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pg 4. GCCs IN INDIA - To be or not to be...

pg 41. Interview: Mr Sashidharan Balasundaram, ISG Research

pg 44. Indian Economy: Trend Indicators

pg 46. PhillipCapital Coverage Universe

 Ground View - Previous Issues

GROUND VIEW Vol 7. Issue 4. 1 - 30 NOVEMBER 2020

MANAGING DIRECTOR & CEO IT SERVICES

Vineet Bhatnagar Vibhor Singhal
Karan Uppal
EDITORIAL BOARD
Manish Agarwalla INFRASTRUCTURE
Kinshuk Bharti Tiwari Vibhor Singhal
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ENGINEERING, Ashka Gulati
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Letter from the MD CONTENTS
I would like to continue expressing my sincere gratitude to all
frontline COVID-19 warriors; words cannot adequately capture
their courage in fighting this crisis. As always, I hope you and your
loved ones are staying safe and doing well. While the prolonged
uncertainty, ups and downs, and anxiety continues, the silver lining
– that we got to spend so much quality time with our loved ones –
has been appreciated by many. We live in a different world now, and
for the foreseeable future, it will be a ‘post-covid-19’ world. But the
indomitable human spirit has prevailed and we have adapted both
personally and professionally, faster-than-anticipated, to a virtual
way of working. The show must indeed go on, and it has gone on, 4. COVER STORY
considering everything that has happened. GCCs IN INDIA – To be or not to be...
By Vibhor Singhal & Karan Uppal
The pandemic has had an economic fallout across sectors. But
what has turned out to be adversity for one, has emerged as an
opportunity for others. While the Indian IT services vendors have
41. INTERVIEW
seen a significant jump in the demand environment for their services, Mr Sashidharan
the other part of the Indian IT ecosystem – the captives (or the Balasundaram,
Global Capability Centers (GCCs)) have faced multiple headwinds Senior Manager,
like Business Continuity Planning (BCP) issues and financial stress for ISG Research
their parent organizations. This, our technology team believes, can
lead to an unprecedented opportunity for IT services providers – in
terms of acquiring some of these GCCs; a win-win situation for both
the parties. Vibhor Singhal and Karan Uppal, from our technology 44. Indian Economy: Trend Indicators
team, have dug deep into this scenario, and have carried out some
interesting analysis of how the scenario could playout, and of who
could be the potential winners and losers. 46. PhillipCapital Coverage Universe
Valuation Summary

In addition to this riveting story, they have also interviewed Mr

Sashidharan Balasundaram, Senior Manager at ISG Research, one
of the largest global IT consulting firms – to understand the GCC
landscape in India, and how the current pandemic could impact it.

Cheers and Best Wishes, Vineet Bhatnagar 

1 - 30 November 2020 G RO U N D V I EW 3
 COVER STORY
BY VIBHOR SINGHAL & KARAN UPPAL

pg. 6 INDIAN GCC LANDSCAPE

How it all began
___________________________________
pg. 9 EVOLUTION OF GCCS IN INDIA
From cost efficiency to value creation
___________________________________
pg. 18 FUTURE GROWTH POTENTIAL
What’s in store for GCCs in India
___________________________________
pg. 22 INSOURCING-OUTSOURCING CYCLES
Third-party vendors or captive centres?
___________________________________
pg. 25 FOCUS SECTION
GCC Monetization – a massive opportunity for service providers
___________________________________
pg. 35 CRYSTAL GAZING
Potential buyers and sellers
___________________________________

4 GROUN D VI EW 1 - 30 November 2020

 The Indian IT industry, ever since its birth five
decades ago, has always been composed of two
critical parts – the third-party IT services providers
(TCS, Infosys, Cognizant, etc.) and GCCs (Global
Capability Centres – the captives). Both have their
own important place in the ecosystem, and have
grown together over the last five decades.

This year, the Covid-19 pandemic has had a wide-

ranging multi-dimensional impact on various
industries. With the world moving to WFH (Work
from Home), technology adoption has seen
unexpected and unprecedented acceleration
across enterprises and consumers. This has led to a
significant reset in the demand environment for the
technology industry, especially for Indian IT services
vendors.

As for the GCCs – when they were forced to shut

operations due to the lockdowns imposed by
various governments (including India), the world
realized that many of them did not have credible
Business Continuity Planning (BCP) and were not
prepared for a WFH scenario. It is expected that
the economic/financial crisis has led (or will lead) to
many of the MNCs struggling financially, eventually
leading them to terminate/postpone their plans to
set-up/expand their GCCs in India/ROW. It is also
widely anticipated that many MNCs might actually
shut down their GCCs, by selling them off to IT
services vendors – to effectively monetize their
‘non-core’ assets to remain financially viable.

This presents an unprecedented opportunity for

the Indian IT-services vendors, to acquire these
talent houses, and boost their inorganic growth,
while expanding their geographical, vertical and
technological reach. It promises to be an interesting
time ahead, with both parts of the Indian IT
ecosystem looking to grow together while also at
the cost of each other.

1 - 30 November 2020 G RO U N D V I EW 5
 INDIAN GCC LANDSCAPE

How it all began

An overview of the Indian IT Services Industry and GCCs in India

The beginning of the Indian IT industry The global technology outsourcing landscape

India’s IT services industry was born in 1967 with the The global technology industry stands at US$ 2.5trillion
creation of Tata Consultancy Services. In 1974, Burroughs (FY19, including ER&D, excluding products). It grew by 5.4%
(an American mainframe manufacturing company) asked in 2019. In contrast, the global sourcing industry stands
TCS (its India sales agent then) to provide programmers for at a mere US$ 300bn, just 12% of the global tech spend.
the installation of system software for an American client. However, global sourcing spend has outgrown global tech
This led to the birth of the Indian outsourcing industry. spend with a CAGR of 7% over the last five years.
Simultaneously, the first software export zone, SEEPZ – a
precursor to the modern-day IT park – was established in
Mumbai in 1973. It has been almost five decades since then, The Indian outsourcing business
and the IT industry has come a long way. It not only provides The Indian outsourcing industry stands at US$ 156bn
critical support and services to thousands of companies (FY19: NASSCOM, including ER&D, excluding products)
across the world, but it is also the largest private sector representing 53% market share of global sourcing – making
employer in the country. it the leader in the industry, by far. A large part of the Indian
In the 70s, the Indian IT industry struggled. The state then IT outsourcing industry comprises of the glamour boys such
was hostile to it, imposing high import tariffs, as high as as TCS, Cognizant, Infosys, and Mindtree, and a plethora
135% on hardware and 100% on software. Eventually, in of third party service providers. However, a decent chunk
1984, a New Computer Policy (NCP-1984) was formulated, of it is composed of the captive centres – the GCCs – set
which offered a package of reduced import tariffs (by 60%) up by various global companies in India. In 2019, GCCs
on hardware and software. This gave life to the Indian IT contributed US$ 28bn to the Indian outsourcing industry,
industry, that has today achieved a size of US$ 200bn –
contributing to 7% of the country’s GDP.
Global sourcing landscape (FY19)

The beginning of GCCs or captives

However, what is left unsaid most of the times, is the role

of captives or GCCs (Global Capability Centres) in this
growth and evolution of the industry. The history of captives
in India started in 1985, with Texas instruments (TI) setting
up its captive/R&D centre in Bengaluru. TI was attracted
to India because of the country’s engineering talent and
costs advantage. What followed was an avalanche of global
companies setting up their captives in India, initially as cost
centres, that have now evolved into full grown centres of
Source: NASSCOM

innovation and IP creation.

6 GROUN D VI EW 1 - 30 November 2020

making up for 20% of the overall business. Over the last five Salient features of the current GCC landscape in India
years, GCCs have seen a higher CAGR of 9.9% compared to
• No of MNCs with GCCs in India: 1,250+
the total Indian IT outsourcing industry CAGR of 8.4%.
• GCC Market size: US$28bn

• Employed workforce: c.1mn

India has evolved as one of the hotbeds for setting up
GCCs over the last two decades • Global 2000 firms with GCCs in India: 383

Over this period, the GCC industry has taken a huge leap, • Key countries: USA, UK, Germany, France, Switzerland,
not just in numbers, but also in the quality of the services Japan, Canada, Singapore, China
it offers. From a cost-arbitrage driven model, to a value
• Key verticals: Software/Internet, BFSI, Consulting,
addition one, Indian GCCs have come a long way.
Healthcare, Telecom, Automotive, Manufacturing

• Key cities: Bengaluru, Hyderabad, NCR, Mumbai,

Chennai, Pune

Distribution of GCCs in India based on HQ location

Source: Nasscom, Zinnov

1 - 30 November 2020 G RO U N D V I EW 7
Distribution of GCCs in India by verticals

Source: Nasscom, Zinnov

Location-based split of GCCs

Source: Nasscom, Zinnov

8 GROUN D VI EW 1 - 30 November 2020

 EVOLUTION OF GCCs IN INDIA

From cost efficiency to value creation

Mapping the last four decades of GCCs in India

It all began with Texas Instruments across industries, technology is becoming a

central part of business strategy. Hence, GCCs
The first wave of offshoring started in 1985 with
have transitioned from being just offshore centres
Texas Instruments setting up a first captive/R&D
providing cost arbitrage – to centres of innovation
centre in Bengaluru, India. Texas Instruments was
and IP creation. Enterprises are rapidly adopting
attracted to India’s engineering talent and costs
digital technologies, building new products and
advantage. The 1990s is when the first wave
services, transforming their business models
of offshoring happened in India; many MNCs
through these GCCs.
were testing and proving this model/concept by
assigning non-core designated functions.

In addition to the cost advantage, the first wave IT Services: Traditional application managment
of offshoring was also driven by organizations that to Cloud/AI
wanted to focus on areas of core competency.
For IT services, offshoring to captives began with
Processes that did not significantly impact
traditional custom application management and
revenues were lifted, re-engineered, and shifted
application support in the 1990s. In the early
to offshore centres, where skilled graduates
2000s, the services being delivered out of captives
delivered services. Results were measured based
got expanded to package implementations,
on pre-defined benchmarks on dedicated time
testing applications. Later, Infrastructure
lines, leaving no scope of subjective judgement
Management Services (IMS), consulting, platform-
for evaluation. But now, owing to rapid disruptions
based solutions, cloud, and cybersecurity

GCC Evolution
Before 2004 2004 to 2009 2009-2014 After 2014
Key Focus First time offshoring, cost Cost arbitrage and mature Business impact and Competitive advantage for
arbitrage delivery thought leadership the enterprise
Vertical Adoption Hi-tech, airlines, financial Ecommerce, internet, Broad-based adoption by all major industry verticals
services (BFSI), telecom manufacturing, professional
services
IT Services ADM, technical support SI, testing, package imple- Infra outsourcing, consulting, Cloud migrations, cybersecu-
mentation platform-based solutions rity, core modernizations
BPO Data processing, document Finance and accounting, Legal Process Outsourcing Analytics, automation, BPaaS
management, customer care procurement, HRO (LPO), analytics, KPO, plat-
form-based solutions
ER&D Product support, digitizing Product design, prototype Engineering analysis, India/APAC based product
engineering drawings, mi- testing, 3D modelling, 2D to product conceptualizations designs, industrial IoT, digital
grations of CADs to systems 3D conversion twins, designing

1 - 30 November 2020 G RO U N D V I EW 9
 gained prominence. Software giant Microsoft, to another, converting 2D drawings into 3D, etc.
for example, has been running its research lab The major driver for offshoring during this phase
in India since 2005. The lab employs a large was largely cost-related, as the high-volume
number of PhD scholars conducting research on activities required limited application of domain
theory and algorithms, machine learning and knowledge. However, some organizations saw
artificial intelligence, systems including cloud, unlimited competency of Indian engineering
security and privacy, programming languages, talent, and started setting up captive centres, like
networking, and technologies for the emerging Texas Instruments, to carry out activities like chip
markets. Another example is of IBM’s India R&D designs. Posts the 1990 era, the captive centres
centre – it was set up in the 1990s mostly to gradually elevated their scope of offshore activities
support its global business; but today, it is working in terms of the value proposition and knowledge
on modern technologies like artificial intelligence intensity. India centres began to service higher-
and robotics. It is using data analytics to deliver end engineering activities such as 3D modelling,
predictive agricultural insights for farmers with low- 2D to 3D conversion, finite element analysis,
end smartphones to help boost yields and lower computational fluid dynamics (CFD) analysis,
input costs. drawing up technical specifications for tenders,
plant engineering, redesigning for improved
cost/performance ratio and value engineering.
BPO: From Data processing, customer care to Today, Indian centres are also working on product
analytics conceptualization, designing India/Asia Pacific
specific products for local markets, Industrial
American Express, General Electric, and British
Internet of Things (IoT), digital twins, etc.
Airways were the first ones to set up an in-house
BPO facility in Gurgaon in the early 1990s.
The early reasons for considering offshoring India is now a destination of choice
to India were centred around reducing costs
Indian units serve various verticals like telecom,
and minimizing the effort spent on “non-
utilities, heavy engineering, pharmaceuticals,
core” activities. These activities – such as data
automotive, aerospace and electric/electronic
processing, document management, customer
machinery design. The country is clearly the
care (primarily voice, to begin with) – were the
destination of choice for auto majors like Ford,
first to be outsourced to Indian captive BPO units.
General Motor, Cummins, Johnson Controls,
With increasing confidence of the companies in
Nissan, Toyota and BMW for engineering design
the capabilities of their Indian operations, higher
work, which they do either through captive centres
value-added activities such as processing of HR,
or third-party service providers. Companies
accounting (F&A) and other non-core functions
like Ford, DailmerChrysler, General Motors,
were also offshored. Today, apart from non-core,
Caterpillar, Texas Instruments, Motorola, Bechtel,
functions like analytics and insights are also being
and Emerson have set up captive units in India.
offshored to Indian units.
Boeing has a research and technology centre
in Bengaluru, which plays a crucial role in areas
ER&D: From high-volume work to cutting edge like materials and processes, flight sciences, and
R&D structure and software. Rolls-Royce has R&D
centres in Bengaluru and Pune, focussing on areas
At the onset of the 1980s, the Engineering,
like data analysis, electrical systems, computer-
Research and Development (ER&D) segment
aided design and aerospace projects.
catered primarily to offshore requirements of high
volume, low value activities such as scanning and
digitization of engineering drawings, migration of
Computer Aided Design (CAD) from one system

1 0 GROUN D VI EW 1 - 30 November 2020

CASE STUDY
Texas Instruments sets up first R&D centre in
India in 1985!

Initially attracted by the country’s engineering talent, Texas Instruments it develops has the involvement and contribution of the company’s
(TI) became the first multi-national company to set up an R&D centre engineers in India.
in India (in Bangalore) in 1985. It started its India operations with
In the past decade, TI has recognized the semiconductor market
the development and support of Electronic Design Automation (EDA)
potential in India. Today, with seven sales and applications support
software systems, which are used for integrated circuit design. In 1989,
operations across eight cities in India, it has one of the largest pres-
the company set up another R&D facility in Bangalore to enhance its
ences in the country amongst semiconductor companies. TI India has
operations in the Asia Pacific region.
made significant inroads into various market segments like industrial,
In 2006, it opened another R&D centre in Chennai to focus on the telecom, medical, consumer, and automotive. It works closely with
wireless segment. Through its Indian operations, TI works in the areas customers to design products for large emerging segments including
of library and software tools, SoC, signal processing technologies and industrial, automotive, energy, electronic manufacturing, education,
microcontrollers. Many of TI’s strategic businesses globally are integral and healthcare.
to the R&D work that takes place in TI India. Almost every product that

Texas Instruments in India – Timeline and key developments

Source: PWC

1 - 30 November 2020 G RO U N D V I EW 11
Timeline – from being captives to becoming GCCs

Originally called captive centres in the early 1990s, they were user computing, server and storage management, network
offshore facilities that performed designated functions for and voice management, remote infrastructure monitoring,
large organizations. The 1990s marked the early adoption and support and IT service management.
period, as a lot of MNCs established and ramped up the
1998-06 – Rapid growth: Global financial services sector
captive centres in India. However, due to unprecedented
(BFSI) rapidly adopted the captive model during the
digital disruption in industries worldwide, the role of Indian
explosive growth phase. BPO captives also started during
captives has evolved from being designated function-
this phase. In 2006, captives delivered US$ 8bn worth of
oriented captives to becoming value providers.
services. Indian engineers’ coding skills and their comfort
1985 - Initiation: TTI set up its first R&D centre in India in with English brought a lot of jobs to Bengaluru. MNCs that
1985, the first multinational to set up a technology centre had spent over five years came here in a big way because
in India, starting an era of offshoring in the country. Initially of talent, out-of-the-box thinking, and the ability to use
attracted by India’s engineering talent, today, many of its global tools seamlessly. More than 78 global banking and
strategic businesses globally are integral to the R&D work financial services companies, including Goldman Sachs,
that takes place in TI India. Almost every product that it Deutsche Bank, JP Morgan and Standard Chartered, set up
develops has the involvement and contribution of the captive units in India to employ a combined 250,000 people,
company’s engineers in the country. according to Zinnov.

1990-98 - Early adoption: During this phase, many 2006-09 – Introspection: Many captives faced the
companies established and ramped up captive centres in dilemma of their relevance and cost while some of them
India. Initial adopters were from verticals like hitech and were monetized due to the global financial crisis hitting in
telecom and involved IT related work like ADM (Application 2008-09. The biggest example of captive monetization was
Development and Management). BPO captives were still TCS acquiring Citigroup Global Consulting Services (CGSL),
few. Some examples of the work profile included application Citigroup’s BPO captive, for US$ 505mn in an all-cash deal in
development, maintenance, Y2K issues, service desks, end- Oct 2008. Similarly, Wipro acquired Citi Technology Services

Source: PWC

1 2 GROUN D VI EW 1 - 30 November 2020

(CTS), the technology and infrastructure outsourcing arm After 2009 – Coming of Age: Many captives reoriented
of Citibank, for US$ 127mn in Dec 2008. Both transactions themselves and are now being seen as business partners
involved multi-million multi-year Masters Service Agreements rather than a back office. Captives are now taking end-to-
(MSA) for providing services to Citibank. end ownerships in product development and processes.
However, growth continued, and new captives continued Following are some of the recent examples – a) Tesco’s
getting added. Captives delivered US$ 10.6bn worth of captive is now managing mission-critical applications, apart
services in 2009. from managing global operations; b) Bosch’s captive now
offers services to customers other than Bosch; c) Ford’s India
captive is the second-largest software development centre
for Ford globally, and also its global analytics hub.

