Board of Directors S. B. (Ravi) Pandit Auditors Chairman & Group CEO B S R & Co. LLP Chartered Accountants Kishor Patil 7th & 8th Floor, CEO & Managing Director Business Plaza, Westin Hotel Campus, Sachin Tikekar 36/3-B, Koregaon Park Annex, Whole-time Director Mundhwa Road, Pune - 411001 Lila Poonawalla Director Dr. R. A. Mashelkar Legal Advisors Director AZB & Partners AZB House, Adi Engineer Peninsula Corporate Park, Director Ganpatrao Kadam Marg, Lower Parel, Prof. Alberto Sangiovanni Vincentelli Mumbai - 400013 Director Anant Talaulicar Director Financial Institutions B V R Subbu - State Bank of India Director - HDFC Bank Limited - The Hongkong & Shanghai Banking Sanjay Kukreja - Corporation Limited Director - Citibank N.A. - Axis Bank Limited Anil Patwardhan - BNP Paribas &KLHI)LQDQFLDO2IÀFHU - Deutsche Bank - ICICI Bank Limited Sneha Padve - DBS Bank Limited Company Secretary - Kotak Mahindra Bank Contents Letter from the Chairman and Group CEO............................................................................................................................................................................ 1 Joint Letter from the CEO and Managing Director and Whole-time Director ........................................................................................................ 3 Financial Highlights ........................................................................................................................................................................................................................ 8 Board’s Report .................................................................................................................................................................................................................................. 10 Management Discussion and Analysis ................................................................................................................................................................................... 50 Enterprise Risk Management Report ...................................................................................................................................................................................... 57 Report on Corporate Governance ............................................................................................................................................................................................ 61 Additional Shareholders Information ...................................................................................................................................................................................... 79 R & D Activities ................................................................................................................................................................................................................................ 87 Community Initiatives ................................................................................................................................................................................................................... 90 Business Responsibility Report .................................................................................................................................................................................................. 107 Standalone Financial Statements .............................................................................................................................................................................................. 117 Consolidated Financial Statements .......................................................................................................................................................................................... 185 Green Initiative ................................................................................................................................................................................................................................. 261 Notice .................................................................................................................................................................................................................................................. 