Cyient Limited (532175) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Cyient Limited Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Krishna Bodanapu, Executive Vice Chairman and Managing Director. Thank you, and over to you, sir.

Thank you very much. Good afternoon, everyone. Thank you for joining this call on a short notice. As you may have seen in the press release yesterday, the Cyient Board approved and made a -- set up appointments to the management team, which I think are quite important to support our growth trajectory and also to enable the opportunities that we are seeing going forward. I wanted to take a moment to just introduce some of the members of the team given that you'll also interact with many of them quite closely and also to just lay out how the organization will function going forward. Firstly, as you know, we also have -- we are also in the process of launching an IPO for our business, Cyient DLM, which is the manufacturing part of Cyient. So to facilitate that, the first decision that was made late last year was to ensure that we had independent management teams running both organizations, like the Cyient DLM and the Cyient. While the IPO might take another few months to finally come to bear, we've already started the process of running both businesses independently as of the 1st of April and have an independent management structure. If I may just take a moment on that. Antony Montalbano has been appointed as the CEO by the Cyient DLM Board and DLM and management structure that is running the Cyient DLM business. But more importantly, and here are really the context for this call for the Cyient business, which is a business that will primarily focus on technology services. Firstly, I'm delighted that the Board has appointed Mr. Karthik Natarajan as the CEO. He will continue in this role as we -- as an Executive Director of the company. As you all know, Karthik has done a fantastic job over the last few years since he's joined us as the Chief Operating Officer of Cyient. Obviously, it was probably the 3 most interesting years of our existence with, first, what happened with the pandemic but also, more importantly, what happened with the recovery, not just with the scale and the pace of recovery but also a fundamental transition in the -- in how our customers are looking at us and what our customers expect out of us. So therefore, I think it was a unique opportunity for all -- unique [indiscernible] opportunity for us. And I think this is a very well deserved recognition on behalf of the Board that Karthik be appointed as the Chief Executive Officer of Cyient effective immediately. Also, as you know, Mr. Ajay Aggarwal, who's been our CFO for the last 12 years, will retire on the 20th of April. I will use the investor call on that day to talk about some of Ajay's achievements in Cyient, which are nontrivial and really have put us in a significant path of how finance can support business, but I'll pass that [ according ] to the next call and state that I'm also extremely delighted that the Board has appointed Mr. Prabhakar Atla as the CFO for Cyient, and a title will be created to CFO-designate till Mr. Aggarwal retires and at which point he will become the CFO. Prabhakar has been with us for 17 years. Many of you would have interacted with him in his role as a business leader. And Prabhakar most recently ran some of the largest business units for Cyient, which include the aerospace and rail business unit and also the communications business unit. And I also think that it's a very unique opportunity for us to appoint a business leader as the CFO, which also happens because, again, compliments to Ajay, he has built a fantastic finance organization that does very, very well on finance, accounting, governance, et cetera. So we can really focus on how finance can support and accelerate the business and the transformation of the business. With -- having said that, I think having Prabhakar will also enable us to engage a lot better with the investor community with business details in addition to, of course, financial details, which we provide very well. So I'm delighted that Prabhakar will take over this role on April 20 upon the conclusion of the Board meeting. Also, Mr. NJ Joseph, who's been the Chief Strategy Officer of the company, retired on the 31st of March or at the end of business on 31st of March. Joseph has also been with us for a long time. For almost 25 years, Joseph has been with Cyient in various roles. So it was great that he's completed his career with Cyient. And I'm also very happy to report that Ramya Mohan has joined us and will head strategy for Cyient. We'll also introduce Ramya to you in future meetings, calls or, of course, in person, and I think he'll actually be at the Investor Day as well. So again, I think I just want to reiterate that all these changes are another way for us to support the acceleration of the business, also the acceleration of both businesses to make sure that we have the right leadership, right focus and right market view on the engineering and technology business and also on the manufacturing business. I also will use this opportunity to say, I'm not going anywhere. I'll still continue in my role. So I will be available for whatever you need from me. And in that context, I hope that I would also be able to interact a bit more with the investor community, given that a lot of the operational responsibilities will be transitioned to Karthik and Anthony, but again, I don't want to say anything beyond that because as far as I'm concerned, nothing changed. So I will just be available as I have, and I will look [indiscernible] in the last 8 years as the CEO of Cyient. With that, I will hand it over to Karthik to say a few words on the transition.