Digitisation is changing the way MNCs are leveraging their GCCs

Global firms are looking at developing countries for R&D

because these countries are becoming huge consumers, with
Developing products from India and China at the forefront of this trend. In fact, markets
are shifting to what used to be called the developing world
India for India and the or the emerging world. Development activities require a lot
of local content; sitting in the US, Germany, or Japan one
world cannot develop products that will be used in India or China.
Multinational companies are using their centres in India,
to not only develop products that can be sold in India, but
also to be tested in the Indian market and then sold in other
countries.

1 - 30 November 2020 G RO U N D V I EW 13
Quick example # 1 Quick example # 2 Quick example # 3
JP Morgan India employees Samsung tweaked ABB – end-to-end
are creating global its washing machine engineering of smart
solutions for the bank design to better suit sensor for electric motors
India markets developed in India

JP Morgan has global technology centres in Bengaluru, Samsung has five R&D centres in India. It The Bengaluru centre is one of ABB’s
Mumbai, and Hyderabad. These centres are at the developed its ActivWash washing machines seven R&D centres in the world. In
core of JP Morgan’s new tech playbook, including in India to meet the unique demands of Bengaluru, the company has a global
blockchain, API (application programming interfaces), local customers. research centre, a business R&D unit
and AI (artificial intelligence). A third of its 50,000 tech for product development, and a global
Dipesh Shah, Managing Director, Samsung
employees are based in India. Overall, it employs about engineering and services centre in
R&D Centre, Bengaluru, in an interview
34,000 people in the country. to Fortune India explained that in India, the same building. This is unique
In a media interview, JP Morgan’s CIO Lori Beer people don’t trust an automatic washing because even though ABB does a
mentioned that most of the technolgy talent in India machine to do its job; they still prefer to rub lot of R&D in Europe and the US, it
collars and cuffs themselves first. “This was houses different functions in different
consists of its own employees, as the bank wants to
strange behaviour, because it’s an automatic countries or cities. Bengaluru is its only
build core products and services completely different
washing machine, but people still had to do
and wants to build it internally. Indian teams are centre where different functions – from
this additional manual job. So, we provided
creating global solutions with complete product conceptualisation to remote monitoring
a sink on top of the washing machine,
ownership. Beer manages a tech budget of more than analytics – are at the same location. ABB
which allows people to do the rubbing. This
US$10bn, one of the largest technology budgets within started an R&D centre here, because
product is now sold worldwide”
the BFSI sector. of the availability of talent and the
At Samsung, he explained, in the 1990s, availability of business cases and
The projects piloted out of India include trade finance the cost factor was important, and the
customers in the market.
and next-gen payment platforms in investment second was the availability of talent. In the
banking. Here, Beer also piloted the concept of ‘virtual beginning, Bengaluru helped the company ABB India’s unit developed a
branch’ – where 300 clients across the globe were scale up really fast, in the rapidly changing smart sensor (used to monitor the
connected to a branch. Cross-border payments, which mobile market. performance, efficiency, reliability
require documentations, were created virtually. This “Samsung India R&D contributed to and lifespan of electric motors); it was
was replicated in many Asian countries, Latin America, development of 3G and 4G for the global both conceptualized and developed in
and Mexico. The CIO mentioned that applications world. 4G was done from Bengaluru. When India. It can be retrofitted to almost any
built out of India were enabling four lines of business this kind of jump comes in technology, you low-voltage motor and connected to the
– retail, investment banking, wealth management, need a lot of people to scale it, and take industrial IoT. With the smart sensor,
and commercial banking. The new roles in which JP it worldwide. Bengaluru really helped in ABB can monitor vibrations, and voltage
scaling these.” of motors, and using analytics, it can
Morgan has begun hiring talent include architects,
data scientists, hybrid cloud, and cyber security experts. predict ways to improve the efficiency of
The bank has developed several digital innovations the motor. The company has many more
including Finn, a mobile only bank with tools designed products developed in India – such
to help customers take control of their money. JP as solar pumps for rural areas with no
Morgan’s Chase Business Quick Capital delivers small electricity. These products are now sold
business customers same day access to capital in a around the world.
digital way.
Source: Fortune India Source: Fortune India

1 4 GROUN D VI EW 1 - 30 November 2020

Quick example # 4 Quick example # 5 Quick example # 6
SAP Labs India – Royal Dutch Shell Lowe’s set up its first
developing software working on a waste-to- technology centre outside
products for the world fuel project from India, the US in Bengaluru
for global deployment

SAP’s R&D centre in Bengaluru is present in Royal Dutch Shell has a technology centre in Lowe’s, a home-improvement company,
India since the last 20+ years. It employs more Bengaluru, one of the three centres of the competes with its larger US rival Home
than 8,000 people and is already the second British-Dutch company; the other two are
Depot, and generates a majority of its
biggest R&D location for SAP globally, after its in Amsterdam (Netherlands), and Houston
revenues through sales from its offline
headquarters in Germany. (US).
stores. It announced its first captive centre /
Initially, the goal of SAP Labs India was to The Shell Technology Centre in Bengaluru GCC in India in 2015, where the goal was
is developing the IH2 technology for global not just costs arbitrage, but also to focus on
meet local requirements catering to localized
deployment. It was invented by the US-
software and legal requirements. However, the next-generation customer experience
based Gas Technology Institute (GTI) in 2009,
over the last 20 years, focus has changed by laying emphasis on technology and
and has been further refined through joint
to developing and conceptualizing more analytics to provide its customers with a
development with Shell-owned CRI Catalyst
products in India, to be used both domestically more personalized shopping experience. This
Company.
and globally. SAP Fashion Management Bengaluru-based centre enabled Lowe’s to
Shell’s IH2 is more advanced than other become an omni-channel home-improvement
Solution is completely conceived, designed,
waste-to-fuel projects, and the price of this
and developed out of SAP Labs India. The company and was its first technology
fuel is expected to be quite competitive
product enables fashion companies to manage innovation centre outside the US.
with oil prices. More importantly, the
their business processes across one large The mandate was completely different
fuel produced through this process is
data system. This product was developed in much cleaner, and will meet Bharat-6 from being a single-function cost-arbitrage
collaboration with global brands like Giorgio specifications, the new standards for model. Instead, the GCC’s focus was on
Armani, Adidas, Luxottica, and Tommy Hilfiger. pollutant emissions implemented in India enablement of omni-channel retail, analytics,
The platform brings wholesale, retail, and in 2020. and personalized shopping experience.
fashion-specific processes in one back-end Lowe’s wanted to increase the share of
system, and is now being licensed by more online revenues and was looking to leverage
than 125 customers across the globe. Bengaluru’s start-up culture and talent pool.
In an interview to Fortune India, Dilipkumar This centre started with just 11 employees,
Khandelwal, Managing Director, SAP Labs but in about 12 months the team size was
India, said “Today, there is no software or over 300.
product development or (strategic initiatives
for SAP in the next five years) that’s not been
developed out of India. Today there is not a
single thing which goes out of SAP, which
doesn’t have a significant India footprint. A
large part of the work for building a global
software meeting the global requirements is
done out of India”.

Source: Fortune India Source: Fortune India

1 - 30 November 2020 G RO U N D V I EW 15
GCCS: Growing in size and revenue the last five years due to increasing focus of enterprises on
building products and platforms, and the rising penetration
As of now, India has 1,250+ GCCs, with a talent pool of
of software across industries. The IT BPM market size has
more than 1mn employees. The total market size of GCCs
seen a CAGR of 8% to US$ 12.6bn, driven by volume
in India is US$ 28.3bn (up from US$ 19.5bn in FY15, 10%
growth in IT BPM work, infrastructure management, etc.
CAGR in the last five years). Within that, the market size of
As per Nasscom, ER&D will dominate the GCCs market
Engineering Research & Outsourcing (ER&D) is US$ 15.7bn
with an increased focus on digital transformation and
(up from US$ 10.2bn, 11% CAGR in last five years) while IT-
end-to-end ownership of global product developments
BPM is US$ 12.6bn (up from US$ 9.3bn, 8% CAGR).
from India. The key verticals where mainstream software
The ER&D market size has grown faster than IT-BPM over product development is happening is BFSI, retail, media and
professional services.

GCC distribution (ER&D and IT-BPM),

GCC evolution in India
market size (USD bn) and growth

Talent split in GCCs Talent split of GCCs within ER&D and IT-BPM

In the talent split of the GCC landscape, IT-BPM employs

about 590,000 people, while ER&D is at around 410,000.
Within ER&D, the largest share of talent (70%) is in Software
Product Development (SPD) followed by Embedded
System Design (ESD) and Mechanical Engineering Services
Source: Nasscom. Zonnov (for all the above charts)

(MES). SPD is the order of the day among ER&D GCCs, re-
emphasizing the digital transformation focus. Within IT-BPM,
the talent split between IT and BPM is around 60:40.

Note: Within ERD - Software Product Development (SPD), Embedded System Design (ESD), Mechanical Engineering
Services (MES)

1 6 GROUN D VI EW 1 - 30 November 2020

As MNCs across verticals shift to cloud infrastructure, the business services to India, and increasing focus on data
emphasis on ADM and IMS is rising. India’s role in global analytics to solve business-focused problems. Going forward,
engineering is demonstrated through large work in ADM as per Nasscom, as GCCs gain ownership, Procurement
and SPD. In BPM, large work around finance & accounting (VMO) and S&M (pre-sales) will lead the next leap of growth
and knowledge services points to MNCs shifting their global in BPM workloads.

Despite strong growth, GCCs’ share in total IT exports

remains stable

Although more enterprises are leveraging GCCs for their

core technology projects, the share of the Indian GCCs to Share (%) of captives in IT exports is flat
total export has remained stable in the last 4-5 years. While it
appear that due to strong growth of GCCs in India over the
last 5-10 years, insourcing by MNCs is eating into the share
of Indian IT services players, the current share of Indian GCCs
to the total export revenue for the industry stands at 21%,
which has been stable (the share was 20% in FY15). However,
Indian IT services companies continue to compete with GCCs
for incremental revenue and digital talent.

Source: NASSCOM

1 - 30 November 2020 G RO U N D V I EW 17
 FUTURE GROWTH POTENTIAL

What’s in store for GCCs in India

They are transforming into the global sourcing hubs from just single-function providers

GCCs have come a long way from when they first started – as to significant changes in their governance model. Adoption
cost centres to take advantage of cost-arbitrage and India’s of Agile has allowed IT functions to be integrated and
talent pool. Today, GCCs are perceived as competency shared, and the work now involves a full lifecycle of product
centres and business enablers for the organisation. development. GCC employees, too, are now hired from tier-
Increasing collaboration between IT & R&D teams has led 1 institutes; they have a defined technical career path.

1 8 GROUN D VI EW 1 - 30 November 2020

Indian GCCs are ready to take the next big leap over the GCCs will focus on these three key aspects over the next
coming decade decade:

GCCs are transforming into a global sourcing hub for • Adoption of digital technologies
the parent organisation’s entire IT and business process o Building new-age technology CoEs around AI/ML,
needs. They are all set to become hubs for the digital Cloud, IoT, etc.
and futuristic products of global companies, and evolve o Transitioning to hyper-converged infrastructure for
from being enablers - to being strategic business partners. supporting digital work-loads.
Single-function GCCs will expand into other functions and o API-led development to reduce the time-to-market for
new multi-function centres will be set up. There will be new age applications.
increasing focus on business value and innovation, which will • Delivery model transformation
be adequately supported by high quality talent, technology, o Adoption of productized models for product and
and leadership, hired from the best universities/companies. application development.
Overall, partnerships between GCCs and ecosystem players o Becoming hotbeds for multi-function shared services
will become deeper and wider, leading to an enhancement in centres.
the quality and quantity of their work profile. • Future skills development
o Re-skill the workforce and acquire niche skills.

Digital Tech adoption across verticals

Domain Software/In- BFSI Semicon Telecom Auto Electronics Industrial
ternet
AI/ML Creating generic AML pattern Developing new Enhancing AI solutions for Home automa- Intelligent power
malware signa- detection, age chipsets for network capabil- autonomous tion using AI/Ml solutions using
tures, ML based improving CX next-gen AI/ML ity with AI/ML, cars, and IoT, Ml based AI, AI led video
security solutions solutions, smart improving user cyber security surveillance for
nano-chipsets device interac- solutions human detection
tion through AI & tracking
IoT IoT led payments building high- Marketing IoT led solutions
end reference assistance for smart
platform, IoT led cities, building
platforms infrastructure,
connected
engines
Data Analytics Customer ana- data analytics in Network monitoring predictive analyt-
lytics, Contextual cash manage- analytics, edge driver behaviour, ics solutions for
extraction, Dis- ment, payment computing warranty diag- control systems
ease detection analytics, cash solutions nostics, demand
management forecasting and
analytics product mix
prediction
Cloud / Cyber Connectivity Fraud detection GPU accelerated home automa- connected cars,
Security platforms, cloud containers tion products, infotainment
SaaS, PaaS, IaaS Cloud SDN systems
solutions solutions
RPA Chatbots, Loan/
Claims process-
ing automation
Blockchain Global payment, Supply chain
P&C Insurance,
Capital Markets

1 - 30 November 2020 G RO U N D V I EW 19
Six key domains have emerged as new-age technology
hotbeds, where GCCs in India can present a value
MNCs with GCCs in India from the
largest global 2000 firm
proposition to assert their increasing importance on the
global technology landscape:

• Artificial Intelligence (AI)/ Machine Learning (ML)

• Internet of Things (IoT)
• Data Analytics
• Cloud / Cyber security
• Remote Process Automation (RPA)
• Blockchain

GCCs should make significant headway in these domains

over the next decade. BFSI and industrial verticals are where
majority of the use-cases have been developed till date, –
but their applications are only expected to expand, as these
technologies gain momentum and credibility.

Regional split: Global 2000 firms with

A MAMMOTH opportunity for expansion GCCs in India
The opportunity for the expansion of GCCs remains HUGE–
not just in terms of numbers, but in terms of their scope of
work. As per Nasscom, only 383 of the Global 2000 firms
have GCCs in India. Around 80% of the Global 2000 firms are
yet to leverage the Indian opportunity. Within the regional
split, Americas and Europe lead, with 28% and 22% of Global
2000 firms having GCC presence in India, followed by APAC
at 10%. Potential growth opportunity of the Indian GCC
landscape remains immense.

Source: NASSCOM, Zinnov

More than 1600 firms have not leveraged the India advantage yet
North American firms have the highest penetration with over 176 firms having a GIC in India, followed by Euro-
pean firms

2 0 GROUN D VI EW 1 - 30 November 2020

Challenges for GCCs be long-term:

Companies across the globe are actively deliberating 1) GFC crisis: (2008-09) – The 2008-09 GFC crisis’ impact
setting up their own captives versus engaging with a third- was limited to a handful of sectors - primarily housing,
party service provider. This dilemma itself is a testimony of BFSI. India did not see any major effect on its economy,
the value that GCCs provide. However, GCCs are also not and actually benefitted from increased outsourcing. But
without their share of challenges: given the propensity to conserve cash, in times of crisis,
most MNCs prefer third-party services vendors over
• Domain knowledge: Even after over four decades of
setting up their own captives in India.
being in operations, GCCs in industries such as insurance,
BFSI and energy, still do not have enough people with 2) Eurozone sovereign debt crisis: (2011-12) – The 2011-
adequate skill sets and deep domain knowledge; this limits 12 Eurozone debt crisis was born out of the GFC crisis,
the growth potential. but directly impacted the credit rating of European
countries, leading to an overall weak macro and demand
• Leadership: Leaders who have an ability to match both
environment in EU. This led to the postponement/
technical and business perspectives are very rare in the
cancellation of plans of many EU companies to set-up/
Indian GCC ecosystem. Leaders with the adequate skillset
expand their captives in India and elsewhere in the world.
prefer to work for third party vendor, where they can see
a clear career path to the CXO position, as opposed to a 3) Brexit: (2016) – As Britain voted to move out of the EU
longer and uncertain future in GCCs. Union in 2016, it created large financial implications for
companies with business across Europe. They had to
• Talent attraction: GCCs are facing a significant challenge
split their operations between UK and EU; many of them
in attracting talent, as a number of newer GCCs and
opted for Eastern Europe (Austria, Hungary, Poland)
start-ups are coming up with competitive talent-attracting
as destinations for their captive units rather than India.
policies. The Indian start-up ecosystem has undergone
In fact, the city of Cluj-Napoca (in Romania) – which is
exponential expansion over the last decade, leading to
famously touted as Silicon Valley of Eastern Europe – was
salary levels reaching unprecedented levels. This has
born out of the Eurozone debt crisis and Brexit.
become a severe headache, not only for GCCs, but also for
traditional Indian IT vendors; the USP for both is their cost- 4) Covid-19: (2019-20) – The world is currently reeling under
arbitrage models. the Covid-19 pandemic, and will take some time to come
out of it. It is an unprecedented healthcare crisis, fast
• Financial constraints/cost arbitrage: While Indian GCCs
taking the shape of an economic and financial crisis too.
have traversed the value chain and are now increasingly
The calamity has impacted GCCs operations in two ways:
demonstrating their effectiveness as centres of excellence
(COEs), the cornerstone of their existence remains the a) As GCCs were also forced to shut operations due
cost-arbitrage model. However, an increase in the quality to the lockdowns imposed by various governments
of work being delivered and higher competition to attract/ (incl. India), the world has realized that GCCs did not
retain talent has meant greater pressure on maintaining the have credible Business Continuity Planning (BCP) and
cost arbitrage. were not prepared to Work-from-Home (WFH), unlike
IT services vendors, which promptly and efficiently
• Technology disruptions: With the technology disruption
migrated to WFH.
caused by digital transformation, GCCs are facing
difficulties in keeping pace with the transformation, both b) The economic/financial crisis has led (or will lead) to
in terms of infrastructure and talent. Simple case in point many of the MNCs struggling financially, eventually
being availability of data scientists (for analytics) and leading them to terminate/postpone their plans to set-
people trained in cloud application development (cloud). up/expand their GCCs in India/ROW. It is also widely
anticipated that many MNCs might actually shut down
The last decade has been an eventful one – with multiple
their GCCs, by selling them off to IT services vendors –
crises, technology disruptions, and the rise of the right-
to effectively monetize their ‘non-core’ assets to remain
wing across the world. Many of these events have directly
financially viable.
impacted the growth of GCCs in India – an impact that might

1 - 30 November 2020 G RO U N D V I EW 21
 INSOURCING-OUTSOURCING CYCLES

Third-party vendors or captive centres?

