L&T Technology Services Ltd Management Discussions

1. BUSINESS PROFILE Overview:

L&T Technology Services Limited (LTTS) is a global leader in Engineering Research and Development (ER&D) services. The Company offers end-to-end consultancy, design, development, and testing across product and process lifecycles. With its deep expertise across software, digital engineering, embedded systems, engineering analytics, and plant engineering, LTTS delivers transformative value journeys for its customers worldwide, driving revitalized operational and business success paradigms.

Headquartered in India, LTTS has over 23,800 employees spread across 22 global design centers, 28 global sales offices and 104 innovation labs as of March 31,2024. The Companies global footprint covers

25 countries across all key geographies, catering to an impressive global clientele encompassing 69 Fortune 500 companies and 57 of the top ER&D firms across key sectors, including, Transportation, Industrial Products, Telecom & Hi-tech, Plant Engineering, and Medical Devices.

LTTS continues to be at the forefront of cutting-edge innovation, partnering with leading technology majors and hyperscalers to enable next-gen solutions and offerings across emerging domains, including AI, Software Defined Everything (SDx), and Cybersecurity. These collaborations focus on streamlining new product development, enhancing remote asset management, enabling robust sustenance paradigms, and advancing virtual product design as well as prototyping.

At the start of the fiscal year, LTTS completed the acquisition of the Smart World and Communication Business Unit from its parent company, L&T. This merger has introduced new strengths and capabilities across Sustainable Smart Spaces, Next-Gen Communications, and Cybersecurity, gaining significant attention from LTTSs international clientele. The positive effects of this strategic move were highlighted in a landmark USD 100 million contract for delivering state-of-the- art cybersecurity solutions, and underscore LTTS commitment to innovation and excellence in serving its customers.

LTTS is active across the following verticals:

Transportation: Accelerating Transformative Growth Journeys for 8 of the Top 10 Global OEMs and Tier 1s

LTTS offers specialized Transportation engineering services that empower global OEMs and Tier 1s to accelerate market entry, foster cutting-edge innovation, and drive sustained business excellence. The Company focuses on Electric Vehicle (EV) technologies, Advanced Driver Assistance Systems

(ADAS), and Autonomous Drive (AD), and is expanding its capabilities in the Software Defined Vehicles (SDV) domain. With global spends on Automotive ER&D set to exceed USD 238 Billion by 2026, LTTS is looking to strengthen its presence by leveraging emerging technologies around AI and enhanced cybersecurity.

In the Trucks and Off-highway segment, LTTS leverages over a decade of experience in providing cutting- edge services to customers and driving new success paradigms across sectors including Construction and Mining, Cranes, Commercial Vehicles, Agricultural Equipment, Powersports, and Polymers.

In Aerospace, the Companys comprehensive offerings suite includes aero engines, aero structures and systems, avionics, air traffic management systems, and digital transformation initiatives. By partnering with leading Aerospace OEMs and Tier 1 manufacturers, LTTS not only ensures significant Return on Investment (ROI) for its customers, but also helps in meeting stringent compliance standards and consistently elevating product quality over time.

Industrial Products: Redefining Success for 7 of the Top 10 Manufacturers

LTTS Capitalizes on its extensive multi-domain expertise across software, hardware, and mechanical engineering to cater to an expanding global industrial products customer base globally. The Companys growing footprint is evident across such key areas including building automation, energy management, and machinery design. As worldwide ER&D spends expand across the domain, driven by the adoption of AI, LTTS is well poised to adopt to the emerging opportunities in the USD 93 Billion market projected by 2026.

With its deep knowledge of the worldwide business dynamics and evolving technology paradigms, LTTS also guides customers toward alternative sourcing strategies in the evolving economic landscape. The approach is complemented by a keen focus on digital manufacturing processes and practices, involving comprehensive digital transformation efforts, for enabling businesses to fully leverage the growth avenues unlocked by Industry 4.0.

Telecom & Hi-Tech: Engineering Next-Gen Transformation Paradigms for 8 of the Top 10 Technology Leaders

The Telecom & Hi-Tech segment for LTTS includes five major domains - Telecom, Consumer Electronics, Semiconductors, Independent Software Vendors (ISVs), and Media & Entertainment (M&E). With the global market for these areas set to exceed USD 300 billion by 2024, LTTS engineers are leveraging emerging technology paradigms, including AI, SDX, and cybersecurity, to unlock new value paradigms for global customers.

The Company leverages its extensive ER&D and New Product Development (NPD) capabilities for enabling major telecom OEMs and CSPs to unlock value from private networks and 5G rollouts for business applications. The strategic acquisition of L&Ts Smart World and Communication unit (SWC) has also helped enhance the Companys robust offerings in the NexGen Comms space by enabling revitalized network architecture, orchestration, and management capabilities.

In the semiconductor domain, LTTS works closely with leading global technology majors and chip manufacturers to enable new age success paradigms across hardware systems design, platform software development, chip development, verification and validation, connectivity, storage, and customer engineering facilities. The Companys offerings also include cutting-edge VLSI services, application engineering, cloud engineering, platform development and migration, product uplift, support, and sustenance, and testing as well as certification solutions.

In M&E, LTTS partners with leading global media technology leaders in driving cutting-edge product engineering, conceptualization, design and development, testing and certification, manufacturing support, maintenance, and value engineering.

LTTS continues to explore and expand its robust and extensive partnership ecosystem with key OTT majors to Capitalize on the ongoing momentum emerging as a result of the shifting global media consumption patterns.

Plant Engineering: Revitalizing Operational Excellence for 7 of the Top 10 Global Organizations

The Companys comprehensive chip-to-cloud capabilities - from design and engineering to project management - help drive delivery, maintenance, and sustenance of bespoke solutions for a global Plant Engineering clientele. With its focus on Engineering, Procurement, and Construction Management (EPCM), the Company supports every phase of a plants lifecycle management through its industry-leading consulting-driven approach and multi-geography Value Engineering Centers.

I n the rapidly evolving Plant Engineering ecosystem, LTTS plays a key role in aiding manufacturers worldwide to modernize and revamp their traditional operation paradigms through the deployment of smart platforms, cutting-edge connectivity, and deep integration services. The Companys offerings, across AI/ML, AR/VR, and digital twins help redefine legacy processes, drive transformative business outcomes, and signify its commitment to leading the digital transformation journey across the Plant Engineering landscape.

Catering to a broad spectrum of industries, including Consumer Packaged Goods, Chemicals, and Energy & Utilities, the Companys Plant Engineering vertical continues to combine transformative digital engineering with deep innovation excellence to ensure sustained avenues of growth and business success for its global clientele. With ER&D spends in the domain projected to exceed USD 90 billion by 2030, LTTS is aligned with global customer expectations to drive new success paradigms leveraging emerging frontiers like AI and enhanced cybersecurity.

Medical Devices: Enabling Cutting-Edge Wellness and Experiences with 3 of the Top 5 Global Healthcare Leaders

Leveraging over three decades of industry presence in combination with cross-vertical engineering expertise, LTTS works closely with the Top 10 global healthcare providers and device manufacturers. The Company helps enable remote medical care, ensure regulatory compliances and approvals (QARA), transform in-vitro diagnostics, drive new age Al-enabled solutions and surgical services, facilitate software-defined wellness journeys, and streamline the growing adoption of the Medical Internet of Things (MIoT).

LTTS digital engineering capabilities play a leading role in helping accelerate product development life cycles, optimize go to market journeys, and unlock sustained value engineering paradigms. This includes such key areas as chronic disease management, remote monitoring, decision support, clinical workflow optimization, care collaboration portals, and health monitoring platforms.

With global ER&D spends on medical devices and offerings set to exceed USD 96 billion, LTTS today continues to redefine the current medical product design methodologies with its cutting-edge digital technologies, solutions, platforms, and offerings, including AI-enabled and AI-powered solutions. This is helping ensure a robust and sustained business success journey across reliable regulatory compliance, best-inclass quality, and revitalized operational paradigms.

