Company analysis of Tech Mahindra Ltd

By Rekha Mohanty












CONTENTS
4.2. Target customer 5
4.3. Distribution channel 5
4.4. Promotion 5
4.5. Revenue Streams 6
4.6. Core capabilities 6
4.7. Value configuration 6
4.8. Partners network 6
4.9. Cost Structure: 7
Business Analysis 9
5.3. Segmental Analysis 9
5.5. Issues & Concerns 10
6. Operational Performance 11
6.1. Sales & Sales Growth : 11
6.2. PBDIT and OPM 11
6.3. Net Profit & Net Profit Margin 12
6.4. Cost Structure : write up 12
6.5 Operating Matrics: 13
7.Financial Performance 15
8.Capital Market Performance 16
9.Recent Strategy 16
10. Outlook 16











Template of Company Scan


1. Preamble: Commitment to excellence over the past year has earned Tech mahindra Ltd recognition as
a 2010 AT & T supplier award winner for its support of affiliates of AT & T, one of the worlds leading
data, voice, wireless and internet services providers. Tech mahindra Ltd the best system integrator by
CMAI and INFOCOMs national telecom awards 2010.It also won Leap vault Change Leadership Award
2010 for Game Changing M&A Domestic Category.


2. Background: The year of incorporation
was 1986 in Pune. The major promoters of
Tech mahindra are Mahindra & Mahindra
Ltd & BT Group plc with holding 44% and
39% of the equity respectively. Tech
Mahindra is a global systems integrator and
business transformation consulting firm
focused on the communications industry.
With the Convergence of media and
telecom, the changing landscape of the
telecom industry is becoming extremely
Competitive.Tech Mahindra is the
leading provider of IT solutions to the
telecom industry. For over two decades, Tech Mahindra has been the chosen transformation partner for
wireline, wireless and broadband operators in Europe, Asia-Pacific and North America.

Write current revenue of the company.. and listing

3. Products & services:
Tech Mahindra provides IT services, R&D services and BPO services
.
IT services Details
Solution Integration Tech Mahindra's SI services enable clients to identify, develop,
and implement the best-fit solutions which are equipped to
meet their changing business requirements.
Application Development
& Management
Tech Mahindra offers scalable end-to-end application
development and management solutions from requirement
analysis to deployment and rollout.
Consulting Tech Mahindra offers a full range of Consulting services to help
analyze the business requirements for effective
implementation of software solutions.
Managed services With a core focus on Telecom, Tech Mahindra has the expertise
and experience to manage an enabling infrastructure and
applications and run outsourced operations for large telecom
operators smoothly.
Infrastructure
management services
Tech Mahindra has demonstrated ability to deliver
Infrastructure Management Services to its clients more
efficiently and cost effectively than their internal IT
departments or other managed service providers.
R&D services Details
Service offerings Product life cycle management
Testing
NMS/EMS Software development
Hardware board development
Network offerings
Technology transformation
Other services
Domain practices Tech Mahindra's expertise has yielded a multitude of
outstanding achievements, thus gaining customer confidence in
the domain capabilities.
BPO As organizations look to streamline businesses by focusing their
resources and technology spending on core competencies, Tech
mahindras BPO and Business Process Management (BPM)
expertise can help them achieve their corporate objectives and
attain exponential benefits.


4. Business Model Analysis:

4.1. Value proposition:
To compete in the modern world, the company produces different products and services to cater their
different customers. Tech mahindra provides IT services, R&D services & BPO.

i) IT services: Solution Integration
Application Development & Management
Consulting
Managed Services
Infrastructure Management Services

ii) R&D services

iii)BPO

4.2. Target customer

For over two decades, Tech Mahindra has been the chosen transformation partner for wireline, wireless
and broadband operators in Europe, Asia-Pacific and North America. Over 30,000 professionals service
clients across the telecom eco-system, from the global network of development centres and sales
offices across Americas, Europe, Middle-East, Africa and Asia-Pacific.Tech mahindras targeted
customers are mostly the Telecom industry.

4.3. Distribution channel
There are different forms of distribution channels like agents, dealers, franchisees, internets and own
outlets. Distribution channels are very much important for any organisation for its growth. In some
cases, distribution channel plays two important roles, one as a selling point and another as after sales
services point. Through this, the organisation will be in direct contact with their customers.

