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)

INDEX
1. Introduction
3
2. Annual Report Analysis 2011-12
3. Annual Report Analysis 2012-13
4. Annual Report Analysis 2013-14
5. Summary

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4
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Introduction
The aim of this project is to analyze the Annual Reports of Mindtree Limited for the years 20112012, 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 ebusiness, 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.

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

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.

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 companys 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 companys
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 companys 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.