Rangsons Elect Management Discussions

Economy Overview

Global Economic Outlook

The outlook for global growth presents a nuanced landscape with risks that are broadly balanced, allowing for the possibility of a soft landing. Projections indicate a global growth rate of 3.1% in 2024 and a modest increase to 3.2% in 2025. This outlook is attributed to the unexpected resilience in the United States and several large emerging market and developing economies. Global headline inflation is projected to decrease to 5.8% in 2024 and further to 4.4% in 2025, with the latter being a downward revision.

Conversely, the downside risks involve potential commodity price spikes due to geopolitical shocks, including ongoing disruptions in the Red Sea, and supply chain disruptions or persistent underlying inflation that could prolong tight monetary conditions. Navigating this delicate balance will require a vigilant and adaptive approach to global economic dynamics, recognizing both the opportunities and challenges that lie ahead.

Global Manufacturing Output Overview

In a positive turn of events, January 2024 marked a manufacturing output. The significant year-ahead outlook has also brightened, marked by a surge in business confidence to its highest level since April of last year. This optimistic sentiment reflects a growing belief in the resilience and potential expansion of the manufacturing sector in the coming months.

However, navigating the supply chain complexities will be crucial for sustaining and maximizing gains in manufacturing output, emphasizing the need for adaptive strategies in this dynamic economic landscape.

Electronics Manufacturing Outlook

As the year concluded, the global electronics sector continued to face challenges, primarily characterized by weakened client demand. Notably, suppliers delivery times experienced renewed lengthening, underscoring the complexities in the sectors supply chain dynamics. A significant challenges was the strongest rise in input prices since

March 2023. Additionally, the persistent and stubborn inflationary pressures further strained profitability. An escalating number of projects being placed on hold further exacerbated the sectors challenges, hinting at uncertainties and caution in the business environment.

Navigating these challenging conditions will require a strategic approach, encompassing adapting to global economic fluctuations, cost management strategies to mitigate the impact of rising input prices, and innovative solutions to address evolving client demands. The resilience of the global electronics sector will be crucial in overcoming these hurdles and positioning for sustainable growth in the face of continued economic uncertainties.

Indian Economy

Indias economic outlook for the year 2024 appears promising, with a projected growth rate of 6.2%, maintaining its status as the fastest-growing large economy globally. This positive trajectory is expected to continue, with Indias GDP projected to increase further to 6.6% in 2025. India is emerging as a pivotal destination for investment and expansion.

Industry Overview

Global Electronics Industry

The global electronics industry was valued at USD 2,494 billion in CY2021. The industry is expected to grow at a compound annual growth rate (CAGR) of 4.9% to reach USD 3,168 billion by CY2026. Some of the critical factors driving this growth are increasing disposable income, audio and video broadcasting, higher broadband penetration, the inclination of the youth towards next-gen technologies, the emergence of e-commerce, rising demand from rural markets, etc.

Global per capita electronic consumption is on the rise, currently standing at USD 324. The West leads in per capita usage, with North America and Europe experiencing rapid growth. This surge is fueled by the widespread adoption of wireless connectivity, driving the integration of electronic devices into daily life. As technology continues to advance, the trajectory of per contributor capita electronic consumption remains a key indicator of evolving lifestyles and societal reliance on digital innovations.

Global EMS Industry

The global Electronics Manufacturing Services

(EMS) market generally consists of companies that manufacture electronic products, predominantly assembling components on Printed Circuit Boards (PCBs) and box builds for Original Equipment

Manufacturers (OEMs).

The global EMS market, valued at USD 880 billion in CY2021, is anticipated to grow at a CAGR of 5.4%, reaching USD 1,145 billion by 2026. This growth is propelled by the increasing trend of electrification, rising demand for smart devices, the surge in wearable technology, 5G technology development, the push for renewable energy, and the proliferation of connected devices. These factors collectively contribute to the dynamic expansion of theEMSmarket,reflectingits crucial role in the evolving landscape of electronic manufacturing.

Indian EMS Industry

Over the next five years, the EMS market in India is poised to reach an impressive USD 80 billion. This growth is attributed to several key factors driving the expansion of Indias EMS industry.

is the increasing share One significant of outsourcing by OEMs in India. Additionally, the development of a robust component ecosystem within the country and government incentives further fuels this growth.

The adoption of a “China plus one” strategy, where companies diversify their manufacturing bases beyond China, has led to increased outsourcing to EMS players in India.

