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|BSE: 532819||Sector: IT|
|NSE: MINDTREE||ISIN Code: INE018I01017|
|BSE 16:01 | 20 Jul||976.90||
|NSE 15:59 | 20 Jul||976.85||
|Mkt Cap.(Rs cr)||16,023|
|Mkt Cap.(Rs cr)||16023.11|
Mindtree Ltd. (MINDTREE) - Chairman Speech
Company chairman speech
Dear fellow shareholders
Wanted to begin our letter by thanking you for your unstinting supportover the years to Mindtree. With your support we accomplished great outcomes last year.This includes:
1. Best ever scores on our annual Customer Experience Survey. We rankedequal or better than the best in our industry on critical parameters by CXOs of ourcustomers. The survey conducted by an independent agency which also conducts similarsurveys for many others in our industry. What was especially heartwarming is that the 2ndmost frequently expressed expectation by our customers was that they would like Mindtreeto help them drive their technology roadmap i.e. we have now earned the trust ofour customers and they are expecting higher value from us.
We are energized and humbled by the results and rededicate ourselves tocontinually creating value for our customers using technology.
2. Deal wins we won deals worth $1.01B last year which includedthe largest deal yet in our history from one of our customers in the airline industry.This customer has entrusted their entire QA function to us in a multi-year multi-milliondollar deal reflecting our strong value proposition and relationships that we have builtover many years. These wins give us strong momentum for continuing our record of growingfaster than our industry as we enter FY2018-19.
3. Value creation for shareholders FY2017-18 also saw ussuccessfully complete our first share buyback program. Counting dividends and buyback wereturned Rs. 4.73 Billion to shareholders in FY2017-18 which is 83% of our PAT for theyear. Our improved financial performance also helped the Street re-rate our stock. Ourmarket-cap was Rs 76 Billion on March 31 2017 and it grew to Rs 126.54 Billion on March31 2018 which makes us one of the best performing stocks on the Indian exchanges inFY2017-18. Our Total Shareholder Return over the period March 2007 (from our IPO) to March
2018 was 15.7%p.a.
We will not rest on the laurels of these achievements and continue todo our best for all our stakeholders.
Would also like to take this opportunity to share with you ourperspective on the most important changes affecting our industry and our actions tostrengthen Mindtree in this period of discontinuous change.
1. Technology changes in technology are reshaping our customers'world as well as our industry. Some of our traditional offerings like coding testingmanaging IT infrastructure etc. have been recast in a very different way throughplatforms automation and other forces. We took note of Charles Darwin's finding that onlythose who can adopt fast will survive in periods of rapid change. We embraced thetechnology revolution and led the thinking for our clients. In many cases we paid theshort term price either by cannibalizing our revenue or sacrificing margins by makinginvestments to prepare for the changes. That call proved to be the right one. We startedFY2017-18 with 11.1%
EBITDA margins in Q1 but ended the year with
16.1% in EBIDTA margins in Q4 in a period when the appreciating Rupeeate away 0.7% of our operating profits. Q4 FY2017-18 also saw us post a QoQ growth of 5.5%which was amongst the best in our industry.
2. Reskilling media articles about the effects of technology change onthe workforce continue to bombard us. Consistent with our philosophy that our passionateand expert people are the most important ingredient for us to create value for customerswe saw the Tsunami a long time ago and prepared adequately. We invested in creating aninternal platform that we call Yorbit which today has 1987 courses sourced from leadingcontent providers all over the world as well as internally created content. Currently13641 Mindtree Minds have completed 1370477 hours of training on the platform. Thisinvestment in reskilling our people was perhaps the biggest reason for our two mostimportant successes of FY2017-18 the first was our strong customer satisfaction scoresthat we shared in the beginning of this letter and also the multi-year low attritionlevels in Mindtree. On people engagement also we compare favorably with the best in ourindustry.
Our approach for creating value for our shareholders rests on 2important principles great governance practices and focus on the long term healthof our business. These principles govern our actions every day. These principles make iteasy for us to choose between tradeoffs that we inevitably have to make while running yourbusiness on your behalf. Since our inception our aim has always been to deliver superiorreturns for shareholders through consistent revenue growth and stable margins. To achievethat we are obsessed about doing our best for our customers. That in turn needs focus andinvestment on talent and technology. Therefore we see focus on our talent and customers isthe means to delivering returns for our shareholders.
People customers and shareholders are not the only stakeholders weserve. Given the many pressing challenges that our world faces today society is also akey stakeholder in our success. We are convinced that business has to contribute tosolving the problems facing society because business has the resources the reachthe technology and the will to do so. Would like to present to you some of the highlightsof our contributions during FY18 for important social causes:
1. Sustainability: We have reduced water consumption to 0.85kl/FTE/ month; we recycle
89% of the waste generated; and approximately 70% of our power needsare met by renewable sources. You will find more information about our initiatives in theSustainability Report.
