ANNUAL REPORT ANALYSIS

(MINDTREE LIMITED)

Submitted By:-

Alok Dubey(G15066)

Kumar Utsav(G15087)

Jyoti Gupta(G15085)

Rishabh Singla(G15105)

Udit Asati(G15115)

Vivek Jain(G15118)

INDEX1. Introduction 3 2. Annual Report Analysis 2011-12 33. Annual Report Analysis 2012-13 44. Annual Report Analysis 2013-14 45. Summary 10

IntroductionThe aim of this project is to analyze the Annual Reports of Mindtree Limited for the years 2011-2012, 2012-2013 and 2013-2014. MindTree Limited is an international Information Technology consulting and implementation company that delivers business solutions through global software development. The Company is structured into two business units:

1. Information Technology ('IT') Services 2. Product Engineering ('PE') Services

IT Services offer consulting and implementation and post production support for customers in manufacturing, financial services, travel and leisure and other industries, in the areas of e-business, data warehousing and business intelligence, supply chain management, ERP and maintenance and re-engineering of legacy mainframe applications.

PE Services provides full life cycle product engineering, professional services and sustained engineering services. It enables faster product realization by leveraging the expertise in the areas of hardware design, embedded software, middleware and testing and through MindTree's own IP building blocks in the areas of Bluetooth, VOIP, IVP6, iSCSI and others in datacom, telecom, wireless, storage, industrial automation, avionics, consumer products and computing.

Mindtree Limited offers IT strategy consulting, application development and maintenance, data warehousing and business intelligence, package implementation, product architecture, design and engineering, embedded software, technical support, testing, infrastructure management and knowledge processing services to customers.

The Company is head quartered in Bangalore and has offices in India, United States of America, United Kingdom, Japan, Singapore, Australia, Germany, Switzerland, Sweden, UAE, Netherlands, Canada, Belgium and France.

ANNUAL REPORT ANALYSIS 2011-2012:

(A) Growth in 2011-2012:

Milestone Year for company as company was able to cross $100 million in quarterly revenues. Growth momentum expected to continue, but the growth rate expected to be slower in FY 2012 owing to their

size, caution in certain segments such as BFSI and growing concerns of mild recession and uncertain external environment.

Infrastructure Expansion : Keeping up on its growth and expansion plans, company continued to invest in building up infrastructure and undertook construction of the second phase of the campus in Bangalore which will provide an additional 187,466 sq. ft. of built-up area and 1,400 seats after the facility becomes operational during the last quarter of 2012- 13. Company also set up development centre in Chennai and Bhubaneswar and also plans to build its first development centre in the United States in Gainesville area.

New Technology: Product Engineering: Labs is pursuing research into cutting edge technologies in the emerging areas of big data and internet of things. Company has also started developing solutions in the Digital Video Surveillance domain to address the growing needs of the surveillance market. It is also planning to build critical intellectual properties in Video Analytics and Video Content Management. Company has also partnered with global leader in storage solutions- Iomega/EMC, to offer video surveillance solutions for SMBs and distributed enterprises, integrated into their Network Attached Storage ( NAS) boxes.

Acquisition of high value clientele: Company was able to add 3 more 20+ million dollar client as compared to 1 last year. No of 10mn, 5 mn and 1 mn clients have also risen compared to last year which reconfirms the company’s claim of better growth than last year. Company had 237 active customers.

Repeat Business: The Company got 98% of its revenues in FY 11 have from repeat business (existing customers).

Company has discontinued captive arm of Kyocera Wireless in India that it acquired for its entry into manufacturing smartphones as investment required to make the business viable turned out to be four-five times higher than the initial planned investment of around Rs 50 crore.

Conclusion: Given the new technology segments the company is targeting, the company has a foresight of expanding its infrastructure. This is in line with its growth plans and expectations. Acquisition of high value clientele and ability to generate repeat business supports the company’s claim of providing quality services to its customers and is expected to continue the same in the future. This will help it in .Company was able to add only 2 patents this year compared to 7 patents in last year. This puts a question mark over the claims of the company that it has been trying to develop new innovative products and work on cutting edge technologies that it forsees as the major drivers of change and growth in coming years. Also, growth is largely driven by Maintenance, Consulting and IP Licensing and Infrastructure and Tech support services. There is inability to sustain growth in “Development” service offering.IT Services has seen weaker margins in Revenue.

(B) Profitability in 2011-2012: Revenue for the year was Rs. 19,152 million signifying a growth of 26.91% in Rupee terms and 21.71% in dollar

terms. EBITDA margins are at 15.31% as compared to 11.8% in the previous year. The main reasons for the increase in

EBITDA margins are rupee depreciation of about 4.3% during the year and increased focus on operational excellence initiatives.

PBIT has increased from Rs.1066 million to Rs 2235 million PAT has increased by 77.7% to Rs. 2,187 million mainly because of the reasons explained above and due to the

exit from mobile business.Conclusion:

(C) Risk in 2011-2012: Uncertain economic environment in leading economies like the US and Europe impacting demand for IT services. Possible risk to margins because of high pressure on prices due to increased competition. High Forex Risk because of currency rate fluctuation as a major portion of revenues are in foreign currencies and

are realized from Onsite assignments and clients. Foreign currency exposure that is not hedged by a derivative instrument or otherwise increased by 34% and is

likely to increase next year too as the volatility arising from fluctuations in currency rates would increase owing to Visa issues and sluggish international scenario.

Estimated amount of contracts remaining to be executed is worth Rs. 420 million . Company has lots of tax disputes with the government for financial years as early as 2001-02 and

subsequent years, against which company has already filed an appeal. If these tax disputes result in an unfavorable judgment for the company, it will result in outflow of resources.

The company reported that there was no material litigation was outstanding as on March 31, 2012.

Conclusion: The remaining unexecuted contract, though part of the business model, carry certain amount of risk of underperformance. The large unhedged foreign currency exposure carries a huge exchange rate risk. The multiple tax disputes carry the risk of materializing, and eating into profitability. Also there seem to be no outstanding risks pending for the company which lowers the risk factor for the company.

(D) Industry in 2011-2012: Much slower and subdued recovery expected in 2012 owing to strains in euro-areas and growing concerns of

mild recession . Global spending on technology expected to grow with global IT offshoring market growing much faster next year

(2012-13). Fastly emerging verticals such as healthcare, telecom, media and retail are expected to continue to grow. Price- based competition. Mature verticals such as BFSI and Manufacturing expected to drive a large share of the IT offshoring market. Indian IT and BPO exports stood at $ 59 billion in FY2011-12, a growth of 16.3% and is likely to grow at 11-14% in

FY13. Smaller deals of USD 100 million would be redefining the IT outsourcing scenario. Emerging trends in Mobility, Social Media, Big Data / Analytics and Cloud shall redefine the technology

landscape of the future(SMAC).

Conclusion: The company’s growth is in line with the industry growth. It is investing and developing new age technologies in the field of SMAC. This will drive future growth of the industry and also the company.

Summary for year 2011-2012: As a result of the untimely products foray and acquisitions (Smartphone segment), weaker margins in its core businesses (IT services, in particular) and lower forex gain led to a sharp decline in overall margins. Company is expected to deliver higher revenue growth than industry estimates and improve EBITDA margins further. Hence, Revenue growth and margin improvement will get all the attention in FY12. Uncertain global environment and the currency volatility seem to be the biggest risks for FY2012-13.