2. BUSINESS ENVIRONMENT

The rise in ER&D intensity across sectors is driving new growth opportunities. Nasscom estimates that total global ER&D spend could well exceed USD 3 Trillion by 2030. With the Automotive, Software, and Healthcare & Medical Devices sectors set to account for about half of this spending, high growth areas like Telecom, Semiconductors and Software will continue to register double-digit CAGR from 2023 to 2030 and drive the next frontiers of growth.

Stickier ER&D spending, led by continued investments in future products and a sustained rise in demand for digital engineering and offshoring services, is expected to drive the growth of the Indian ER&D sector as well.

While current Nasscom estimates indicate the US to be the largest ER&D spender at about USD 550 Billion, trends suggest a sustained rise of markets across the EU and Asia-Pacific regions.

Estimates from Zinnov also corroborate this trend, and further predict a 2X rise in Digital Engineering spends by 2026, at over USD 1.6 Trillion.

The sustained rise in digital ER&D spending is expected to be shaped by the growing global attention on the development and adoption of Generative (Gen) AI. Estimates indicate that the industry attracted funding to the tune of approximately USD 14 Billion between 2018-2022, a rate that is only set to accelerate with the accelerated roll out of Gen AI applications across segments. LTTS is focused on unlocking new value paradigms for its stakeholders in the evolving scenario, and has already upskilled over 3,000 engineers in this new growth area.

As the dynamics of the global ER&D landscape evolve, we must continue to reassess its key drivers, including the continued availability of talent, new partnerships and alliances, and revitalized compliance with laws and regulations. This would help ensure continued business success in a dynamic ecosystem.

Driven by its key differentiators around multi-vertical domain expertise, value-maximizing customercentric innovations across major industry segments, and a robust network of alliances across emerging technologies including AI and SDX, LTTS continues to be well poised to navigate the evolving landscape.

3. MAJOR ACHIEVEMENTS

During the year, LTTS had multiple major deal wins across all its verticals. Large deal bookings were led by a marquee USD 100 million win, a USD 50 million and USD 40 million engagement, and more than twenty USD 10 million projects (including several in the range of over USD 15 million and USD 20 million).

Key Deal Wins

Transportation

• Selected by a leading Aerospace & Defense OEM for a 3-year, USD 15 million engagement covering engineering services for avionics, including simulation.

• Engaged by a leading Agricultural and Construction equipment maker to help set up a 100-member Offshore Development Center (ODC) in India.

• A new engagement from a leading European automaker to provide engineering design, vehicle platform software, electrification, and propulsion computer-aided engineering.

• Onboarded by a major North American automotive OEM to assist in their software-defined vehicle initiatives, encompassing digital cockpits, ADAS, AI, and connected platforms across multiple regions in North America, Europe, and India.

• Chosen as a strategic engineering partner by a global automotive parts supplier for 3 of its major business units, encompassing, electrical distribution systems, electronics and instrumentation, and components.

• A multi-year contract from an American electric vehicle OEM to provide support in body engineering and interior design engineering for their upcoming generation of EVs.

• A Leading Aerospace & Defense customer has selected LTTS as a partner for setting up a CoE for Field Programmable Gate Arrays (FPGA) & DO254 work in USA to support their ongoing and new programs over the next 3 years.

• A leading Tier 1 automotive supplier has awarded LTTS a large engineering deal to set the stage for delivering ultra-low emission solutions to global customers.

• An European automotive components maker has entrusted LTTS with ownership of all its electronics programs related to telematics, invehicle infotainment/cockpit, clusters & traditional body executed across EMEA, Japan, and the NAFTA regions.

• Chosen as the preferred partner by a prominent aerospace and defence company for its In-Flight Entertainment (IFE) systems for the next 4 years.

Industrial Products

• Design, implementation and support of application software of meter data management, prepaid system, energy analytics and integration services for a leading smart metering and digital solutions customers covering 11 million end users.

• A multi-million dollar deal with a leading European renewables OEM to deliver Industry 4.0 and Digital PLM services.

• Long-term service contract for supply chain optimization, leveraging value engineering, should costing, smart sourcing and improving manufacturing efficiency for a global leader in residential and commercial climate solutions.

Telecom & Hi-Tech

• Secured a USD 50 million engagement with a global technology major to enable new opportunities for digital video platforms, enhancing the customers flagship suite of products, including its cloud native portfolio, and driving new levels of automation and optimization.

• Selected by a leading US technology major to provide post silicon validation services for their upcoming Server Derivative Chips which will be used to power hyperscalers for data centers.

• Working with a leading 5G wireless connectivity solutions provider for establishing a 5G Center of Excellence, to provide support in RF design, hardware, signal processing algorithms, and systems engineering.

• For a leading semiconductor company, LTTS will be providing full stack engineering services, including Design For Testability (DFT) and Design Verification (DV), for a range of the customers System on Chip (SOC) and Intellectual Property (IP) designs.

• A first-of-its-kind marquee program in India, worth about USD 100 million, from the Maharashtra State Cyber Department, under the Government of Maharashtra, for developing secure, digitally interconnected smart and safe cities through premier cybersecurity and Digital Forensic solutions consolidated under one umbrella.

Plant Engineering

• Finalized a landmark, multi-year engineering services partnership with bp plc. to leverage LTTS over two decades of experience in engineering, manufacturing services, digital and enterprise data management, and low carbon initiatives.

• A multi-year deal with a global oilfield services provider to set up a software center of excellence in India for driving their digital transformation journey.

• An engineering managed services project from a leading European fragrance, flavor ingredients, and nutrition maker, to support the execution of its Capex program in France and Switzerland for driving greater flexibility, better agility, and a faster time to market.

• Awarded a multi-year, multi-million dollar plant engineering contract from a global Agri food company to provide engineering design services for a new plant in Netherlands.

• A Netherlands-based energy major has empanelled LTTS to provide plant engineering services for their global assets across all refineries and new energy projects.

• Secured a multi-year contract for a greenfield specialty chemical plant in the Middle East from a leading regional petrochemical manufacturer, covering Re-FEED, Engineering, Procurement, and Construction Management.

• Selected as strategic partner to oversee the global PLM landscape across transformation, development, and 24x5 infrastructure support for a leading HVAC and refrigeration solutions provider.

Medical Devices

• Chosen as a partner by a leading healthcare technology provider for large scale part to print verification activities for medical device parts by leveraging diverse measurement systems.

• Selected by a leading global healthcare as its test engineering partner, for next gen platform development, integration, and a faster time to market.

• Design and development of a next-gen Digital Surgery Platform for a major global healthcare company, including R&D support to onboard the customers robotics, surgical and operative devices onto the platform to deliver enhanced experiences and outcomes for patients.

4. SIGNIFICANT INITIATIVES

LTTS has continued to invest considerable time and effort in strategic initiatives that will propel its technology footprint, engineering infrastructure, and human resources, with the objective of providing a differentiated experience to its customers. These include:

• Collaboration with NVIDIA to unveil Gen AI and advanced Software-Defined Architecture for Medical Devices.

• Becoming a Palo Alto Networks Managed Security Services Partner (MSSP) for delivering a suite of security services to end customers across industrial verticals.

• Partnership with Google Cloud to harness the power of its Gen AI technologies and tools for the development of DevX, LTTS Developer Experience Platform.

• Alliance with Amazon Web Services (AWS) to help global automotive manufacturers accelerate the transition towards SDVs leveraging Gen AI.

• Collaboration with the nasscom GenAI Foundry to stimulate the growth of Gen AI startups.

• Strategic alliance with AT&Ts Connected Climate Initiative (CCI) to work toward the collective

emissions reduction commitment and help enable companies to make sustainable business decisions. CCI is a collaborative effort that works on connectivity-based solutions to reduce greenhouse emissions by 1 gigaton by 2035.

• Expanding presence across India delivery centers, including, Vadodara, Chennai, and Bangalore (new campus inaugurated with a capacity to host 4,000 engineers).

