TABLE OF CONTENTS Corporate Information 1 Executive Vice Chairman’s Communique 2 Consolidated Financial Performance for Last Three Years 4 Directors’ Report 5 Management Discussion and Analysis 22 Corporate Governance Report 35 Standalone Financials 49 Consolidated Financials 123 Statement of Subsidiary Companies 193 CORPORATE INFORMATION Board of Directors Committees of Directors Mr. Anand G. Mahindra, Chairman Audit Committee Mr. Vineet Nayyar, Executive Vice Chairman l Mr. T. N. Manoharan, Chairman Mr. C. P. Gurnani, Managing Director l Mr. Anupam Puri Mr. Anupam Puri Mr. Bharat N. Doshi l Mr. M. Damodaran Mr. M. Damodaran l Mr. Ulhas N. Yargop Mrs. M. Rajyalakshmi Rao Mr. Ravindra Kulkarni Nomination and Remuneration Committee Mr. T. N. Manoharan l Mr. Ravindra Kulkarni, Chairman Mr. Ulhas N. Yargop l Mr. Anupam Puri l Mr. Ulhas N. Yargop Chief Financial Officer Mr. Milind Kulkarni Stakeholders Relationship Committee l Mr. Ravindra Kulkarni, Chairman Company Secretary & Chief Compliance Officer Mr. G. Jayaraman l Mr. Ulhas N. Yargop l Mr. Vineet Nayyar Registered Office Gateway Building, Corporate Social Responsibility Committee Apollo Bunder, l Mr. Vineet Nayyar, Chairman Mumbai – 400 001. l Mrs. M. Rajyalakshmi Rao Corporate Office l Mr. Ulhas N. Yargop Plot No. 1, Phase III, Rajiv Gandhi Infotech Park, Executive Committee Hinjewadi, Pune - 411 057. l Mr. Vineet Nayyar, Chairman l Mr. Bharat N. Doshi l Mr. Ulhas N. Yargop Bankers Bank of Baroda Securities Allotment Committee BNP Paribas l Mr. Vineet Nayyar, Chairman Citibank N. A. l Mr. C. P. Gurnani HDFC Bank Ltd. l Mr. Ulhas N. Yargop The HSBC Bank Ltd. ICICI Bank Ltd. Auditors IDBI Bank Ltd. Deloitte Haskins & Sells LLP Kotak Mahindra Bank Ltd. Chartered Accountants Standard Chartered Bank 1 ANNUAL REPORT 2013 - 2014 EXECUTIVE VICE CHAIRMAN’S COMMUNIQUE Vineet Nayyar Executive Vice Chairman Dear Shareholders, The year gone by has been another year of progressive customers and approximately 90,000 associates. We and exciting changes in the technology world. closed FY14 with revenues of ` 18,831 crores; a growth Everywhere, we see more evidence that change is of 31.4% year-on-year (YoY). Profit After Tax was happening on an exponential scale. This velocity ` 3,029 crores up 54.9% YoY. With almost no debt on and volume of change is a result of huge leaps in our books as of now, we have decided to increase our technology and the increasing connectedness of dividend, with the Board of directors recommending a people and things. dividend of 200% for FY14 against 50% in FY 13. Hyper connectivity is dramatically changing the world One of the most important events in the year gone around us and the way business is done. Technology by was the merger of Mahindra Satyam with your has evolved from an overhead to an enabler and Company, effective June 24, 2013. Our efforts and increasingly to a full-fledged competitive advantage. planning led to a remarkably seamless integration and Enterprises are now unleashing the power of we continue to reap the benefits of having a larger, technology to prepare themselves for the future and to more diverse platform which can help us serve our align with the changing needs of new age customers. customers better. I take this opportunity to thank our Business operations are being transformed to be investors, customers and employees whose constant take advantage of trends like collaboration and support made this endeavour a great success. inclusion. Today’s larger digital ecosystem allows The year gone by has also been significant not only in consumers more flexibility, convenience and choice. terms of our growth but also in terms of the improved Emerging business models powered by technology are conversion of our sales pipeline. We saw steady increasingly, disrupting traditional views of business closures of new large deals in both the telecom and processes. Our customers are looking at solutions the enterprise division. Our ability to compete and win in digital enablement to enable their business to be large deals especially in the Enterprise side has been future-ready. a significant achievement this year. We hope to focus Fiscal year 2013-14 has been an iconic year for us too and strengthen this capability in the coming years. in many respects. In keeping with our strategy of investing in new We have grown at a steady pace and have surpassed areas, we ventured in to the area of Network services the USD 3 billion mark in revenues, with 625+ active in when we signed the Base telecom deal. This is a 2 unique opportunity