A notable shift is observed in the EMS markets dynamics, transitioning from traditional contract manufacturing to Original Design Manufacturing (ODM). This shift caters to the evolving needs of OEMs, emphasizing product innovation. EMS players are strategically repositioning within the value chain, moving beyond traditional box build services to focus on design and PCB assembly, aligning with the changing dynamics of the electronics manufacturing landscape.

Industry View

Aerospace & Defense

The Aerospace and Defense EMS sector is expected to be around USD 45 billion in 2026, growing at around 6%.

The commercial aerospace industry is experiencing significant growth, driven by an increase in aircraft deliveries, coupled with the replacement of aging aircraft, which has become a major growth driver. Furthermore, there is a growing demand for enhanced safety features and digital communication devices in the aviation sector.

The surge in defense budgets across many countries has also contributed to the growth of the defense industry.

Governments are investing in advanced electronic systems for both aircraft and defense equipment to bolster national security.

In India, the Aerospace and Defense sector is undergoing a transformative phase with initiatives focused on modernization and indigenization programs.

Medical Technology

The global EMS market for the Medical Electronics segment was valued at USD 27 billion in 2021 and is expected to grow at 6% CAGR to reach USD 37 billion by 2026.

The landscape of medical electronics is rapidly evolving, propelled by advanced technologies like the Internet of Things (IoT), wireless connectivity, and Artificial

Intelligence (AI). These innovations have paved the way for the integration of medical wearable technologies, marking a notable trend in recent years. The rise of digital therapeutics and at-home diagnostics is transforming how healthcare is delivered, offering personalized and accessible solutions to patients.

In India, the government has been proactive in supporting the medical electronics sector, recognizing its potential impact on healthcare. Several initiatives have been undertaken to foster the growth of this sector, aligning with global advancements.

Industrial

The global EMS market for the Industrial Electronics segment is valued at USD 80 billion in 2021 and is expected to grow at 6.5% CAGR to reach USD 110 billion by 2026.

Industrial electronics stand at the forefront of enhancing efficiency including energy, transportation, petroleum, chemical, semiconductor, mining, and agriculture. The current emphasis in this domain extends to power conditioning, incorporating power electronic switches, sensors, actuators, meters, intelligent electronic devices (IEDs), automation equipment, semiconductors, nanotechnology, and more. The integration of power semiconductor devices is particularly instrumental in modernizing industrial technology.

Artificial Intelligence (AI-driven) technologies are playing a crucial role in optimizing buildings and industries. The widespread adoption of smart devices within buildings and the interconnection of control systems contribute to this focus on connected factories is another notable trend, aiming to digitize and smarten industrial operations.

In this evolving landscape, power electronic devices emerge as key components, presenting numerous opportunities for advancement. As industries continue to embrace innovative technologies, the synergy between industrial electronics, AI, and smart solutions is poised to redefine modern manufacturing and industrial processes. This confluence of advancements signifies a transformative era for industrial electronics, shaping the future of industrial operations.

New Industries

Two key emerging industries expected to have disruptive growth in the global EMS market are Telecom and Automotive. In the Telecom segment, the global EMS market was valued at USD 95 billion in 2021 and is anticipated to grow at 5.7% CAGR, reaching USD 126 billion by 2026. This growth is propelled by the expansion of network infrastructure, the development of data centers, and the increasing adoption of 5G technology. Indias role in global telecom electronics production is expected to rise, presenting opportunities for growth.

In the Automotive Electronics segment, the global EMS market was valued at USD 63 billion in 2021 and is forecasted to grow at a CAGR of 6.3%, reaching USD 85 billion by 2026.Theriseinelectronificationis attributed to the adoption of Advanced Driver Assistance Systems (ADAS), the surge in Electric Vehicle (EV) adoption, and the increasing focus on safety and connectivity. Auto Original Equipment Manufacturers (OEMs) are actively seeking collaboration with Indian EMS providers to showcase capabilities and enhance system-level understanding. Furthermore, India is positioned to become a leader in the shared mobility space by 2030, presentingsignificantopportunities for both electric and autonomous vehicles. This dynamic landscape underscores the potential for collaboration and growth in these emerging industries, paving the way for advancements in technology and sustainable solutions.

Segment–wise & Product-wise Performance of Cyient DLM

Segment Performance

Aerospace and Defence continues to be our strongest segment with significant growth coming from our top clients. All our top clients have grown over 60% in the Financial Year 2023-24. However, Industrial and Medical Technology segments have declined in terms of overall revenue share due to external macroeconomic factors and temporary client-specific slowdowns. Opportunities in the pipeline for Industrial and

Medical Technology segments are healthy and there are increased conversations around adding new programs within the existing customer base.

