating to Rs. 1,274,865,410/-.
BUSINESS PERFORMANCE / FINANCIAL OVERVIEW
Your company is a leading IT services and solutions provider for the
Telecom Industry, serving segments such as Telecom Services Providers
(TSPs), Telecom Equipment Manufacturers (TEM''s) and Independent
Software Vendors (ISV''s) with a wide array of services catering to the
changing needs of the Telecom ecosystem.
During the year 2011-12, your Company''s consolidated revenues increased
to Rs. 54,897 Million from Rs. 51,402 Million in the previous year, at a
growth rate of 6.8%. In Financial Year 2010-11, your Company executed
a large System Integration project for an Indian Telecom Service
Provider and had a one-time revenue of Rs. 2,989 Million from this
project. Excluding this one-time revenue, the growth in revenue was
13.4% in Financial Year 2011-12. The geographical split of revenue was
quite balanced with 47% share from Europe, 34% from Americas and 19%
from the Rest of the World (ROW).
The consolidated Profit before Interest, Depreciation, Tax and
Exceptional items was at Rs. 10,176 Million (18.5% of revenue) against Rs.
11,322 Million (22% of revenue) in the previous year. This decline in
operating Profits was due to increase in employee costs and also
change in the business mix.
The consolidated Profit after tax, after exceptional items and
minority interest, amounted to Rs. 5,385 Million as against Rs. 7,438
Million in the previous year. The cancellation of 2 G licenses by the
Supreme Court in January 2012 impacted two of your company''s domestic
customers'' business viability. As a matter of abundant precaution,
your Company provided dues from these customers amounting to Rs. 679
Million as doubtful debts.
The consolidated Profit after tax, including share of Profit in
associate company (Mahindra Satyam), amounted to Rs. 10,955 Million as
against Rs. 6,442 Million in the previous year, a growth rate of 70%.
The global technology landscape continues to be shaped by both economic
forces and by the emergence of new trends like social media and cloud
computing. The lingering crisis in Europe, volatile financial markets
and government austerity programs could impact spend on IT in the
coming year. Our Customers have to face the twin challenges of
optimizing current IT spend and investing in future technologies and
trends. The underlying strength of the global delivery model and the
signifi cant benefits it offers to global customers could help
corporations in achieving both objectives. Your Company has been
providing solutions, which leverage the global delivery model, to
Telecom companies to improve Customer experience, bring in operational
effi ciencies and improve customer''s Average Revenue Per User (ARPU).
Your Company serves large global telecom companies as well as green fi
eld operators across 31 countries. Your company has 130 active
customers at the end of the Financial Year 2011-12, and the focus for
the coming year is broadening relationships across customer base
leveraging Six Pillar Strategy.
Your Company''s service offerings are grouped in six distinct domains
based on the areas of customer spend. The six domains which are
Applications, Networks, Infrastructure, Value Added Services (VAS),
Security Solutions and Business Services together cover all areas of
customers spend in our target markets.
Customer Centricity and enhancing customer experience has always been a
focus area for your Company. This year, your Company launched a
Customer Centricity Offi ce (CCO), with a Chief Customer Centric Offi
cer to ensure that the high levels of customer experience are
Your Company continues to invest in new technologies like smart
computing products, cloud, analytics and mobility. These investments
will help your Company capitalize on the emerging revenue opportunities
in these areas.
Your Company''s domain expertise and leading solutions in the telecom
vertical has earned itself a niche in the market place. Your Company
was awarded the 2011 Microsoft Communications sector Partner of the
year award. Voice & Data India''s leading communication magazine
ranked the Company as India''s No. 1 Telecom Software service provider.
CanvasM Technologies Limited (CanvasM), a wholly owned subsidiary of
your Company, was ranked amongst the Top 10 Value Added Services (VAS)
Your Company today has more than 15 delivery centers worldwide and 17
sales offices. In the year gone by, Company established a delivery
center in Bonn Germany to service clients in Germany and Central
In summary, your Company is well positioned in the markets it serves
with a broad range of service offerings and a diversifi ed customer
base across geographies.
FINANCIAL OVERVIEW OF MAHINDRA SATYAM
The turnaround of Mahindra Satyam (Satyam Computer Services Ltd.)
gathered further momentum in the current year.