Both approaches reduce costs on non-core activities

Ever since the dawn of the IT outsourcing industry, the their “IP”, the technology. But as technology becomes
companies have had this perennial dilemma – whether to commonplace, the same companies prefer to outsource
outsource to a third-party vendors or set-up own captive its development/maintenance – looking to save costs
centres /GCCs. Both models have their own advantages rather than innovate. A classic example is the auto
and disadvantages – but both offer one value proposition industry. In the early 2000s, when infotainment systems
unequivocally – both lower costs incurred on the non core were key product differentiator, auto OEMs across the
aspects of business.This one agenda has driven the growth world preferred to develop it in-house, in their own
for both third-party vendors and GCCs over the last three GCCs. As the decade turned, and the technology
decades – and this will not change in the next three. What became commonplace, it is now the first piece of
keeps changing, however, is the proclivity towards either business they want to outsource.
of the two, depending on the parents’ financial condition,
3) Global macro-economic factors: Global events, too, play
state of technology development and disruption, and global
their part in determining the trajectory of the insourcing-
macro-economic factors.
outsourcing cycle. Events such as GFC provided
Historically, global MNCs have switched from one model to boost to outsourcing while ones like Brexit impacted
another – from insourcing to outsourcing and vice-versa – it negatively. The current Covid-19 pandemic, which
primarily due to three factors: is fast transforming from a healthcare to an economic
to a financial crisis, is expect to negatively impact the
1) Financial state and business priorities of the company:
insourcing cycle, and lead to many GCCs being sold
Outsourcing today is as much a business decision as
and/or further outsourcing to the third-party vendors
a cost decision. Hence, the business outlook/strategy
(discussed in detail in the next section).
and the financial state/preferences have dictated the
insourcing-outsourcing decision for companies. A To illustrate the different insourcing-outsourcing cycles, we
company in good financial health and/or looking to deep-dive into the case of UBS. The Swiss bank is a prime
grow its business across emerging markets, typically example of how enterprises prefer different models (third-
tends to favour insourcing. A company with stretched party vs. captives) at different points of time, depending on
financials, just looking to save costs on IT, tends to prefer different business requirements and the macro environment.
outsourcing. In fact, many a times, the same company
The covid-19 pandemic is one macro event that will force
switches from one model to another, depending on its
many enterprises to rethink their IT outsourcing strategies.
priorities. Classic example is UBS – discussed in detail
While few might decide in favour of setting up captives,
later in this article.
majority will look to sell their captive units – to monetize
2) State of technology development/disruption: non-core assets and reduce operating costs. That is the main
Technology is no longer just an enabler, but also a USP thesis of this report – discussed in more detail in the next
for many businesses. The advent of digital technologies, section.
especially, has completely changed the perspective of
global leaders about technology. As a new technology
raises its head, it becomes a key differentiator and
business USP for companies. In that phase of technology,
companies tend to prefer insourcing – to keep control on

2 2 GROUN D VI EW 1 - 30 November 2020

CASE STUDY:

Perfecting the insourcing-outsourcing cycles

UBS remains a key BFSI client for almost all IT vendors across • Today, UBS has multiple IT outsourcing vendors on its
the world. It has been, by far, one of the largest and most rolls, including Accenture, Cognizant, Infosys, Wipro, HCL
diversified clients for the outsourcing industry. It has had a Tech, Luxoft and ePAM.
long and interesting history of outsourcing.
In 2013, it began building up its own capacity in India and
• UBS started its own captive, ISC (Indian Service
elsewhere. Today, 10,000 people work at UBS in India –
Centre) in Hyderabad in 2006, which rapidly grew to
almost 6,000 employed through external providers, and over
2,000 employees, providing services that were not yet
4,000 on its own payrolls.
commercially available in the market.
• Later, as a shift in strategy to “BUY” rather than “BUILD”, Current scenario
it sold the ISC to Cognizant in 2009 for US$ 75mn. UBS remains a key account for many vendors. For Wipro
The sale marked the start of the next stage in the and Luxoft, it is one of their top clients – while it contributes
development of the UBS offshoring and outsourcing a substantial share of revenues for Cognizant and ePAM.
strategy – where it engaged various vendors across the Accenture and Infosys, too, derive a decent share of their
world. BFSI revenues from UBS.

The flip-flop of UBS’s outsourcing strategy UBS is a key client for multiple vendors

In 2018, UBS started to focus more on increasing its internal IT staff, at the expense of external vendors

1 - 30 November 2020 G RO U N D V I EW 23
 Moving to insourcing • In 2018, more than 30% of UBS’s staff was offshored. It

In October 2018, UBS reported a 7% jump in its staff count decided to shift more activities from high-cost to low-cost

to 63,684 people, from 59,470 a year ago. This was a result locations, using its own offshore and nearshore shared

of it expanding its captive centres in Mumbai/Pune, which it services centres.

intended to use as global insourcing hubs. Thereafter, UBS • With the opening of a second site in Pune in 2018, it now
decided to keep 60% of its IT services in-house; almost 70% operates six offshore service centres in India, China, and
was outsourced to third-party vendors in 2018. The company Poland, and two nearshore centres in Switzerland and the
took this U-turn in its outsourcing strategy on two counts: US.

• Expanding captive centres is one of its largest levers for • For its outsourced services, it decided to consolidate
cost reduction, which in turn is a strategic pillar of its third-party vendor locations from 35 in 2018 to only
corporate transformation plan. 9 by 2020. This was to reduce costs and improve risk

• The management believes that the typical business management.

processes outsourced ten years ago (like data inputting) • It is internalizing select activities, currently performed by
can be digitized or automated. With the speed of external providers, to enable higher productivity, lower
digitization picking up, classic IT services providers (like costs, and to build critical in-house knowledge. Over
Wipro, Cognizant, etc.,) are struggling to keep up with June 2018-19, it increased internal staff by over 3,000.
this speed. Majority were hired into its offshore centres in India. This

Over the next year, as the company increased its overall increase was more than offset by a huge reduction of

workforce count by 3%, it reduced its external staff by a 5,500 in external headcount, leading to an overall decline

whopping 25% – from 21,805 in June 2018 to touch 16,277 of roughly 2,289.

in June 2019. This was supposed to lead to significant • It intends to further reduce the external headcount,
cost saving for the company. Key details about this new through automation of processes, specifically in
outsourcing strategy: operations and IT.

• It has reduced vendors by 45% since 2013 and aims to

Significant reduction in UBS’s external push this above 50%. In addition, it has implemented

workforce over 2018-19 measures to further tighten its internal demand

management. “To say it in very simple terms: We will buy
less, cheaper, and smarter.”

• Automation is expected to be a key driver for cost

efficiency.

While UBS’ insourcing strategy intends to cuts vendor

revenues, it represents a strategic bet on India. The company
and its management realize the strategic significance of
India, with the huge pool of engineers, mathematicians,
statisticians, physicists, and other highly-qualified science
and technology graduates. Hence the importance of India as
a delivery / innovation centre for UBS is definitely increasing.
But at the same time, it also represents the perfect flip-flops
Source: UBS

that MNCs undergo, in terms of their outsourcing strategy,

from captives in one decade to third-party in another.

2 4 GROUN D VI EW 1 - 30 November 2020

 FOCUS SECTION

GCC Monetization – a massive

opportunity for service providers
PhillipCapital India’s IT research team’s exclusive database provides details of India’s
GCC landscape

To understand the massive opportunity represented by

the GCCs/Captives, PhillipCapital India’s IT research team
has created an exclusive and exhaustive database, which
represents the overall GCC landscape in India. It contains
the following aspects Vertical distribution
• List of the MNCs (1,200+) operating their GCCs/captives
out of India
• Verticals that they belong to (e.g. BFSI, retail,
manufacturing)
• Geographic region they belong to (America, Europe,
APAC)
• Services provided by the GCCs to the parent (IT, BPO,
ER&D, etc.)
• Headcount
• Location
PhillipCapital’s database gives a broad-based understanding
and insights into the GCC landscape in India. In terms of
geography, 66% of all GCCs operating out of India are
headquartered in America, 25% are from Europe, 7% are
from Asia Pacific, and 1% from the Rest of the World.

Geographic distribution Service-line distribution

Source: NASSCOM, Zinnov, PhillipCapital India Research

1 - 30 November 2020 G RO U N D V I EW 25
 The Indin GCC landscape - PhillipCapital India database
Geography
Americas UK Germany Rest of EU Japan RoW Total
Software/Internet 258 17 2 21 1 16 315
IT & services 109 7 3 11 3 6 139
Manufacturing 82 8 15 25 8 5 143
BFSI 56 9 2 11 1 6 85
Healthcare & Lifesciences 57 3 9 11 2 4 86
Telecom 47 5 1 6 1 10 70
Industrial 25 4 5 25 1 2 62
Hi-Tech 28 0 3 9 9 7 56
Automotive 18 3 14 15 8 4 62
Media/Entertainment 26 8 1 2 0 3 40
Consulting 33 6 1 4 0 2 46
Semiconductors 26 2 1 3 2 1 35
Retail & CPG 22 4 1 6 0 2 35
Travel & Transportation 9 3 0 7 1 2 22
Oil & Gas 9 2 0 4 0 0 15
Aerospace and defence 7 1 0 6 0 0 14
Total 812 82 58 166 37 70 1225
IT-BPM 449 43 10 48 6 30 586
ER&D 248 24 40 93 27 29 461
SPD 9 1 0 1 0 0 11
IT-BPM & ER&D 60 4 7 17 4 8 100
IT-BPM & SPD 36 6 1 5 0 3 51
Consultancy 10 4 0 2 0 0 16
Total 812 82 58 166 37 70 1225

Key GCCs in different verticals operating out of India

Software/Internet Manufacturing BFSI Healthcare Automotive
Adobe Akzo Nobel JP Morgan Abbott Fiat Chrysler
Google Adidas Goldman Sachs AstraZeneca Ford
Microsoft BASF BNP Paribas GlaxoSmithkline Honda
Oracle Danaher Nomura Mylan Hyundai
Pegasystems Cummins AIG Pfizer John Deere
Indeed Dow Chemical Barclays Boston Scientific Komatsu
Go-Jek Dupont American Express Johnson & Johnson Continental
Source: NASSCOM, Zinnov, PhillipCapital India Research

Retail CPG Travel Aerospace Telecom Energy

AB inbev Amadeus Airbus AT&T Exxon Mobil
GAP Expedia Boeing Verizon Baker Hughes
Hersheys Fedex Bombardier Telstra Castrol
Lowe’s Sabre Lockheed Martin Sprint Shell
Modelez Travel Tripper Safran Ciena Total
Pepsico Kuoni Thales Ericsson Valvoline
Target Maersk Collins Aerospace Netgear Halliburton

2 6 GROUN D VI EW 1 - 30 November 2020

Amongst verticals, software/internet forms the majority share o Servicenow launched its new innovation centre in
followed by IT and services, manufacturing, and BFSI. Hyderabad in 2018 for product engineering and

Software/Internet developing ServiceNow’s next generation AI and

machine learning capabilities.
• This vertical represents 26% share of the total with MNCs
like Adobe, GE Digital, Google, Microsoft, Temenos, IT & Services

Oracle, Pegasystems, Servicenow, Indeed, and Go-Jek • This vertical represents 11% share of the total with MNCs
operating out of India. like Fujitsu and Ripple operating out of India.

• 82% of the Software GCCs are headquartered in • 78% of the IT and services GCCs are headquartered in
Americas, 13% are from Europe. the Americas, 15% in Europe.

• Bengaluru and Hyderabad have the highest proportion o Ripple claims to be the only enterprise blockchain
of MNCs in the software/internet domains. New product company with products in commercial use by
development, testing and support work happens in these hundreds of customers across 55+ countries.
development centres.
o Fujitsu global delivery centres in Pune, Noida and
o For example, Temenos’ Bengaluru and Chennai Hyderabad cater to its US operations.
offices are involved in designing and supporting
Manufacturing
leading banking products like T24 (Temenos’ award
winning core banking platform). • This vertical represents 12% share of the total with MNCs
like Akzo Nobel, Adidas, BASF, Caterpillar, Cummins,
o Similarly, Pegasystems, which has two development
Dow Chemical, Danaher, and Dupont operating their
centres with 1,500 employees in Hyderabad (1,100)
GCCs/captives out of India.
and Bengaluru (400), carries out its new product
development and support work from its captive • 57% of the manufacturing GCCs are headquartered in the
centres. Americas while 33% are in Europe (6% in UK and 10% in
Germany).

Common size – geography-wise

Geography
Americas UK Germany Rest of EU Japan RoW
Software/Internet 32% 21% 3% 13% 3% 23%
IT & services 13% 9% 5% 7% 8% 9%
Manufacturing 10% 10% 26% 15% 22% 7%
BFSI 7% 11% 3% 7% 3% 9%
Healthcare & Lifesciences 7% 4% 16% 7% 5% 6%
Telecom 6% 6% 2% 4% 3% 14%
Industrial 3% 5% 9% 15% 3% 3%
Hi-Tech 3% 0% 5% 5% 24% 10%
Automotive 2% 4% 24% 9% 22% 6%
Source: NASSCOM, Zinnov, PhillipCapital India Research

Media/Entertainment 3% 10% 2% 1% 0% 4%
Consulting 4% 7% 2% 2% 0% 3%
Semiconductors 3% 2% 2% 2% 5% 1%
Retail & CPG 3% 5% 2% 4% 0% 3%
Travel & Transportation 1% 4% 0% 4% 3% 3%
Oil & Gas 1% 2% 0% 2% 0% 0%
Aerospace and defence 1% 1% 0% 4% 0% 0%
Total 100% 100% 100% 100% 100% 100%

1 - 30 November 2020 G RO U N D V I EW 27
• Majorly, manufacturing MNCs have their ER&D centres in who carry out administrative support, business
India where they develop and support key products for analytics, supply chain management, finance and
the Asia market. accounting and other roles.

o Caterpillar’s India presence includes state-of-the art o Unilever’s technology and innovation centre in
manufacturing facilities, research and development Bengaluru currently provides IT services to its global
centres, service and support organizations. operations.

o In April 2018, Dow Chemical inaugurated a state- BFSI

of-the-art application development hub, ‘Dow
• This vertical represents 7% share of the total, with MNC
India Technology Centre’ (DITC) in Navi Mumbai,
banks such as JP Morgan, Goldman Sachs, Deutsche
with highly skilled, research and development
Bank, Nomura, BNP Paribas, Barclays, Allianze, AIG, and
specialists with capabilities in analytical science,
American Express operating their GCCs/captives out of
material science, process optimization, and IP search
India.
analysis to support business units in India and extend
application support to markets in the region. • 66% of the BFSI GCCs/captive centres are headquartered
in the Americas while 26% are in Europe.
Retail & CPG
• BFSI vertical MNCs’ IT-BPM centres are also one of the
• There are about 35 retail and CPG GCCs in India.
largest employers in India.
• It represents 3% of overall GCCs with MNCs like AB
o AIG’s analytics and service team supports commercial
inbev, GAP, Hersheys, Lowe’s, Modelez, Pepsico, and
insurance by providing insights through accurate and
Target operating out of India.
comprehensive data capture, catastrophe modelling,
• 63% of the retail and CPG GCCs/captive centres are from risk engineering, advanced portfolio analytics, and
the Americas while 31% are from Europe. actuarial services.

o Target employs around 2,100 people in Bengaluru o BNP Paribas’ India centre provides application

Common size – vertical wise

Geography
Americas UK Germany Rest of EU Japan RoW Total
Software/Internet 82% 5% 1% 7% 0% 5% 100%
IT & services 78% 5% 2% 8% 2% 4% 100%
Manufacturing 57% 6% 10% 17% 6% 3% 100%
BFSI 66% 11% 2% 13% 1% 7% 100%
Healthcare & Lifesciences 66% 3% 10% 13% 2% 5% 100%
Telecom 67% 7% 1% 9% 1% 14% 100%
Industrial 40% 6% 8% 40% 2% 3% 100%
Hi-Tech 50% 0% 5% 16% 16% 13% 100%
Source: NASSCOM, Zinnov, PhillipCapital India Research

Automotive 29% 5% 23% 24% 13% 6% 100%

Media/Entertainment 65% 20% 3% 5% 0% 8% 100%
Consulting 72% 13% 2% 9% 0% 4% 100%
Semiconductors 74% 6% 3% 9% 6% 3% 100%
Retail & CPG 63% 11% 3% 17% 0% 6% 100%
Travel & Transportation 41% 14% 0% 32% 5% 9% 100%
Oil & Gas 60% 13% 0% 27% 0% 0% 100%
Aerospace and defence 50% 7% 0% 43% 0% 0% 100%

2 8 GROUN D VI EW 1 - 30 November 2020

 services and operations support to the group Automotive
including development of new applications, features,
• There are about 62 automotive OEMs and tier-1 GCCs in
extensions, interfaces, upgrades as well as enhancing
India.
and maintaining existing applications.
• It represents 5% of overall GCCs with MNCs such as
Healthcare
Continental, Fiat Chrysler, Ford, Honda, Hyundai, John
• This vertical represents 7% share of the total with MNC Deere, and Komatsu operating out of India.
pharma companies such as Abbott, AstraZeneca,
• 52% of the automotive GCCs/captive centres are from
GlaxoSmithkline, Mylan, Pfizer, and Johnson & Johnson
Europe (23% from Germany alone) while 29% are from
operating their GCCs/captives out of India.
US.
• 66% of the healthcare GCCs/captive centres are
o Continental’s R&D centre headcount has doubled to
headquartered in the Americas while 27% are from
around 3,000 employees from 1,400 in 2015, and it is
Europe.
one of the three systems & technology hubs world-
• Majority of the healthcare and life sciences GCCs are wide.
operating as ER&D centres for the parent.
o In 2016, Ford announced its new technology centre
o For example, in 2016 Abbott picked up an entire in Chennai, which is its third R&D base in Asia. This
under-construction space in Mumbai to set up its centre is a hub for product development, mobility
innovation and development centre. solutions and business services for India and also for
the world.
o AstraZeneca has its Global Technology Centre (GTC)
in Chennai, which provides IT services and support o Hyundai’s Hyderabad R&D centre coordinates with its
to the group with an employee strength of +2,400. Namyang (Hwaseong, South Korea) centre to improve
AstraZeneca also has a R&D centre in Bengaluru to synergies between Hyderabad and Namyang, reduce
support AstraZeneca’s global established medicines the time-to-market, and address competitive intensity.
portfolio. Its team of 90 employees consists of
scientific experts in the fields of regulatory science,
clinical science, and patient safety.

Why would the MNCs sell their GCCs now ?

2005-15 was a period of hyper growth – it saw many new
GCCs set up by companies based out of US, Europe, Japan, The pace of new GCCs has slowed since 2015
and the Middle East. The total number of GCCs set up saw
a CAGR of 7% between 2005 and 2015. These GCCs had
embraced the at-scale local talent availability and benefited
from lower costs of operations. But from 2015 to the present,
growth of new captives being set up has slowed down – to
1% CAGR from 2015 to 2019 (vs. 7% during 2005-15). Future
growth will be impacted by the financial pressure posed by
the Covid-19 crisis as well.