Product Category

PCBA and Box Build continue to be the key Product categories growth for FY24. Significant in the PCBA segment is due to increased volumes from existing customers and Box

Build share of business is impacted due to change in revenue mix. The mechanical segment is primarily the

Precision Machining business to support our key clients. The company is also focusing deeply on growing the Cable Harness business resulting in some of the recent investments. With capacity expansion in Bengaluru and Mysuru facilities, the infrastructure for the Mechanical and Cable Harnesses assembly business is adequately provisioned for the expected growth.

Risks and Concerns

Risk & Mitigation Plan:

The Company has an organization-wide ERM (Enterprise Risk Management) framework based on best-in-class standards. It covers various company operations and key criteria such as strategic risks, reputation risks, operational risks, financial risks, and compliance/litigation risks. The ERM framework is reviewed periodically by KPMG, the Companys internal auditor, and a report on the mitigation status of risks is presented to the Risk Committee. The

Company also has an internal risk committee that periodically reviews the risk management process.

Risk	Impact	Mitigation
Operational Risk	Operational inefficiency leads to productivity loss and severely	We have invested in tools, people, and processes to integrate & enhance business performance. We also impacts financial performance. hav e robust internal processes and audits (internal & external) to make continuous improvements to our existing processes and to achieve excellence. The usage of Industry-leading software (such as Kinaxis Rapid Response) in Supply Chain helps us improve OTD (on time delivery) and customer satisfaction.
Geopolitical Risk	Geopolitical tensions heighten uncertainty, which hurts investment and economic growth. Conflicts and wars also tend to reduce global supply capacity with potentially inflationary effects.	We have a well-diversified business spread across geographies and segments. We focus on markets in NAM, Europe, Middle East and India. Our business is diversified into three (3) key segments, Aerospace & Defence, Medical Technology and Industrial.
Currency Risk Technology/ Obsolescence Risk	Fluctuations in Foreign Currency can impact profitability. Risk of raw materials or the final products being offered to customer becoming End of Life/ Obsolete	Regular evaluation of hedging policy by internal risk management to assess its effectiveness. Natural hedging by matching inflows with outflows wherever possible and protection in contracts. Automated tools are in place to identify obsolescence early and secure the required materials. Early discussions with customers on any products/solutions becoming obsolete and supporting the customer in the development of new-gen products/solutions. Alternatives Management and Last-Time Buy for potential Obsolete parts.
Attrition Risk	Risk of losing talents across key areas	Focus on employee engagement activities. Actions around talent development, retention and compensation corrections.
Competition Risk	environment, there may be a severe impact on margins due to pricing pressures.	Focus on acquiring next-gen talents through Graduate Engineering Trainees (GET) Program I n this highly competitive erings and providing solutions off Differentiated throughout the product life cycle. Offering Design Led Manufacturing solutions to increase stickiness. High focus on quality score and providing consistent output to our clients.

Internal control systems and their adequacy

The Company has adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization, and ensuring compliance with corporate policies. The Company has a well-defined manual for the delegation of authority for approving revenue and expenditure. The Company uses the SAP system globally to record data for accounting, consolidation, and management information purposes, connecting to information.

Cyient DLM had appointed M/s KPMG as internal auditors for the Financial Year 2023-2024. KPMG carried out the internal audit based on an internal audit plan, which is reviewed each year and approved by the Audit Committee. The internal audit process is designed to review the adequacy of internal control checksandcoversallsignificantareas of the Companys operations. The Company has an Audit Committee of the Board of Directors, the details of which have been provided in the Corporate Governance report. The

Audit Committee reviews audit reports submitted by the internal auditors. Suggestions for improvement are considered, and the audit committee follows up on the implementation of corrective actions. The committee also meets the Companys statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems in the Company and keep the

Board of Directors informed of its key observations from time to time. The statutory auditors have also independently audited the internal financial controls over financial reporting as of March 31, 2024. They have opined that adequate internal controls over financial reporting exist and that such controls were operating effectively.

Shareholders Value Creation

With the launch of the IPO (Initial Public Offering) during the year, Cyient DLM is abletocreatesignificantvalue to our investors driven by strong growth in revenues and profits.