4.4. Promotion
Tech Mahindras proven expertise and experience in providing Business Support Service (BSS) solutions
can help reduce operating costs. Its in-depth understanding of the operational and financial challenges
faced by various telecommunication and media companies has helped them achieve operational
excellence.

4.5. Revenue Streams
Tech Mahindra partners with clients, building an ongoing relationship that delivers not only
an appropriate BSS, but also one that is fully supported in terms of roadmap and resources over time. Its
singular focus on telecom, and a comprehensive BSS Practice with proven consulting and delivery skills
in all major BSS products, has made us a partner of choice for the delivery of major IT transformation
programmes for telecom service providers worldwide.
Mention from which areas the revenue are coming
4.6. Core capabilities
Tech mahindras core capabilities are well trained and highly skilled professionals

4.7. Value configuration
Tech Mahindras in-depth understanding of the operational and financial challenges faced by various
telecommunication and media companies has helped them achieve operational excellence. Through
their coherent and evolving portfolio of offerings, they have enabled their clients to improve their long-
term performance. Tech Mahindras BSS infrastructure consolidation and rationalization has made it
possible to remain competitive in the Next Generation market place.

4.8. Partners network
The Partner Program at Tech Mahindra represents their innovative concept in building partner
relationships. Some of the recent partnerships company entered in are
i. Engaged with Microsoft to build Sandbox Framework Product Development. Development of
communication sector Products / Frameworks Support for RFI, RFP & Joint GTM in progress,
Staff Augmentation and fixed price projects.
ii. Tied up with HP to Openview, Opencall, Hardware& Storage.
iii. Engaged with Sun Microsystems for IPTV, JCAPS, SeeBeyond, Hardware, Storage.
iv. Tied up with IBM for Websphere, Rational, and Tivoli including Micromuse, DB2, Lotus,
Hardware and Storage.
v. Tech Mahindra is a Platinum certified partner in the Oracle Partner Network in Technology, EAI,
Portal Development, Metasolv, and Siebel.
vi. Tech Mahindra has a strategic partnership with Siebel.
vii. TechMahindra has a reseller Partnership with SubexAzure.
viii. Tech Mahindra has a global Premier partnership with BEA Systems Inc. BEA Systems Inc. is a
world leader in enterprise infrastructure software, delivering powerful standards-ased platforms
for building enterprise applications and managing Service-Oriented Architectures even in
heterogeneous IT environments.

4.9. Cost Structure:
Q4 2009-10
Rs in
Million

Total Sales Revenue 44,269

Cost

% of total
Revenue
Personnel Expenditure 18.556 41.91
Operating & other expenses 13,266 29.96
Depreciation 1097 2.47
Interest 25 0.056
Mention write up and compare total cost as a percent of sales against previous years.
5.





Business Analysis

5.1. Growth Drivers: Tech Mahindra helps companies innovate and transform by leveraging its unique
insights, differentiated services and flexible partnering models.
i. Diversify across customers vertical, geographical and technology offerings
ii. Minimal overlaps in terms of target industry segments and clients
iii. Likely syner5gy benefits.
iv. Ability to sell a wide range of services to the companys existing customers.
v. Common support and control systems-reduction in operating expenses.

5.2. Value Drivers: Tech Mahindra is focused on creating sustainable value growth through innovative
solutions and unique partnership
i. Customer first
ii. Good Corporate Citizenship
iii. Professionalism
iv. Commitment to quality
v. Dignity of the individual

5.3. Segmental Analysis

Vertical segmentation

















Geographical Segmentation








5.4. Competition:Competitive position is
low to moderate for large player.

company
name
Market
Share (%)
TCS 32.13
WIPRO 24.80
INFOSYS 22.62
HCL 5.24
TECH MAHIN. 4.95





5.5. Issues & Concerns

i. High Volatility in Currency Rates (Specially $)
ii. High Degree of Competition
iii. Lack of Skilled human knowledge leading to execution risk
iv. Absence of strict regulations
v. Low level of R&D expenditure by Indian companies
vi. Uncertainty in International market
vii.
Mention in details
6. Operational Performance

6.1. Sales & Sales Growth :

Tech Mahindra derives revenue
Principally from technology services
Provided to clients in the Telecomm-
unications industry. The overall revenue
increased in 2009-10 in comparison
to 2008-09.This reflected the increase
in the number of clients served during the
respective years as well as an increase in the
amount of business from these clients.