Covid-19-led impact on demand on several industries such as

retail (non-essential), travel & transportation, manufacturing,
and automobiles is leading to severe pressure on firms to
Source: Nasscom

continue with their existing operations. As the volume of

work falls, it becomes difficult to justify the costs of running

1 - 30 November 2020 G RO U N D V I EW 29
captive centres. Hence, there has been an active interest GMTC-I in 2004 in Bengaluru, and it contributed to GM’s
from MNCs to sell their captives at the moment. global programs across propulsion systems, vehicle
engineering, controls development, testing, creative
So why would parents sell GCCs/captives?
design and special projects. It houses a design studio
1. Monetization: A GCC/captive is often viewed by and an engineering centre with state-of-the-art, in-house
its parent organization as a liquid asset, which it can electronics hardware and software testing and validation
relatively easily slice off and sell to generate immediate infrastructure. TCS can leverage this sort of infrastructure
cash. This situation is further exacerbated by the and technology domain knowledge to win new clients in
pressures that the parent organization faces due to the the automotive space.
pandemic. An example can be JC Penney, which has filed
3. Geographic expansion: Acquisition of captives can
for bankruptcy in the US; or Fedex (possibly) hiving off its
also open the gates for a service provider for expansion
captive centre in India to generate some liquidity.
into new geographies. Setting up a delivery centre with
2. Operational: Parent organizations will often sell a captive capacities in the thousands and then acquiring talent
that has either served its purpose or never lived up to from local markets can be daunting. Service providers can
expectations. They might find it useful to transfer work really benefit by acquiring a captive in such geographies,
to service providers, as these are much better versed with pre-existing delivery infrastructure. A good example
with latest technologies across diverse spectrums. Also, would be HCL Tech’s acquisition of Volvo’s external
parents may realise that having a captive is not as cheap IT business; here, HCL on-boarded 2,500 Volvo IT
or efficient as third-party service providers. employees, which made HCLT the largest Indian-heritage
3. Strategic: After setting up and running a captive, parent firm present in the Nordic region.
organizations may realise it is best to focus on their 4. Vertical expansion: Besides geographic expansion,
core business and outsource non-core work to service a service provider can expand its vertical delivery
providers. Recent examples include ABN AMRO selling capabilities by acquiring a captive, or create a completely
a majority stake in Stater (mortgage services player in new vertical for itself. For example, the acquisition
Benelux and Germany) to Infosys to focus more on its of PSA Group’s R&D centre in Germany by French
core business – selling mortgages. Similarly, HCL Tech engineering major Segula Technologies expanded the
acquired Volvo’s external IT services in Nordics business latter’s capacity by 2,000 employees and gave it a strong
as that was not the core business of Volvo group. presence in Europe’s largest automotive market. Europe
has very large R&D spending and while Segula already
has a presence in automotive R&D, this acquisition
Why would service providers want to acquire GCCs/
expanded its capabilities, reach, and client exposure.
captives?
In terms of leveraging the R&D centre further, Segula’s
1. Access to talent: Acquiring a GCC/captive will help MD mentioned that the company wants to use the
a service provider get access to niche talent, which is competencies of these 2,000 engineers to increase
difficult to tap from the market due to unavailability of the Segula’s market share with other German automakers
necessary skillsets or lack of domain experience. And that such as Volkswagen, BMW, and Daimler.
talent can be leveraged to win new clients in the market.
For example, TCS acquired certain assets of GM’s captive
in 2019; 1,300 employees of General Motors India were
transferred to TCS. Through this deal, TCS got key talent
in the advanced automotive ER&D space, which it can
leverage for its other clients and also to win new clients.

2. Access to key IP or technology: A service provider

would benefit from the key IP or technology by acquiring
the captive. When TCS bought GM’s captive in 2019,
it benefitted through GM’s key technologies being
delivered out of its India centre. GM had established

3 0 GROUN D VI EW 1 - 30 November 2020

CASE STUDIES:
Case Study # 1 Case Study # 2
TCS to acquire Postbank Systems from TCS to acquire staff and select assets
Deutsche Bank of Pramerica Systems from Prudential
Financial

Year: 2020 Year: 2020

No of Employees: 1,500 No of employees: 1,500

In October 2020, Tata Consultancy Services and Deutsche In October 2020, Tata Consultancy Services and Prudential
Bank AG announced an agreement under which TCS will Financial Inc. (PFI) announced an agreement under which
acquire 100% of the shares of Postbank Systems AG (PBS) TCS will acquire staff and select assets of Pramerica
from Deutsche Bank AG. PBS is a full-range captive IT Systems Ireland (Pramerica), a subsidiary of Prudential. PFI
service provider; it offers project management, application will retain the Pramerica Ireland entity, which will continue
management, and infrastructure support services to to operate from Letterkenny and will focus on providing
Postbank and other subsidiaries of Deutsche Bank (DB). regional business services, reporting under its global asset
manager, PGIM.
PBS and its c.1,500 employees will become part of TCS,
deepening the relationship between the two organizations. Pramerica’s 1,500 employees will be transferred to TCS.
This will add to TCS’ scale in Germany and strengthen its As part of TCS’ new Global Delivery Centre in Ireland,
growth outlook. TCS is ranked by analysts as the fastest- they will continue to provide PFI with a range of business,
growing IT service provider in Germany, with a 10-year digital, and technology services, while also expanding
CAGR of over 24%. The transaction is expected to be TCS nearshore capabilities to provide the multifunctional,
complete by the end of 2020, and is subject to both parties digital services and solutions to other customers in Ireland,
finalizing further agreements and regulatory and government the UK, Europe and the US.
approvals.
This transaction is yet another example of global banks
For DB, this deal will help in its restructuring plan to reduce and insurance companies shedding non-core assets
costs. As per media articles, its cost restructuring plan is as they navigate through economic uncertainty. For
centred around cutting 18,000 jobs with half of those job Prudential, shedding the operation is expected to help the
cuts expected to be in Germany. insurer trim costs, as it aims for US$ 750mn in savings by
the end of 2023. For TCS, acquiring Pramerica will bring
TCS is already a IT services provider to DB. For TCS, this
multi-year services contracts, strategy expertise and a
acquisition will further deepen its relationship with DB,
development centre in Ireland. It will also enhance TCS’
and help gain more market share in DB’s overall spend,
capabilities in Insurance from Ireland, to service EU and US
as it paves the way for fetching more business in other
customers. Pramerica Systems has 80% IT services work
transformational and strategic projects within Deutsche Bank.
while 20% is BPS (actuarial and customer engagement
TCS can leverage the domain skills of 1,500 employees to
processes). TCS will be offshoring a lot of that work and
expand in other accounts in Germany in BFSI and other
will redeploy these teams to service other customers
verticals. It gets ready infrastructure and talent in Germany,
from a new nearshore centre in Ireland. It will generate a
from where it can service the larger European market. Lastly,
revenue of USD 300mn over the next five years from this
language and culture are still huge barriers in Europe,
deal.
which are addressed for TCS via acquiring local talent. The
company will earn a revenue of EUR 460mn (USD 543mn)
over the next five years from this deal.

1 - 30 November 2020 G RO U N D V I EW 31
Case Study # 3 Case Study # 4
Infosys signs the largest deal in its history Infosys acquires 75% stake in ABN
with Vanguard, takes over 1,300 of its AMRO’s mortgage services unit (Stater)
employees

Year: 2020 Year: 2019

No of Employees: 1,300 No of employees: NA

In 2020, Infosys entered into a multi-year agreement with In March 2019, Infosys signed a large deal with ABN
Vanguard, which is perhaps the biggest deal the company AMRO, the third largest bank in the Netherlands,
has ever signed (approximately USD 1.5bn as per media headquartered in Amsterdam. As a part of the deal,
articles). Through the partnership, Infosys will assume Infosys acquired 75% of the shareholding in Stater N.V.,
day-to-day operations, supporting Vanguard’s Define a wholly owned subsidiary of ABN AMRO Bank N.V., that
Contribution (DC) recordkeeping business, including offers pure-play, end-to-end mortgage administration
software platforms, administration, and associated services in the Netherlands, Belgium, and Germany.
processes. Also, approximately 1,300 Vanguard employees, Infosys paid EUR 127.5mn for a 75% stake in Stater. ABN
currently supporting the full-service recordkeeping client AMRO will continue to hold the remaining 25%. Stater is
administration, operations, and technology functions, will a market leader and one of the largest mortgage service
transition to Infosys. All Vanguard employees currently providers in the Benelux region, operating across the
performing these roles will be offered comparable positions mortgage and consumer-lending value chain, with deep
at Infosys, in close proximity to Vanguard’s offices in Malvern, capabilities in digital origination, servicing, and collection.
PA, Charlotte, NC, and Scottsdale, AZ. Transitioning Stater also brought deep European mortgage expertise
employees will receive the same salary and comparable and a robust digital platform to drive superior customer
benefits for a transition period of 12 months. experience for Infosys’ clients.
Martha King, MD of Vanguard Institutional Investor Group, At the time of acquisition, Stater serviced 1.7mn
will move to Infosys to head the latter’s Mid Atlantic mortgage and insurance loans for approximately 50
Retirement Services Centre of Excellence and serve as its clients in The Netherlands and Belgium. The company
Chief Client Officer. As per media articles, Infosys has set was started in 1997, and had a solid client base, including
up a 3,000-seater facility in Bengaluru to service the deal, many of the largest Dutch and Belgian banks for their
which includes BPS services and digital transformation work, most important product – mortgages.
to take Vanguard’s record keeping services onto a cloud
ABN AMRO’s management revealed that while mortgages
platform.
are a key product for the bank, providing administrative
For Vanguard, the deal allows the company to focus on its mortgage services is not a core activity. Hence, the
core business – retirement services and asset management. management is quite happy to hand over majority control
Additionally, it has successfully avoided negative media to Infosys, where it will continue to hold 25% stake,
attention (had it laid off 1,300 employees) by transferring and will remain a strategic client for Stater. As the same
employees to Infosys. employees were going to service ABN AMRO, comfort
level is also ensured.
Infosys acquires key talent in the core retirement-services
industry via this deal, which it can leverage to grow in other For Infosys, as it was already operating in mortgage
BFSI accounts in the US. Infosys currently serves half of the services, this deal has only added revenue in a similar
top-20 retirement service firms in the US, helping clients to line of business, along with access to a key client – ABN
manage risk, improve participant experience, and deliver AMRO. Also, Stater gave direct access to the key markets
better retirement plan outcomes through technology of Netherlands, Belgium and Germany. Infosys can
services and digital solutions. Since it is a large deal, it leverage Stater’s clients to cross-sell and up-sell its other
provides revenue visibility; also, there is the possibility of core IT services.
increasing the scope of the deal in future.

3 2 GROUN D VI EW 1 - 30 November 2020

Case Study # 5 Case Study # 6
Cognizant inks multi-year agreement with HCL Tech buys Volvo’s external IT
ING, takes over ING employees services arm

Year: 2012 Year: 2016

No of employees: 1,000 No of employees: 2,500

In June 2012, Cognizant expanded its relationship with ING, In 2016, HCL Tech acquired Volvo’s external IT business
US, to offer a comprehensive array of insurance business along with signing a significant IT outsourcing deal
process services, and acquired over 1,000 ING employees (infra and applications) of approximately US$ 1bn+ with
in Minot, North Dakota, and Des Moines, Iowa, to create Volvo group. With this acquisition, HCL Tech added
a US-based centre of excellence for insurance and finance 40 key clients in the Nordics region and France to its
business process services. ING US is a US-based retirement, portfolio. Approximately 2,500 employees working for
investment management, and insurance operation of Dutch- the Volvo Group were transferred to HCL across 11
based ING Groep N.V. Cognizant was to provide specific countries. HCL Tech gave consideration of US$ 130mn
technology systems for ING US for seven years, building on for Volvo’s external IT business which generated revenue
its already existing relationship with ING, with a deal contract of US$ 190mn over the last twelve months preceding
value of US$ 330mn. the acquisition. This unit offers services related to IT
infrastructure, mainframe services, and application
The centre was to be part of Cognizant’s global delivery
operation services to third-party clients.
network and would allow it to provide an expanded range
of business-process services, spanning the insurance and With the acquisition of Volvo’s external IT business, HCL
financial services industries, from the US. As part of the Tech gained significant advantage in the Nordics and the
multi-year agreement, Cognizant was to purchase ING US’s wider European region. It also gained highly skilled talent
existing facility in Minot, North Dakota, and sub-lease offices from Volvo along with domain skills and expertise. HCL
in the ING US facility in Des Moines, Iowa, providing business Tech claims to be the largest IT services provider of Indian
and workplace continuity for ING’s customers and the origin in the Nordics. The company has also announced
employees, who would transition to Cognizant. an automotive centre of excellence in Gothenburg, based
on the domain expertise of the Volvo team, to serve the
For ING, the expanded relationship with Cognizant offered
former’s global automotive and manufacturing customers.
job continuity for its employees. At the same time, it allowed
it to focus more on its core business of providing retirement, For Volvo group, providing IT services to clients was not
investment management, and insurance solutions. its core activity. Hence, by divesting the business, it could
focus more on its own business, which itself was facing
For Cognizant, the expanded relationship helped it to
significant disruption. Secondly, it also ensured that the
acquire top quality talent from ING in the retirement,
company didn’t have to lay-off a large number of its
investment management, and insurance segments. It could
people.
capitalise its onshore centre for servicing other BFSI clients
for providing business-process services.

1 - 30 November 2020 G RO U N D V I EW 33
Case Study # 7 Case Study # 8
TCS acquires certain assets Wipro secured one of its largest deals and
of General Motors Technical acquired Alight India’s operations
Centre, Bengaluru

Year: 2018
No of Employees: 9,000
Year: 2019
No of Employees: 1,300 In June 2018, Wipro secured one of its largest contracts worth c.US$ 1.6bn, spanning 10 years,
from US-based Alight Solutions. As a part of the contract, Wipro was to buy Alight Solutions’ India
General Motors (GM) is a client of TCS since the last 16 years. operations for US$ 117mn in cash. Alight had developed a rich set of technology and delivery
It acquired certain assets of the GM Technical Centre – India capabilities across its India centres located in Gurgaon, Noida, Mumbai, and Chennai. It provides
(GMTC-I) in Bengaluru, and also won a large deal from GM, benefits of administration and cloud-based HR and financial solutions to 1,400 clients serving 19mn
supporting its global vehicle programs with engineering employees and their 18mn family members. Alight India had a workforce of 9,000 employees. It
design services for the next five years. Over 1,300 employees reported revenues of Rs 11.32bn in FY18 and Rs 5.31bn in FY17.
of GMTC-I were transferred to TCS, including teams focused Wipro’s focus was to modernize Alight’s core technology assets and automate its operations, to
on propulsion systems, vehicle engineering, controls enhance the user experience of Alight’s end customers. The deal increased Wipro’s strength in
development, testing, creative design, and special projects. administration and cloud-based HR services and financial solutions, which it could cross sell to its
Through this deal, GM was to benefit from the scale and other clients.
cross-sectoral knowledge of TCS, while TCS was to benefit
from the influx of world-class engineering talent. GMTC-I Alight’s management had indicated that this deal would enable it to accelerate investment in
was established in 2004 in Bengaluru, and it contributed consumer-facing technologies and services across its health, wealth, and cloud operations by
to GM’s global programs across propulsion systems, vehicle leveraging Wipro’s industry-leading strengths in automation, machine learning and data analytics.
engineering, controls development, testing, creative design
and special projects. It houses a design studio and an
engineering centre with state-of-the-art, in-house, electronics
hardware and software testing and validation infrastructure. Case Study # 9
From GM’s perspective, it was able to hive off certain assets Wipro buys ATKO’s Captive Centre along with
of GMTC-I (which were operational since 2004) along with winning a large deal
the attached employees, without attracting negative media
attention related to large-scale layoffs. Also, because the same
employees would be working on GM projects, there was
comfort in terms of deliverables. From TCS’s perspective, it was
able to make the relationship stronger by winning a five-year
Year: 2014
deal with an approximate value of US$ 600-700mn, with the
No of Employees: 500
possibility of recurring revenue. This was also the first time in
the automotive space that a large ‘lift and shift’ deal took place;
In July 2014, Wipro won a significant deal of approximately US$ 1.1bn for 10 years from the
hitherto, deal sizes in automotive ER&D outsourcing were small
Canadian logistics and utilities firm ATCO Ltd, and in the process, also bought the information
(US$ 50-100mn size; project-based work). Additionally, TCS
technology (IT) services business of ATKO for US$ 195mn. As part of the deal, Wipro absorbed about
got key talent in the advanced automotive ER&D space, which
500 employees in Canada, and 50 in Australia. ATCO I-Tek, ATCO’s IT services business, had about
it could leverage for its other clients, and also win new clients.
700 employees. As part of the ATCO contract, Wipro agreed to provide infrastructure management,
This is a prime example of captives of OEMs not being as cost
application development and maintenance, and asset management.
efficient as service providers.
Wipro mentioned that the deal gave it significant local capability in markets like North America and
Australia where ATKO has a presence. Most of the ATCO employees came with significant domain
knowledge and presence in those markets, which enabled Wipro to provide many services to
utilities firms in other markets as well.

For ATKO, this deal led to outsourcing of its own IT infra and application development costs. Also, it
got to focus on its own business while selling the non-core captive centre.

3 4 GROUN D VI EW 1 - 30 November 2020

 CRYSTAL GAZING

Potential buyers and sellers

PhillipCapital presents, from its own rich database, a set of MNCs that could possibly
monetize their GCCs

In this section, we present a list of MNCs that might consider let any workers go until 1 Oct. It was expected that by
monetizing their GCCs based in India. We have evaluated October, the US would have had enough time to get the
several parameters listed below to arrive at a list of 34 MNCs coronavirus under control, and return to more typical travel
from PhillipCapital’s exclusive database. and expenditure levels. In Europe, German airlines Lufthansa
laid off 22,000 permanent employees as it predicted muted
The Covid-19 pandemic is causing significant demand- and
demand recovery for travel. Just like airlines, another sector
supply-side pressures, and an uncertain near-future demand
that took a hit was retail. While a move to online shopping
environment for many industries including aerospace, travel,
was already causing significant demand reduction for brick-
hospitality, manufacturing, and oil & gas, to name a few.
and-mortar stores, the pandemic put even more pressure on
One of the most devastating effects it has had is on the
non-food traditional retailers.
travel sector. Scores of airline workers were laid off in US and
Europe, as the demand for travel (both business and leisure) We have collated a list of 35 retailers who have already file
sank significantly. In the US, the government’s coronavirus for bankruptcy this year. A report from S&P Global Market
relief aid didn’t get extended beyond September, causing Intelligence in July 2020 identified 40 retailers that have filed
airlines to go ahead with layoffs in October 2020. A provision for bankruptcy, which is already higher than 2018 and 2019.
of the CARES Act (the US government’s US$ 2.2tn economic The wave of filings also means permanent store closures are
stimulus package) covered nearly 75% of the airlines’ piling up. Some of the significant ones include department
payroll expenses, with the stipulation that they should not store giant JC Penney, Gold’s Gym, Aldo etc.