Revenues grew by 24% to Rs. 63,956 Million over the previous year, EBITDA
grew by 128% to Rs. 10,240 Million (16% of revenue) reflecting the
progress of the turnaround. PAT before exceptional item increased to Rs.
11,882 Million from Rs. 4,971 Million.
A brief snapshot of Mahindra Satyam''s Statement of Profit and Loss is
Particulars (Rs. in Million)
Consolidated P&L Summary FY12 FY11
Revenue 63,956 51,451
EBITDA 10,240 4,489
EBITDA margins (% to revenue) 16% 8.7%
Other Income 4,189 2,879
Interest 118 97
Depreciation 1,577 1,721
Profit Before Tax 12,734 5,550
Provision for Tax 852 579
Profit before exceptional items 11,882 4,971
and minority Interest
Exceptional Items (1,094) 6,411
Minority interest (84) 33
Profit After Tax 13,061 (1,472)
PAT margins (%to revenue) 20.4% (2.9%)
UPDATE ON THE PROPOSED AMALGAMATION OF MAHINDRA SATYAM AND TECH
In March 2012, the respective Boards of Tech Mahindra and Mahindra
Satyam approved the merger of Mahindra Satyam with Tech Mahindra. This
landmark event, makes way for the creation of a formidable top-tier
global player and one of India''s top IT employers.
The Board of Directors at their meeting held on 21st March, 2012 have
pursuant to the provisions of Sections 391 to 394 read with Sections
78, 100 to 104 and other applicable provisions, of the Companies Act,
1956 and subject to the requisite approval of the shareholders of the
Company and subject to all necessary statutory approvals have approved
to amalgamate Venturbay Consultants Private Limited (Venturbay),
Satyam Computer Services Limited (Mahindra Satyam), C&S System
Technologies Private Limited (C&S System), Mahindra Logisoft Business
Solutions Limited (Mahindra Logisoft) and CanvasM Technologies
Limited (CanvasM) with the Company. Based on the recommendation of
the valuers, the Board of Directors have approved swap ratio of Two (2)
fully paid Equity Shares of face value of Rs.10/- each of the Company for
every Seventeen (17) Equity shares of face value of Rs. 2/- each of
Satyam Computer Services Limited (Mahindra Satyam). The proposed Scheme
of amalgamation will be subject to approvals by various regulatory
agencies and shareholders, including the approval from the High Courts
of Bombay and Andhra Pradesh.
This Amalgamation would result in creation of a new off shore services
leader with revenues of over $ 2.4 billion, more than 75,000
professionals and 350 active clients.
Your Company is happy to inform that the Competition Commission of
India has granted approval for the Amalgamation of the companies vide
their order dated 26th April, 2012. The Hon''ble High Court, Bombay has
dispensed the meeting of creditors & directed the Company to hold
meeting of the equity shareholders of the Company on 7th June, 2012 to
seek their consent on the said amalgamation and arrangement.
The rationale for the merger
- Creation of a single ''go-to-market'' strategy with benefits of scale
and enhanced depth and breadth of capabilities, translating into
increased business opportunities
- Stronger merged entity financially and in industry positioning
- Unified management focus and fungible talent pool
- De-risked business profile
- Optimized costs and productivity improvement with benefits of scale
- Diversification into multiple verticals like BFSI, Manufacturing and
- Ability to offer a wide range of service offerings like Enterprise
Services and Engineering Services to current and future customers
The Power of one
The combined entity will be able to better leverage Tech Mahindra''s
depth of expertise developed in telecom to better penetrate the
opportunity presented by Mahindra Satyam''s diverse set of clients
across multiple verticals. Likewise, Mahindra Satyam''s expertise in
enterprise solutions will enable a more complete value proposition to
be delivered to Tech Mahindra''s clients and penetration into the larger
landscape. Geographically, your Company derives a signifi cant portion
of its revenues from Europe, while Mahindra Satyam''s business is highly
focused on Americas. The amalgamated entity will have a further
balanced share of revenue contribution from three key geographies viz
Americas, Europe and Rest of World. There would be minimal overlap of
services and offerings and this would lead to an ease in the
integration process of the two entities.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed analysis of your Company''s performance is discussed in the
Management Discussion and Analysis Report, which forms part of this
Continuous improvement of process and enabling technologies that meet
client expectation is a way of life in your Company. There is a very
robust process framework which is implemented to ensure greater
customer satisfaction through improved quality, higher productivity and
reduced cycle time.
