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R Systems International Ltd

BSE: 532735 | NSE: RSYSTEMS ISIN: INE411H01032
Market Cap: [Rs.Cr.] 895.07 Face Value: [Rs.] 1
Industry: Computers - Software - Medium / Small

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Director's Report
DIRECTORS

Dear Shareholders, Your directors take great pleasure in presenting the Twenty First Annual Report on the business and operations of R Systems International Limited ("R Systems" or the "Company") together with the audited statements of accounts for the year ended December 31, 2014.

1. Financial Results a. Standalone financial results of R Systems

(Rs. in Millions)

Particulars Financial Year ended
31.12.2014 31.12.2013
Total income 3,045.65 2,739.72
Profit before depreciation, 685.01 589.30
exceptional items and tax
Less : Depreciation and 67.24 47.81
amortisation
Add : Exceptional items* 393.13 -
Profit before tax 1,010.90 541.49
Less : Current tax (net of MAT 247.53 188.29
credit)
Less : Deferred tax change/(credit) 13.08 (12.32)
Profit after tax 750.29 365.52
Surplus in the statement of profit and loss
Balance as per last financial 633.83 609.70
statements
Add: Profit for the current year 750.29 365.52
Less: Appropriations
Proposed dividend(refer note below) 121.76 120.70
Tax on proposed dividend (refer note below) 24.33 21.24
Interim Dividend 624.33 139.24
Tax on Interim Dividend 119.29 23.66
Transfer to General Reserve - 36.55
Total Appropriation 889.71 341.39
Net Surplus in the statement of profit and loss 494.41 633.83

 

* Exceptional Items (Rs. in Millions)
Particulars Financial Year ended
31.12.2014 31.12.2013
Profit on buy back of subsidiary shares 77.79 -
Profit on sale of subsidiaries 240.69 -
Provision for diminution in the value of investment written back 74.65 -
Total 393.13 -

The Company has issued 712,600 equity shares pursuant to exercise of employee stock options under the R Systems International Limited Employee Stock Option Scheme 2007 up to book closure date for distribution of dividend for the year ended December 31, 2013 and accordingly increased the appropriation in the current year by Rs. 0.68 million and Rs. 0.12 million as dividend and tax on dividend respectively.

b. Consolidated financial results of R Systems and its subsidiaries

(Rs. in Millions)

Particulars Financial Year ended
31.12.2014 31.12.2013
Total income 6,575.68 6,007.69
Profit before depreciation, 986.55 819.96
exceptional items and tax
Less : Depreciation and 112.45 101.71
amortisation
Add : Exceptional items* 250.11 -
Profit before tax 1,124.21 718.25
Less : Current tax (net of MAT 325.29 192.50
credit)
Less : Deferred tax change/(credit) 17.58 (1.23)
Profit after tax 781.34 526.99
Surplus in the statement of profit and loss
Balance as per last financial statements 767.74 582.14
Add: Profit for the current year 781.34 526.99
Less: Appropriations
Proposed dividend 121.76 120.70
Tax on proposed dividend 24.33 21.24
Interim Dividend 624.33 139.24
Tax on Interim Dividend 119.29 23.66
Transfer to General Reserve - 36.55
Total Appropriations 889.71 341.39
Net Surplus in the statement of profit and loss 659.36 767.74

Previous Year figures have been regrouped / recasted, wherever necessary.

* Exceptional Items (Rs. in Millions)

Particulars Financial Year ended
31.12.2014 31.12.2013
Currency translation reserve released on buy back of subsidiary shares 26.09 -
Profit on sale of subsidiaries 224.02 -
Total 250.11 -

2. Results of Operations Standalone Accounts

• Total income during the year 2014 increased to Rs. 3,045.65 million as against Rs. 2,739.72 million during the year 2013, a growth of 11.17%.

• Profit after tax was Rs. 750.29 million during the year 2014 as compared to Rs. 365.52 million during 2013, a growth of 105.27%.

