ANNUAL REPORT 2015-16 Let’s S lve Inside Message from the 1. Corporate Overview Founder Chairman 01 Message from the Founder Chairman 02 Let’s Solve 04 The Journey So Far… 06 At a Glance 10 Message from the CEO 12 Board of Directors 15 Key Leadership Team 16 Corporate Information 17 Key Financial Highlights 18 Corporate Social Responsibility 2. Our DNA 20 Client-Centricity 21 Digital Leadership 22 Best Place to Learn, Evolve, Grow 3. Statutory Reports 26 Directors’ Report 55 Corporate Governance Report 62 Management Discussion and Analysis 76 Risk Management Framework 4. Financial Statements Mr. A. M. Naik, Founder Chairman, was conferred the Order of the Standalone Dannebrog as Knight First Class by Her Majesty, Queen Margrethe of 77 Independent Auditor’s Report Denmark. The knighthood is royal acknowledgement of Mr. Naik’s role in 82 Balance Sheet fostering Indo-Danish ties in the fields of business, commerce and culture. 83 Statement of Profit & Loss 84 Cash Flow Statement 86 Notes forming part of accounts Prior experience in enabling Consolidated technology-driven growth across 118 Independent Auditor’s Report 122 Balance Sheet multiple businesses gave your 123 Statement of Profit & Loss 124 Cash Flow Statement company an unmatched 126 Notes forming part of accounts ‘Business-to-IT connect’ Message from the Founder Chairman The management team at L&T Infotech is increasingly building competencies in new-age technologies like Digital & Automation Dear Shareholders, Information Technology is increasingly becoming the axis on which a clear differentiator in markets where services were vulnerable our world rotates. Technology pervades multiple aspects - building to commoditisation. The L&T heritage has also served as an communication platforms, accelerating processes, expanding inspirational force across Team Infotech, motivating it to live up outreach, adding ‘intelligence’ to functions and contributing to to a seven-decade-old legacy of customer-centricity, professional delivering superior outcomes. The speed at which IT developments excellence, and the consciousness of larger social obligations even have transited from lab to life indicate a growing acceptance that as it vigorously pursued business goals. the old order will be disrupted and replaced with a new ‘digital’ way. Going forward, I am confident that the relationship between parent and subsidiary will become increasingly symbiotic - each I am very happy that your company - L&T Infotech - is playing complementing and augmenting the other. As L&T Infotech forays an increasingly important role in a sector of critical significance into uncharted geographies, it could well play the role of a flag- around the globe. bearer for the entire Group. Our technology journey really began when we formulated an IT As we enter an era of growing convergence, the future presents vision for the L&T Group, and committed ourselves to nurturing the a canvas of unprecedented change. The management team at newly-formed subsidiary. We recognised early that our IT initiative L&T Infotech is increasingly building competencies in new-age was uniquely positioned. Prior experience in enabling technology- technologies like Digital & Automation. The team comprises of driven growth across multiple businesses gave your company an high-calibre technology professionals with global experience, as unmatched ‘Business-to-IT connect’. I place on record, the pivotal well as experts possessing deep domain knowledge. We believe role of the Company’s former CEO & MD, Mr. V.K. Magapu, in that this blend of talent, bolstered by a strong management providing leadership and direction in the formative years of this culture, will help the Company successfully address the challenge organisation. of change and scale new heights. Brand L&T has undoubtedly proved to be a key asset all along the journey. It has opened doors, providing access to new markets, A.M. Naik secured credibility among first-time customers and functioned as Founder Chairman Annual Report 2015-16 Let’s Solve This is the age of disruption. Emerging technologies have turned business models upside down. Start-ups are threatening the behemoths. Corporations today are racing to disrupt themselves. At the core of this disruption is technology which is connecting business with customers in ways, never fathomed before. Augmented Reality, 3D Printing, Internet-driven cars, Wearable devices, Smart Cities – technology phrases which were science fiction a few years ago, are a reality and here to stay. Technology is changing. The familiar and successful organisations will be those who will transform themselves to be able to thrive at the convergence of physical and digital worlds. To navigate such change, businesses need a partner, who solves complex business problems, wherever they are. At L&T Infotech, we solve. We Solve Digital. We Solve IoT. We Solve Automation. Let’s Partner. Let’s Solve. 