One of key achievements of your Company was to get assessed at Stage 5
of the Mahindra Quality Way Model, a business excellence framework.
Your Company is the fi rst Large Services Company within the Mahindra
Group Companies to be assessed at Stage 5. We also embarked on the
journey of CMMI 1.3 Level 5 assessment and successfully completed the
same on 18th April, 2012. The customer satisfaction surveys also refl
ected improved scores and good feedback across all levels of client
As in the previous years, in this year too, your Company successfully
completed the surveillance audits and continues to be certifi ed for
ISO9001:2008, ISO/IEC 20000-1:2005, ISO/IEC27001:2005, BS25999:2008.
Your Company believes in ability of each of its associates and hence
provide ample opportunities to tap this potential and invests in the
growth and development of all of its associates.
Talent Management at the Company involves motivating and promoting
leadership development. The Company launched a Global Leadership Cadre
(GLC) program about 7 years ago with the aim of sculpting agile and
creative young leaders. GLC Program identifi es management graduates
from the Tier I business institutes across the globe and also technical
specialists from within the organization. These highly talented GLC
participants with a faster career progression could be potential
successors to senior management in the organization. Complimenting the
GLC program is Management Trainee (MT) program running successfully for
past 5 years wherein candidates from Tier II B Schools across India are
groomed for future GLC roles.
The Shadow Board program continues to nurture young talent with high
potential and make them a part of the organization''s strategy planning.
Aiming to provide a platform to our associates for taking
responsibility of shaping their careers, the Company launched this year
a mentoring initiative that aims to provide a platform to associates
with potential to be groomed and guided by in-house Mentors. This also
gives an excellent opportunity to Mentors to hone their people
motivation and developmental skills.
This year also saw an increased focus on Senior Leadership Development
to address specific training needs of nominated senior associates
within the organisation. Company''s in-house Leadership Programs ran
into their second successful year - the Excellence in Leadership
Program, specifically designed for middle managers with an aim of
grooming associates in skills required to excel from a team manager''s
role to a business leader''s role; the Young Leaders Program, specifi
cally designed for fi rst time managers with an aim at grooming
associates in the skills required to move from a team member''s role to
a team manager''s role. Associates participate in these 6 month programs
while they are working.
Another successful learning program is the Executive Post Graduate
Diploma in Telecom Management in collaboration with Symbiosis Institute
of Telecom Management (SITM). The program offers in-depth knowledge on
telecom concepts and general business management that helps our Company
to be prepared for the ever changing telecom market, thus nurturing the
leadership talent within the organization.
The Company believes in inclusivity and has many initiatives to foster
diversity in age, gender, culture and capability. Especially for women
associates of the Company, a platform is created to voice their
opinions & suggestions and promote Women in the Workplace. It helps to
identify and implement initiatives that promote gender diversity and
make TechM a preferred career destination for women associates.
During the Financial Year 2011-12, your Company, along with its
subsidiaries, made a net addition of 2,430 associates to its workforce.
The strength was 40,763 associates as at 31st March, 2012, as compared
to 38,333 associates a year before, registering an increase of 6.3%.
BPO headcount included in this fi gure is 14,792 associates, up from
11,011 associates, a year before.
During the year under review, the Company incorporated a new step down
subsidiary at America viz. Tech Talenta Inc. The said Company is a
wholly owned subsidiary of Tech Mahindra (Americas) - Inc. a wholly
owned subsidiary of your Company. Further during the year under review,
your Company bought the stake of 19.90% held by Motorola Cyprus in
subsidiary Company CanvasM Technologies Limited (CanvasM) thus making
CanvasM a wholly owned subsidiary of the Company.