• Basic earnings per share (of face value of Re. 1/- each) was Rs. 5.90 for the year 2014 as compared to Rs. 2.90 for the year 2013, a growth of 103.45%.

Consolidated Accounts

• Consolidated total income during the year 2014 increased to Rs. 6,575.68 million as against Rs. 6,007.69 million during the year 2013, a growth of 9.45%.

• Profit after taxes was Rs. 781.34 million during the year 2014 as compared to Rs. 526.99 million during 2013, a growth of 48.27%.

• Basic earnings per share (of face value of Re. 1/- each) were Rs. 6.14 for the year 2014 as compared to Rs. 4.18 for the year 2013, a growth of 46.89%.

3. Appropriations and Reserves Dividend

During the year 2014, the Board declared four interim dividends namely, first interim dividend of Re. 0.95 per equity share of Re. 1/- each at its meeting held on June 03, 2014, second interim dividend of Re. 0.50 per equity share of Re 1/-each at its meeting held on July 26, 2014, third interim dividend of Re. 0.90 per equity share of Re. 1/- each at its meeting held on October 29, 2014 and fourth interim(Special) dividend of Rs. 2.55 per equity share of Re. 1/- each at its meeting held on December 20, 2014.

Taking into consideration the operating profits for the year 2014, the Board of Directors (the "Board") is pleased to recommend a final dividend of Re. 0.95 per equity share of Re. 1/- each, being 95% on the par value of Re. 1/- per share, to be appropriated from the available profits of the Company for the financial year 2014 subject to the approval of the shareholders at the ensuing Annual General Meeting. Total dividend including four interim dividends already paid for the year 2014 comes to Rs. 5.85 per equity share of Re. 1/- each i.e. 585%, as compared to total dividend including interim dividend paid for the year 2013 at Rs. 2.05 per equity shares of Re. 1/- each i.e. 205%.

The aforesaid final dividend for the year 2014 as recommended by the Board, if approved at the ensuing Annual General Meeting, will be paid to all the equity shareholders whose names appear in the Register of Members of the Company as of the opening business hours on June 05, 2015 after giving effect to all valid share transfers in physical form which would be received by the Company’s registrar and share transfer agent M/s Link Intime India Private Limited up to the end of business hours on June 04, 2015 and to those whose names appear as beneficial owners in the records of National Securities Depository Limited ("NSDL") and Central Depository Services (India) Limited ("CDSL") as of the said date.

The register of members and share transfer books shall remain closed from June 05, 2015 to June 09, 2015, both days inclusive.

Transfer to Reserves

It is proposed not to transfer any amount to General Reserve in respect to dividend declared after April 01, 2014 in pursuance of the Section 123 of the Companies Act, 2013 and Rules made thereunder.

4. Business

R Systems is a leading provider of outsourced product development services, business process outsource services and also offers own product suite in BFSI, Manufacturing & Logistic verticals. R Systems diversi_ed offering includes:

Services Group

Under IPLM Services, R Systems delivers solutions and services in the area of Information Technology and Information Technology enabled services. The IT services cover application development, systems integration and support and maintenance of applications.

Under the ITES we cover managed services, BPO services covering both technical support for IT and Hi-Tech electronic gadgets, high-end Quality Process Management and Revenue and Claims Management using our global delivery model.

Products Group

R Systems products group consists of two units. Indus which address the retail lending, telecom and insurance industry and ECnet which addresses supply chain, warehousing and inventory management.

Indus offerings include an integrated enterprise muti-portfolio lending suite for banking and financial services in the Retail, Corporate and SME sectors, credit management and revenue collection for telecom companies, iPerSyst for insurance companies which helps in timely policy renewal and customer retention along with other IT services to banking and financial clients.

ECnet Supply Chain products provide solutions for holistic management of the complex interaction between an organisation and its trading partners. The integrated solution aims to reduce all supply chain costs through improved collaboration and optimisation. The solutions are robust and scalable and give measurable ROI to clients within one year. Further, ECnet also operates as a channel partners for reselling and implementing several ERP products of one of the largest business software company to serve customers in a key customer segment: Small- to medium-sized businesses. These products present an opportunity to cross and up sell these solutions since these are adjunct to ECnet’s own product offerings.