Thanks, Krishna. I really want to start off by saying that I'm really excited to be the CEO of Cyient, and thanks to the Board members of Cyient, our Chairman, Mr. Murugappan; Mr. Reddy, Founding Chairman; and Krishna Bodanapu for the confidence posted in me. I would also like to take a moment to express my gratitude to the Board for their support and confidence, and it's a privilege and honor for me to serve this role and really committed to drive growth and value for our shareholders. And continue to support us, and I'm personally excited about the technology future of this company. And the engineering world is undergoing rapid transformation driven by the rise of autonomy, the digital enterprise and the decarbonization. And please rest assured saying that we will try to build a predictable, consistent performance. That's been one of the priorities that you have been seeking. And I'll work closely with Prabhakar and making sure saying that we're able to build the business, which is more predictable, and be able to deliver on the promises that we make. And we definitely want to set aspiring goals over the next 3 years. We'll talk about more as part of what we will deliver in our results in the next 3 weeks and really look forward to meet some of you during the next available opportunity.

Thank you very much, Karthik. With that, I will open it up for any questions. I'll say in the investor call, I will request Ajay and Prabhakar to speak now that it is today -- it will be transition where we have -- the common transition will only happen [indiscernible] at the end of the Board meeting. So with that, I will open it up if there's any questions or comments or clarifications.

[Operator Instructions] The first question is from the line of Shradha from Asian Market Securities.

Karthik, congratulations, and Ajay, thanks for the valuable contribution you've given to us over the last many years. One question to you, Karthik, is, do you see any significant changes that you would bring in after the celebration or you would broadly want to continue with what has been laid out for the past few years?

I think we are really super excited about the leadership team that we have been able to put together. I think it's a combination of what we have proved over many years, along with some of the acquisitions that we made in the last 18 months and plus some of the leaders that they have onboarded. I think we believe we have a very strong leadership team I'm personally excited about. And I genuinely believe that this team can take on bigger challenges and be able to benchmark ourselves to be the best in class. So I'm really happy to share that, I think, we'll have a team that we make continuity towards what we have started off over the last 3 years. And we also made changes over the period of a couple of years. And we are really excited about the current bench that we have, and we will be able to really take on the challenges that are ahead of us.

Good. And just one more question. So Krishna, so are we still looking at the role of CEO? Or do you think that role will be done away with now?

We will let the organization evolve a little bit. Karthik is working on a structure that will be most appropriate for us. Again, there's a bit of change in how the structure will be, so it's still an internal communication. So we might not necessarily have a CEO role in the old form like Karthik did. But I think we have a very good structure in place to support Karthik.

Okay. Great. And all the best for the new Cyient.

Next question is from the line of Sandeep Shah from Equirus Securities.

I joined slightly late, so pardon me if I'm asking this question again. Congratulations to all the leaders for their promotion and the new position. Just one question, Mr. Prabhakar Atla, who has been -- handling the responsibility as a leader for a significant portion of the business. Who will replace them as a whole? And do we actually believe that this track record, which has been strong would be missed by now shifting the responsibility from a business side to finance side as a whole? Just a thought.

I think, obviously, you have to allow us that rule that we'll talk through all those things, and we're -- it is going to be quite important to maintain the momentum. So I'm very confident that we have the right leaders in place to continue that momentum. We wouldn't have taken these decisions if we thought that any of the momentum would be compromised in any manner. We are -- the one announcement that we did make internally, Mr. Andy Smith will take over Prabhakar's role in aerospace and rail. Prabhakar held 2 businesses, aerospace and rail and communications. Andy Smith will take over Prabhakar's role. And Andy has also been with us for a long time, almost 10 years, running various businesses, largely, the semiconductor business. So we have a very seasoned executive whose background was actually, first, aerospace with the companies like Rolls-Royce and then rail with the companies like Bombardier. So Andy will be a fantastic leader to run that business. We are defining the structure for communications. And again, we have some very, very strong leadership there with a number of executives both will come through the Cyient system but also through the acquisition of Celfinet a few months ago. So I'd say, obviously, the most important thing now is to sustain the momentum. And I'm very confident with the right leaders, both at the top level but also with people running the business.

Okay. Okay. And all the best to Mr. Ajay, sir, as well.

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Krishna Bodanapu for closing comments.

Thank you very much. And again, thanks everyone for speaking or joining the call this afternoon. It's a big change for us, but I think we've done a lot of the work on the leadership team. We have a set of fantastic leaders that you will also interact with over the next few months and quarters, some through, of course, the investor calls but also through an Investor Day, which we will again do later this year. Of course, you will see and meet Prabhakar and Karthik a lot more often. But I also wanted to just reiterate that I'm available for anything you need, so that does not change. So thank you for all the support, and we will get back to the business of running the business, and I hope to speak to all of you soon in about 2 weeks with our results and the way forward for next year. Thank you very much.

Thank you. Ladies and gentlemen, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.