• Strategic partnership with Bharat Sanchar Nigam Limited (BSNL) to drive and enable global enterprises in their private 5G network deployments.

5. ENVIRONMENT, HEALTH, AND SAFETY

LTTS has a vision of "Engineering a sustainable tomorrow through technology and innovation." We are committed to the creation of a sustainable world by minimizing environmental impact, maximizing social outreach, and offering sustainability focused solutions. As part of our commitment to the environment, LTTS is undertaking various focused initiatives around water and energy conservation, besides expanding its social outreach. This includes:

Reviving Natural Ecosystems: As part of its Social Responsibility mandate, LTTS is restoring degraded patches of forest in Bandipur Tiger Reserve in Karnataka. This has led to large animals like elephants returning to their natural habitat.

Holistic Rural Development: In panchayats of Tiruvallur, Tamil Nadu, community members, especially the women members are being trained in farm and non-farm-based skilling activities. Post these trainings, the community members have begun to earn an additional income.

Revamping Public Spaces: A neglected and degraded space below a flyover opposite to the RGA Tech Park in Bengaluru was restored under a unique Chess theme. The project hinged on the principle of "Reduce-Reuse and Recycle". Old paver blocks were used to create walkways and footpaths, the chess pieces were made from discarded plastic & metal waste and the entire landscape has been designed to minimize water usage.

Strengthening women artisan using environment friendly raw materials: LTTS provided the women artisans of Malharphet village, Kolhapur with training, a tool kit, and eco-friendly raw materials. The first batch of 25 women artisans successfully completed training in producing standardized and high-quality Kolhapuri footwear using environmentally friendly cork-based granules as a replacement for traditional leather or synthetic leather.

Integrated Village Development Project: In the draught-prone area of Beed, Maharashtra, an Integrated Village development project has been implemented by LTTS focusing on watershed management, improved agricultural practices, and the empowerment of community institutions like Self Help groups and Farmer Producer Organizations. As part of this initiative, the old electricity-based pumping station in the village has been replaced with a solar powered water pumping station.

6. ENTERPRISE RISK MANAGEMENT

LTTS integrated approach to risk management:

Enterprise Risk Management (ERM) is integral to LTTS strategy for achievement of long-term goals. Risk Management in LTTS has evolved to navigate the variations and challenges that could potentially impact LTTS multi-geography operations.

Risk Management Policy and Risk Management Framework at LTTS:

LTTS has implemented a robust Risk Management Policy (RMP) and Risk Management Framework (RMF) for the assessment, monitoring, and treatment of enterprise level risks. The RMP and RMF are administered across the organization by the Enterprise Risk Management (ERM) team, established as per terms of reference of the Risk Management Committee (RMC). The RMF adopted by LTTS is aligned with globally accepted risk management frameworks. The philosophy of risk management is to enable the achievement of the companys strategic objectives by identifying, analyzing, assessing, mitigating, monitoring, preventing, and governing any risks or potential threats.

Risk Management: Strategic Partner

Risk Management is a decision enabler which instills a consistent approach for risk-based decision making. It is a strategic partner that enables leadership in improved decision making by performing a preassessment of potential outcomes, associated key risks, etc. Through diligent efforts and strategic approach, risk management at LTTS is considered as an enabler that enhances business value.

Risk Assessment

For effective rollout of risk management program, risks assessments are performed across multiple levels viz. enterprise, business unit, customer account and project levels.

Our approach to risk management is designed to provide reasonable assurance that the risks facing the business are being assessed and mitigation plans are deployed, and all information that may be required to be disclosed is reported to senior management and Board Committees including, where appropriate, the Chief Executive Officer, Chief Financial Officer, Audit Committee, and Risk Management Committee.

LTTS Risk Appetite:

The Risk Appetite statement acts as a guidepost on the level, scale and range of risk that can be accepted to meet corporate goals. The Risk Appetite statement of LTTS is part of the Risk Management Framework.

Determinants of Risk Appetite: Risk appetite thresholds are the quantitative or qualitative benchmarks that are determined in conjunction with departmental goals and performance indicators of respective departments. These thresholds are dynamic and determined by combination of factors, such as LTTS strategy, mission, and vision, regulatory environment, risk culture, key risks and impact, business and industry segments, etc.

Monitoring of Risk Appetite: The risk appetite thresholds are monitored on a regular basis by respective risk owners i.e. Business unit, Delivery unit and enabling functional teams, in alignment with their respective roles and responsibilities. ERM monitors the appetite of key risks on a quarterly basis.

LTTS Risk Categorization:

LTTS risk categorization is a systematic process of classifying risks together into common categories, enabling a structured overview. Risk categorization helps to provide structured approach in risk identification, determination of common risk causes, developing consistent mitigation plans, focused risk discussion with specific risk category owners, etc.

LTTS risk management framework includes the following risk categories and appropriate risk indicators are used to identify these risks.

Strategic Risk: Risks that make it difficult to achieve strategic objectives and goals. (e.g., geopolitical risk, technological disruptions, disruptive business models, etc.)

Operational Risk: Risks and challenges faced by Business Units (BUs) and enabling functions in regular course of business. (e.g., risk related to cybersecurity, data privacy, contractual non-compliance, people risk including human rights, etc.)

Financial Risk: Risks such as inefficient utilization of financial resources, currency fluctuation risks, credit risks, liquidity and funding challenges, etc.

Compliance Risk: Risks arising out of non-compliance with applicable laws and regulations such as Immigration laws, Taxation laws, Data Privacy laws etc.

The key risks for the Company, and the mitigation plans for the same, are listed below:

