The business landscape today is continuously changing, and companies need to constantly grow and evolve to remain relevant.
At Cyient, we try to continuously redefine what it means to be a strategic partner for our clients. While at the core we strive to deliver more value to our clients, the challenge remains on how we leverage the opportunities in front of us to deliver on that value proposition.
Vision 2030 and the AGILE Framework
To leverage the opportunities ahead, we laid out our Vision 2030 and the AGILE framework.
Vision 2030 defines our growth aspiration and our larger purpose, i.e. “Apply technology imaginatively to solve problems that matter.”
Breaking this down further implies:
- Apply technology (LEVERAGE our competence)
- Imaginatively (GROW through intellect and innovation)
- To solve problems that matter (THRIVE by creating impact)
To guide us through ourjourney and to achieve our wider purpose, we have created the AGILE framework. This framework drives focus on five key strategic pillars:
- Ambition: Move from services to solutions
- Growth: Deliver industry-leading earnings growth
- Investment: Prioritize investments
- Leadership: Develop talent for 2030
- Execution: Develop a winning culture
Our S3 strategy drives our ambition to move from services to solutions. We follow a twopronged approach to drive S3 transformation across our value chain. The first focuses on building capability across product life cycle of Design-Build-Maintain. The second focuses on leveraging key technological drivers to move up the business offering stack— from services to solutions.
In FY18, we worked across all the five strategic pillars to progress towards our vision. Strengthened by the achievements of the year, we are confident that we have a well laid out and sustainable strategy that is supported throughout our organization and is aligned with the overall vision. In line with our strategy, in FY18 we took two noteworthy decisions. The first was to start a new business group named the “New Business Accelerator (NBA).” This group will focus on identifying and commercializing new solutions with an emphasis on emerging technology and innovation. A portion of our revenue has been budgeted for the NBA and we are currently developing solutions as part of this initiative. While this involves a significant cost in the short-term, we are confident that this will help us accelerate our revenues in the future.
The second decision was to roll out a Diversity and Inclusion (D&I) initiative to strengthen Cyient’s culture and steer us towards developing a “winning culture.”
D&I is an important theme to enhance our values further and is a strong enabler for innovation. We have taken a number of actions on D&I and will be strengthening our focus in this area in the coming year with more concrete actions to drive significant change.
Our Progress and Results
From a financial perspective, FY18 was a good year. We delivered a strong performance and recorded our highest ever revenue at $607 million—a growth of 12.9% YoY. This growth was led by the Communications, Transportation, and Aerospace and Defense business units. Our operating margin grew by 60 bps at 14%, and net profit grew by 16.1% over FY18. Our DLM business grew by 13.2% over the year with broad-based growth across customers. This year we recorded the highest-ever cash balance at $168 million despite an acquisition and enhanced dividend payout with continued healthy cash generation.
We recognize the importance of stakeholder engagement in driving growth and innovation and hence focus on continuously improving our stakeholder satisfaction. For FY18, our Customer Satisfaction score was 58.1 against the industry average of 55.2. While we fared well on the services side, we have an opportunity to improve the score for our DLM business.
Overall, our associate engagement score saw a dip from 63% last year to 60% this year. However, despite the drop, it continues to remain within the industry benchmark range. We witnessed a positive shift across key parameters of customer focus and HR practices but faired lower on other key metrics of rewards and recognition, talent, and staffing.
Acquisitions are a key enabler for us to drive growth by building domain capabilities and strengthening our presence in emerging technology areas. As a company, we have a well laid out M&A strategy. We continue to focus on building capabilities through M&A. In line with our strategy to strengthen our capability around Design-Build-Maintain, we made two key acquisitions through the year—B&F Design Inc. and AnSem N.V.
B&F Design Inc. is a Connecticut-based tooling and precision engineering company with a focus on the aerospace and defense industry. Their expertise in design and manufacturing of engine assembly equipment, repair and tooling, engine factory modernization, and automation equipment will help us create a differentiated value proposition centered on tooling and precision engineering.
AnSem N.V. specializes in advanced analog, radio frequency, and mixed-signal integrated circuit design. The company provides custom ASICs for global clients across key industries including automotive, medical, industrial, smart home, and smart grid, with long-life applications of five to ten years. Their capability allows us to offer turnkey ICs— from concept circuit to final production. With this acquisition, Cyient can help clients develop smart analog sensors to capture data while leveraging our IoT and analytics capabilities.
We also signed a definitive agreement to acquire 100% ownership of Cyient Insights Private Limited (Cyient Insights), a data science company whose 51% stake was acquired by us in 2014. The complete integration of Cyient Insights will allow us to create a unique ecosystem of engineering services, IoT, and analytics, and provide complete system solutions to our clients.
This year we also formed a joint venture named Cyient Solutions & Systems Private Limited with Israel-based BlueBird Aero Systems. BlueBird Aero Systems is a leader in design, development, and production of micro, mini, and small tactical Unmanned Aerial Systems (UAS). Cyient Solutions & Systems will indigenize, manufacture, assemble, integrate, and test advanced UAV systems at our production facilities in Hyderabad by leveraging BlueBird’s technology and manufacturing know-how.
We also signed a partnership with Xynteo, an international advisory firm, as a partner organization in India2022, a business-led coalition committed to creating a new model of growth by the 75th year of India’s independence. As part of this coalition, Cyient will lead the healthcare impact track with focus on incubating and scaling projects aimed at delivering technology-enabled healthcare solutions, primarily focused on the diagnostics space in India.
We also signed an agreement to sell our 49% stake in Infotech Aerospace Services, Inc. (IASI) to Pratt & Whitney, a division of United Technologies Corporation. The divestment of IASI will enable us to sharpen the focus on our Design-Build-Maintain strategy by exiting non-core minority investments.
Awards and accolades are a reflection of our commitment to drive value for our clients. This year we were awarded the prestigious Golden Peacock Award for Risk Management (GPARM) by the Institute of Directors. The award is a recognition of our commitment towards taking proactive, risk-mitigating measures to safeguard the interest of our business and stakeholders.
During the year we also won two prestigious awards from Pratt & Whitney: the “Productivity Savings and Cost Avoidance Award” and the “Supplier Productivity Innovation Award.” This is the fifth year in a row that Cyient has won the Supplier Productivity Innovation Award. We also won the Boeing “Supplier of the Year” award for the fourth time in six years. Both the awards are a testimony to our focus on nurturing an innovation-driven culture and developing disruptive, cutting-edge solutions. This year, we were also recognized as a “Leader in Corporate Innovation” at the 13th Indo-American Corporate Excellence Awards.
The award was given for our ability to apply innovative techniques to optimize cost and operations and for promoting the concept of innovation among employees. We also received the CII Industrial Innovation Awards 2017 for being one of the “Top 26 Innovative Organizations” in India.
An Expansive Opportunity
Technology has the potential to solve some of the biggest problems that matter in the world today. As we look to fiscal 2019 and beyond, we will remain focused on leveraging technology to drive innovation and deliver value to our clients. We will invest in technology and innovation in areas where we see the greatest opportunity for growth.
We are excited to build on our momentum from the past year and will continue to focus on our S3 strategy execution with a focus on moving from services to solutions and building capability across the Design-Build-Maintain value chain. We are confident that our S3 strategy will help us move closer to our aspirations and achieve the larger purpose we envision for Cyient.
Managing Director & CEO