Major airlines laid off thousands of Retail bankruptcies

employees due to low demand

Date Company Country Layoffs

Mar-20 Westjet Canada 7,000

Jun-20 Air Canada Canada 16,500

Jul-20 British Airways UK 12,000

Oct-20 American Airlines US 19,000

Oct-20 United Airlines US 13,000

Source: Media articles

Oct-20 Lufthansa Germany 22,000

Oct-20 IAG UK 12,000 Source: S&P Global Market Intelligence

Data compiled July 23, 2020. S&P Global Market Intelligence’s bankruptcy coverage is limited to public companies
or private companies with public debt where either assets or liabilities at the time of the bankruptcy filing are greater
than or equal to $2 mn, or private companies where either assets or liabilities at the time of the bankruptcy filing are
greater than or equal to $10mn

1 - 30 November 2020 G RO U N D V I EW 35
 These datapoints indicate the demand stress these sectors
Retailers that have filed for bankruptcy are currently facing. Oil & gas companies are under pressure
because of low oil prices while manufacturing companies
Date Retailer Category are facing supply disruptions due to unavailability of either
Jan-20 Papyrus Stationery raw materials or labour due to travel restrictions and
Feb-20 Pier 1 Imports Home Improvement social distancing norms. We think these sectors, which still
Mar-20 Art Van Furniture Home Improvement face significant demand pressure, might consider GCC
Mar-20 Modell’s Sporting Goods monetization options. So, from our database of 1,200+
Mar-20 Dean & Deluca Grocery retailer captives, we have identified a list of 34 potential candidates
Apr-20 True Religion Apparel & accessories that might consider selling off their GCCs/captive centres by
Apr-20 Roots USA Apparel & accessories analysing their financial
May-20 Neiman Marcus Department Stores
May-20 J Crew Group Apparel & accessories
May-20
May-20
Gold’s Gym
JC Penney
Gym
Department Stores
Potential sellers – small
May-20
May-20
Aldo
John Varvatos
Footwear
Apparel & accessories
single-function GCCs with
May-20
May-20
Tuesday Morning
Sage Stores
Discount Home Goods
Department Stores
struggling parents
May-20 Centric Brands Apparel & accessories
May-20 Hertz Rental Car Company
The list is narrowed down using the following criteria:
May-20 Advantage Rental Car Company
• Verticals – Aerospace & Defence, Automotive, Industrials,
May-20 Le Pain Quotidien Bakery & Café Chain
Healthcare, Retail & CPG, Manufacturing, Oil & Gas,
Jun-20 GNC Holdings Healthcare Chain
Travel & Transport, Telecom and BFSI. These verticals are
Jun-20 24 Hour Fitness Gym
facing higher business pressure due to the pandemic.
Jun-20 Chuck E Chese Entertainment Centres
Jul-20 Lucky Brand Denim Maker/Brand • Debt/equity ratio – Current debt/equity ratio is more than
Jul-20 Sur la Table Kitchen accessories 1.5, indicating higher leverage.
Jul-20 Brooks Brothers Apparel & accessories • Interest coverage ratio – lower interest coverage ratio,
Jul-20 RTW Retailwind Women Lifestyle Retailer indicating stretched financials.
Jul-20 Ascena Retail Group Apparel & accessories
• Newsflow about companies’ financial stress / restructuring
Jul-20 NPC International Fast Food Operator
plans / layoffs
Jul-20 G Star Apparel & accessories
Based on the above parameters, we have narrowed down
Jul-20 Muji USA Stationary
34 companies (listed below) which we think can monetize
Jul-20 Ney York & Company Apparel & accessories
their GCCs. Not surprisingly, the list includes companies from
Aug-20 Lord & Taylor Department Stores
sectors such as automotives, retail & CPG, manufacturing,
Source: Media articles

Aug-20 Tailored Brands Apparel & accessories

semiconductors, and aerospace; those that are facing a lot
Aug-20 Stein Mart Discount Department Stores
of demand-side pressure due to the ongoing pandemic.
Sep-20 Century 21 Discount Department Stores
Stressed balance sheets and an uncertain demand
environment can lead to these companies putting their
GCCs/captives on the block, for much-needed liquidity.

3 6 GROUN D VI EW 1 - 30 November 2020

 List of Potential GCC/Captive Sellers
Sr. No GCC owner Region Vertical Currency Debt/ Equity Ratio Net Debt ($ mn)
1 Rockwell Collins (Collins Aerospace) Americas Aerospace and defense USD 1.1 7,191
2 Thales Europe Aerospace and defense EUR 1.1 3,481
3 GRUPO ANTOLIN Europe Automotive EUR 11.8 165
4 John Deere Americas Automotive USD 4.0 3,270
5 American Axle & Manufacturing(AAM) Americas Automotive USD 3.8 3,235
6 Tenneco Americas Automotive USD 2.8 4,474
7 General Motors* Americas Automotive USD 2.3 (2,877)
8 Federal Mogul Americas Automotive USD (0.3) 150
9 Ford Americas Automotive USD 4.7 (7,610)
10 Delphi Europe Automotive USD 3.5 1,419
11 Banca Sella Europe BFSI EUR NA NA
12 Deutsche Bank Europe BFSI EUR NA NA
13 BNP Paribas Europe BFSI EUR NA NA
14 American Express Americas BFSI USD NA NA
15 Prudential Process Management Services Americas BFSI USD NA NA
16 Eli Lilly Americas Healthcare & Lifesciences USD 5.9 13,487
17 Amgen Americas Healthcare & Lifesciences USD 3.1 21,520
18 Kimberly-Clark Americas Manufacturing USD 36.6 7,709
19 3M Americas Manufacturing USD 2.1 18,848
20 Halliburton Americas Oil & Gas USD 1.4 9,235
21 Lowe's Americas Retail & CPG USD 12.0 22,874
22 Hershey Americas Retail & CPG USD 2.6 3,987
23 Kelloggs Americas Retail & CPG USD 2.6 8,072
24 GAP Americas Retail & CPG USD 2.3 6,023
25 JCPenney Americas Retail & CPG USD 5.9 4,511
26 GAP Americas Retail & CPG USD 2.3 6,023
27 PepsiCo Americas Retail & CPG USD 2.3 27,890
28 Diageo Europe Retail & CPG GBP 2.0 16,572
29 General Mills Americas Retail & CPG USD 1.6 12,241
30 Danone Europe Retail & CPG EUR 1.0 14,685
31 CommScope Americas Telecom USD 5.5 9,456
32 Verizon Americas Telecom USD 2.1 1,30,549
33 Sabre Holdings Americas Travel & Transportation USD 3.6 2,985
34 Senvion* Europe Industrial EUR 1.8 196
Source: Bloomberg
Note: Above financial data is of latest Fiscal years. *General Motors has already transferred assets and employees of its Bengaluru technical centre to TCS in Sep 2019; # Senvion, Germany based wind turbine maker sold its Indian
operations to a strategic investor in April 2020.Last year, Senvion had filed for insolvency in a German court.
Note: This is just an indicative list, based on our research, of companies that “might be likely” to monetize their GCCs.

1 - 30 November 2020 G RO U N D V I EW 37
Potential buyers - large/mid size IT services companies

Buying GCCs can turn out to be a mammoth opportunity for

service providers and can enhance their inorganic growth. FY20 net cash - large caps (USD mn)
Today, service providers are sitting on significant cash
balances, compared with what they had during GFC crisis.
Services providers are also more open to consider buying the
struggling captives, as companies like Infosys and Coforge
have quoted in the recent earnings calls. They benefit from
the opportunity to increase presence in underpenetrated
verticals, geographic expansion, capability expansions,
talent, etc.

Net cash position of Indian IT players has improved since

the GFC crisis
IT services players around the globe have been very strong
FCF generators. Since the GFC crisis, net cash positions of
the big IT players have improved significantly, thanks to the
consistent growth in the overall business, and strong FCF
conversion. For example, TCS had a net cash position of less
than US$ 1bn in FY09; by FY20, it had a chest of US$ 5bn. FY20 net cash - mid caps (USD mn)
FCF conversion (FCF/PAT) in FY20 for TCS stood at 93%.
As seen from the charts aside, tier-1 IT services players are
in a much better position, having strong net cash positions.
This cash can be deployed in M&As, where along with
niche technology and design firms, captives are also being
considered. PhillipCapital analysts’ recent interaction with
industry advisors confirm this. Probable candidates include

Source: Company, PhillipCapital India Research

TCS, HCL Tech, Wipro, Tech Mahindra and Cognizant who
have been aggressive in M&A activities in the last 3-4 years
and/or have strong cash positions.

The current exposure to verticals of IT services companies

provides a clue about the potential acquisition of GCCs for
individual companies. The BFSI vertical is well penetrated
and hyper competitive, comprising of large Indian vendors
competing with global service providers such as Accenture
and Capgemini. Players like Tech Mahindra and HCL Tech,
which have lower revenue share from BFSI (relatively), are
likely to acquire GCCs in this space. Some of the midcap
companies like LTI, Coforge, and Mphasis are over-
dependent on BFSI, so they could diversify by expanding
into verticals such as Retail & CPG (for LTI, Mphasis),
Healthcare (Mphasis and Coforge), and Manufacturing
(Mphasis).

3 8 GROUN D VI EW 1 - 30 November 2020

 Indian IT companies’ current exposure to various verticals
BFSI Retail & CPG Manufacturing ENU Healthcare Hitech Telecom Travel Others
TCS 32% 15% 9% 10% 9% 7% 19%
Infosys 32% 15% 9% 12% 7% 9% 13% 3%
Wipro 31% 16% 8% 13% 14% 13% 5%
HCL Tech 22% 10% 18% 11% 14% 17% 8%
Tech M 16% 8% 16% 10% 39% 11%
LTI 46% 11% 16% 11% 11% 6%
LTTS 32% 13% 21% 34%
MindTree 20% 22% 50% 8%
Cyient 14% 12% 3% 5% 28% 27% 10%
Coforge 51% 30% 19%
Persistent 32% 19% 49%
Mphasis 63% 12% 12%* 13%
Mphasis* - Logistics & transport
Source: Company, PhillipCapital India Research

The table below captures the areas in which tier-1 and selected tier-2 companies can acquire GCCs, or, where they
can expand and diversify their vertical exposures

Likely segments of acquisitions for Indian IT players

TCS Infosys Wipro HCL Tech Tech M LTI MindTree Mphasis
Manufac Manufac Manufac BFSI BFSI Retail & CPG BFSI Retail & CPG
Telecom Hitech Telecom Telecom Retail & CPG Telecom ENU Manufac
Hitech Healthcare Retail & CPG ENU Healthcare Healthcare
Source: Company, PhillipCapital India Research

Captive acquisitions by Indian IT players

Companies Year Name of Captive Consideration ($mn)
2008 Citi Global Services 505
TCS 2010 SuperValu Inc 100
2020 Post Bank Systems (Deutsche Bank subsidiary) NA
2008 Citi Technology Services 127
Wipro 2014 ATCO I-Tek 195
2018 Alight Solutions 117
Infosys 2018 Stater NV (ABN AMRO IT Services unit) 128
HCL Tech 2016 Volvo IT 135
2008 T-Systems India (Deutsche Telekom Subsidiary) NA
2009 UBS India Captive 75
Cognizant 2009 Invensys NA
2011 Corelogic 50
2012 ING NA
Source: Company data, PhillipCapital India Research

1 - 30 November 2020 G RO U N D V I EW 39
 is not as cheap or efficient as having third-party service

Conclusion providers.
3. Strategic: After setting up and running a captive, parent
organizations may realise it is best to focus on their core
Indian IT services industry is an integral part of the Indian business work, and outsource non-core work to service
economy (7% of GDP, largest private sector employer) and providers.
the global IT landscape (53% marketshare of the global
sourcing industry). Of this, GCCs form a small but integral At the same time, third party service providers are likely to
part – contributing 20% of the total industry. Over the next latch onto these assets because:
decade, this part of the industry is expected to undergo 1. Access to talent: Acquiring a GCC/captive will help
significant transformation, with multiple forces pulling it in service providers get access to niche talent, which is
different directions. Covid-19 has just accentuated one of difficult to tap from the market due to unavailability of the
those drivers. required skillsets, or due to lack of domain experience. It
can leverage this talent to win new clients in the market.
The GCC market is expected to continue to expand, driven
2. Access to key IP or technology: Service providers
by the evolution of the industry, enhancement of its delivery
would benefit from the key IP or technology by acquiring
capabilities, and low penetration levels. With only 383 of
captives. A GCC’s infrastructure and technology domain
the Global 2000 firms having a GCC in India, 80% of them
knowledge can be leverage to win new clients in the
are yet to leverage this opportunity. Also, Indian GCCs
same/different industry.
have a long way from when they first started as cost centres
3. Geographic expansion: Acquisition of captives can open
to take advantage of the cost arbitrage and talent pool in
the gates for a service provider in terms of expansion into
India. Today, GCCs are perceived as competency centres
new geographical markets, circumventing the daunting
and business enablers for the organisation. Increasing
task of setting up a delivery centre with capacities in the
collaboration between the IT and R&D teams has led to
thousands and then acquiring talent from local markets.
significant changes in their governance model. Adoption of
4. Vertical expansion: Similar to a geographic expansion,
Agile has allowed IT functions to be integrated and shared,
service providers can expand their vertical delivery
and the work now involves the full lifecycle of product
capabilities by acquiring captives or by creating
development. Their employees, too, are now hired from Tier-
completely new verticals for themselves.
1 institutes and have more defined technical career paths.

What Covid-19 has accentuated is another driver, which Overall, Covid-19 is likely to provide a significant boost
could well see the GCC footprint diminishing in India. The to the monetization of GCCs in India – with transactions
pandemic-led impact on demand on several industries like being win-win deals. These would provide sellers with
retail (non-essential), travel & transportation, manufacturing, quick monetization of ‘non-core’ assets to help run their
automobiles, etc., is leading to severe pressure on firms core businesses strongly – at the same time, the sales
to continue with the existing operations. As the volume of would provide buyers a unique opportunity to expand their
work falls, it becomes difficult to justify the costs of captive footprints and boost growth, utilizing idle balance-sheet cash.
centres. Hence, there has been an active interest from MNCs
As corroborated by our exclusive database of GCCs in India,
to sell their captives at the moment.
the scope for captive monetization is immense, and can
Parent enterprises are expected to sell their captives for the lead to mammoth opportunities for the Indian IT Services
following reasons: companies (like TCS, CTSH, Infosys etc). This, in addition to
1. Monetization: A GCC/captive is often viewed by the organic boost the sector has received, due to accelerated
its parent organization as a liquid asset, which it can digital adoption and cloud migration, presents a remarkable
relatively easily slice off and sell to generate immediate opportunity for the sector, to make up for its lackadaisical
cash. This situation is further exacerbated by the growth of FY15-18. That an adversity like Covid-19 would turn
pressures that parent organizations face due to the into this mammoth opportunity for the IT Services sector –
pandemic. who would have thought!!
2. Operational: Parent organizations will often sell a captive
that has either served its purpose or never lived up to
expectations. Also, parents may realise having a captive

4 0 GROUN D VI EW 1 - 30 November 2020

 INTERVIEW – Sashidharan Balasundaram

1. GCC/Captives centres have in terms of developing human-capital

seen significant growth in last two around these new-age requirements.
decades. How do you see the growth Cyber security, data scientists, and
of captives in the next 5-10 years? digital technologist are/will be the
Global Capability Centres (GCCs) are next in-demand talent requirements.
a key part of the Indian IT and BPO Our research says an estimated 3.5mn
Services growth story. They have cyber security jobs will be available,
been contributing to incremental job but unfilled, by 2021. This could be
creation; now with focused growth the next growth driver for GCCs in
beyond Tier 1 cities, in search of the modern digitally transformed and
low cost, less populated, and highly transforming era.
skilled employee bases - Tier 2 cities With increasing levels of work-from-
To dig deeper into the GCC will see more takers. Also, with man- anywhere adoption among GCCs,
landscape in India, and the machine combination, as Software service providers, and enterprises,
opportunity presented by the BOTs take more mundane work with comes a new set of challenges and
higher efficiency and accuracy, skills opportunities – such as remote
monetization of these needed to do those mundane tasks are employee management, technical
captives, we interviewed now primarily RPA Developer, Tester, support, 100% availability, business
Mr Sashidharan and Process Engineering. Successful continuity and improved security
implementation of automation use- requirements for end-point devices,
Balasundaram, Senior cases at scale will increase the GCCs networks, data centers, cloud
Manager at ISG Research. role in strategic and key technology infrastructure, web applications, email,
decisions for the parent enterprise. voice and video conferencing solutions.
Over the next five years, enterprises 2. Which are the other locations
Mr Balasundaram has over
are expected to incrementally adopt that compete with India for GCCs
12 years of experience modern and repeatable technologies units? What do these locations
in operations, strategy, in making the business processes have as a competitive advantage/
more resilient, low cost, scalable, disadvantage?
technology research and
and secure. GCCs will play a greater India continues to be the favourite
procurement consulting role in achieving agile, repeatable, location for GCCs with the talent
within IT services, consistent, and cost-effective digital availability across domains, and
transformations in their parent new-age technologies. To keep this
manufacturing, banking
enterprises. India will see increase in momentum going, government,
and insurance verticals. He new GCCs in manufacturing ER&D, educational institutions, and industry
has expertise in consulting, financial services, supply chain, retail, should come together to develop the
travel, e-commerce, media and telco curriculum for the next generation
competitive intelligence and
in particular, owing to the increased technologies and up-skill the existing
formulating strategies for demand and shift in consumer talent. To compete with the European
the go-to-market approach. expectations, high investments to GCC destinations such as Poland,
address the changing demands, quick Austria, and Czech Republic, it’s
An electronics engineer from
demand cycles, and new business important to set-up language and
Anna University, Chennai, he model evolution. This makes the talent- multi-cultural institutes in India to
has a post-graduate degree hubs like India ideal destinations for develop German, French, Spanish,
GCCs. Danish, and other European language
in global business strategy
Location dependent solutions are skills among our human-capital. This
and analysis from Alliance
shifting to Cloud. This will have could increase India’s opportunity
Manchester Business School, increased demand and opportunities to pick-up language-based business
The University of Manchester, aligned to these net new skills will be processes from both private and public
in-demand globally. In the past, there sectors, and hi-tech and complex
UK.
has been significant demand for skills engineering work that is not sent
in automation and analytics. While offshore to GCCs or service providers
this continues, India has capitalized as of now. However, the drivers will