# Key Risks	Mitigation	Capitals Impacted
1 Information and Cyber Security:	• LTTS Information Security policies are based on industry best practices and leading security frameworks, with a continuous reinforcement of security controls to ensure the confidentiality, integrity, and availability of information assets.	FC SRC HC IC
The breadth and complexities of digital ecosystem continues to grow with the fast-evolving technological landscape, remote workforce, usage of emerging technologies, cloud, artificial intelligence, etc.	• LTTS has implemented a comprehensive Information Security Management System (ISMS) across the company to ensure cybersecurity preparedness. Employees undergo a mandatory ISMS training followed by assessment on yearly basis for building positive security culture and behaviour.
Such complexities can result in the increased risk of cybersecurity threats, security vulnerabilities and cybersecurity incidents which can further lead to business disruptions, impact client service delivery, unauthorized disclosure of sensitive information, etc.	• Established managed defense, security monitoring and incident response process to detect and respond to cybersecurity threats and incidents. Regular assessment and adjustment of security controls, processes to identify and mitigate cybersecurity risks.
	• Information and cybersecurity program is an integral part of LTTS corporate governance and risk management structure. This program consists of multiple factors including comprehensive governance program across the company, multi-layered controls, ISMS Standard 27001:2013 and TISAX certification, etc.
	• Cyber insurance is purchased, to protect and safeguard LTTS against any potential damages that may arise from cybersecurity incidents and breaches.
2 Data Privacy: Risks of non-compliance with existing and emerging data privacy laws and risk of non-compliance with data privacy contractual obligations with third parties across geographies and jurisdictions where LTTS operates	• LTTS has developed a structured global data privacy framework to manage the current and emerging data privacy compliance requirements.	FC HC SRC IC
	• The shifts in regulatory paradigms are addressed by robust data privacy compliance practices and Data Privacy policies and procedures are implemented and timely updated.
	• Periodic privacy audits are performedjointly with external consultants.
	• Privacy awareness programs are implemented which includes privacy emailers, training, privacy quiz, etc.
	• LTTS has implemented a personal data breach response and mitigation plan in alignment with applicable data protection laws.
	• LTTS has embedded privacy by design as a backbone for new systems and applications.
	• Data Protection Office works to ensure that LTTS is well-equipped with required adeptness to cater to ever unfolding regulatory behest.
3 Revenue concentration: Concentration of revenue in key geographical markets and key customers leading to dependency	• Senior leadership regularly monitors the concentration risk periodically using parameters such as percentage of revenue contribution by geography, revenue contribution from Top 5/10/20 clients.	FC SRC
	• The integration of L&Ts Smart World & Communication business into LTTS has further helped to dilute the concentration percentages
	• Leadership level connects with top clients to ensure healthy customer engagement and percentages.
	• Customer feedback surveys like CSAT, etc. are conducted to ensure client satisfaction.
4 Risk of non-availability of skilled talent: Challenges in attracting and retaining skilled manpower i.e. manpower with niche skills, and high attrition rates in certain areas which impacts business growth, increases operational costs, impacts delivery capabilities, leads to client dissatisfaction, causes reputational damage, etc.	• The HR team at LTTS regularly monitors the attrition rates. Review of monthly trend and pattern analysis of attrition rate is performed and also benchmarked with comparable industry peers.	FC IC HC
	• LTTS deploys a variety of initiatives to attract, engage and retain its skilled talent pool and to enhance the overall work experience. E.g. of these initiatives includes learning and development programs for employees, rewards and recognition program, offering technical career growth opportunities, other programs such as long service awards, executive certification program, diversity initiatives for women workforce, etc.	SRC
5 Evolving and disruptive technologies: Inability to innovate and develop new services and solutions to keep up with customer expectations and evolving technologies which could result in lower growth traction.	• LTTS being a global player in the Engineering Research and Development (ER&D) segment, continuously explores opportunities in new technologies by way of investments for solution and competency building. LTTS also collaborates with customers for jointly exploring and developing new technological solutions in customer projects.	FC IC HC SRC
	• Strategic collaborations with leading technology companies for training and capacity building on new edge technologies. Eg. Collaboration with Nvidia, a leading American technology company, for training and upskilling of 1,000 employees on GenAI.
	• With the focus of driving innovation and the development of solutions and accelerators for customers, LTTS invests in labs such as technology labs, Innovation labs, etc. and Centers of Excellence (CoE), which are focused towards building leading edge technologies.
	• LTTS Global Engineering Academy (GEA) is continuously engaged in training and equipping the young workforce with latest technologies and skills.
6 Exchange rate volatility: LTTS operates in a global environment which results in foreign exchange risk/ exposure.	• LTTS recognizes the importance of FX risk management and has implemented a comprehensive strategy to minimize the potential impact of currency fluctuations.	FC
	• LTTS strives to naturally hedge the FX exposure by matching the currency of our foreign currency payables with receivables. LTTS regularly assesses FX exposure across different currencies to identify potential risks and prioritize hedging strategies. The hedging strategies include FX forward contracts and in certain situations, currency options to limit potential losses.
	• The effectiveness of hedging strategies are continuously evaluated, and periodic reports are presented to the management to ensure informed decision-making.
9 ESG: Increased relevance of ESG performance from various stakeholders including customers, investors and regulatory bodies leading to risks and opportunities can lead to an impact on business growth and reputation.	• LTTS has embedded sustainability as one of the focused business offerings.	FC HC
	• LTTS is rolling out multiple sustainability initiatives to achieve committed targets.	SRC NC
	• Various policies that ensure aspects of Human rights, Employee Health & Safety, Diversity & Inclusion, Grievance Redressal, Employee talent enrichment programs, etc have been implemented.
	• Governance on regulatory requirement like Social Security laws, financial reporting, Sanctions, Anti-Bribery and Anti-Corruption
	• Transparent communication of ESG KPI performance via Annual Reports and other communication mediums for perusal of Investor Relations, Customer, community, etc.
	• Participation in various rating assessments to benchmark LTTS performance with peers and industry best practices.
10 Geopolitical challenges: Uncertainty in global macroeconomic, cyclical downturns and geopolitical factors resulting in disruption in global supply chains, cost reduction initiatives by clients and impediments to employee mobility/ business operations	• The Company has a well-diversified portfolio of customers, business operations and revenue-mix spread across multiple business units. Diversification of Business offerings across industry segments helps the company to Capitalize its technological expertise and capabilities, thereby limiting dependence on any particular industry segment or any financial impact due to cyclical downturns.	FC SRC HC IC
	• LTTS actively monitors the risk of Client and market concentration and the risk of dependency on top customers. Parameters such as percentage of revenue contribution by geography, revenue contribution from Top 5/10/20 clients are regularly monitored.
	• LTTS resorts to hiring local talent as much as possible in critical geographies to minimize business operations impact. LTTS also has location-wise crisis management and business continuity teams, with a tested and ongoing WFH/ WFX program to ensure streamlined operations.
	• LTTS has a well-defined Risk Management Framework for monitoring of Country Risk before entering any new geography and continuous monitoring of country risks to ensure pro-active risk management. LTTS also has a counter party screening process to ensure compliance with various sanctions while doing business with new entities or operations in any geographies.
11 Business continuity risk: Risk of potential events that can disrupt business operations, safety of resources, assets, etc. Eg. natural disasters, other force-majeure events.	• LTTS has a well-defined Business Continuity Plan (BCP) in place for each location, which includes aspects of disaster recovery, IT server redundancy, employee health and safety, employee movement to safe places etc.	FC IC HC SRC
	• Country specific travel advisories are assessed and communicated to the delivery teams at the time of prospecting opportunities in new geographies.	NC
	• LTTS adheres to industry-best practices of safety & security.
12Regulatory noncompliance: Due to presence in multiple geographies and changing regulatory landscapes, there is a potential risk of noncompliance with the local laws of the countries where LTTS have operations. Noncompliance with the local laws could result in fines and penalties, prosecution, and reputational damage.	• To ensure compliance with local laws, LTTS have a dedicated compliance management team.	FC HC
	• LTTS leverages technology by way of a Compliance Management Tool to monitor and govern all compliances.	SRC
	• To ensure that compliance management tool is updated with recent rules and amendments, the Company has subscriptions for updates from professional consultants.
	• Compliance dashboards are placed before the Audit Committee Meetings on a quarterly basis by the compliance officer.
	• Regular Internal Audits are conducted to monitor compliance with applicable laws and regulations.

 

TYPES OF CAPITALS:
• FC: Finance Capital	• HC: Human Capital	• NC: Natural Capital
• IC: Intellectual Capital	• SRC: Social and Relationship Capital

7. OUTLOOK

During the year, LTTS has continued to strengthen its position as the nations largest pureplay ER&D services provider. Having crossed the USD 1 Billion-mark annual run rate in the previous year, the Company has now set its sights on the next milestone of USD 1.5 Billion. Despite global headwinds, LTTS has registered a 3-Yr CAGR of 16% in Revenue and 25% in Net Profit.

The Companys journey ahead is being enabled by a focused realignment with new opportunities around AI, SDX, and Cybersecurity. The emerging paradigm is supported by subsuming new capabilities from Smart World and Communication acquisition, closed successfully at the start of the fiscal year. By leveraging the new synergies, LTTS has registered several multi million deal wins across segments, with a marquee USD 100 million engagement reaffirming the positive impact of the decision on the Companys digital- focused growth trajectory. The Company expects that this trend of scaling new capabilities across markets will continue to strengthen over the coming years.

As emerging technologies reshape the world around us, LTTS believes that the future will be defined by a twin-track approach to growth. This involves leveraging new partnerships and alliances, while focusing on up- skilling and cross-skilling our talent pool for unlocking new growth avenues. The Company is also working closely with leading global hyperscalers, including AWS, Google Cloud, Intel, Microsoft Azure, and NVIDIA, for developing new age and future-proof technology solutions and offerings.

The forward momentum is further strengthened by the growing collaboration of the LTTS Global Engineering Academy (GEA) with leading centers of learning and R&D, thereby driving depth and sustainability in our approach towards enabling a deep, reliable, and resilient talent paradigm. Our commitment to growth is further illustrated by an industry leading portfolio of 1,296 patents across sectors and the focused reskilling and upskilling of over 3,000 engineers in AI and allied technologies during the year.