As on 31st March, 2012, your Company has 16 subsidiaries, including two
step-down subsidiaries. There has not been any material change in the
nature of the business of the subsidiaries. As required under the
Listing Agreements with the Stock Exchanges, the Consolidated Financial
Statements of your Company and all its subsidiaries and its associate
Company i.e. Mahindra Satyam & its subsidiaries are attached. The
Consolidated Financial Statements have been prepared in accordance with
Accounting Standards AS 21, AS 23 and AS 27 issued by The Institute of
Chartered Accountants of India and show the financial resources,
assets, liabilities, income, Profits and other details of your Company
and its subsidiaries and associate companies as a single entity, after
elimination of minority interest.
In terms of general exemption granted by the Ministry of Corporate
Affairs pursuant to Section 212(8) of the Companies Act, 1956, the Copy
of the Balance Sheet, etc. of the subsidiaries are not required to be
attached with the Balance Sheet of the Company. The Company Secretary
will make these documents available upon receipt of request from any
member of the Company interested in obtaining the same. These documents
will be available at Registered Offi ce / Corporate Offi ce of the
Company and the offi ce of the respective subsidiary companies, during
working hours up to the date of the Annual General Meeting.
EMPLOYEE STOCK OPTION PLAN (ESOP)
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company is committed to play its role as an enlightened corporate
citizen and continues to earmark 1.5% of its Profit after Tax (PAT)
every year for CSR activities. CSR activities are carried through Tech
Mahindra Foundation (TMF).
TECH MAHINDRA FOUNDATION (TMF)
TMF was established in its present form in 2007 by your Company as one
of the major manifestations of its Corporate Social Responsibility.
Your Company contributes 1.5% of its Profit after tax to TMF which now
has a corpus of Rs. 47 Crore as on 31st March, 2012. It has disbursed
approx Rs. 33 Crores to 70 NGOs over 5 years and impacts more than 50,000
benefi ciaries per year through NGO partners across Delhi-Noida,
Mumbai, Pune and Bangalore.
TMF seeks to achieve its objectives by working in partnership with
outstanding community based NGOs which share its goals and values and
have demonstrated competence, dedication and integrity. TMF NGO
projects address felt community needs.
TMF''s major achievements have been:
- Qualitative improvement in Primary Education of both government and
English medium NGO Schools.
- Development of Yuva English progamme to empower youth to become
- Creation of Vision For India (VFI) a network of outstanding
visually impaired NGO partners impact through shared resources &
- Shikshak Samman Awards in Delhi to outstanding municipal teachers -
a way to bring about systemic change by recognizing merit.
Our Future plans include improving our outcomes and impact across 3
verticals Education, Vocational Training and enablement of Visually
As a part of a responsible business group having a global presence,
your Company has taken considerable steps not only in creating Green
strategies but also making environmental stewardship a core part of our
business strategy that takes accountability for every dimension of
social, cultural, economic and environmental governance, creating
sustainable value for all its stakeholders.
Your Company has been participating in the Sustainability Reporting of
the Mahindra Group since Financial Year 2007-08. During the year under
review the 4th Sustainability Report for the year 2010-11 was released.
All these reports were in accordance with the latest guidelines of the
internationally accepted, Global Reporting Initiative (GRI). This
report was assured by Ernst & Young and conforms to the highest level
for reporting ''Sustainability'' performance, which is A . The report and
the performance rating of A was checked and confirmed by GRI*. The
detailed Group Sustainability Reports are available on the
In order to take a structured path for reducing its carbon footprint,
your Company has a 5 Year Sustainability Road map. We are consciously
reducing GHG emissions and waste, as well as conserve water,
bio-diversity and natural resources. In the Financial Year 2011-12
concerted efforts were made to ensure targets are met over committed
time lines in the following thrust area:
- Renewable energy using Wind & Solar for generating electricity.
- Rainwater Harvesting & Sewage Treatment Plant.
- Eco-friendly e-waste disposal systems.
- Occupancy sensors to reduce the electricity consumption.
*GRI is a Netherlands based multi-stakeholder network of experts
worldwide, which has pioneered the development of the world''s most
widely used sustainability reporting framework. United Nations is one
of its key stakeholders. This reporting framework sets out the
principles and indicators that organizations can use to measure and
report their economic, environmental, and social performance.