1 - 30 November 2020 G RO U N D V I EW 41
be those skills that are scarce and in- to run the day-to-day operations 5. BFSI vertical has some of the
demand for Digital Transformation and supporting Vanguard’s record-keeping largest captive centres in India.
Engineering. business, including its software Do you think they will continue to
3. Captives are significant job platforms, administrations, and expand their captive centres, or
providers, employing about a million associate processes. This partnership give incremental work to service
people. Do you think we can see expands the digital enablement providers?
high involuntary attrition and a in client experience for Vanguard. On 1st October 2020, Goldman Sachs
pause in new hiring from captives Approximately 1,300 Vanguard roles announced its intent to open its second
over the next year? – currently supporting the full-service India office in Hyderabad, which is
recordkeeping client administration, expected to be operational in the
Captives may pause hiring in non-core
operations, and technology functions – second half of 2021, with about 500
areas, adoption of RPA will increase,
will transition to Infosys. employees. This announcement, in
new skills such as bot developers,
testers, and process engineers will be Insourcing decision will be made when: the middle of the pandemic, reiterates
hired. From a core-area perspective, • Ongoing work becomes more the role India and its local talent plays
if the parent enterprises are of the proprietary, IP-driven, and complex in supporting global enterprises’ key
“keeping the lights on” is good business areas, day-to-day operations,
• There is less satisfaction with
enough category, hiring will be frozen. innovation, and making them digitally
the service levels of outsourcing
If they are the “seize the opportunity competitive.
partners
to transform the business” category, This does not mean outsourcing
• Cost saving goals are not met
you will see increased hiring, especially providers will see any decline in
data scientists, AI/ML developers, and • Increasing cost then projected while demand. Financial services verticals
analytics specialist. India reported an outsourcing have experienced high disruption
increased tax collection for September • Less value is derived from the in the recent years from digital
2020, signalling reduction in pay-cuts outsourcing relationship banking, straight through processing,
and businesses coming back to pre- Setting-up captive centres are auditor-less insurance audits via
covid levels – which resonates for the also a significant growth driver for video applications, bot-AI-based
current situation of GCCs. Outsourcing Service Providers; this risk underwriting, and more, in both
4. Has Covid had a negative/positive means Build-Operate-Transfer is also customer experience as well as time to
impact on perspective? Will clients a significant business for Indian and process areas.
prefer outsourcing now, more than Western service integrators with scale 6. ER&D services companies like
in-sourcing? and operational capability. LTTS, Tata Elxsi, KPIT, Cyient have
The outsourcing vs. insourcing dilemma Industries such as utilities, capital seen deal pipeline pickup in recent
is dependent on each enterprise’s markets, banking, insurance, quarters. Does it mean that more
unique scenario. Key parameters such automotive, transportation, travel, companies are now outsourcing their
as cost, risk, value and control should retail CPG, and industrial equipment ER&D work as it cheaper? Can ER&D
be assessed to arrive at a decision. are highly prone to volatility, due outsourcing industry benefit out of
to changing market conditions, this pandemic as it may be expensive
In 1H 2020, we observed some
continuously evolving customer to run a captive?
enterprises’ outsourcing decisions
being put on hold after detailed expectations, and regulatory Nasscom released the global ER&D
provider evaluations; some have requirements. Technology is the market statistics in 2019, which
extended their current outsourcing enabler in all of these industries, highlighted 33% or US $30 billion
agreements to keep the lights on to bridge the gap between today’s revenue India derived from global
for another 12-24 months. This is reality and tomorrow’s expectation. outsourced ER&D spend of about
a temporary COVID19 induced Speed and agility are two primary US $90 billion. Digital Twins, Plant
scenario. Enterprises are showing drivers to establish market leadership. Engineering, Production Analytics,
intent and interest to move ahead with For enterprises to develop any new Predictive Maintenance, Supply-Chain
outsourcing as planned; it is just that technology by themselves leveraging Engineering, Design and Testing are
the time of decision has shifted by 1-2 their GCCs will be time consuming in some of the key investments’ pandemic
quarters. the speed race. As we have seen from has only accelerated. In the near term
the 2008 great recession fuelled by owing to the travel restrictions, we
Enterprises such as Vanguard, the
Lehman Brothers’ collapse, outsourcing could expect increased offshoring in
largest defined contribution asset
providers are the best go-to strategic Engineering space.
manager in the US, have embraced the
partners for GCCs to accelerate from In the automotive space, with the
opportunity at hand and established
ideation to development to production uptick in electrification and the urge
a strategic partnership with Infosys
to updates, with speed and agility. to reduce the carbon emissions, many

4 2 GROUN D VI EW 1 - 30 November 2020

large auto manufacturers have joined Manufacturing (DLM) has been a This is very similar to large capital
hands in Research and Development, significant portion of all of Cyient’s Investments; decisions are made
joint product strategy, where better operations, which have been based on opportunities presented,
innovation ecosystem is built. From impacted by the pandemic and a considering the risk, opportunity, as
a supplier standpoint, large battery slowdown in manufacturing. Amid well as strategic focus on the capital
technology development and the pandemic, Cyient Australia has that a service provider is looking to
manufacturing providers are created, acquired Integrated Global Partners invest.
which also increases the opportunity for US$ 8.56mn – to strengthen In some cases, you would see service
for ER&D services companies. its digital capabilities in energy providers expanding in low-growth
• LTTS has launched an Electric and mining industries. Cyient also verticals such as BFSI. Institutions in
Vehicle (EV) laboratory at its added one of the top-3 med-tech this vertical have been large spenders
Bangalore Design Centre; this lab is enterprises to its client-list in 2Q on technology, and many large banks
expected to cater global customers FY21. The transportation business have already invested heavily in digital
for EV testing, and evaluate and is driving its growth, while its transformation, while many continue
verify the performance, endurance, semiconductor BU experienced to run their own captives successfully.
and electromagnetic compatibility de-growth, and continues to Service providers who are already
of EVs. Also, LTTS announced see softness due to a decline working with these BFSI enterprises
eight multi-million-dollar deal wins in one of its key clients. Cyient may see an existing opportunity.
in its 2Q FY21 financial review, looks very optimistic, as the new Further, with reducing profits in
signalling growth in new business. business opportunities across its banking, and increasing customer
This includes three deal-wins above business lines are seeing increased expectation in insurance, and changing
US$ 15mn in TCV, and three above offshoring and demand is just investor preferences in investment
US$ 10mn in TCV. However, it opening up. banking, fin-techs compete in every
is important to note that overall • Tata Elxsi is the only engineering BFSI ecosystem such as payments,
revenue is down by 6.3% yoy. services provider that has seen AML, lending, deposits, capital markets
• In 1QFY21, KPIT won a US$ 60mn 11.1% revenue increment yoy trading, mutual funds, P2P Lending,
five-year contract from a tier-1 in 1HFY21; profit before tax has insurance, KYC – STP. BFSI enterprises
automotive system supplier for increased by 45% in the same need partners to be successful in this
autonomous driving, ADAS, and period. Embedded product heavily-competed industry when it
safety electronics products as a design contributes to almost 87% comes to technology. This, in turn,
strategic software partner; also of its revenue, while industrial drives some banks to monetize their
five other contracts in the same design and visualization, system captives to IT service providers with
quarter from Automotive suppliers; integration, and support contribute long-time retention contracts; you see
in 2QFY21, it won 5 deals from to the remaining 13%. Revenue these billion-dollar, 10 year+ contracts
OEM car manufacturers across increment is driven by healthcare are back on the table via this approach.
US, Europe, and Asian markets and transportation verticals, where Enterprises in manufacturing, travel,
for autonomous driving, electric Tata Elxsi signed a multi-year deal transportation, tourism, hospitality,
power train, in-car networking, with a tier-1 European automotive and retail are heavily impacted by
and connected car technologies. supplier and won new OEM clients the COVID19 pandemic, these
KPIT is re-iterating its position as in 1HFY21. enterprises look to monetize assets
software integrator partner across • Volvo Group formed strategic that are non-strategic in nature to
CASE (Connected, Autonomous, alliance with Samsung SDI for the sustain this blow, while also partnering
Shared, Electric) aligned practices. joint development of battery packs with service providers to emerge as
KPIT has also seen a 15.4% decline specifically developed for Volvo stronger players back in the market.
in revenue yoy; significant revenue Group’s truck applications. From a service provider stand point,
decline from Americas and Asian investments are made to grow account
FY21 is expected be far better than
clients in 1HFY21. opportunity, market share, long-term
the slump ER&D service provider has
outsourcing contracts, industrial IP
• Cyient is repositioning itself as a experienced in FY20.
and talent acquisition at a high level.
Digital-engineering provider, with
7.In which areas or geographies will Strategy-level nuances differ from
deep expertise in design, build
service providers be interested in provider to provider based on their
across its key verticals such as
buying a captive? What would be investment appetite and expansion
aerospace and defence, energy
the criteria, considerations involved targets.
and utilities, communications,
for service providers to buy a
transportation, medical
captive?
and healthcare. Design Led

1 - 30 November 2020 G RO U N D V I EW 43
Indian Economy – Trend Indicators
Monthly Economic Indicators
Growth Rates (%) Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20
IIP -4.6 -6.6 2.1 0.4 2.2 5.2 -18.7 -57.3 -33.4 -16.6 -10.8 -7.4 0.2
PMI 51.4 50.6 51.2 52.7 55.3 54.5 51.8 27.4 30.8 47.2 46.0 52.0 56.8 58.9
Core sector -5.1 -5.5 0.7 3.1 2.2 6.4 -8.6 -37.9 -21.4 -12.4 -8.0 -7.3 -0.8
WPI 0.3 0.0 0.6 2.8 3.5 2.3 0.4 -1.6 -3.4 -1.8 -0.2 0.4 1.3 1.5
CPI 4.0 4.6 5.5 7.4 7.6 6.6 5.8 7.2 6.3 6.2 6.7 6.7 7.3 7.6
Money Supply 9.7 10.6 9.8 10.4 11.2 10.2 8.8 10.7 11.7 12.3 13.2 12.6 12.2 11.6
Deposit 9.4 10.3 9.7 10.1 11.2 10.0 7.9 9.8 10.7 11.0 12.0 10.9 10.5 10.1
Credit 8.8 8.9 8.0 7.1 8.3 7.5 6.2 6.7 6.2 6.2 6.3 5.5 5.1 5.1
Exports -6.6 -1.6 -0.3 -1.8 -1.7 2.9 -34.6 -60.3 -36.5 -12.4 -10.2 -12.7 6.0 -5.1
Imports -12.0 -15.0 -12.7 -8.8 -0.8 2.5 -28.7 -58.6 -51.0 -47.6 -28.4 -26.0 -19.6 -11.5
Trade deficit (USD Bn) -21.9 -34.7 -31.0 -22.4 0.8 1.3 -11.4 -55.9 -79.5 -105.2 -64.0 -51.2 -76.6 -25.9
Net FDI (USD Bn) 2.0 2.6 2.8 4.3 5.3 2.7 4.0 0.2 0.2 -0.8 3.2 17.7 2.4
FII (USD Bn) 2.2 2.7 6.0 -0.5 1.7 -1.5 -15.0 -1.8 -0.4 3.3 0.6 6.8 -0.3
ECB (USD Bn) 4.9 3.4 2.1 2.1 8.4 4.2 7.4 1.0 1.5 1.0 2.1 1.8 5.2
Dollar-Rupee 71.4 71.1 71.5 71.2 71.3 71.5 74.4 76.2 75.7 75.7 75.0 74.6 73.5 73.5
FOREX Reserves (USD Bn) 433.6 442.6 451.1 457.5 471.3 481.5 475.6 479.5 493.5 506.8 534.6 541.4 542.0 560.7
NRI Deposits (USD Bn) 132.9 133.7 132.7 133.1 133.6 132.5 130.6 129.3 131.1 132.7 135.1 137.8

Quarterly Economic Indicators

Balance of Payment (USD Bn) Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Exports 83.4 83.4 83.1 87.4 82.7 80.0 81.2 76.5 52.3
Imports 129.1 133.4 132.4 122.6 129.5 119.6 117.3 111.6 62.3
Trade deficit -45.8 -50.0 -49.3 -35.2 -46.8 -39.6 -36.0 -35.0 -10.0
Net Invisibles 29.9 31.0 31.5 30.6 31.8 32.1 33.4 35.6 29.8
CAD -15.8 -19.1 -17.8 -4.6 -15.0 -7.6 -2.6 0.6 19.8
CAD (% of GDP) -2.3 -2.9 -2.7 -0.7 -2.1 -0.9 -0.4 0.1 3.9
Capital Account 4.8 16.6 13.8 19.2 28.6 13.6 23.6 17.4 0.6
BoP -11.3 -1.9 -4.3 14.2 14.0 5.1 21.6 18.8 19.8

GDP and its Components (YoY, %) Q1FY19 Q2FY19 Q3FY19 Q4FY19 Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21
Agriculture & allied activities 3.8 2.5 2.0 1.6 3.0 3.5 3.6 5.9 3.4
Industry 7.8 4.7 4.4 1.4 3.8 -0.2 -0.4 0.0 -33.8
Mining & Quarrying -7.3 -7.0 -4.4 -4.8 4.7 -1.1 2.2 5.2 -23.3
Manufacturing 10.7 5.6 5.2 2.1 3.0 -0.6 -0.8 -1.4 -39.3
Electricity, Gas & Water Supply 7.9 9.9 9.5 5.5 8.8 3.9 -0.7 4.5 -7.0
Services 7.3 7.2 7.3 8.3 5.5 6.1 4.9 3.5 -24.3
Construction 6.4 5.2 6.6 6.0 5.2 2.6 0.0 -2.2 -50.3
Trade, Hotel, Transport and Communications 8.5 7.8 7.8 6.9 3.5 4.1 4.3 2.6 -47.0
Finance, Insurance, Real-Estate & Business Services 6.0 6.5 6.5 8.7 6.0 6.0 3.3 2.4 -5.3
Community, Social & Personal Services 8.8 8.9 8.1 11.6 7.7 10.9 10.9 10.1 -10.3
GDP at FC 6.9 6.1 5.6 5.6 4.8 4.3 3.5 3.0 -22.8

4 4 GROUN D VI EW 1 - 30 November 2020

 Annual Economic Indicators and Forecasts
Indicators Units FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20E FY21E FY22E

Real GDP/GVA growth % 5.4 6.1 7.2 8.0 8.0 6.6 6.0 3.9 -6-7 8-10

Agriculture % 1.5 5.6 -0.2 0.6 6.8 5.9 2.4 4.0 4.2 3.5-4.0

Industry % 4.5 4.2 8.1 11.9 8.4 6.8 4.5 0.8 -11.6 12-14

Services % 7.0 6.9 9.0 8.6 8.1 7.8 7.7 6.4 -7.9 11-13

Real GDP ` Bn 85463 90636 97121 104919 113190 121042 128031 133011 123700 136070

Real GDP US$ Bn 1571 1499 1588 1603 1687 1878 1844 1887 1672 1890

Nominal GDP ` Bn 99440 112335 124680 137719 153624 170950 189712 203398 184940 208104

Nominal GDP US$ Bn 13.8 13.0 11.0 10.5 11.5 11.3 11.0 7.2 -9.1 12.5

WPI (Average) % 1828 1858 2039 2104 2290 2652 2714 2885 2499 2890

CPI (Average) 10.2 9.5 6.4 4.9 4.5 3.6 3.4 4.7 4.5-5 3.3-3.7

Money Supply % 13.6 13.5 12.0 10.3 7.3 9.6 10.6 10.5 '11-12 '11-12

CRR % 4.00 4.00 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0

Repo rate % 7.50 8.00 7.50 6.75 6.25 6.00 6.25 5.15 4.0 3.5-3.75

Reverse repo rate % 6.50 7.00 6.50 5.75 5.75 5.75 6.00 4.90 3.35 3-3.15

Bank Deposit growth % 14.2 14.6 12.1 9.7 11.2 6.2 9.6 9.5 '10-11 '11-12

Bank Credit growth % 14.1 13.5 12.5 10.7 4.7 9.8 13.0 8.0 '6-7 '10-11

Centre Fiscal Deficit ` Bn 5209 5245 5107 5328 5356 5911 6344 7119 13316 8182

Centre Fiscal Deficit % of GDP 5.2 4.6 4.1 3.9 3.5 3.5 3.4 3.5 8.0 4.0

State Fiscal Deficit % of GDP 2.0 2.2 2.6 3.1 3.5 2.4 2.9 3.1 4.0 3.5

Consolidated Fiscal Deficit % of GDP 6.9 7.1 6.6 7.0 7.0 5.9 6.3 6.6 12.0 7.5

Exports US$ Bn 306.6 318.6 316.7 266.4 280.1 309.0 337.2 320.4 278.8 320.6

YoY Growth % -1.0 3.9 -0.6 -15.9 5.2 10.3 9.1 -5.0 -13.0 15.0

Imports US$ Bn 502.2 466.2 460.9 396.4 392.6 469.0 517.5 477.9 358.5 430.1

YoY Growth % 0.5 -7.2 -1.1 -14.0 -1.0 19.5 10.3 -7.6 -25.0 20.0

Trade Balance US$ Bn -195.6 -147.6 -144.2 -130.1 -112.4 -160.0 -180.3 -157.5 -79.7 -109.6

Net Invisibles US$ Bn 107.5 115.2 116.2 107.9 97.1 111.3 123.0 132.8 106.9 115.0

Current Account Deficit US$ Bn -88.2 -32.4 -27.9 -22.2 -15.3 -48.7 -57.3 -24.7 27.2 5.4

CAD (% of GDP) % -4.7 -1.7 -1.4 -1.1 -0.7 -1.8 -2.1 -0.9 1.1 0.2

Capital Account Balance US$ Bn 89.3 48.8 90.0 41.1 36.5 91.4 54.4 83.2 35.5 65.5

Dollar-Rupee (Average) 54.4 60.5 61.2 65.5 67.1 64.5 69.9 70.5 72-76 70-75

Source: RBI, CSO, CGA, Ministry of Agriculture, Ministry of commerce, Bloomberg, PhillipCapital India Research

1 - 30 November 2020 G RO U N D V I EW 45
 PhillipCapital India Coverage Universe: Valuation Summary
CMP Mkt Cap Net Sales (` mn) EBIDTA (` mn) PAT (` mn) EPS (`) EPS Growth (%) P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROCE (%)

Name of company Sector ` ` bn FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E