Mention amount of recent quarter with
proper comparison and reasons.






6.2. PBDIT and OPM

The Operating Profit & its margin
is decreasing from Q2 of FY 2009 because
total expenditure is increasing continuously.
The major reasons behind this are
i) Due to increase in head counts &
annual increments.
ii) Due to increase in business Volumes,
increase in number of office locations
in India & over seas and overall growth in
business activity.



6.3. Net Profit & Net Profit Margin


In the Q4 of FY 2009-10 the Net Profit
is increasing because of increase in sales
& decrease in operating expenses. The
major reason behind increase in sales is
increase in the number of clients served &
the increase in the volume of business
from the existing clients.















6.4. Cost Structure : write up
Qtrs Sales Personnel % Depreciation % Travelling %
Services
Of
Business
Associates % Others %
OND2008 11024 3621.8 32.85 278 2.52 937.7 8.506 2311.3 20.966 1094.4 9.927
JFM2009 10126.6 3260 32.19 276.5 2.73 838.2 8.2772 2377.9 23.482 942.9 9.311
AMJ2009 10602.3 3934 37.11 286.4 2.7 778.4 7.3418 2334.4 22.018 921.2 8.689
JAS2009 11098.4 4114.7 37.07 301.4 2.72 705.1 6.3532 2304.5 20.764 1188 10.7
OND2009 11499 4116.2 35.8 321.2 2.79 669.7 5.824 2965.7 25.791 1127.7 9.807
JFM2010 11638.7 3814.9 32.78 389.6 3.35 556.7 4.7832 3097.6 26.615 1394.2 11.98
*
Source:BSE
% is calculated upon sales of the respective quarter.
* Figures are in Rs/mn.
6.5 Operating Matrics:

Business Per Employee For The last 6 quarters

Business per employee is decreasing because of
increasing number of employees in comparison to
the increase in the revenue.










In charts ..follow rules - 123


Profit Per Employee for the last 6 quarters

In the last quarter of 2010 the Net profit per
employee is increasing because the net profit
increases more than the increase in the number
Of employees.














Vertical wise Revenue for the last 6 quarters

From the last 6 quarters the revenue coming
from
Telecom service Provider is increasing
because
Tech Mahindra is the Leader in Providing IT
solutions to Telecom Industry.










Geography wise Revenue Distribution of last
3 years

In the last two years the geography wise
revenue
distribution is more or less stagnant showing
the
Company is maintaining its stability inspite of
the
Economic up & down turns.












Offshore & Onsite Revenue For the last 6
quarters

In the last 6 quarters a shift in onshore-
offshore
Ratio towards offshoring,meaning that
company is
Able to better leverage its centres in Pune
,Mumbai,
Bengaluru,Noida
,Kolkata,Chandigarh,chennei,
Hyderabad Etc.




7.Financial Performance
ROCE & ROE
Through out the last three years
It has been observed that ROE is
Less than the ROCE,it indicates
the company will have to take on
further debt to grow.











Debt-Equity Ratio

The Debt -equity ratio in the 2008
was more because of increase in Debt &
In 2009 it was zero because of no debt
burden .







8.Capital Market Performance

Relative Performance Analysis

In the last month 2010 ITSS is out performing
the performance of the company as well as
the performance of SENSEX.It signals we
shouldnt invest in the company ,rather we
should invest in ITSS Industry.

9.Recent Strategy

Tech Mahindra has continually demonstrated solutions for monitoring market changes and for
implementing superior market strategies.Those strategies are
i. Undertaken initiatives to deal with service specific security like IPTV, which is one of the killer
applications of NGN Telecom.
ii. Synergy, economies of scale, opportunities to acquire new technology to stay competitive.
and improve market reach are the reasons for M&A strategy.Tech Mahindra merged with Satyam to
reduce the dependence on British Telecom.

10. Outlook
i. As the ITSS industry will witness suatainable growth of 15 %, Tech Mahindra is also expected to
grow in future.
ii. The spending related global technologies is expected to grow from 2010 onwards.
iii. The company will continue to diversify in terms of geographies, verticals & service lines
iv. The growth in the telecommunication sector will help it expand its foot prints in the local
Information Technology outsourcing market.
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