DSIJ Interview With Ajay Aggarwal CFO, Cyient LTD.

"We are focused on creating an agile organisation to deliver business value to customers"

Ajay Aggarwal CFO , Cyient  

What is driving growth at Cyient?

Cyient’s vision to “apply technology imaginatively to solve problems that matter” focuses on helping our clients solve key business and technological challenges that have a larger societal impact. To achieve this vision, we implemented the S3 (Services, Systems, Solutions) strategy, which focuses on building our capabilities and providing greater ownership and accountability across the product life cycle, as well as expanding our offerings across the value continuum from services to solutions.

Cyient continues to implement its strategy to expand from services to systems and solutions with the AGILE 2030 execution framework. By developing capabilities across the design-build-operate maintain continuum in our focus industries, we are creating differentiated business offerings and expanding our addressable market in the industries we play. This allows us to address a broader range of customer needs, be it in aerospace, defence, transportation, energy, utilities, healthcare, telecommunications, or manufacturing.

Cyient’s values and cultures underpin its strategy: Values FIRST (Fairness, Integrity, Respect, Sincerity, and Transparency) and the AGILE culture (Ambitious, Growth mind-set, Inclusive, Lead by Example, and Empowered) frameworks guide our behaviour and actions and reinforce trust with our stakeholders

We launched the New Business Accelerator (NBA) in FY18 and made good progress through the course of FY19 by proactively identifying opportunities, engaging with and acquiring new technologies, new skills, new partners, and developing new solutions. The NBA is incubating 18 new initiatives, and the first crop is at the market-entry stage, generating strong interest from our customers. The Cyient IoT platform, Cyient Augmented/Virtual Reality platform, and Cyient Smart-City platform are a few examples.

Cyient also recently adopted the “Readiness 2020” initiative that focuses on operational efficiency improvements across the organisation to drive greater growth and profitability. We remain focused to create an agile organisation taking the best of domain, technical, and service line capabilities to deliver business value to customers continuously.

What are your priorities at Cyient? 

1. From an execution perspective, focus on stakeholder satisfaction including shareholders, investors, vendors and associates. As a result of our significant growth in revenue and profit over the last five years, dividend pay-out has substantially improved over the last five years. During the year, the company also bought back its equity shares with an objective to maximise returns to its shareholders. The company has achieved significant improvement in free cash flow generation capabilities of the business with an increased focus on receivables management, tax optimisation and prudent capex strategy. These improvements in business performance also resulted in increase in market capitalisation and the focus would continue with rigour in future as well.

2. Leverage the cash available in the business to focus on acquisitions and other investments that fill the gaps in our strategy. Pursue strategic and best-fit mergers and acquisitions, organic investments, joint ventures etc. to access relevant and advanced technologies, skills, regulatory practices, and markets; successfully integrate entities that have been acquired.

3. Focus on margin improvement driven by higher offshore revenue contribution, better operating performance and delivering on the cost optimisation initiative. Further, investing in talent, systems and process to boost productivity along with continued focus on strong governance and risk management would be another priority.

What are the key challenges faced by IT industry in India?

I foresee a couple of challenges in the IT  Industry in India. We need to focus our learning and development initiatives on building a future-ready workforce and equipping them with the right skills through re-skilling, training & development. Factors such as higher sub-contracting, supply-side concerns, recent appreciation in INR impacting FX – more pronounced in mid-caps - are aggravating margin concerns. Change management is one of the biggest challenges for companies that are undergoing digital transformation.

Going forward, do you see Indian economy slowing down?

The outlook seems positive for India, one of the fastest-growing economies, despite softer growth in recent times. It has been one of the least impacted countries by the global turmoil. India’s strong macroeconomic fundamentals, policy changes, implementation of reform measures and fostering an environment to boost investments and infrastructure development attribute to the healthy growth path for the country. Despite the positive outlook, the economy remains vulnerable to certain domestic and geopolitical risks, especially economic and political changes that can affect demand and relative prices. The continued focus on sound economic policies, faster policy implementation, expanding investment opportunities, formal job creation and infrastructure development could help the economy go a long way.

What is the growth outlook for the IT industry in India?

Our business does not typically fit into the specific IT industry as we are more of an engineering and technology solutions company. To that extent, despite its recent challenges, the growth outlook for the IT industry in India seems positive. The changing business landscape provides opportunity for innovation and technology adoption. Traditional business models are being disrupted with digital and softwarebased business models. Companies see an increased spend by clients on digital despite macro uncertainties. Automation is a key area of investment for a larger business impact.

As we embark on this journey we see immense opportunities for us in the future. Building capabilities, leveraging on technology drivers, strengthening automation and AI capabilities with IP creation would be the key to the future. Operationally, innovative products and services, cost optimisation and supply chain management would extend the value creation for stakeholders. As an organisation, we will strive towards our aspirations without compromising on our core values.

How is the trade war and the rhetoric impacting IT industry in India?

They do not impact Cyient much, given the nature of our business. Further, we are in good shape with our localisation initiatives, best-in-class infrastructure and facility at each location with an objective to work closer to the customer.