CORPORATE GOVERNANCE PHILOSOPHY
Your Company believes that Corporate Governance is a voluntary code of
self-discipline. In line with this philosophy, it follows healthy
Corporate Governance practices and reports to the shareholders the
progress made on the various measures undertaken. Your Directors have
reported the initiatives on Corporate Governance adopted by your
Company in the section ''Corporate Governance'' forming part of the
Hon. Akash Paul, Mr. B. H. Wani, Mr. M. Damodaran and Mr. Ravindra
Kulkarni are directors liable to retire by rotation and being eligible,
offers themselves for re-appointment.
During the year under review, Mr. Nigel Stagg and Mr. Richard Cameron,
nominees of British Telecommunications Plc (BT), resigned as Directors
with effect from 23rd December, 2011. Directors placed on record their
appreciation for the services rendered by Mr. Stagg and Mr. Cameron. BT
has not nominated new Directors in place of their said nominees.
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the representation received from the Operating
Management and after due enquiry, confi rm that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii. they have, in the selection of the accounting policies, consulted
the Statutory Auditors and these have been applied consistently and
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2012 and of the Profit of the Company for the year ended
on that date;
iii. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
iv. the annual accounts have been prepared on a going concern basis.
M/s. Deloitte Haskins & Sells, Chartered Accountants, the Auditors of
your Company, hold offi ce up to the conclusion of the forthcoming
Annual General Meeting of the Company and have given their consent for
re-appointment. The shareholders will be required to elect auditors for
the current year and fi x their remuneration. Your Company has received
a written confi rmation from M/s. Deloitte Haskins & Sells, Chartered
Accountants to the effect that their appointment, if made, would be in
conformity with the limits prescribed in Section 224 of the Companies
Act, 1956. The Board recommends the re-appointment of M/s. Deloitte
Haskins & Sells, Chartered Accountants as the Auditors of the Company.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
In view of the nature of activities that are being carried on by your
Company, Rules 2A and 2B of the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988, concerning conservation
of energy and technology absorption, respectively are not applicable to
your Company. Your Company being a software solution provider requires
minimal energy consumption and every endeavour has been made to ensure
the optimal use of energy, avoid wastage and conserve energy as far as
FOREIGN EXCHANGE EARNINGS AND OUTGO
The foreign exchange earnings of your Company during the year were Rs.
47,074 Million (previous year Rs. 42,087 Million), while the outgoings
were Rs. 20,834 Million (previous year Rs. 17,616 Million).
During the year under the review, 89% of your Company''s revenues were
derived from exports.
PARTICULARS OF EMPLOYEES
The information required under Section 217(2A) of the Act and the Rules
(as amended) made there under, is provided in an Annexure to this
Report. However, as per the provisions of Section 219 (1) (b) (iv) of
the Companies Act, 1956, the Directors'' Report being sent to the
shareholders does not include this Annexure. Any shareholder
interested in perusing a copy of the Annexure may write to the Company
Secretary at the Registered Offi ce / Corporate Offi ce of the Company.
DEPOSITS AND LOANS/ADVANCES
Your Company has not accepted any deposits from the public or its
employees during the year under review. The particulars of
loans/advances and investment in its own shares by listed companies,
their subsidiaries, associates, etc., required to be disclosed in the
annual accounts of the Company pursuant to Clause 32 of the Listing
Agreement are furnished separately.
Your Company continued its quest for excellence in its chosen area of
business to emerge as a true global brand. Several awards and rankings
continue to endorse your Company as a thought leader in telecom
Awards for Financial Year 2011-12
- CanvasM a wholly owned subsidiary of the company has won the National
Telecom Award for FightBack 2012
- CanvasM a wholly owned subsidiary of the company ranked amongst
India''s Top 10 VAS players by V&D 2011
- Tech Mahindra ranked among top 3 at the ''DSCI excellence award for
security in IT services company (Large)'', 2011
- Tech Mahindra tops 2011 Global Services 100 in the following
- Global ITO Vendors
- ADM Vendors
- IM Vendors
- Speciality Product Engineering Vendors
- Contact Center and Customer Management Vendors
Your Directors gratefully acknowledge the contributions made by
employees towards the success of your Company. Your Directors are also
thankful for the co-operation and assistance received from its
customers, vendors, bankers, regulatory and Governmental authorities in
India and abroad and its shareholders.
For and on behalf of the Board
Place: Noida Anand G. Mahindra
Date: May 23, 2012 Chairman