R Systems is focused on key business verticals – Telecom and Digital Media, Banking and Finance, Healthcare Services, Manufacturing and Logistics, and Government Services and invested in building capabilities and domain knowledge around these focused verticals. This has helped in providing innovative and cost effcient solutions and services under chosen verticals.

Customers and Delivery Centres

R Systems rapidly growing customer list includes a variety of Fortune 1000, government and mid-sized organizations across a wide range of industry verticals including Banking and Finance, High Technology, Independent Software Vendors, Telecom and Digital Media, Government, HealthCare, Manufacturing and Logistic Industries. R Systems maintains eleven development and service centres and using our global delivery model, we serve customers in the US, Europe, South America, the Far East, the Middle East, India and Africa.

There were no changes in the nature of the Company’s business and generally in the classes of business in which the Company has an interest and in the business carried on by the subsidiaries during the year under review. For details of Company’s subsidiaries please refer note number 14 relating to subsidiaries.

5. Quality

R Systems has continuously invested in processes, people, training, information systems, quality standards, frameworks, tools and methodologies to mitigate the risks associated with execution of projects. Adoption of quality models and practices such as the Capability Maturity Model Integrated CMMi and Six Sigma practices for processes have ensured that risks are identified and mitigated at various levels in the planning and execution process. R Systems journey for various quality certifications / standards for the development and service centres in India is provided below:

In the year 2014, Noida IT Center of the Company was reappraised for SEI CMMI Level 5 ver 1.3. In the year 2013, Noida BPO center was certified as PCI-DSS ver 2.0 compliant for the Call Analytic Services provided to one of the major client.

As of the date of this report, Noida IT centre is SEI-CMMi level 5, PCMM Level 5, ISO 9001 : 2008 and ISO 27001 : 2005 certified; Noida BPO centre is PCMM Level 5, ISO 9001 : 2008 and ISO 27001 : 2005 certified. Pune and Chennai development centres are SEI-CMM Level 5, ISO 9001 : 2008 and ISO 27001 : 2005 certified. The continuing compliance with these standards demonstrates the rigor of R Systems processes and difierentiates us to keep our competitive edge in service and product offerings.

To maintain and strengthen competitive strengths, R Systems continues to make investments in its unique and proprietary with best practices, tools and methodologies for flawless execution and consistent delivery of high quality software. The pSuite framework offiers services along the entire software lifecycle that includes technology consulting, architecture, design and development, professional services, testing, maintenance, customer care and technical support. R Systems expects that its technology focus, investment in processes, talent and methodologies will enable it to distinguish itself from competition as it seeks to provide services to technology / product companies.

6. Acquisition

Subsequent to the closing of the year 2014, the Board of Directors at its meeting held on April 23, 2015 has approved the acquisition of a Singapore based ERP company having operations mainly in South East Asia through wholly owned subsidiary namely R Systems (Singapore) Pte. Limited, for a maximum consideration of SGD 7.50 million including the earn-outs over the next three years on ful_llment of certain conditions. The above said approval is subject to execution of definitive agreements and receipt of necessary corporate and regulatory approval.

7. Directors

During the year under review, the following changes took place in the office of directors of the Company.

Mr. Suresh Paruthi and Lt. Gen. Baldev Singh (Retd.) were reappointed as directors liable to retire by rotation at the previous Annual General Meeting held on May 10, 2014.

Mr. Anuj Kanish, who expressed his unwillingness to be re-appointed at the previous Annual General Meeting of the Company held on May 10, 2014, ceased to be the director of the Company w.e.f. May 10, 2014 on completion of his term as additional director.

Mr. Amardeep Singh Ranghar and Mrs. Ruchica Gupta were appointed by the Board of Directors at its meeting held on July 07, 2014 as an additional director to hold office till the ensuing Annual General Meeting of the company.