2. Promoting primary education: We adopted an entire schooldistrict in a rural area near Bangalore and have engaged with multiple stakeholders over a10 year period. When we started our engagement this district ranked amongst thebottom-five in the state of Karnataka. Today it ranks in the top-five. Patiencecommitment by the many Mindtree Minds who volunteered their service to the community anddeployment of smart technology have helped deliver this remarkable turnaround.
3. Social Inclusion: We use our technology capabilities tosolve large social problems like waste management agriculture etc. through the "IGot" platforms and assistive technologies built by us.
FY2017-18 saw us delivering many innovative solutions which createdsignificant value for our customers. Some of the noteworthy projects were:
1. We collaborated with a global network equipment leader to designdevelop and deploy a software solution which gives immense flexibility capex and opexsavings etc to our customer's customers. This is a service chaining solution which helpsmeet the challenges of ever growing combination of features security and bandwidthrequirements. Such a solution is critical in the world of large data centers andmulti-cloud environments where the end customer does not want to buy additional hardware.This solution has many patents to its credit and has been an instant hit winning manyinternational awards in networking events like Interop and Network World. Our solution hasenabled hundreds of millions of dollars in revenues for our client. This is an area wherewe are making more investments in the future.
2. Our team worked with one of the world's largest humanitarianorganizations to enable real time inventory view of blood products in the supply chain.This has helped our customer become more responsive to the dynamic needs of hospitalsespecially during disasters. We vastly improved the current processes by automating
30% of data extraction analytics and reporting thereby enabling nearreal-time view of the inventory.
3. We have been working with one of the world's largest insurancecarrier for many years. One of the services we provide for them is Testing and QualityAssurance. Last year we helped them reduce the duration of overall testing cycle by
~60% and they were able to detect ~45% of defects through automatedtesting. This not only provided a great quality product for our client but also helpedsignificantly reduce their operational cost on Testing.
The successes of last year are almost entirely attributable to ourpeople. They are incredibly talented and passionate. They live our values ofCollaboration Expertise and Dedication every single day. They set high standards forthemselves and hold us accountable to deliver to those standards. Our people will continueto be the most important factor contributing to our future successes as well.
As leaders our job is to ensure that our people are treated fairly andgiven the resources they need to make an impact for our customers. We are working onimproving the diversity of our talent worldwide which we believe will unleash thecreativity and passion of our people to solve very challenging problems for our customers.
Both of us are very proud to be part of this winning team.Collectively we have the opportunity to make Mindtree a memorable company and all of usspend most of our waking moments chasing that dream.
Your company is incredibly lucky to have a highly engaged Board whereevery member feels invested in Mindtree's success in the marketplace. Recently we saw 3Board members complete their tenure
Prof. Pankaj Chandra Ms. Manisha Girotra and
Mr. V G Siddhartha. On your behalf we would like to thank all of themfor their immensely valuable contributions. They had a part to play in many of ourachievements. We wish them the very best for their future endeavors.
We are also excited to welcome Mr. Bijou Kurien to our Board subjectto your approval at the forthcoming AGM. As explained earlier in this letter a part ofour response to the changing dynamics of our industry is to gain deeper expertise in theverticals we serve. Mr. Kurien brings a wealth of knowledge and deep networks in theRetail and CPG industries which is one of our largest verticals.
We are sure that Mr. Kurien will help us refine and strengthen ourstrategy to serve our customers in this vertical. We are looking to strengthen our Boardfurther with experts in technology and chosen domains in the future.
We engaged an external firm which is a global leader in the field oftalent management and board governance to conduct our annual board evaluation survey. Thefindings were discussed at the Board meeting in April 2018. The evaluation highlightedthat we are already at the forefront of many global good practices on board processes andgovernance. Nonetheless continuous improvement is the way of our lives at Mindtree and weare working on making the changes identified through this exercise. You will find moredetails about the evaluation in the
Looking ahead with confidence
FY2018-19 brings a host of challenges and opportunities. The year aheadis our 20th year in business. We continue to be guided by our mission to "engineermeaningful technology solutions that make businesses and societies flourish". We willcontinue to aspire to be our customers' primary and trusted partner for transformationaltechnology initiatives as well as the place for great talent to flourish. Our goals forFY2018-19 include:
1. Growing faster than our industry.
2. Improving operating margins.
3. Improving our lead over the rest of the industry in Digital we are in a special place to help our customers lead their industries using data and otherdigital technologies. For us our Digital business has grown at twice the company's growthrate and we will continue this journey.
4. Delivering greater efficiencies for our clients using technology in"run-the-business" programs.
5. Incubate the seeds for a future-proofed Mindtree where we can takenew solutions in new business models to enterprises.
6. Increasing the diversity on gender and ethnicity withinMindtree narrowing the gender-pay gap.
Once again we thank you - our shareholders our customers and theamazing Mindtree Minds across the globe for your unstinting support affection and forinspiring us to do our best.
With warm regards
Place: Bengaluru Date: April 18 2018