262 Letter from the Chairman and Group CEO Dear Fellow KPites, horizon continuously and to keep us up-to-date on the latest We completed another year of transformation for the Company WHFKQRORJ\ RIIHULQJV (TXDOO\ LPSRUWDQWO\ ZH KDYH IRUWLÀHG amidst the fast-changing industry scenario and geo-political our PDFs (Product Development Forums) to ensure that environment. I would like to use this letter to explain the every practice in every SBU reviews its technology roadmap industry and KPIT performance, the world as we see today and and investments on a quarterly basis with a view to gain our actions and plans for the subsequent years. leadership position. We will continue to focus on Innovation through multiple activities coordinated by SBUs as well as the CTO function. We have seen good sustainable success in new “The year that went by” offerings around Digital Transformation (especially IoT and IT Overall Financial Snapshot / OT applications), Application / Infrastructure management services (revolving around AI and automation) and engineering In FY17, our revenues grew by 3.0% in ` terms, whereas the beyond the automotive verticals (energy and life sciences). We bottom line declined by 15.1%. In US Dollar terms, the overall KDYHPDGHVLJQLÀFDQWSURJUHVVLQWKH3URGXFWVDQG3ODWIRUPV UHYHQXH ZDV ÁDWWLVK ZLWK D JURZWK RI 7KH VHUYLFHV unit and expect a couple of new products to hit the market revenue showed a modest growth of 0.5% in US Dollar terms during the current year. while there was a growth of 10.2% in the products revenue, albeit on a smaller base. People & Processes: Over the last one and half years, we have invested in our training infrastructure, not only for freshers but 2XU RSHUDWLQJ SURÀWDELOLW\ IRU )< ZDV ORZHU DV FRPSDUHG across all levels in the organization. With the fast-changing ZLWKWKHSUHYLRXV\HDU,ZRXOGOLNHWRGHWDLOKHUHWKHVSHFLÀF industry requirements, training to and trainability of the people UHDVRQVIRUWKHORZHUSURÀWDELOLW\,QVXEVHTXHQWVHFWLRQRIWKLV KDVEHFRPHDQHYHQPRUHVLJQLÀFDQWIDFWRULQWKH&RPSDQ\ letter, I will also talk about the actions we have already taken operations. We realize the importance of this and are focussing to improve the same. even more sharply on imparting the right training to the right We continued our investment in global account management SHRSOHWRHQVXUHVPRRWKÁRZRIRSHUDWLRQV and strengthening of the front end with subject matter experts. 3URÀWDELOLW\ 3URGXFWLYLW\:KLOHWKHSURÀWDELOLW\ZDVORZHU 2YHUWKHODVWPRQWKVZHKDYHDGGHGDOPRVWDFFRXQW during the year due to reasons mentioned earlier, we have managers globally, mostly in the US. As one would appreciate, PDGHVLJQLÀFDQWSURJUHVVRQWKHSURGXFWLYLW\IURQW:HKDYH these investments take some time to show actual, on-the- in-house developed best-in-class productivity improvement ground results. We also continued our fresher hiring policy DQGDXWRPDWLRQSODWIRUPVEDVHGRQVHOIOHDUQLQJDQGDUWLÀFLDO and thus ended the year with a net headcount increase of intelligence algorithms. These platforms are comparable, and more than 1,000 people, as compared with the last year. Most in some cases, better than similar competitive platforms in the of these net additions were freshers and thus their absorption PDUNHW:HKDYHJDLQHGVLJQLÀFDQWWUDFWLRQDQGQHZ$06ZLQV on revenue generating projects was limited, resulting in with these platforms. We will continue to improve these further lower offshore utilization. Hence, higher market investments and deploy them in the market. and lower utilization, coupled with additional one-time legal H[SHQVHVWKHRSHUDWLQJSURÀWDELOLW\VXIIHUHGGXULQJ)< 7HFKQRORJ\DQG,QQRYDWLRQ ,Q )< ZH KDG ODLG GRZQ SULRULW\ DUHDV WR IRFXV RQ YL] Last year, we created a separate CTO function, targeted to Growth through Account Acquisition & Mining, Leadership in have a consolidated view of technologies across the Company. 2IIHULQJV3HRSOH 3URFHVVHVDQG3URÀWDELOLW\ 3UHGLFWDELOLW\ The CTO function not only works with all the SBUs to create innovative leadership offerings but also works extensively Growth through Account Acquisition & Mining: The focus outside the Company to nurture a culture of innovation within on industry verticals has yielded us good results. Over 90% and outside the organization. This provides a platform for of our revenues come from our focus verticals and we are attracting innovative minds and bringing forward bright ideas gaining more traction because of our specialization. We have to develop smart, safe and sustainable solutions. PDGH VLJQLÀFDQW LQYHVWPHQWV LQ DFFRXQW PLQLQJ DQG ZH DUH FRQÀGHQWRIJHWWLQJWKHULJKWUHWXUQVIURPWKHVHLQYHVWPHQWV We have successfully completed the third edition of .3,7 in the years to come, starting this year. Our new account Sparkle, an annual national design and development acquisition strategy is also much focussed on the right quality innovation contest. KPIT Sparkle 2017 aimed at fostering a RI HQWHUSULVH FXVWRPHUV IRU ORQJ WHUP PXWXDOO\ EHQHÀWWLQJ culture of innovation and critical thinking among engineering UHODWLRQVKLSV 7KRXJK WKH RYHUDOO UHYHQXHV ZHUH ÁDWWLVK ZH and science students across colleges in India. The theme of had decent growth in our strategic accounts. the competition this year was ‘Smart Cities and centered around creating solutions