During the fiscal, LTTS demonstrated a robust competitive positioning within the global dynamics of the engineering and technology services sector. This was reflected across the ratings by leading analysts and industry bodies, and a growing patents portfolio.

• LTTS was rated as a Leader in Manufacturing Smart Industry Services 2023 RadarView by Avasant and was positioned as Leaders in Everest Groups ACES Automotive Engineering Services PEAK Matrix? Assessment 2023 - Electric.

• ISG rated LTTS as Leaders in Manufacturing Industry Services and Solutions 2023 - Digital Factory/Manufacturing Solutions, North America and Agile Product Development and Design Services.

• Zinnov rated LTTS in the leadership zone across 14 Engineering domains, as leaders in Overall 2023 ER&D Services, and in the leadership zone across Automotive, Aerospace, Electrification, Industrial, Telecom, Semiconductors, and Telehealth.

As on March 31 2024, LTTS boasted an impressive patents portfolio comprising 1,296 patents, reflecting the Companys focus on and commitment toward innovation and collaborative development. The scenario is further complemented by a growing alliance ecosystem with leading technology majors and hyperscalers, especially in emerging areas like AI and Gen AI. LTTS has already filed an impressive 54 unique patents in AI, and has trained over 3,500 of its engineers to leverage the emerging opportunities and skillsets across the emerging domain.

By continuing to cater to diverse industries and maintaining a steady growth trajectory, LTTS solidified its competitive edge in FY24, showcasing resilience, innovation, and a customer-at-the-core mindset in navigating the challenges and opportunities of the evolving market landscape. The Company remains committed towards enabling deep transformative journeys for its global customer base - engineering new frontiers of business success and sustainable excellence across domains.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

LTTS has robust internal control framework commensurate with its size, scale, and complexity of l defined policies and procedures, system automations, authorization segregation of duties and physical security to ensure compliance with applicable statutes, safeguarding assets from unauthorised use and to enhance overall corporate governance.

LTTS uses an Enterprise Resource Planning (ERP) package that gives reliable financial and operational information with regards to accounting, consolidation, and management information purposes. It has continued its efforts to align all its processes and controls with global best practices.

The Company has laid down internal financial controls as detailed in the Companies Act, 2013. The design and operating effectiveness of controls is reviewed by an in-house Internal control team which was further validated by an independent consultant engaged by the Company. The statutory auditors have also independently audited the internal financial controls over financial reporting as of March 31,2024 and have opined that such controls were operating effectively.

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 Independent Internal auditors on quarterly basis.

9. SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

LTTS growth journey is aligned with the global ER&D spend patterns. Our ability to adapt to new opportunities around technology services offshoring and offer solutions that meet the ER&D demands of customers worldwide continue to be key differentiators.

Operationally, the Companys success is built on optimizing the utilization rates of its billable workforce, the ability to secure sustainable billing rates, and effectively managing talent. At LTTS the talent management paradigm encompasses streamlined recruitment practices, focused skill development initiatives, and sustained identification and retention of top-tier professionals.

Navigating foreign exchange fluctuation challenges is crucial for our business, especially as a substantial portion of our revenues are derived from transactions in currencies such as USD and EURO. The balance between onsite and offshore project execution also plays a pivotal role, with offshore work generally yielding higher profit margins compared to onsite engagements.

On the regulatory and compliance front, LTTS standing is defined by its commitment to safeguard client confidentiality and intellectual property rights — a breach of which could lead to significant legal ramifications. Equally important is the adherence to local laws across the jurisdictions that LTTS operates in, particularly in the areas of immigration and data protection.

These elements collectively underscore the multifaceted nature of LTTS operational, financial, and legal considerations - each singly and together critical to the Companys sustained growth and continued operational excellence.

10. FINANCIAL PERFORMANCE

This part of the Management Discussion and Analysis refers to the consolidated financial statements of LTTS and its subsidiaries, referred to as the "Group." The financial statements and related notes to the consolidated accounts of LTTS for the year ended March 31, 2024 prepared in accordance with the Indian Accounting Standard (referred to as "Ind AS"), prescribed under Section 133 of the Companies Act, 2013, and read with the Companies (Indian Accounting Standard) rules as amended from time to time.

Refer to the Standalone and Consolidated financial statements in Annual Report for detailed schedules and notes.

Effective April 1, 2023, LTTS completed the acquisition of Smart World & Communication (SWC) Business of L&T. In compliance with Ind AS requirements applicable to common control transactions, all previous period financials have been re-stated to include the SWC Business. As a result, all figures & comparisons reflect this re-statement.

A. FINANCIAL PERFORMANCE HIGHLIGHTS Revenue Trend

Revenue from operations for the year ended March 31, 2024 increased 9.4% YoY to Rs. 96,473 Mn from Rs. 88,155 Mn for the year ended March 31,2023, while CAGR growth over the past 5 years is 13.7%.

Earnings per share trend

Earnings per share (basic) for the year ended March 31,2024 increased 7.4% YoY to H 123.34 in from H 114.82 for the year ended March 31,2023, while CAGR growth over the past 5 years is 10.7%.

Free cash flow trend

Free cash flow for the year ended March 31, 2024 increased 10.3% YoY to H 12,509 Mn from H 11,343 Mn for the year ended March 31, 2023. CAGR growth over the past 5 years is 11.8%.

B. FINANCIAL CONDITION

1. SHARE CAPITAL

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Authorised:
5,285,300,000 equity shares of Rs. 2 each (Previous year 5,250,000,000 equity shares of 2 each)	10,571	10,500
Issued, subscribed, and fully paid up
105,753,842 equity shares of Rs. 2 each	212	211
(Previous year: 105,608,142 equity shares of Rs. 2 each)
Total	212	211

The authorized share Capital of the Company as at March 31, 2024 was Rs. 10,571 million divided into 5,285 million equity shares of Rs. 2 each. The issued, subscribed and paid-up Capital as at March 31, 2024 was Rs. 212 million divided into 105.8 million equity shares of Rs. 2 each. (As at March 31, 2023: Rs. 211 million divided into 105.6 million equity shares of Rs. 2 each).

The authorized share capital increased to 5,285 million equity shares of Rs. 2 each during the year effective December 7, 2023.

2. OTHER EQUITY (EXCL. NON-CONTROLLING INTEREST)

The other equity of the company as at March 31, 2024 stood at Rs. 53,059 million as against Rs. 44,138 million as at March 31,2023. Breakup of other equity is as below: -

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Retained Earnings	44,737	36,667
Securities Premium	11,872	11,462
Hedging Reserve	815	296
Employee share options outstanding (Net of deferred compensation)	961	938
Foreign Currency Translation reserve	451	451
Other items of other comprehensive income	(194)	(93)
Capital Reserve	(5,583)	(5,583)
Total	53,059	44,138

Retained Earnings

The retained earnings of the company as at March 31, 2024 stood at Rs. 44,737 million as against Rs. 36,667 million as at March 31, 2023. Movement in retained earnings was primarily on account of profit earned during the year offset by dividends declared.

Securities Premium

The securities premium balance as at March 31, 2024 stood at Rs. 1 1,872 million as against Rs. 11,462 million as at March 31, 2023. Increase in securities premium is mainly on account of exercise of ESOPs.

Hedging Reserve

Hedging reserve relates to financial derivatives used for risk management strategy of the company.

The balance in hedge reserve (net of tax effect) as at March 31,2024 is credit balance of Rs. 815 million as against Rs. 296 million as at March 31, 2023.

Foreign currency translation reserve

The foreign exchange differences arise from the translation of financial statements of foreign operations with functional currency other than Indian rupees.

The foreign currency translation reserve balance as at March 31, 2024 stood at Rs. 451 million as against Rs. 451 million as at March 31,2023.

Employee share options outstanding (Net of deferred compensation)

The amount of stock option outstanding as at March 31, 2024 stood at Rs. 961 million as against Rs. 938 million as on March 31, 2023. It represents cumulative expense to be recognized until the employee share options are vested/expired upon which such amount is transferred to profit and loss.