The stock price saw an appreciation of 67.5% as of

April 1, 2024, from the date of listing price on July 10, 2023. The company has effectively utilized the IPO proceeds towards repayment of loans, capital investments and funding incremental working capital in line with the objects defined in the RHP.

As of March 31, 2024, the IPO proceeds (net of issue expense) utilization stands as below:

( in Million)

Objects of the Issue	Amount to be Utilized	Utilization (Actuals)	Utilization %
Funding incremental working capital requirements	2,911	799	27.4%
Funding capital expenditure	436	18	4.1%
Repayment of borrowings	1,609	1,609	100.0%
Achieving inorganic growth through acquisitions	700	-	0.0%
General corporate purposes	934	-	0.0%
Total	6,590	2,425	36.8%

Investor Engagement

The company communicates the business outlook, strategies, and new initiatives to its investors regularly and in a structured manner. We believe that communication with the investor community is as important as timely and reliable financial performance. We engage with the investors through multiple communication channels and have had as many as 32 plant tours covering more than 145 investors. The companys dedicated Investor Relations Department and the companys Senior Management Team participated in various roadshows and investor conferences. During the financial year, we had six unique coverage reports from reputed analyst firms followed by four special coverage reports.

Discussion on financial performance with respect to operational performance

Revenue Growth:

During the Financial Year 2023-24, revenue has witnessed a YoY growth of 43.2% in Rupee terms.

Growth is majorly driven by Aerospace and Defense segments with all top clients growing in excess of 60%

YoY. Revenue CAGR over the last 4 years is at 23.8%, representing consistency in growth. Company revenues are well diversified across 3 major geographies, namely: NAM (North America), EMEA (Europe & Middle East) and APAC (Asia Pacific including India).

EBITDA:

EBITDA CAGR growth over the last 4 years was healthy at 34.2% primarily driven by revenue growth. For FY24, the EBITDA stands at 1,110 million, a growth of 26.5% YoY. FY24 has been an exceptional year for investments in Sales and General Administration expenses in lieu of the expected growth in the future that caused EBITDA growth to be lower than revenue growth.

PAT:

PAT CAGR through FY21 – FY24 is healthy at 73%. It is primarily driven by revenue growth and operational growth is at 93% YoY majorly from

Revenue growth and Other Income from IPO proceeds.

Order Book

The order book growth in FY21 through FY24 is deal initiatives and a strategic significant focus on tapping growth potential with our key clients.

We also have a robust order book of 21,705 million as of March 31, 2024, as well as a healthy pipeline of prospective projects which are currently at various stages of negotiation.

NWC:

The increase in Net Working Capital is majorly contributed by the reduction in customer advances due to revenue mix change. With global semiconductor availability challenges in recent years, most suppliers tightened their credit terms which caused DPO to be unfavorable. As a result, we see the net working capital in days to go up in FY24. With progressive supply chain and operations expected to stabilize in the medium term.

ROCE:

With significant investments by way of Net Working Capital and Capital Expenditure, ROCE improvement is not seen in

FY23 and FY24. With most investments already in place, ROCE expected to improve with efficiency in capital utilization and NWC parameters.

Financial Performance for the Year 2023-24

AS discussed below are for the consolidated results of Thefinancial

Cyient DLM Limited and its subsidiary. The discussion should be read in conjunction with the Consolidated Financial Statements and related notes to the Consolidated Accounts of Cyient DLM for the Year Ending March 31, 2024

Consolidated Financial Results (Profit & Loss Statement):

	For the year ended March 31, 2024		For the year ended March 31, 2023
Particulars	Mn	% of Rev	Mn	% of Rev
INCOME
Revenue from operations	11,918.71	100%	8,320.33	100%
Other income	278.26	2.3%	63.11	0.8%
Total income	12,196.97		8,383.44
EXPENSES
Cost of materials consumed	9,487.38	79.6%	6,341.53	76.2%
Changes in inventories of finished goods and work-in- progress	(287.78)	-2.4%	110.61	1.3%
Employee benefits expense	1,173.80	9.8%	646.94	7.8%
Finance costs	343.87	2.9%	315.16	3.8%
Depreciation and amortisation expense	223.12	1.9%	194.15	2.3%
Other expenses	435.19	3.7%	343.45	4.1%
Total expenses	11,375.58	95.4%	7,951.84	95.6%
Profit before tax	821.39	6.9%	431.60	5.2%
Tax expense / (benefit)
(a) Current tax	212.09	1.8%	129.71	1.6%
(b) Deferred tax	(2.66)	0.0%	(15.38)	-0.2%
Total tax expense / (benefit)	209.43	1.8%	114.33	1.4%
Profit for the year	611.96	5.1%	317.27	3.8%