for your company to position itself and alliances like SAP, CA Technologies, Juniper as a key partner to Telecom customers in the Network Networks, Teliasonera, Pegasystems, BASE and space. On the non-organic front, we continued to HP for our achievements in Testing, Mobility, Learning make select bets and investments in markets through among others. BASF IT, and in capabilities through the merger of Mahindra Rise™ tenets continue to inspire us as our Mahindra Engineering Services. teams drive positive change across all stakeholders. Our customer base has also increased significantly as Our associates are engaged with the community as we added 113 new logos. We expanded our footprint well and the employee volunteering programme across geographies with the launch of a new branch has seen an overwhelming participation across the in Istanbul to serve as a hub for Turkey and Central organization with a steady increase over the years. Asia. Our delivery centres in Fargo, USA and Antwerp, As we look ahead, we are confident of our defined Belgium were our other new additions. strategies and are committed to delivering enhanced Co-innovation with partners and customers continues value to all our stakeholders. I would like to thank to be a focus area. Our co-innovation model has helped our valued customers and associates for their support us enhance existing offerings, create differentiators, that has been critical and integral to our success. I intellectual properties, and develop re-usable assets also like to place on record our deepest gratitude to for our customers. our shareholders for their continued patronage and unwavering faith. I assure you that my team and I will We demonstrated Thought Leadership with our live up to the trust you have reposed in us. participation at various global events including the World Economic Forum 2014. Tech Mahindra this We look forward to an exciting year ahead with new year, was the recipient of some of the major industry milestones and achievements. awards across multiple domains. The Tech Mahindra leadership was honored with the Ernst and Young Sincerely, ‘Entrepreneur of the year’ [Manager] Award, CNBC India ‘Business Leaders’ Award and DQ ‘IT Person of the year’ Award. Vineet Nayyar Tech Mahindra was included in the Global Services Place: Mumbai 100 list and we have been recognized by our partners Date: 27th June 2014 3 ANNUAL REPORT 2013 - 2014 CONSOLIDATED FINANCIAL PERFORMANCE FOR LAST THREE YEARS Particulars 2011-12 2012-13 2013-14 ` Mn US$ Mn ` Mn US$ Mn ` Mn US$ Mn Revenue 117,024 2463.0 143,320 2,632.7 188,314 3,098.2 Total Income 122,037 2568.5 145,442 2,671.7 189,444 3,119.0 EBIDTA (Operating Profit) 19,518 410.8 30,633 562.6 41,838 687.1 PBIT 21,341 449.2 28,858 530.0 37,746 622.0 Interest 1,073 22.6 921 16.9 799 13.3 PBT 20,268 426.6 27,937 513.1 36,947 608.7 PAT before exceptional, earlier period 17,979 378.4 21,458 394.1 29,424 484.2 items and minority interest PAT 18,432 387.9 19,556 359.3 30,288 498.0 EBIDTA Margin % 16.7% 16.7% 21.4% 21.4% 22.2% 22.2% PAT Margin %* 15.4% 15.4% 15.0% 15.0% 15.6% 15.6% Equity Capital 2,309 48.6 2,316 42.7 2,335 39.0 Net Worth 48,158 1,013.6 68,535 1,262.4 91,820 1,532.4 Net Block Including CWIP 18,161 382.2 20,086 370.0 22,966 383.3 Investments 14,650 308.3 14,174 261.1 14,719 245.6 Current Assets 76,684 1,614.0 89,634 1,651.0 105,472 1,760.2 Current Liabilities & Provisions 39,550 832.4 46,531 857.1 45,749 763.5 Total Assets 115,541 2,431.8 138,105 2,543.8 159,396 2,660.1 Current Ratio 1.9 1.9 1.9 1.9 2.3 2.3 ROCE % # 42.3% 42.3% 41.3% 41.3% 43.0% 43.0% EPS (Diluted, in ` and US$) ^^ 79.8 1.7 82.4 1.5 126.8 2.1 * PAT before exceptional, earlier period items and minority interest # ROCE% =PBIT/Average capital employed ^^ EPS for FY 2011-12 is Basic EPS Note : The merged financials for FY 2011-12 and FY 2012-13 are prepared from audited accounts of the 6 companies as if merger has taken place on 1st April 2011, however we have not obtained the audit opinion on the merged entity's consolidated financials. ` Mn Revenue Geographywise Revenue 2013-14 Customer Count 188,314 629 Rest of 143,320 world 516 23% America 117,024 45% 364 Europe 32% 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 ` Mn Profit After Tax ` Mn Net Worth Headcount 89,441 91,820 83,109 30,288 74,116 68,535 19,556 18,432 48,158 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 4 DIRECTORS’ REPORT Your Directors present their Twenty-seventh Annual Report together with the audited accounts of your Company for the year ended 31st March, 2014.