2 Corporate Overview - Let’s Solve Our DNA Statutory Reports Financial Statements Solving complex problems is embedded deeply in the DNA of Larsen & Toubro. Our enduring group legacy of over seventy five years has seen us work closely with core industries like engineering, technology, construction, manufacturing and financial services. The L&T legacy has translated into a deep domain experience and institutional knowledge, giving us a unique real-world expertise of diverse industries ranging from automotive to aerospace, construction to consumer goods, housing to healthcare and ship-building to sciences. At L&T Infotech, we enable and engage with clients to create winning and enduring solutions for their complex challenges. Emanating from client-centricity, driven by digital leadership and reinforced by a culture of excellence in the form of best professionals in the industry, we believe in crafting far-reaching solutions for our clients. Solutions that help build innovative business models, enhance operational efficiencies and create captivating customer experiences. Let’s Solve 3 Annual Report 2015-16 The Journey So Far… The confident steps taken in 1997 picked up pace and became swift strides, as we covered many miles and created memorable milestones. Acquisition of Achieved GDA Tech Inc., USA- SEI CMM-L5 Electronic design Certification services company 1997 2004 2008 2002 2007 Company was Was awarded the Established incorporated in initial multi-year business Dec, 1996, by spin-off annuity contract by in South Africa of Information Systems Global Fortune 100 Division of L&T Oil & Gas Corporation Where We are among the TOP 20 we stand Global IT Services companies with an We work with today… annual revenue of 258 clients, $ 887Mn + including 49 Fortune 500 Companies 4 Corporate Overview - The journey so far… Our DNA Statutory Reports Financial Statements Positioned among the Top 20 IT Service Re-organisation of providers by Everest Achieved SEI CMMi verticals. Introduction Group v1.2 Level 5 of Media & certification for all Entertainment and Positioning to cater development centres Travel & Logistics to Smart Cities in India verticals Opportunities 2011 2015 2010 2013 2016 Acquisition of Acquisition of transfer agency Information Systems business unit from Research Centre (ISRC), Citigroup in Canada a unit of UTC Group (L&T Infotech Financial Services Technologies Inc.) Note: The above information has been presented on Financial Year basis. We have 20,000+ employees 44 Working out of Sales Offices 22 Delivery Centres across the Globe 5 Annual Report 2015-16 At a Glance Our Promise We SOLve comPLex bUSIneSS CHallenges at THE conVergence OF digital AND PHYSICAL WORLD WITH OUR ReAL-world exPertise AnD CLIenT-CenTRICITy. Our Pedigree We are part of Larsen & Toubro Limited Today, L&T continues to be engaged in (L&T), a diversified conglomerate of the core sectors of the economy. It is Larsen& revenue over USD 15 Billion. Tracing its augmenting its presence in infrastructure, roots back to 1938, the company has been defence and technology sectors and sees involved in nation-building over the last an expansive role in building of smart Toubro seven decades. The company is a leader in cities and communications. Engineering, Construction, Manufacturing, Limited Finance and Technology. L&T has consistently contributed to India’s a diversified progress over the decades. From setting up cement plants and building offshore conglomerate oil platforms in the 1980s to creating tracing its roots Knowledge Cities and Business Parks, L&T’s profile and portfolio has been in line back to 1938. with its strategic vision of contributing to nation-building. 6 Corporate Overview - At a Glance Our DNA Statutory Reports Financial Statements Our Real-World expertise – Our business-to-IT Connect Leveraging Domain experience and Institutional Knowledge of the L&T Group Heavy Engineering Power Construction Construction Defence Equipment Ship Building Finance & Housing & Insurance Real Estate Hydrocarbons 7 Annual Report 2015-16 At a Glance Global Presence Europe 12 Sales offices 2 Delivery centres North America 14 Sales offices 8 Delivery centres India 9 Sales offices & Delivery centres Middle East & South Africa APAC 4 Sales offices 5 Sales offices 1 Delivery centre 2 Delivery centres Banking & Insurance Energy & Automotive Financial Services Process and Aerospace Where we Utilities Engineering and Consumer Packaged Media and Solve Construction Goods, Retail & Entertainment Pharmaceuticals Travel and Hi-Tech Plant Equipment Logistics 8 Corporate Overview - At a Glance Our DNA Statutory Reports