Other items of other comprehensive income

The amount of other items of other comprehensive income as at March 31, 2024 is debit balance of Rs. 194 million as against a debit balance of Rs. 93 million as on March 31, 2023. It represents movement due to remeasurements of defined benefit plans (net of tax effect) based on actuarial valuation.

Capital Reserve

The amount of Capital Reserve as at March 31,2024 is debit balance Rs. 5,583 million as against a debit balance of Rs. 5,583 million as on March 31, 2023. It represents Capital reserves generated from Common control Business combination towards acquisition of Smart World & Communication

3. NON-CURRENT FINANCIAL LIABILITIES

Non-Current financial liabilities as at March 31, 2024 stood at Rs. 5,208 million as against Rs. 3,896 million as at March 31, 2023. It mainly includes below:

Lease Liabilities

Lease liability as at March 31, 2024 stood at Rs. 5,195 million as against Rs. 3,731 million as at March 31, 2023. Increase in lease liability is on account of net addition in premises taken on lease.

Other Financial Liabilities

Other Financial Liabilities as at March 31, 2024 stood at Rs. 13 million as against Rs. 165 million as at March 31,2023. Decrease in other financial liability is on account of derivative financial instruments.

4. NON-CURRENT PROVISIONS

Provisions as at March 31, 2024 stood at Rs. 83 million as against Rs. 53 million as at March 31, 2023. It includes provisions pertaining to postretirement medical benefits, which have been regrouped from current to non-current.

5. CURRENT FINANCIAL LIABILITIES

Current financial liabilities as at March 31, 2024 stood at Rs. 18,113 million as against Rs. 25,887 million as at March 31,2023. It mainly includes below:

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Trade payables
Due to micro enterprises and small enterprises	187	104
Due to others	13,930	12,265
Lease liabilities	1,393	811
Other financial liabilities	2,603	12,707
Total	18,113	25,887

Trade Payables

Payables to micro and small enterprises as at March 31, 2024 stood at Rs. 187 million as against Rs. 104 million as at March 31,2023.

Payables to others as at March 31, 2024 stood at Rs. 13,930 million as against Rs. 12,265 million as at March 31,2023. It also includes payable to related parties. Increase in trade payables is on account of growth in business operations.

Lease Liabilities

Lease liability as at March 31, 2024 stood at Rs. 1,393 million as against Rs. 811 million as at March 31,2023. Increase in lease liability is on account of net addition in premises taken on lease.

Other financial liabilities

Other financial liabilities as at March 31, 2024 stood at Rs. 2,603 million as against Rs. 12,707 million as at March 31, 2023. It mainly includes liability towards employee benefit expenses, derivative financial instruments, Capital creditors & Purchase consideration payable towards SWC etc. The decrease in liability is majorly on account of payout of Purchase consideration towards SWC in April 2023.

6. OTHER CURRENT LIABILITIES

Other current liabilities as at March 31, 2024 stood at Rs. 5,101 million as against Rs. 4,688 million as at March 31, 2023. It mainly includes unearned revenue, liability towards employee car scheme etc.

7. CURRENT PROVISIONS

Provisions as at March 31, 2024 stood at Rs. 1,540 million as against Rs. 1,361 million as at March 31, 2023. It mainly includes provisions pertaining to employee benefits such as post-retirement medical benefits, gratuity.

8. NON-CURRENT ASSETS (OTHER THAN NONCURRENT FINANCIAL ASSETS AND DEFERRED TAX ASSETS)

The Non-current assets (other than non-current financial assets and deferred tax assets) as at March 31, 2024 stood at Rs. 16,257 million as against Rs. 13,095 million as at March 31, 2023. It mainly includes below:

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Property, plant and equipment	3,927	2,850
Right-of-use assets	5,951	3,777
Capital work-inprogress	131	65
Goodwill	6,035	6,010
Other intangible assets	213	393
Total	16,257	13,095

Property, plant, and equipment

The gross block of Property, Plant, and equipment as at March 31, 2024 stood at H 8,002 million as against H 6,628 million as at March 31,2023.

Additions during the year ended March 31, 2024 stood at H 2,451 million, mainly comprising of H 459 million towards computers, H 225 million towards laboratory equipment, H 659 million towards office and other equipment, H 176 million towards vehicles and H 932 million towards leasehold improvements. Disposals during the year ended March 31,2024 stood at H 1,082 million.

The Company has been investing in infrastructure facilities in line with business growth requirements.

Right of use assets

The gross block of Right of use assets as at March 31, 2024 stood at H 8,735 million as against H 6,504 million as at March 31, 2023. Net addition during the year ended March 31, 2024 stood at H 2,231 million.

Capital work in progress (Capital WIP)

Capital WIP as at March 31, 2024 stood at Rs. 131 million as against Rs. 65 million as at March 31,2023. It mainly includes work in progress pertaining to infrastructure facilities.

Goodwill

The carrying value of goodwill as at March 31, 2024 stood at Rs. 6,035 million as against Rs. 6,010 million as at March 31, 2023.

Increase in carrying value of goodwill is basically on account of foreign currency translation. Goodwill have been tested for impairment.

Other intangible assets

The gross block of other intangible assets as at March 31, 2024 stood at H 4,105 million as against H 4,026 million as at March 31, 2023. It mainly includes specialized software, technical knowhow, tradename etc.

9. NON-CURRENT FINANCIAL ASSETS

Non-current financial assets as at March 31, 2024 stood at Rs. 3,691 million as against Rs. 2,799 million as at March 31, 2023. It mainly includes below:

Non-current financial assets: Investments

Non-current investments as at March 31, 2024 stood at Rs. 1,991 million as against Rs. 1,752 million as at March 31, 2023. The increase is mainly on account of investment in non-convertible debentures and corporate deposits.

Non-current financial assets: Others

Other non-current financial assets as at March 31, 2024 stood at Rs. 1,700 million as against Rs. 1,047 million as at March 31, 2023. It mainly includes security deposits, fixed deposits with maturity more than 12 months and non-current derivative financial instruments. Increase is mainly on account of derivative financial instruments.

10. OTHER NON-CURRENT ASSETS

Other non-current assets as at March 31, 2024 stood at Rs. 2,580 million as against Rs. 2,175 million as at March 31, 2023. It mainly includes prepaid expenses and income tax receivables. Increase is mainly on account in income tax receivable.

11. CURRENT FINANCIAL ASSETS

Current financial assets as at March 31,2024 stood at Rs. 50,214 million as against Rs. 51,686 million as at March 31,2023. It mainly includes below:

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Investments	12,936	21,088
Trade receivables	21,803	21,517
Cash and cash equivalents	11,221	5,346
Other bank balances	2,684	1,553
Other financial assets	1,570	2,182
Total	50,214	51,686

Investments

To achieve the goal of Capital preservation, liquidity and optimization of returns, the Company makes investments after considering counterparty risks based on multiple criteria including Tier I Capital, Capital adequacy ratio, credit rating, profitability, NPA levels and deposit base of banks and financial institutions.

Investments as at March 31, 2024 stood at Rs. 12,936 million as against Rs. 21,088 million as at March 31, 2023. It mainly comprises of investment which are measured at fair value through profit and loss (FVTPL) i.e., mutual funds and investment measured at amortised cost i.e., corporate deposits, non-convertible debentures, commercial papers, and certificate of deposits.

The decrease in investment is mainly on account of payout of SWC Business Transition of H 8,000 Mn.

Trade Receivables

Trade receivables (net of allowance for doubtful debts) as at March 31,2024 stood at H 21,803 million as against Rs. 21,517 million as at March 31,2023.

Allowance for doubtful debts as at March 31,2024 stood at Rs. 173 million as against Rs. 295 million as at March 31,2023.

The days sales outstanding stood at 82 days as at March 31, 2024 as compared to 89 days as at March 31,2023.