Analysis: Revenue:

Revenue YoY growth is majorly driven by Aerospace and Defense segments with all top clients growing in excess of 60% YoY. Medical Technology and Industrial segments have declined in growth percentage due to macroeconomic reasons and some client-specific issues. elfare and

Other Income:

Other income for FY24 was 278.26 million as compared to 63.11 million in FY23. The increase is majorly driven by interest income from IPO proceeds. The unutilized portion of IPO proceeds were invested in the form of Fixed Deposits that resulted in other income increase of 243.10 million. The remaining impact is mainly due to forex losses.

Direct Material Costs (Cost of Raw Materials + Change in Inventory):

Direct material costs as a percentage of revenue stood at 77.2% in FY24 when compared to 77.5% in FY23. There is a marginal reduction of fixed assets, thein material costs primarily due to a change in revenue mix across multiple customers. The growth in high-margin accounts has driven the material costs. We expect to see further improvements in this aspect.

Employee Benefit Expenses:

Employee Benefit Expenses as a percentage of revenue have gone up by 2% YoY. In FY24, it is at 9.8% vs 7.8% in FY23. The Company made investments in Sales, Operations, and CTO organization to manage the expected growth in the future that caused the ratio to

. Further investments in this goup area will not be linear and we expect to see absorption benefits coming in with growth in the coming years. The . overall increase in absolute terms is to be attributed to the following reasons:

• Salaries & Wages including Bonus: Increase of 79.8% ( 453.58 million) over FY23 primarily due to hikes and investment towards key roles in Sales, Operations and Technology functions.

• Employee Stock Options: The Company introduced the RSU scheme in FY24 that caused an increase of

49.07 million over FY23. • Staff An increase of 24.21 million over FY23 which is a growth of 33.3%.

Finance Costs:

Finance costs for the year stood at 343.87 million, an increase of 9.1% over FY23. The increase is mainly due to funding higher working capital for revenue growth and an increase in the interest rate on borrowings. As a percentage of revenue, it stood at 2.9% as against 3.8% in FY23 with an improvement of 0.9%. As higher revenue growth demands higher working capital, we are able to offset the finance cost percentage impact to a large extent due to the utilization of IPO funds.

Depreciation and Amortization:

Duetohigher and amortization cost as a ratio to revenue drops to 1.9% in FY24 when compared to 2.3% in FY23. With an increase of 14.9% in absolute terms, the ratio to revenue to attainimprovement remainsdirect favorable due to better absorption in FY24.

Other Expenses:

Other expenses primarily include stores & spares, power & fuel, repairs & maintenance, travel & conveyance, etc. The increase of 91.7 million or 26.7% over FY23 is primarily inflation-related, IPO expenses, and additional spending towards travel expenses to meet clients and related stakeholders.

Taxes:

ETR is at 25.5% as against 26.5% in FY23 reduced by 100bpsduetoefficient tax

Consolidated Financial Results (Balance Sheet):

5Particulars	As at Mar 31, 2024	As at March 31, 2023
ASSETS
Non-current assets
Property, plant and equipment	1,374.45	1,217.50
Capital work-in-progress	9.51	13.34
Goodwill	30.30	30.30
Other intangible assets	22.45	16.46
Right of use assets	494.14	345.28
Financial assets.
(a) Investments	662.12	895.22
(b) Other financial assets	53.23	34.97
Deferred tax assets (net)	58.66	53.79
Income tax assets	-	5.03
Other non-current assets	68.79	38.41
Total non-current assets	2,773.65	2,650.30
Current assets
Inventories	4,642.19	4,250.83
Financial assets
(a) Trade receivables	2,258.69	1,617.48
(b) Cash and cash equivalents	416.89	773.41
(c) Other bank balances	4,948.98	902.60
(d) Other financial assets	248.93	54.66
Other current assets	743.43	797.90
Total current assets	13,259.11	8,396.88
Total assets	16,032.76	11,047.18
EQUITY AND LIABILITIES
EQUITY
Equity share capital	793.06	528.66
Other equity	8,296.72	1,450.06
Total equity	9,089.78	1,978.72
LIABILITIES

 