Maruti Suzuki Automobiles 6,988 2,111 7,16,904 6,88,264 74,276 70,657 57,756 58,065 191 192 -23.0 0.5 36.5 36.4 4.4 4.1 28.4 29.1 11.9 11.4 11.2 10.7

4 6 GROUN D VI EW
Bajaj Auto Automobiles 3,078 891 2,91,115 2,61,955 50,962 44,227 51,000 44,103 176 152 17.7 -13.5 17.5 20.2 4.5 3.9 17.4 19.9 25.6 19.5 23.5 20.0

Mahindra & Mahindra Automobiles 705 877 4,48,655 4,72,091 63,506 73,539 35,509 41,808 30 35 -34.5 17.7 23.7 20.1 2.4 2.3 13.6 11.7 10.3 11.4 1.9 7.4

Tata Motors Automobiles 171 564 26,10,680 24,92,091 2,51,487 2,43,108 -91,994 -18,478 -39 -6 -57.6 -84.7 -4.4 -28.5 0.8 0.9 5.1 6.7 -14.6 -3.0 -3.3 0.2

Hero MotoCorp Automobiles 3,060 611 2,82,891 2,90,070 39,580 39,592 29,559 30,359 148 152 -12.7 2.7 20.7 20.1 4.3 3.9 15.5 15.3 20.9 19.5 25.2 19.1

Ashok Leyland Automobiles 91 268 1,72,672 1,33,721 11,737 4,983 5,177 -2,799 2 -1 -79.7 -154.1 51.7 -95.7 4.2 5.3 24.3 58.4 8.1 -5.5 6.2 -1.0

Bharat Forge Automobiles 499 232 80,558 64,641 11,147 6,185 4,282 540 9 1 -58.5 -87.4 54.3 430.2 4.5 4.5 23.9 42.8 8.2 1.1 5.7 1.7

Escorts Automobiles 1,403 189 57,610 65,263 6,758 9,472 4,948 7,276 41 61 4.7 47.1 33.8 23.0 4.8 4.0 27.6 19.4 14.2 17.4 13.7 18.0

Endurance Technol-
Automobiles 1,163 164 69,177 63,596 11,308 10,038 5,643 4,484 40 32 9.4 -20.5 29.0 36.5 5.4 4.8 14.4 15.9 18.8 13.2 17.8 12.7
ogies

Ceat Automobiles 1,128 45.6 67,788 66,378 7,211 6,906 2,599 2,171 64 54 -12.2 -16.5 17.6 21.0 1.6 1.5 9.0 9.7 8.9 7.1 8.8 7.6

Hindustan Unilever FMCG 2,129 5,003 3,82,730 4,40,077 96,000 1,13,557 69,350 81,612 32 35 10.8 8.2 66.3 61.3 57.3 10.6 51.6 43.2 86.4 17.3 66.2 27.5

ITC FMCG 191 2,348 4,51,361 4,55,245 1,79,043 1,61,537 1,52,682 1,31,711 12 11 22.5 -13.7 15.3 17.8 3.7 3.5 12.7 14.1 23.8 19.8 24.1 19.6

Nestle FMCG 17,786 1,715 1,22,953 1,33,129 28,643 32,564 19,882 21,651 206 225 23.7 8.9 86.2 79.2 88.7 64.7 59.4 52.1 102.9 81.7 37.8 43.5

Dabur India FMCG 509 900 87,036 92,617 17,924 20,006 15,479 16,855 9 10 1.7 8.9 58.1 53.4 13.6 12.0 50.0 44.4 23.4 22.5 23.6 23.3

Godrej Consumer
FMCG 708 724 98,265 1,04,637 21,430 24,664 15,776 16,810 15 16 -24.5 6.6 45.9 43.0 9.2 8.5 34.7 29.9 20.0 19.6 16.6 17.8
Products

Britannia FMCG 3,557 857 1,14,440 1,31,125 18,432 25,293 14,196 18,163 59 76 22.5 27.9 60.2 47.1 19.4 21.8 47.2 34.4 32.2 46.3 30.5 38.5

Marico Industries FMCG 378 488 73,150 72,835 14,690 15,408 10,500 10,886 8 8 -5.7 3.7 46.5 44.9 14.9 13.6 32.8 31.1 32.1 30.4 34.9 32.8

Colgate FMCG 1,567 426 44,876 47,356 12,017 14,006 8,165 9,194 30 34 9.6 12.6 52.2 46.4 26.7 24.0 35.1 29.9 51.2 51.7 49.9 50.8

Emami FMCG 401 178 26,549 27,132 6,906 8,195 3,136 4,185 7 9 0.2 36.3 58.0 42.5 10.0 9.0 25.9 21.4 17.2 21.2 16.6 22.0

Bajaj Corp FMCG 187 28 8,258 8,720 2,051 2,481 1,848 2,268 13 15 -16.6 22.8 14.9 12.1 4.2 3.2 13.5 10.4 28.3 26.7 32.3 29.7

Agro Tech Foods FMCG 698 17.0 8,344 9,112 581 682 339 362 14 15 0.0 6.7 50.1 47.0 4.2 3.9 29.3 24.6 8.3 8.3 8.9 8.7

Titan Company Retail 1,348 1,196 2,00,096 1,62,693 24,177 16,702 15,176 10,109 17 11 5.1 -33.4 78.8 118.4 17.5 16.0 49.6 70.8 22.2 13.5 22.9 13.0

Jubilant Foodworks Retail 2,620 346 38,858 33,373 8,771 6,530 3,203 1,289 24 10 -3.1 -59.8 107.9 268.2 27.9 28.0 38.7 51.7 25.9 10.5 34.1 25.5

Trent* Retail 787 280 34,413 26,285 5,440 1,796 1,228 -1,632 55.9 167.9 5.1 -7.5 10.7 2.1

ABFRL* Retail 157 131 87,425 58,041 12,254 4,550 -1,452 -3,682 14.9 38.5 -11.2 -21.9 7.0 0.5

V-Mart* Retail 2,049 37 16,604 10,732 2,138 1,133 493 -221 19.8 35.8 10.8 -5.1 15.3 3.3

1 - 30 November 2020
 PhillipCapital India Coverage Universe: Valuation Summary
CMP Mkt Cap Net Sales (` mn) EBIDTA (` mn) PAT (` mn) EPS (`) EPS Growth (%) P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROCE (%)

Name of company Sector ` ` bn FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E

1 - 30 November 2020
Shoppers Stop* Retail 183 16 33,362 19,763 5,494 2,354 -1,210 -1,289 6.9 15.7 -88.5 3.6 4.3

Thangamayil Retail 439 6 16,942 14,946 1,030 1,758 479 1,069 35 78 58.3 123.3 12.6 5.6 2.7 1.9 9.7 3.6 21.8 33.4 25.2 31.2

KDDL Retail 165 1.9 6,523 4,875 760 475 -6 -225 -1 -19 -102.7 -322.6 -8.6 1.1 1.2 4.3 7.1 -0.3 -14.4 3.6 -1.6

Asian Paints Paints/Tiles 2,186 2,097 2,02,113 1,90,882 41,618 43,021 27,101 27,761 28 29 25.4 2.4 77.4 75.5 20.7 17.8 50.3 48.1 26.8 23.6 25.8 24.3

Kajaria Ceramics Paints/Tiles 623 99 28,080 21,269 4,159 2,628 2,553 1,151 16 7 10.3 -54.9 38.8 86.0 5.8 5.5 23.5 36.5 14.9 6.4 14.2 6.9

Somany Ceramics Paints/Tiles 258 15.8 16,101 12,932 1,314 791 183 -83 4 -2 -60.4 -145.1 59.6 -131.9 1.8 1.8 15.5 25.2 3.0 -1.4 5.5 2.8

Havells India Con Elec 824 516 94,292 91,030 10,274 8,971 7,330 5,516 12 9 -6.9 -24.7 70.3 93.4 12.0 11.6 49.8 57.2 17.0 12.4 15.3 11.3

Voltas Con Elec 760 252 76,581 64,182 6,867 4,409 5,722 3,676 17 11 8.9 -35.8 44.0 68.4 5.9 5.6 36.5 57.2 13.4 8.2 14.5 9.6

Polycab Con Elec 930 139 88,300 82,922 11,350 8,085 7,730 5,256 52 35 45.9 -32.0 17.9 26.4 3.6 3.3 12.1 16.8 20.1 12.6 23.2 13.2

V‐Guard Industries Con Elec 179 77 24,820 22,035 2,533 1,697 1,852 1,197 4 3 11.8 -35.4 41.5 64.1 7.7 7.1 30.4 44.9 18.6 11.0 18.8 11.2

Finolex Cables Con Elec 289 44 28,773 829 3,699 -18,324 4,025 -18,409 26 -120 17.0 -557.4 11.0 -2.4 1.6 1.5 9.4 -1.8 14.8 -64.5 15.3 -64.8

KEI Industries Con Elec 380 34 48,843 47,600 4,960 4,724 2,551 2,702 33 34 40.3 5.9 11.7 11.0 2.0 1.7 7.1 7.3 16.9 15.3 20.5 16.4

Bajaj Electricals Con Elec 554 63 49,771 47,100 2,069 1,369 -1 146 -0 1 -100.1 384.7 4.1 4.0 34.6 49.3 -0.0 1.0 4.0 3.2

Orient Electric Ltd Con Elec 228 48 20,618 20,106 1,805 1,701 786 743 4 4 13.4 -5.4 61.6 65.2 - - - - - -

Indo Count Industries Consumer Oth 160 31.6 21,167 17,774 2,198 1,642 1,715 736 9 4 88.9 -57.1 18.4 42.9 3.2 3.1 15.3 21.0 17.4 7.3 15.0 8.0

HDFC Bank Banks 1,395 7,678 5,61,863 6,63,480 4,87,496 5,66,255 2,62,573 3,12,629 48 57 23.7 19.1 29.1 24.5 4.5 3.8 15.7 13.6 16.4 16.9 2.0 2.0

ICICI Bank Banks 468 3,231 3,32,671 3,71,439 2,81,012 3,46,459 79,308 1,42,881 12 21 134.8 68.9 38.2 22.6 2.8 2.4 11.5 9.3 7.1 10.9 0.8 1.3

Kotak Mahindra Bank Banks 1,898 3,757 1,34,997 1,54,919 1,00,208 1,19,314 59,469 69,235 31 36 22.2 14.3 60.9 53.2 7.4 6.0 37.5 31.5 12.9 12.4 1.8 1.8

State Bank of India Banks 239 2,130 9,80,848 11,02,657 6,81,326 6,87,380 1,44,881 1,69,138 16 19 16.7 14.7 12.6 1.1 1.0 3.1 3.1 7.2 7.9 0.4 0.4

AXIS Bank Banks 596 1,823 2,52,062 2,94,699 2,34,382 2,55,903 16,272 80,624 6 26 -68.3 354.8 103.3 22.7 2.0 1.8 7.8 7.1 2.1 8.6 0.2 0.9

Indusind Bank Banks 850 643 121 132 108 115 44 28 64 37 3.0 -42.1 13.3 23.0 1.7 1.6 13.5 7.4 1.6 0.9

Bank of Baroda Banks 47 217 2,74,510 2,81,116 1,96,910 1,80,256 5,460 8,510 1 2 -16.1 55.9 39.7 25.5 0.3 0.3 1.1 1.2 0.9 1.3 0.1 0.1

Indian Bank Banks 65 73 76,064 1,58,053 64,980 1,06,466 7,537 17,826 12 16 84.7 27.5 5.2 4.1 0.2 0.2 1.1 0.7 4.3 5.9 0.3 0.3

DCB Bank Banks 95 29 12,649 13,033 7,531 8,516 3,380 3,120 11 10 3.6 -7.7 8.7 9.4 0.9 0.8 3.9 3.5 10.3 8.7 1.0 0.8

G RO U N D V I EW
HDFC Limited NBFC 2,251 4,048 1,27,480 1,42,832 1,74,215 1,58,808 72,510 1,03,828 42 50 -17.4 17.9 53.4 45.3 4.5 3.8 23.2 25.5 14.0 11.5 1.9 1.7

Muthoot Finance NBFC 1,156 464 63,228 71,880 44,475 49,666 31,687 34,282 79 85 50.5 8.2 14.6 13.5 14.6 13.5 10.4 9.3 6.6 5.8 - -

47
 PhillipCapital India Coverage Universe: Valuation Summary
CMP Mkt Cap Net Sales (` mn) EBIDTA (` mn) PAT (` mn) EPS (`) EPS Growth (%) P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROCE (%)

Name of company Sector ` ` bn FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E

Shriram Transport Fina NBFC 975 247 79,972 82,347 62,336 64,102 25,018 22,199 110 88 -2.4 -20.5 8.8 11.1 1.2 1.2 4.0 3.8 14.8 11.4 - -

4 8 GROUN D VI EW
Cholamandalam Inves NBFC 352 288 38,202 42,149 25,267 27,883 10,960 12,105 13 15 -11.9 10.4 26.3 23.8 3.5 3.1 11.4 10.3 15.3 13.9 - -

LIC Housing Finance NBFC 322 162 48,215 50,673 42,217 44,619 24,018 30,356 48 60 -1.2 26.4 6.8 5.4 0.9 0.8 3.8 3.6 13.9 15.6 1.2 1.4

Mah & Mah Finance NBFC 159 196 51,130 52,201 33,982 36,578 9,064 9,133 7 7 -41.8 0.8 21.6 21.4 0.9 1.3 5.8 5.4 8.1 6.9 - -

Manappuram Finance NBFC 162 137 18,322 21,382 22,449 24,598 14,803 15,148 18 18 58.8 2.3 9.2 9.0 2.4 2.0 6.1 5.6 28.8 23.8 - -

Indiabulls Housing Fin NBFC 178 82 51,891 62,847 51,633 60,488 32,925 42,560 77 100 -19.5 29.3 2.3 1.8 0.4 0.4 1.6 1.4 19.0 22.1 2.4 2.9

Shriram City Union Fin NBFC 1,064 70 36,079 35,314 22,387 22,802 10,005 8,418 152 128 1.2 -15.9 7.0 8.3 1.0 0.9 3.1 3.1 14.7 11.2 - -

Repco Home Finance NBFC 241 15 4,924 4,608 4,196 3,829 2,804 2,026 45 32 19.5 -27.7 5.4 7.5 0.8 0.8 3.6 3.9 16.9 10.8 2.4 1.7

ICICI Lombard NBFC 1,353 615 94,035 99,308 20,241 22,152 11,937 15,061 26 33 13.8 26.2 51.5 40.8 - - 20.5 21.6 - -

HDFC AMC NBFC 2,428 517 21,434 21,673 17,034 17,765 12,624 13,416 59 63 36.0 6.3 40.9 38.5 - - - - - -

Nippon Life AMC NBFC 293 179 11,932 12,748 5,931 7,814 4,158 5,734 7 9 -14.6 37.9 43.1 31.3 - - - - - -

Magma Fincorp NBFC 45 12 12,398 11,579 6,099 5,642 810 872 3 3 -73.5 7.7 15.1 14.0 0.4 0.4 2.0 2.2 3.0 3.2 - -

Hindustan Zinc Metals 220 929 1,85,610 1,67,643 88,470 75,080 68,050 49,095 16 12 -14.5 -27.9 13.6 18.9 2.3 3.1 8.1 10.7 16.9 16.6 17.4 13.0

JSW Steel Metals 338 816 7,18,320 7,04,600 1,18,730 1,12,754 47,240 17,612 20 7 -37.2 -62.7 17.2 46.0 2.2 2.1 11.4 12.1 12.9 4.7 10.3 7.4

Vedanta Metals 113 420 8,44,470 7,46,278 2,06,870 1,42,717 1,07,220 7,409 29 2 59.0 -93.1 3.9 56.8 0.8 0.8 3.8 5.8 19.6 1.4 -3.9 1.6

Tata Steel Metals 543 622 13,98,167 12,30,372 1,74,631 1,43,401 64,716 -6,291 57 -5 -37.8 -109.7 9.6 -98.8 0.8 0.9 9.6 11.0 8.8 -0.9 5.1 3.8

Hindalco Metals 218 490 11,81,440 10,87,999 1,43,060 1,13,439 40,430 23,508 18 11 -26.4 -41.9 12.0 20.6 0.8 0.8 6.6 8.2 6.9 3.9 6.6 4.8

NMDC Metals 94 286 1,16,992 82,289 60,019 37,803 36,988 28,814 12 9 -20.2 -22.1 7.7 9.9 1.0 1.0 4.5 7.0 13.4 10.1 13.5 10.0

Jindal Steel & power Metals 242 247 3,69,175 3,59,752 78,539 72,352 2 -8,556 0 -8 -100.1 -28.9 0.8 0.8 7.7 7.9 0.0 -2.7 5.6 4.1

SAIL Metals 43 179 6,16,642 5,69,951 1,02,157 44,755 28,924 -14,126 7 -3 5.6 -148.8 6.2 -12.6 0.4 0.4 7.0 15.1 7.0 -3.5 6.8 2.5

NALCO Metals 37 68 84,718 77,021 4,892 3,280 1,382 256 1 0 -92.0 -81.5 49.3 266.4 0.7 0.7 9.9 15.2 1.4 0.3 1.2 0.3

Pennar Inds. Metals 19 3 21,066 16,530 1,691 877 537 -156 4 -1 -27.0 -129.6 5.1 -17.1 0.4 0.4 3.7 7.9 7.7 -2.3 12.0 3.3

Larsen & Toubro Cap Goods 1,126 1,581 14,54,524 14,30,627 1,63,290 1,54,817 95,490 69,296 68 49 2.6 -27.6 16.6 22.9 2.4 2.1 17.4 18.2 14.3 9.3 6.2 5.4

Siemens Cap Goods 1,399 498 1,36,838 96,085 15,510 8,145 11,859 6,008 33 17 41.4 -49.3 42.0 82.9 5.5 5.3 29.0 55.6 13.1 6.4 11.1 6.0

ABB India Cap Goods 1,073 227 73,151 55,468 5,312 1,911 3,752 1,466 18 7 64.6 -60.9 60.6 155.1 6.5 6.3 39.8 109.9 10.7 4.1 7.8 5.2

Bharat Electronics Cap Goods 106 258 1,29,211 1,34,814 27,301 25,513 17,938 16,582 7 7 -6.6 -7.6 14.4 15.6 2.6 2.4 8.9 9.7 18.1 15.4 16.4 14.0

1 - 30 November 2020
 PhillipCapital India Coverage Universe: Valuation Summary
CMP Mkt Cap Net Sales (` mn) EBIDTA (` mn) PAT (` mn) EPS (`) EPS Growth (%) P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROCE (%)

Name of company Sector ` ` bn FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E