Cash and Cash equivalents

Cash and cash equivalents as at March 31, 2024 stood at Rs. 11,221 million as against Rs. 5,346 million as at March 31, 2023. It mainly includes bank balances maintained in Indian and foreign bank accounts, fixed deposits with maturity less than 3 months, remittance in transit and cheques on hand. Increase in cash and cash equivalents is on account of cash flow generated from business operations.

Other Bank balances

Other bank balances as at March 31, 2024 stood at Rs. 2,684 million as against Rs. 1,553 million as at March 31, 2023. It mainly includes fixed deposits having maturity more than 3 months but less than 12 months and earmarked balances with banks pertaining to unclaimed dividends. Increase in other bank balances is on account of fixed deposits having maturity less than 3 months.

Other Financial Assets

Other financial assets as at March 31,2024 stood at Rs. 1,570 million as against Rs. 2,182 million as at March 31, 2023. It mainly includes unbilled revenue (pertaining to time and material contracts), derivative financial instruments, advance to employee, security deposits, loans and advances to related parties etc.

The decrease is mainly on account of loans and advances to related parties which moved from Rs. 751 million as at March 31, 2023 to Rs. 10 million as at March 31, 2024 and unbilled revenue which moved from Rs. 968 million as at March 31,2023 to Rs. 898 million as at March 31, 2024 offset by increase in derivative financial instruments which moved from Rs. 331 million as at March 31,2023 to Rs. 469 million as at March 31,2024.

12. OTHER CURRENT ASSETS

Other current assets as at March 31, 2024 stood at Rs. 12,056 million as against Rs. 12,067 million as at March 31, 2023. Other current assets mainly consist of advance to suppliers, service tax/GST receivable, unbilled revenue (fixed price contracts) etc.

13. DEFERRED TAX ASSETS/LIABILITIES (DTA/DTL)

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Deferred Tax Assets	54	138
Deferred Tax Liabilities	745	397

Deferred tax assets (DTA) as at March 31, 2024 stood at Rs. 54 million as against 138 million as at March 31,2023.

Deferred tax liability (DTL) as at March 31, 2024 stood at H 745 million as against H 397 million as at March 31, 2023. Increase in deferred tax liability is mainly on account of DTL on account of cash flow hedges and branch profits.

14. INVENTORIES

Inventories as at March 31, 2024 stood at H 33 million as against H 16 million as at March 31,2023.

C. OPERATIONAL ANALYSIS Financial Performance

Particulars	FY24		FY23
	Rs million	% of Revenue	Rs million	% of Revenue
Income
Revenue from operations	96,473	100.0%	88,155	100.0%
Expenses
Employee benefit expenses	49,298	51.1%	46,308	52.5%
Other operating expenses	27,985	29.0%	24,238	27.5%
Depreciation and amortization expenses	2,716	2.8%	2,338	2.7%
Operating profit (EBIT)	16,474	17.1%	15,271	17.3%
Other income	2,073	2.1%	2,033	2.3%
Finance costs	509	0.5%	444	0.5%
Profit before tax	18,038	18.7%	16,860	19.1%
Tax Expenses	4,975	5.2%	4,696	5.3%
Profit after tax	13,063	13.5%	12,164	13.8%
Minority interest	26	0.0%	43	0.1%
Profit for the year	13,037	13.5%	12,121	13.7%

Revenue from Operations

Our Revenue from operations increased by 9.4% to Rs. 96,473 million for the year ended March 31, 2024 from Rs. 88,155 million for the year ended March 31,2023.

Revenue growth in reported terms includes impact of currency fluctuations. We, therefore, additionally report the revenue growth in constant currency terms, which represents the real growth in revenue excluding the impact of currency fluctuations. In USD terms, our revenue from operations increased by 6.9% to $ 1,164 million for the year ended March 31, 2024 from $ 1,089 million for the year ended March 31, 2023. Our revenue from operations for fiscal 2024 in constant currency grew by 7.0%. Also, we crossed a billion dollars in revenue run rate in financial year 2024 with broad based growth across segments.

In terms of project type, revenue from time and material contracts (as a % of total revenue) for the period ended March 31, 2024 stood at 62.6% as against 65.5% for the year ended March 31, 2023 and revenue from fixed price contracts (as a % of total revenue) for the period ended March 31, 2024 stood at 37.4% as against 34.5% for the year ended March 31,2023

Revenue from top 5 customers for the year ended March 31, 2024 stood at 14% (14% for the year ended March 31,2023).

Refer "Segment Reporting" section of MD&A for more details on the analysis of segment revenues and profitability.

Employee Benefit expenses

Employee benefit expenses for the year ended March 31, 2024 stood at Rs. 49,298 million (representing 51.1% of revenue from operations for such year) as against Rs. 46,308 million (representing 52.5% of revenue from operations for such year) for the year ended March 31, 2023. It mainly includes salaries (including overseas staff expenses), share based payment, staff welfare, contribution to provident fund and gratuity fund.

The increase is mainly on account of increase in headcount to 23,812 as at March 31, 2024 end from 23,074 as at March 31,2023 end.

Other Operating Expenses

Other operating expenses for the year ended March 31, 2024 stood at Rs. 27,985 million (representing 29.0% of revenue from operations for such year) as against Rs. 24,238 million (representing 27.5% of revenue from operations for such year) for the year ended March 31, 2023. It mainly includes subcontracting and component, engineering and technical consultancy fees, cost of computer software, rent and establishment expenses, travelling expenses, legal and professional charges, overheads charges and miscellaneous expenses

The increase in cost is majorly on account of increase in Subcontracting charges, cost of computer software, rent and establishment cost, travelling expenses in line with business growth.

Depreciation and amortization expenses

Depreciation and amortization expenses for the year ended March 31,2024 stood at Rs. 2,716 million (representing 2.8% of revenue from operations for such year) as against Rs. 2,338 million (representing 2.7% of revenue from operations for such year) for the year ended March 31,2023.

Out of total expense, expense pertaining to depreciation on right of use assets (as per IND AS 116 accounting) for the year ended March 31,2024 stood at Rs. 1,235 million as against Rs. 949 million for the year ended March 31, 2023.

Other Income

Other income for the year ended March 31, 2024 stood at H 2073 million as against H 2033 million for the year ended March 31, 2023. It mainly includes below:

(Rs in million)

Particulars	Year ended 31-03-2024	Year ended 31-03-2023
Foreign exchange gain	502	676
Profit/(loss) on disposal of PPE and ROU	163	16
Gain/(loss) from mutual fund investments (measured at fair value through profit and loss)	37	(68)
Interest received*	816	876
Miscellaneous income	72	103
Net gain/(loss) on fair valuation of investment	483	424
Insurance Claims Received	-	6
Total	2,073	2,033

*Interest income includes interest earned and accrued interest on account of investment in various instruments such as commercial paper, fixed deposits , Nonconvertible debentures etc.

Finance costs

Finance costs for the year ended March 31,2024 stood at Rs. 509 million as against Rs. 444 million for the year ended March 31,2023. It mainly includes interest on bill discounting and interest on lease liability accounted as per IND AS 116.

Tax expenses

Tax expenses comprise of current tax and deferred tax.

Current income tax is the amount expected to be paid to the tax authorities in accordance with the applicable tax laws in relevant jurisdictions. Deferred income tax reflects the impact of timing differences between taxable income and accounting income.

Current tax expenses for the year ended March 31,2024 stood at Rs. 4,715 million as against Rs. 4,561 million for the year ended March 31,2023.

Deferred tax expenses for the year ended March 31, 2024 stood at H 260 million as against H 135 million for the year ended March 31,2023.

(Rs in million)

Particulars	Year ended 31-03-2024	Year ended 31-03-2023
Profit before tax	18,038	16,860
Tax expense	4,975	4,696
Effective tax rate	27.6%	27.9%

Effective tax rate for the year ended March 31, 2023 is higher on account of conclusion of certain past year assessments and no such incidence in current year.