Pursuant to the implementation of Section 149 of the Companies Act, 2013, Mr. Raj Kumar Gogia, Mr. Gurbax Singh Bhasin, and Mr. Suresh Paruthi, existing Non-Executive Independent Directors of the Company whose offices were liable to retire by rotation, under the erstwhile applicable provisions of the Companies Act, 1956, are proposed to be appointed as Independent Directors of the Company, not liable to retire by rotation, at the ensuing Annual General Meeting. These directors have given the declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Mr. Amardeep Singh Ranghar who was appointed as additional director at the Board Meeting held on July 07, 2014 and who shall hold the office up the date of ensuing Annual General Meeting, is also proposed to be appointed as Independent Director of the Company, not liable to retire by rotation, at the ensuing Annual General Meeting. He has given the declarations that he meets the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Mrs. Ruchica Gupta was appointed by the Board as an additional director of the Company at its meeting held on July 07, 2014 to hold office upto the date of ensuing Annual General Meeting and proposed to be appointed as a regular director pursuant to Section 152 of the Companies Act, 2013.

At the ensuing Annual General Meeting Mr. Raj Swaminathan, Director & Chief Operating Officer of the Company is liable to retire by rotation in accordance with the provisions of Section 152 of the Companies Act, 2013 read with the Articles of Association of the Company and being eligible, offier himself for reappointment as director of the Company. Further, on the recommendation of the Nomination & Remuneration Committee of the Company, Lt. Gen Baldev Singh (Retd.) is proposed to be reappointed as President and Senior Executive Director of the Company for a period of three years i.e. w.e.f. April 01, 2015 to April 01, 2018 subject to the approval of the Central Government and the shareholders at the ensuing Annual General Meeting of the Company.

None of the directors of the Company are disqualified as per the provisions of Section 274(1)(g) of the Companies Act, 1956 and Section 164(2) of the Companies Act, 2013. The directors of R Systems have made necessary disclosures, as required under various provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

8. Employees Stock Option Plans / Schemes

The industry in which R Systems operates is people intensive and R Systems believes that human resources play a pivotal role in the sustainability and growth of the Company. R Systems has always believed in rewarding its employees with competitive compensation packages for their dedication, hard work, loyalty and contribution towards better performance of the Company. To enable more and more employees to be a part of the financial success of the Company, retain them for future growth and attract new employees to pursue growth, R Systems has set up employees stock option plans / schemes from time to time for its employees and for the employees of its subsidiaries. As on the date of this report, the prevailing stock option plans of R Systems are as follows:

(a) R Systems International Ltd. - Year 2004 Employee Stock Option Plan : For the employees of R Systems and its subsidiaries other than ECnet Limited.

(b) R Systems International Ltd. - Year 2004 Employee Stock Option Plan – Ecnet : For the employees of ECnet Limited, a subsidiary of R Systems. The term of the said plan has been expired on August 31, 2014.

(c) Indus Software Employees Stock Option Plan - Year 2001 : Initially formulated for the employees of Indus Software Private Limited which got amalgamated with R Systems and the plan continues as per the scheme of amalgamation approved by the Hon’ble High Courts of Delhi and Mumbai. As on the date of this report, no stock options are in force under this plan.

(d) R Systems International Limited Employee Stock Option Scheme 2007 : For the employees of R Systems and its subsidiaries.

As required under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines, 1999 as amended, details relating to options approved, granted, vested, exercised, lapsed, in force etc. under the prevailing employees stock option plans / schemes during the year ended December 31, 2014 are as follows:

S. No. Particulars R Systems International Ltd. Year - 2004 Employee Stock Option Plan R Systems International Ltd. - Year 2004 Employee Stock Option Plan - ECnet** Indus Software Employees Stock Option Plan Year 2001 R Systems International Limited Employee Stock Option Scheme 2007
(a) # (b) # (c) # (d) #
a. Total number of shares covered under the plan 199,500 2,000,000 738,980 6500,000
b. Pricing Formula Prevailing Price once the Company’s shares are listed and at the Fair Market Value as per the terms of R Systems International Ltd. - Year 2004 Employees Stock Option Plan on the date such option is granted when the Company’s shares are not listed. Prevailing Price once the Company’s shares are listed and at the Fair Market Value as per the terms of R Systems International Ltd. - Year 2004 Employees Stock Option Plan - ECnet on the date such option is granted when the Company’s shares are not listed. As approved under the "Scheme of Amalgamation" of Indus Software Private Limited with the Company by the Hon’ble High Courts of Delhi and Mumbai. "Exercise Price" means the market price which is payable for exercising the options and "Market Price" means the latest available closing price, prior to the date of the meeting of the Board of Directors / Compensation Committee, in which options are granted, on the stock exchange on which the shares of the Company are listed. If the shares are listed on more than one stock exchange, then the stock exchange where there is highest trading volume on the said date shall be considered.
c. Options granted during the year Nil Nil Nil Nil
d. Options vested during the year Nil Nil Nil Nil
e. Options exercised during the year Nil Nil Nil 804,000
f. The total number of shares arising as a result of exercise of options during the year Nil Nil Nil 804,000
g. Options lapsed during the year 1,344,500 1,300,410 Nil Nil
h. Variation of terms of options during the year Nil Nil Nil Nil
i. Money realised by exercise of options during the year (Rs.) Nil Nil Nil 9,704,280
j. Total number of options in force at the end of the year 102,150 Nil Nil 245,280
k. Employee wise details of options granted to (during the year)
(i) Senior managerial personnel Nil Nil Nil Nil
(ii) Any other employee who receives a grant in any one year of options amounting to 5% or more of options granted during that year Nil Nil Nil Nil
(iii) Identified employees who were granted options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant Nil Nil Nil Nil
l. Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of options N.A. N.A. N.A. 5.90*

# Please note that the details given above for plan (a), (b) and (c) are after making the required adjustments in relation to consolidation of each of the 5 equity shares of Rs. 2 each into 1 equity share of Rs. 10 each as approved by the shareholders in the year 2006 and after Subdivision of each of the equity shares of Rs. 10 each into 10 equity shares of Re. 1/- each as per record date of February 28, 2014.

*EPS is Rupees per equity shares of Re. 1/- each i.e. after giving into effect Sub-division of equity shares of Rs. 10 each into equity shares of Re. 1/- each as per record date of February 28, 2014.

**During the year ended December 31, 2014, R Systems International Ltd. - Year 2004 Employee Stock Option Plan – Ecnet has been expired on August 31, 2014 due to expiry of the term of the plan.

During the year ended December 31, 2014, R Systems had not granted any options under any of the aforementioned plans.

All options granted under Indus Software Employees Stock Option Plan - Year 2001 have already been vested and exercised or lapsed and no options were in force as on December 31, 2014.

For options granted during the earlier years under plan (a), (b) and (c), R Systems used the fair value of the stock options for calculating the employees compensation cost.

For the purpose of valuation of the options granted during earlier years, the management obtained fair value of the options at the date of grant under respective schemes from a firm of Chartered Accountants, to determine accounting impact, if any, of options granted over the periods. In the considered opinion of the valuer, the fair value of option determined using ‘Black Scholes Valuation Model’ under each of above schemes is "Nil" and thus no accounting thereof is required. The assumptions used for the purpose of determination of fair value are stated below:

As
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Satinder Singh Rekhi , Managing Director

Baldev Singh , President & Senior Execut. Dir

Raj Swaminathan , Director & COO

Raj Kumar Gogia , Director


Company Head Office / Quarters:

B-104A Greater Kailash-I,
,
New Delhi,
New Delhi-110048
Phone : New Delhi- / New Delhi-
Fax : New Delhi- / New Delhi-
E-mail : investors@india.rsystems.com
Web : http://www.rsystems.com

Registrars:

Link Intime Spectrum Reg. Ltd
44 Naraina Indl Are,Phase I,Naraina,New Delhi - 110028

 
Fund Holding
Scheme Name No. of Shares
 
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