Non-current liabilities
Financial liabilities
Particulars	As at Mar 31, 2024	As at March 31, 2023
(a) Borrowings	746.72	995.63
(b) Lease liabilities	515.10	362.56
(c) Other financial liabilities	180.60	166.32
Provisions	106.32	95.27
Total non-current liabilities	1,548.74	1,619.78
Current liabilities
Financial liabilities
(a) Borrowings	588.91	2,149.11
(b) Lease liabilities	70.46	53.21
(c) Trade payables
(i) total outstanding dues of micro enterprises and small enterprises	80.85	69.17
(ii) total outstanding dues of creditors other than micro enterprises and small enterprises	3,119.41	2,783.45
(d) Other financial liabilities	216.66	76.49
Other current liabilities	1,280.86	2,292.36
Provisions	3.49	2.99
Income tax liabilities (net)	33.60	21.90
Total current liabilities	5,394.24	7,448.68
Total liabilities	6,942.98	9,068.46
Total equity and liabilities	16,032.76	11,047.18

Equity:

The Company has only one class of shares – equity shares with a par value of 10 each. The Authorized Share Capital of the Company was 85,000,000 equity shares.

On June 6, 2023, we had undertaken a pre-IPO placement by way of private placement of 4,075,471 equity shares aggregating to 1,080 million at an issue price of 265 per equity share. We had completed an Initial Public Offer (“IPO”) by way of fresh issue of 22,364,653 equity shares of face value of 10 each of the Company at an issue price of 265 per equity share aggregating to 5,920 million. The equity shares of the

Company were listed on National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE) on July

10, 2023

Equity increased from 1,978.72 million as of March 31, 2023, to 9,089.78 million as of March 31, 2024. A significant portion of this increase is from: • Share Capital: 264.40 million

• Premium on issue of Shares (net of issue expenses):

6,426.32 million

• Profit for the year: 611.96 million

• Share based payments and others: 41.48 million • Fair value adjustment on investments: ( 233.10) million

Liabilities:

Borrowings:

Overall borrowings reduced from 3,144.74 million in FY23 to 1,335.63 million in FY24. During the year, the Company repaid all external working capital loans outstanding as per objects of the IPO and 200 million inter-company working capital loan, and the remaining balances as on March 31, 2024, represent the balance of inter-company loan (Term loan and Working Capital loan).

Trade Payables:

Our trade payables consist of payables towards suppliers against the purchase of goods and services.

It stood at 3,200.26 million as on March 31, 2024.

( 2852.62 million as of March 31, 2023). An increase of 347.64 million due to increase in purchases from credit suppliers.

Other Current Liabilities:

Other current liabilities stood at 1,280.86 million as of March 31, 2024 (vs 2,292.36 million as of March 31,

2023). It primarily represents advance from customers and the same has reduced by 1,011.50 million due to set-off against AR on pro-rata basis for key accounts and new POs accepted with reduced advances on account of nature of business.

Assets:

Non-Current Assets:

Overall non-current assets have gone up by 123.35 million caused by addition of capital expenditure net-off of depreciation. The Company spent capex to the extent of 338 million during the year to manage growth and enhance capabilities. Investments under Financial Asset is reduced by 233.10 million due to fair value adjustment of investment in STUAM Technologies (formerly Innovation Communications Systems Limited).

Current Assets: Inventory:

Inventory as of March 31, 2024, stood at 4,642.19 million as against 4,250.83 million as on March 31, 2023. The increase of 391.36 million is primarily from raw materials due to an increase in revenue. Inventory was closely monitored during the year, and as a result, DIO reduced to 117days in FY24 against 139 days in FY23.

Trade Receivables:

The trade receivables have increased from 1,617.48 million as of March 31, 2023, to 2,258.69 million as of March 31, 2024. The Company regularly monitors trade receivables, which has resulted in a DSO of 57 days for FY24 (53 days in FY23) representing effective collection management. In absolute terms, it has gone up by 641.21 million primarily due to higher revenues in Q4 FY24 with collections expected in the subsequent quarter.

Cash & Bank Balances:

Cash and Bank Balances have gone up by 3,689.86 million mainly due to IPO proceeds not utilized being invested in fixed deposits. The break-up of cash and cash equivalents are provided in the table below:

5Value in millions	As of March 31, 2024	As of March 31, 2023	Change	Remarks
Cash and Cash equivalents	416.89	773.41	(356.52)	Utilization towards business Increase in Escrow Account
Other Bank Balances	4,948.98	902.60	4,046.38	(FD of IPO proceeds)
Total	5,365.87	1,676.01	3,689.86

Other Current Assets:

It mainly includes the advances paid to suppliers towards raw materials. It is marginally reduced in FY24 to 743.43 million from 797.90millionduetoprocurementefficiency.