1 - 30 November 2020
BHEL Cap Goods 31 109 2,14,861 2,15,697 -6,676 -2,298 -8,466 -6,137 -2 -2 -177.3 -27.5 -12.9 -17.8 0.4 0.4 -14.3 -38.1 -2.9 -2.1 -1.3 -0.8

Cummins India Cap Goods 512 142 51,577 47,387 5,863 5,833 6,153 5,896 23 21 -12.9 -6.3 22.6 24.1 3.4 3.3 24.3 24.0 14.7 13.5 13.1 11.9

Thermax Cap Goods 843 101 57,313 48,594 4,062 3,541 2,825 2,547 24 21 -12.9 -9.8 35.6 39.5 3.3 3.1 24.0 26.7 9.3 8.0 8.4 7.5

KEC International Cap Goods 350 90 1,19,654 1,15,185 11,190 10,499 5,057 4,644 20 18 36.2 -8.2 17.8 19.4 3.2 2.8 10.0 10.9 18.1 14.3 15.2 11.2

Kalpataru power Cap Goods 299 46 1,26,760 1,14,180 15,630 13,234 4,781 3,992 31 27 7.4 -12.4 9.7 11.0 1.4 1.1 5.2 5.3 14.2 10.0 11.4 9.2

Engineers India Cap Goods 73 46 31,064 27,615 4,044 3,097 4,892 3,815 8 6 30.6 -22.0 9.5 12.2 2.0 1.9 4.7 6.4 20.9 15.4 21.3 17.9

Bharat Dynamics Cap Goods 309 57 30,952 25,659 7,276 4,981 5,349 3,958 29 22 26.7 -26.0 10.6 14.3 2.2 2.0 6.9 6.9 20.5 13.9 19.4 13.2

Cochin Shipyard Cap Goods 355 47 34,225 31,688 7,093 6,114 6,377 5,402 48 41 32.5 -15.3 7.3 8.6 1.3 1.1 3.6 4.8 17.1 13.3 16.7 13.2

GE T&D Cap Goods 101 26 31,587 29,404 -863 684 -1,375 -454 -5 -2 -158.7 -67.0 -18.8 -56.9 2.5 2.6 -34.9 41.9 -13.1 -4.6 -6.8 -0.2

Praj Inds. Cap Goods 87 16 11,024 10,495 781 646 668 495 4 3 13.0 -25.9 23.9 32.2 2.2 2.2 20.0 24.1 9.3 6.7 9.2 6.9

VA Tech Wabag Cap Goods 186 12 25,572 21,286 1,906 1,164 716 342 13 6 -22.2 -52.2 14.2 29.8 0.9 0.8 7.0 9.4 6.1 2.8 8.3 3.6

Ultratech Cement Cement 4,890 1,411 4,21,248 4,11,219 92,836 83,883 58,105 31,649 201 110 127.4 -45.5 24.3 44.6 3.6 3.4 16.9 18.2 14.9 7.6 11.8 6.4

Shree Cement Cement 24,465 883 1,28,684 1,27,320 37,591 29,997 15,441 14,481 428 401 46.9 -6.2 57.2 61.0 6.7 6.1 23.5 27.7 11.7 10.1 12.1 9.4

Ambuja Cement Cement 258 513 2,71,036 2,31,789 45,970 33,615 20,950 12,519 11 6 -10.1 -40.2 24.5 40.9 2.1 2.0 8.8 13.4 8.7 5.0 9.6 6.0

ACC Cement 1,726 324 1,53,431 1,27,998 20,983 17,511 13,775 10,033 73 53 -9.4 -27.2 23.5 32.3 2.8 2.6 12.8 15.8 11.9 8.1 12.0 7.8

Dalmia Bharat Cement 1,031 193 96,740 97,221 21,060 17,360 2,240 801 12 4 -37.8 -64.3 88.7 248.3 1.9 1.9 10.5 13.0 2.1 0.8 3.1 2.3

JK Cement Cement 1,939 150 58,016 51,516 12,134 9,751 4,834 2,074 63 27 83.4 -57.1 31.0 72.3 5.0 4.7 14.1 17.5 16.1 6.5 10.4 5.9

HeidelbergCement In Cement 202 46 21,576 19,241 5,157 3,991 2,680 1,969 12 9 21.4 -26.5 17.0 23.2 3.5 3.0 8.5 10.7 20.4 13.0 15.1 10.6

Star Cement Cement 89 37 18,439 19,545 3,951 3,692 2,855 2,051 7 5 -2.9 -28.2 12.8 17.9 2.0 1.8 8.9 9.5 15.4 10.2 14.7 10.1

JK Lakshmi Cement Cement 347 41 43,641 37,346 7,980 6,524 3,064 2,132 26 18 538.3 -30.4 13.3 19.1 2.4 2.2 6.8 8.2 18.2 11.4 14.0 10.3

India Cement Cement 156 48 51,864 52,992 5,948 5,864 639 189 2 1 234.8 -70.5 75.5 255.4 0.9 0.9 13.2 13.8 1.2 0.4 2.9 2.3

Sanghi Cement Cement 34 8 8,875 8,799 1,929 1,445 654 -96 3 -0 24.3 -114.6 13.0 -88.7 0.5 0.5 11.3 15.4 3.8 -0.6 4.4 1.4

Mangalam Cement Cement 216 6 12,283 10,257 1,994 1,505 759 540 28 20 -879.5 -28.8 7.6 10.7 1.0 0.9 4.4 6.1 13.2 8.2 10.7 7.3

Tata Consultancy IT Services 2,724 10,222 15,69,490 15,73,898 4,21,100 4,03,635 3,23,400 3,10,299 86 83 2.7 -4.1 31.6 32.9 11.8 10.8 24.1 25.1 37.5 32.9 34.3 31.4

G RO U N D V I EW
Infosys Technologies IT Services 1,140 4,855 9,07,910 9,61,464 2,22,680 2,42,035 1,67,640 1,71,454 39 40 11.5 2.3 28.9 28.2 7.3 6.8 20.6 18.8 25.5 24.2 25.5 25.0

HCL Technologies IT Services 839 2,277 7,06,780 7,26,232 1,66,930 1,80,126 1,10,940 1,12,382 41 41 9.3 1.3 20.5 20.3 4.4 3.7 13.8 12.7 21.5 18.2 20.6 17.4

49
 PhillipCapital India Coverage Universe: Valuation Summary
CMP Mkt Cap Net Sales (` mn) EBIDTA (` mn) PAT (` mn) EPS (`) EPS Growth (%) P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROCE (%)

Name of company Sector ` ` bn FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E

Wipro IT Services 356 2,034 6,10,232 5,87,287 1,26,592 1,27,490 97,234 94,277 17 17 14.0 -3.0 20.8 21.5 3.6 3.3 15.7 15.8 17.4 15.1 16.0 15.0

5 0 GROUN D VI EW
Tech Mahindra IT Services 866 837 3,68,677 3,64,030 57,261 54,086 40,330 36,303 46 42 -4.6 -10.0 18.7 20.8 3.5 3.1 14.6 15.3 18.5 15.1 12.7 10.9

L&T Infotech IT Services 3,264 570 1,08,786 1,17,947 20,292 22,909 15,199 16,553 87 95 0.3 8.9 37.4 34.3 10.5 8.6 27.8 24.6 28.1 24.9 25.8 22.9

L&T Technology Servi IT Services 1,688 177 56,192 53,784 11,105 9,418 8,224 6,471 79 62 6.5 -21.3 21.5 27.3 6.4 5.4 16.7 19.0 29.6 19.8 30.4 21.0

Mindtree IT Services 1,396 230 77,643 76,887 10,623 12,471 6,309 7,818 38 48 -16.3 23.9 36.3 29.3 7.2 6.0 21.1 18.0 20.0 20.5 18.5 19.7

NIIT Technologies IT Services 2,425 147 41,839 45,994 7,198 7,688 4,509 4,718 72 78 9.4 7.6 33.5 31.1 6.3 6.7 18.6 17.8 18.8 21.4 19.3 18.9

Persistent Systems IT Services 1,156 88 35,658 39,515 4,930 5,631 3,403 3,732 45 49 0.2 9.7 26.0 23.7 3.7 3.3 17.0 14.2 14.3 13.8 13.3 13.7

Cyient Limited IT Services 485 53 44,275 39,301 5,959 4,766 3,740 2,864 34 26 -23.2 -23.4 14.3 18.6 2.1 1.9 8.4 9.8 14.6 10.3 12.3 9.8

Hexaware Technologies IT Services 471 141 62,137 68,859 9,991 11,115 6,302 7,022 21 23 -4.4 11.4 22.3 20.0 4.3 3.9 13.8 12.1 19.4 19.5 18.8 18.2

Mphasis Ltd IT Services 1,315 246 88,436 92,608 16,505 16,863 11,849 11,665 63 62 13.6 -1.5 20.9 21.2 4.2 3.9 13.7 13.2 20.3 18.4 20.4 17.4

Sun Pharma Pharma 513 1,230 3,23,252 3,50,583 70,054 82,666 40,711 52,282 17 22 6.7 28.4 30.2 23.5 2.7 2.5 17.8 14.5 8.9 10.5 7.7 8.9

Dr Reddy's Labs. Pharma 4,829 803 1,74,600 1,92,812 41,732 43,383 32,765 23,527 192 138 74.3 -28.2 25.1 35.0 5.3 4.7 19.7 18.6 23.4 13.5 16.6 10.2

Divi's Laboratories Pharma 3,546 941 53,944 68,305 18,222 26,571 12,944 18,354 49 69 -2.1 41.8 72.7 51.3 12.9 10.7 51.6 35.3 17.7 20.8 - -

Cipla Pharma 746 602 1,71,320 1,93,554 32,060 41,033 15,465 21,639 19 27 6.3 39.9 38.7 27.7 3.8 3.5 19.3 15.1 9.8 12.5 - -

Lupin Pharma 884 401 1,51,428 1,61,648 23,548 26,051 9,586 10,763 21 24 22.8 12.3 41.8 37.2 3.2 3.0 17.8 16.0 -3.2 8.0 - -

Biocon Pharma 420 504 62,115 77,961 16,031 20,685 7,482 9,930 6 8 -47.1 32.7 67.4 50.8 7.5 6.6 32.5 25.4 11.6 13.1 9.8 11.1

Aurobindo Pharma Pharma 849 497 2,30,985 2,56,805 48,643 55,727 28,808 33,856 49 58 16.2 17.5 17.1 14.6 2.9 2.5 10.8 9.4 16.9 17.0 17.5 18.1

Cadila Healthcare Pharma 433 443 1,38,121 1,54,290 27,707 34,691 14,873 19,771 15 19 -17.0 32.9 29.8 22.4 4.3 3.9 18.5 14.4 10.6 16.9 6.5 10.9

Ipca Laboratories Pharma 2,198 279 45,886 55,155 9,218 15,160 6,036 10,893 48 86 31.0 80.5 46.0 25.5 7.7 6.0 30.6 18.2 16.6 23.7 14.8 22.7

Glenmark Pharma Pharma 480 135 1,03,972 1,16,210 16,981 19,440 7,760 8,303 28 29 18.3 7.0 17.4 16.3 2.0 1.8 9.5 8.2 11.6 11.1 8.6 8.8

Adani Ports & SEZ Infrastructure 375 762 1,18,731 1,26,711 75,654 82,630 53,106 46,239 26 23 20.5 -12.9 14.3 16.5 3.0 2.5 13.0 12.8 20.7 15.3 9.2 9.4

PNC Infratech Infrastructure 173 44 48,779 46,340 7,643 6,256 4,603 3,321 18 13 41.7 -27.9 9.6 13.4 1.7 1.5 5.3 6.8 19.7 12.3 19.7 13.0

NCC Infrastructure 44 27 82,188 76,024 10,302 9,123 4,049 3,175 7 5 -33.1 -21.6 6.5 8.3 0.5 0.5 4.1 4.6 7.9 6.0 10.1 8.4

KNR Construction Infrastructure 286 40 22,442 24,687 4,871 4,690 2,360 2,380 17 17 -11.2 0.8 17.0 16.9 2.5 2.2 8.6 8.3 15.5 13.7 14.4 13.2

Ashoka Buildcon Infrastructure 74 21 39,374 40,162 5,856 5,221 3,871 3,683 14 13 19.2 -4.9 5.3 5.6 0.8 0.7 3.7 4.5 14.9 12.5 14.6 13.1

IRB Infrastructure Infrastructure 120 42 68,522 50,361 29,714 22,707 7,209 -1,055 21 -3 -15.2 -114.6 5.9 -40.0 0.6 0.6 3.2 7.5 10.8 -1.6 5.1 2.6

1 - 30 November 2020
 PhillipCapital India Coverage Universe: Valuation Summary
CMP Mkt Cap Net Sales (` mn) EBIDTA (` mn) PAT (` mn) EPS (`) EPS Growth (%) P/E (x) P/B (x) EV/EBITDA (x) ROE (%) ROCE (%)

Name of company Sector ` ` bn FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E FY20E FY21E

1 - 30 November 2020
Sadbhav Engineering Infrastructure 50 9 22,517 21,391 2,795 2,353 681 237 4 1 -63.4 -71.3 12.6 44.0 0.4 0.5 7.0 8.4 3.2 1.1 4.2 2.7

Ahluwalia Contracts Infrastructure 244 16 18,849 16,964 1,530 1,866 644 954 10 14 -45.1 48.1 25.4 17.1 2.0 1.8 9.4 7.4 8.4 11.2 10.4 13.1

ITD Cementation Infrastructure 54 9 28,607 25,174 2,956 1,762 438 -309 3 -2 -47.4 -170.6 21.1 -29.8 0.9 0.9 3.8 6.9 4.2 -3.0 8.0 3.3

Container Corp Of India Logistics 412 251 64,737 58,879 16,748 10,800 10,085 6,326 17 10 -17.0 -37.3 24.9 39.7 2.5 2.4 13.9 21.4 10.0 6.1 3.8 6.3

VRL Logistics Logistics 176 16 21,185 16,408 2,983 2,244 901 270 10 3 -2.0 -70.1 17.6 58.9 2.5 2.4 6.8 8.7 14.4 4.1 12.4 5.6

Allcargo Logistics Logistics 123 30 73,462 97,118 5,035 6,600 1,683 2,004 7 8 -30.4 19.1 18.0 15.1 1.4 1.3 8.0 6.0 8.0 8.9 7.2 7.8

Gateway Distriparks Logistics 103 13 12,920 10,667 3,134 2,312 1,004 237 9 2 18.5 -79.4 11.1 54.2 0.9 0.9 6.5 7.8 7.6 1.6 9.1 4.8

Aegis Logistics Logistics 223 77 71,833 38,745 5,153 5,095 3,384 2,880 10 8 52.8 -14.9 23.3 27.4 4.8 4.4 15.6 16.1 20.5 16.0 9.0 13.0

Mahindra Logistics Ltd Logistics 398 29 34,711 30,645 1,582 1,459 551 421 8 6 -35.7 -23.6 51.4 67.3 5.3 5.0 18.3 19.8 10.3 7.5 11.3 8.5

Transport Corp of India Logistics 251 19 27,178 24,299 2,405 2,126 1,531 1,153 20 15 4.7 -24.6 12.6 16.7 1.9 1.7 9.7 10.9 15.0 10.3 10.9 8.7

Navkar Logistics 27 4 5,671 5,686 1,663 1,183 452 123 3 1 -14.5 -72.7 8.9 32.8 0.2 0.2 5.7 7.7 2.5 0.7 3.3 1.9

Godrej Properties Real Estate 1,088 274 17,202 11,665 1,671 3,223 2,088 1,745 9 8 -17.5 -16.4 119.5 143.0 9.3 8.7 185.3 102.4 7.8 6.1 18.8 17.2

Oberoi Realty Real Estate 460 167 21,753 19,323 10,697 8,829 7,608 5,545 21 15 -6.1 -27.1 22.0 30.1 1.9 1.8 16.2 20.0 8.8 5.9 8.4 8.2

Phoenix Milla Real Estate 655 112 19,411 10,241 9,672 6,180 4,974 2,478 32 16 -19.5 -50.2 20.2 40.5 2.7 2.7 15.7 23.6 13.4 6.8 7.7 4.2

Shobha Real Estate 307 29 35,664 32,249 6,771 5,785 2,405 1,501 25 16 -20.1 -37.6 12.3 19.7 1.2 1.2 8.4 9.7 9.9 5.9 22.4 17.4

UPL Agri Input 426 326 3,57,560 3,89,874 71,040 81,094 25,710 30,385 34 40 -22.1 18.2 12.7 10.7 1.7 1.5 7.7 6.2 12.6 12.6 6.9 9.0

PI Industries Agri Input 2,422 367 33,054 41,732 7,178 8,971 4,566 5,927 33 39 11.3 18.1 73.2 62.0 12.8 7.1 51.0 40.9 17.4 11.5 17.3 14.5

Coromandel Inter Agri Input 786 231 1,31,367 1,42,634 18,532 19,905 11,872 12,646 41 43 32.8 6.5 19.4 18.2 5.3 4.2 13.3 12.1 27.5 23.2 39.0 34.4

Chambal Fertiliser Agri Input 186 77 1,22,060 1,21,431 19,644 20,104 11,837 10,762 28 26 47.7 -9.1 6.5 7.2 2.2 1.8 8.7 7.7 33.4 24.9 24.0 23.5

SRF Sp Chemicals 5,159 306 72,094 74,930 14,584 18,732 8,414 10,024 144 166 26.4 15.6 35.9 31.0 6.1 4.7 23.6 17.9 18.6 15.2 11.9 11.2

Aarti Industries Sp Chemicals 1,136 198 46,207 51,621 9,773 10,427 5,361 5,325 31 31 -1.2 -0.7 36.9 37.1 6.6 6.0 22.1 21.2 18.4 16.4 - -

Atul Sp Chemicals 6,395 190 40,931 37,929 9,020 9,520 6,445 6,503 217 219 52.9 0.9 29.4 29.2 6.0 5.2 21.1 19.5 21.1 17.8 - -

Vinati Organics Sp Chemicals 1,227 126 10,289 9,853 4,139 3,863 3,373 2,931 32 29 -36.3 -12.2 37.8 43.0 9.8 8.6 30.3 32.6 25.9 19.9 - -

Camlin Fine Sciences Sp Chemicals 98 12 10,491 12,288 1,307 1,966 477 908 4 7 338.7 90.4 24.9 13.1 2.9 2.3 12.6 8.4 7.4 19.0 - -

G RO U N D V I EW
Camlin Fine Sciences Sp Chemicals 71 9 10.2 13.0 1.3 2.1 0.5 1.0 4 8 343.2 99.5 17.8 8.9 2.1 1.7 9.3 5.6 14.0 22.0 - -

Source: PhillipCapital India Research Estimates

51
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5 2 GROUN D VI EW 1 - 30 November 2020