Profit attributable to equity shareholders

Profit attributable to equity shareholders for the year ended March 31, 2024 stood at Rs. 13,037 million as against Rs. 12,121 for the year ended March 31, 2023. Growth in profit attributable to equity shareholders is in line with revenue growth.

Earnings per share

Earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by the weighted average numbers of the equity shares outstanding during the period.

Basic EPS before extraordinary items has increased by 7.4% to Rs. 123.34 per share for the year ended March 31, 2024 from Rs. 114.82 per share for the year ended March 31, 2023.

Diluted EPS before extraordinary items has increased by 7.4% to Rs. 123.00 per share for the year ended March 31, 2024 from Rs. 114.48 per share for the year ended March 31, 2023.

D. CASH FLOWS AND DIVIDEND Cash Flow

Summary of cash flow statement is as under:

(Rs in million)

Particulars	As at March 31, 2024	As at March 31, 2023
Net cash (used in)/ from operating activities	14,928	13,130
Net cash (used in)/from investing activities	(2,333)	(5,779)
Net cash (used in)/from financing activities	(6,579)	(4,453)
Net (decrease) / increase in cash and cash equivalents	6,016	2,898
Cash and cash equivalents at beginning of the year	5,272	2,374
Cash and cash equivalents at end of the year	11,288	5,272

Net cash (used in)/from operating activities

For period ended March 31, 2024, net cash flow from operating activities stood at Rs. 14,928, consisting of profit before tax of Rs. 18,038 million, adjusted for depreciation and amortization, interest income, finance cost, investment income, bad debts, employee stock option cost etc. of Rs. 2,703 million and cash used in net working Capital of Rs. 557 million and cash used to pay taxes (net of refund), which was Rs. 5,256 million.

For period ended March 31, 2023, net cash flow from operating activities stood at Rs. 13,130 million as at the year ended March 31,2023, consisting of profit before tax of Rs. 16,860 million, adjusted for depreciation and amortization, interest income, finance cost , investment income, bad debts, employee stock option cost etc. of Rs. 2,488 million and cash used in net working Capital of Rs. 1,551 million and cash used to pay taxes (net of refund), which was Rs. 4,667 million.

Net cash (used in)/from investing activities

For period ended March 31,2024, net cash used in investing activities stood at Rs. 2,333 million.

This primarily includes net decrease in current/ non-current investments which includes mutual funds, certificate of deposits, commercial papers etc. of H 8,015 million, net purchase of property, plant, equipment, and intangibles of H 2,420 million, decrease in deposits matured/having maturity less than 3 months of H 1,104 million, H7,978 million payout towards consideration for acquisition of SWC and income received from investments including interest income of H 1,153 million.

For period ended March 31,2023, net cash used in investing activities stood at Rs. 5,779 million.

This primarily includes net increase in current/ non-current investments which includes mutual funds, certificate of deposits, commercial papers etc. of Rs. 7,875 million, net purchase of property, plant, equipment, and intangibles of Rs. 1,788 million, partially offset by deposits matured/ having maturity less than 3 months of Rs. 2,857 million and income received from investments including interest income of Rs. 1,026 million.

Net cash (used in)/from financing activities

For period ended March 31, 2024, net cash used in financing activities stood at Rs. 6,579 million. This primarily includes dividend payments of Rs. 4,967 million, payment pertaining to lease liability of Rs. 1,103 million and interest payments (including interest on lease liability) of Rs. 509 million.

For period ended March 31, 2023, net cash used in financing activities stood at Rs. 4,453 million. This primarily includes dividend payments of Rs. 3,167 million, payment pertaining to lease liability of Rs. 842 million, interest payments (including interest on lease liability) of Rs. 444 million.

Dividend

The Company declares and pays dividends in Indian rupees. Companies are required to pay/ distribute dividend after deducting applicable withholding income taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.

The Board of Directors of the Company has recommended the final dividend of Rs. 33 per equity share for the year ended March 31, 2024 (Previous Year Rs. 30 per equity share), subject to approval by the shareholders at the forthcoming annual general meeting. The total final dividend payment is expected to be Rs. 3,490 million.

For the year ended March 31, 2024, Dividend per share for the year was H 50 which includes interim dividend of H 17 and recommended final dividend of H 33. This translates to a dividend payout of 41% for year ended March 31, 2024 and the highest payout so far.

For the year ended March 31, 2023, Dividend per share for the year was Rs. 45 which includes interim dividend of Rs. 15 and final dividend of Rs. 30.

E. KEY FINANCIAL RATIOS (CONSOLIDATED)

Ratio	FY 24	FY 23
Days Sales Outstanding (in days)	82	89
Interest Coverage Ratio	NA	NA
Current Ratio	2.5	1.9
Debt Equity Ratio	NA	NA
Operating Profit Margin (%)	17.1%	17.3%
Net Profit Margin (%)	13.5%	13.7%
Return on Net Worth (%)	27%	28%

Explanations for changes in ratios:

1. Days Sales Outstanding for the year ended March 31, 2024 went down to 107 days as compared to 116 days for the year March 31, 2023, on account of consistent efforts in collection. This led to only a 1% increase in Trade receivables as at March 31, 2024, compared to March 31, 2023, whereas Revenue increased by 9% in FY24.

2. Interest Coverage ratio & Debt Equity ratio are not relevant metrics for the Company as it does not have any debt.

3. Current Ratio improved to 2.5 in FY24 compared to 1.9 in FY23 driven by decrease in other financial liabilities to Rs. 2,603 million as of March 31, 2024 compared to Rs. 12,707 million as of March 31,2023.

4. Operating profit margin, Net profit margin, and Return on Net Worth was broadly at a similar level in FY24 as compared to FY23.

F. SEGMENT REPORTING (CONSOLIDATED)

Our segmental reporting comprises business and geographic segmentation.

Business Segmentation

LTTS operates in five industry segments namely Transportation, Telecom & Hi-tech, Industrial Products, Plant engineering, Medical devices

Graphical representation of reportable segments contribution to revenue is as under:

Transportation

Transportation segment is our largest segment by revenue and contributed 32.8% of the companys total revenue in FY24 vs 31.4% of the total revenue in FY23. Transportation revenue grew by 14.1% in FY24, with operating margin improving to 19.6% from 19.4% in FY23.

Telecom & Hi-tech

Telecom segment is the second largest segment. The segment has contributed 26.4% of the companys total revenue in FY24 vs 26.8% of the total revenue in FY23. Telecom revenue grew by 8.2% in FY24.The operating margin of this segment has decreased to 9.7% in FY24 from 10.3% in FY23, on account of increased investments in technology & solutions during the year.

Industrial Products

The Industrial Products segment is the third largest segment and contributed 17.0% of the companys total revenue in FY24 vs 17.3% of the total revenue in FY23. The segment has shown an uptick in revenue by 7.2% in FY24. The operating margin of this segment has improved to 30.4% in FY24 from 29.8% in FY23 due to operational efficiencies.

Plant Engineering

Plant Engineering contributed 14.0% of the companys total revenue in FY24 vs 14.5% of the total revenue in FY23. The segment has shown a 5.9% growth in revenue in FY24. The operating margin of this segment has decreased to 25.6% in FY24 from 27.0% in FY23, on account of initial ramp up costs of large deals won during the year.

Medical Devices

Medical Devices segment is the smallest segment and contributed 9.8% of the companys total revenue in FY24 whereas in FY23 it was 10.0%. The segment has shown a 7.3% growth in revenue in FY24. The operating margin of this segment has decreased to 31.0% in FY24 from 32.5% in FY23, on account of increased investments in technology & solutions during the year.

Further, the segment wise operating profits as a percentage to respective segment revenue has been depicted below for the periods indicated:

Geographical Segmentation

We present our revenues by client billed location, irrespective of the location of the headquarters of the client or the location of the delivery Centre where the work is performed.

North America continued to dominate by contributing 55.0% of the total revenue. Contribution from Europe was 15.9%, from India it was 21.9% while Rest of the World contributed 7.2% of total revenue.