Key Financial Ratios:

Ratios	FY2023-24	FY2022-23
Current Ratio	2.46	1.13
D/E Ratio	0.21	1.80
ROE %	11.1%	23.1%
ROCE %	10.6%	13.5%
DSO (Days)	57	53
DIO (Days)	117	139
DPO (Days)	70	78
Customer Advance (Days)	25	66
Fixed Assets T/O	8.6	6.8

Current Ratio:

The Current Ratio increase is mainly due to higher cash and bank balances on account of money received from the issue of shares through Initial Public Offering and repayment of current borrowings during the year.

Debt-Equity Ratio:

Reduced substantially to 0.21 from 1.80 mainly due to an increase in equity by way of the issue of shares through Initial Public Offering and repayment of current borrowings during the year.

ROE:

At 11.1% during FY24 against 23.1% in FY23 mainly due to an increase in equity by way of the issue of shares through the Initial Public Offering. Despite healthy Profit After Taxes growth, the ratio has negative variance primarily due to a higher equity base.

ROCE:

The ROCE in FY24 reduced to 10.6% from 13.5% in

FY23. Despite the increase of EBIT by 56.04% YoY, ROCE reduced primarilyduetosignificantincrease in capital employed on account of IPO proceeds.

DSO:

Days Sales Outstanding (DSO) of 57 days as of March

31, 2024, is marginally higher when compared to 53 days as of March 31, 2023. The increase is mainly due to higher revenue in Q4 from clients having higher credit period.

DIO:

Days Inventory Outstanding is improved by 22 days due to procurement efficiency and better inventory management. It stands at 117 days, reduced from 139 days of the previous year.

DPO:

Supplier payables at 70 days, down by 8 days from the previous year. Due to macroeconomic reasons such as

Semiconductor shortages, the Israel-Hamas war, most suppliers started demanding upfront money causing challenges to enhance or improve credit period.

Customer Advance Days:

It is substantially reduced to 25 days down from 66 days in the previous year. A major reduction is due to set-off against AR on a pro-rata basis as per contractual terms. However, due to seasonality and revenue mix, fresh advances on new POs are reduced during the financial year.

Fixed Assets Turnover:

Due to better utilization of fixed assets and improvement in capacity utilization, the ratio has improved to 8.6 from 6.8. With moderate capital investments, the Company was able to generate 43.2% more revenues in the Financial Year 2023-24

NURTURING OUR ASSOCIATES

Strengthening our human capital is vital to our growth strategy. Our principles guide us in every action we take, prioritising associate well-being at every stage of their journey with us.

Human Capital

In a rapidly evolving landscape, it is a business imperative for our workforce to continually acquire new skills and seize learning opportunities. We recognize that it is the passion and dedication of our people that propel us forward, enabling us to redefine the boundaries of what is possible.

Thus, we foster a culture where continuous learning and personal growth flourish, the tools and support needed. In doing so, we embark on a path paved with remarkable achievements and groundbreaking discoveries. For it is through the investment in their development, that we cultivate not only a thriving work culture but also lay the bedrock for sustainable success.

Total Headcount (as on March 31, 2024):

• 1609 global associates (permanent: 722 & contingent: 887)

- Mysore (permanent: 510 & contingent: 578)

- Hyderabad (permanent: 139 & contingent: 278)

- Bengaluru (permanent: 64 & contingent: 31)

- Other Geographies (permanent: 09)

Male/Female Diversity

• We value diversity in our workforce and all efforts are made to ensure that we provide an inclusive working environment and are able to attract and retain diverse talent.

- Permanent (male: 591 & female: 131)

- Contingent (male: 717 & female: 170)

Attrition Rate (Permanent)

• Overall: 17.9%

Culture

Having an inclusive culture is the cornerstone to creating a diverse, innovative environment that inspires growth and associate engagement. Cyient DLM defines its culture with the acronym AGILE (Ambition, Growth Mindset, Inclusive, Lead by Example, and Empowered).

We believe it is critical that we invest and focus on our culture to ensure that we have clear expectations of how we will lead, manage, act, and treat each other, our customers, and the community. This year we have created a focus on how we can ensure that inclusion is the key foundation for all our stakeholders to excel. This inclusive culture will ensure all of our associates have a voice and that it is heard and valued. With this the employer brand would increase and will help attract the right talent for our current and future requirements.

Resource Planning

Resource planning is done based on anticipated future requirements. This planning takes into account specific project needs and the essential skill sets required.

Understanding significantly influences these factors the talent acquisition process, aiding in the selection of suitable candidates, talent reviews, and facilitating learning and development initiatives.

With this we strive to have a process in place to ensure that the organisation has the right people in the right place at the right time aligning with our strategic goals.

Policies & Procedure

Our policies provide our employees with clarity on how to conduct business ethically and responsibly. The policies of our company are reviewed periodically or on a need basis by the Board and its committees. During this assessment, the efficacy of the policies is reviewed and necessary changes to policies and procedures are implemented.

All our policies and procedural documents are available on the intranet for our associates reference.

Performance Management

We believe in automation of our people management tools. Our online performance management tool gives us an edge to ensure our associates stay productive and engaged by having clear goal-settings and open feedback.

A continuous process of evaluating associates will close the gaps, if any, by providing the necessary training to acquire required future skills & competencies.

Learning & Development

We have an online tool for all learning needs that enables associates to develop the skills they need for the future.

With this tool, we try to bridge the gaps between the resources we have today and those required in the near future. We understand the value of investing in our people to retain talent and provide them with opportunities to grow along with the organisation.

Leadership and behavioural training:

• Emerging Leadership Program

• Business Leadership Program

• Communication Skills Training

• Negotiation Skills Training

Customer-initiated training:

• Digital Product Definition (DPD) requirement • Supplemental Purchase Order Conditions (SPOC)/ Self Release Delegate (SRD)/Honeywell Aerospace

Supplier Portal (HASP) Tools • Zero Defect Workshop

• Quality Management Systems (QMS)

Internal training:

• Technical training – Association Connecting of

Electronic Industry (IPC), Quality Management System (QMS), International Organization for Standardization (ISO), Electrostatic Discharge (ESD),

Hazardous material handling

• Non-technical training Fire & safety, first

Emergency Response Team (ERT)

The company has undertaken and institutionalized the Kaizen, 5S, and Lean Six Sigma initiatives. These initiatives continuously improved operational excellence, and the company has seen the benefits of this in the form of better customer satisfaction.

With this, we create a space where associates can upskill, which not only has holistic benefits but also fulfils the needs of the individual, empowering them their future endeavours.

Rewards

We believe in rewarding associates for their good work to keep them motivated and accountable for their tasks. This, in turn, helps us retain associates through our timely rewards using the Rewards & Recognition tool.

The tool ensures transparency throughout our rewards process for the year.

Our rewards include not only monetary incentives but also growth and career opportunities, prominence, recognition, a positive organizational culture, and a satisfying work-life balance.

Associate Wellbeing & Welfare

Associate wellbeing is paramount to our commitment to sustainable operations and our promise of ‘care.

We actively engage in various initiatives aimed at promoting positivity, wellness, and good health among our associates and their families. We organize various events for aspects of wellbeing.

We believe in the wellbeing of our associates by providing insurance such as Group Mediclaim insurance for employees, dependants and parents, as well as Group Term Life insurance, Group Personal Accident insurance.

We also facilitate annual health check-ups for their welfare, including:

• Associate health check-up • Eye Check-up

• Audiometry examination

Webinars for Associate Enrichment:

• Supporting mental wellbeing through wellness sessions

• POSH (Prevention of Sexual Harassment) awareness sessions

• Financial planning sessions

• Health awareness sessions

Industrial Relations

We believe in respecting individual rights by maintaining and cultivating relationships with our shop floor worker representatives, other collectives, and their members.

We believe in maintaining cordial relations with our work committee members to promptly identify and resolve conflicts, ensuring zero production loss.

Employee Support Benefits

• Advancement Incentives for educational milestones.

(e.g., Diploma to Graduation)

• Marriage Gifts

• Financial assistance for critical requirements

Associate Engagement Activities

Engagement at the workplace is a strategic imperative for our success and sustainability. With increased engagement, we have witnessed an increase in productivity, groupsofemployees performance, innovation, different reduced turnover, a positive organisational culture characterised by trust, the creation of an employer brand, adaptability & resilience, and a healthier work environment. We organise various activities such as:

Celebrating diversity and special occasions

• Womens Day celebration • Ayudha Pooja celebration

• National Safety Day

• Environmental Day

Celebrating national and cultural events

• Republic Day celebration • Independence Day celebration

• Sports Events

Physical and team-building activities

• Creative team connect using innovative outbound activities

• Team outings