From the Desk of the Managing Director
Dear Fellow Stakeholders
I am delighted to report that it has been yet another successful year for your company.In 2015 your company has gone through some exciting transformation and reiterated itsposition as a matured player in the offshore IT Services industry. Your company nowdelivers digital transformation services with industry specific innovation and creativityto businesses.
Just like the Oyster delivering the Pearl our business oyster continues to producepersistent value for our customers and various stakeholders. Over the last year we haveendured the sea of opportunities challenges and growth to realize valuable pearls foryour business. For us delivering value signifies our ability to manage technological andbusiness challenges through innovation and learning which in turn gives a distinctadvantage to our global customers.
We are proud of our highly-motivated global workforce our enthusiastic set ofcustomers who have reposed faith in our capabilities and prudent financial strategiesthat make your company one of the best managed IT Services player in the industry today. Iam delighted that we continue to be driven by strong global vision and values.
In 2015 we ventured into some challenging areas of technology and are rapidly buildingcompetencies in the areas of Analytics Mobility and Cloud Services. We have setup ahighly specialized Analytics team to obtain advanced business intelligence. Our analyticalsolutions deliver actionable business insights in the various spheres of CustomerAnalytics Speech and Text Analytics Risk and Financial Portfolio Analytics AutonomicsSocial Media Analytics Healthcare Analytics and Operational Analytics.
We too realized some interesting developments over the past year. We were recertifiedat PCMM level 5 and are amongst few Indian offshoring players with such high maturitypractices three times in a row. In 2015 we recruited sizeable technological minds fromthe IITs to help us upscale to the next level of strategic growth. Our human resourcepractices too were upgraded and we began deploying new employee engagement programs.
We stand committed to continue to serve our customers on key verticals of Telecom &Digital Media Banking & Finance Healthcare Manufacturing & Logistics andGovernment Services. We have also expanded our capabilities in certain geographies byacquiring strategic businesses. In 2015 we acquired IBIZ a Singapore-based enterprisethat specializes in offering diverse ERP services. Today our global marketing efforts aregeared to highlight our capabilities and strengths in Engineering across differentverticals in different geographies.
Your company now serves customers from 14 development and service centres located inNorth America Europe the Far East and India through a very robust global deliverymodel. All the while we are also exploring opportunities in other geographies that we feelcan help us in our strategic business expansion plans.
R SYSTEMS IN 2015
2015 has been a transformation year for R Systems. We have realigned our focus toprovide the core IT Services. We have invested in building capabilities in Analytics andMobility across all our business verticals. We are leveraging our global presencevertical specialization and horizontal addition of Analytics and Mobility to gather adistinctive edge in the industry. Our sales funnel across all our businesses is also veryencouraging.
We reported revenue of Rs. 6050 million (US$ 94.32 million) with EBITDA of Rs. 715million (US$ 11.15 million) and net profit of Rs. 978 million (US$ 15.25 million). Netprofit increased by 25.20% over the previous year from Rs. 781 million to Rs. 978 million.Net profit for 2015 contains an exceptional profit of Rs. 540 million (US$ 8.42 million)as against Rs. 185 million (US$ 3.03 million) in 2014.
The exceptional profit for 2015 mainly relates to sale of Indus product division asagainst sale of Europe BPO in 2014. Following our strategy to focus on core servicebusiness we divested from the Indus product business in July 2015 we earlier sold ourEurope BPO in November 2014. This has impacted revenue and operational profits; howeverin 2015 we acquired IBIZ a Microsoft gold channel partner having ERP and BusinessIntelligence competencies. IBIZ is having presence in South East Asia. We also acquired arelatively small but strategic telecom IT business in Europe from a renowned telecomoperator.
Discipline in execution and strengthening of the US dollar contributed positively tothe overall 2015 performance despite the cross currency challenges mainly due to a weakEuro. We were also able to maintain healthy utilization above 75%. We served 150-pluscustomers including 21 million US dollar plus customers. We added 20 marquee clients overthe year. Telecom and Digital Media continues to be our largest industry vertical with ~30% share of revenues. We have a strong balance sheet with shareholder funds of Rs. 2429million and cash and bank balances of Rs. 922 million. The value creation by your companywas also recognized by way of awards and accolades from industry leaders and ourcustomers.
In 2016 we will witness some instrumental changes in the industry. We will witnesslarge-scale disruptive innovation across global enterprises that will be fueled byincreased focus on areas such as cognitive computing mobility big data analytics IoT(Internet of Things) and cloud computing. The pace of technological change will alsobecome faster demanding faster turnaround time.
2016 will be a promising year because of increased IT spends. Disruptive technologieswill be the front runners and cloud-based applications rapid mobile adoption and bigdata analytics will drive business to new digital frontiers.
I am extremely positive about the outlook for your company. The USA economy is givingmixed signals now but I feel that over the years IT industry has learnt to live inuncertainty. What is more interesting is the way the world is now looking at technology asa solution to its everyday problems. Technology now is not an add-on supplementary elementbut a central actor that can make positive changes happen. Your company is ready to facechallenges and is equipped with far higher technological competence andinnovation-readiness than ever before.
Our strategy for FY 2016 is to focus for profitable growth while intensifying ourinvestment in innovation around people processes and technologies. I am confident that RSystems will realize profitable growth in FY 2016. Our sales funnel is strong across allbusinesses and we will continue to focus on delivering increased business value throughinnovation. Our engineering services are focused on sustaining and extending our portfolioof services in all the verticals in which we operate. Our industry domain knowledgecombined with our expertise in big data advanced analytics mobility and cloud will helpus move into the new digital age.
To conclude I extend my gratitude to all our stakeholders for contributing to oursuccess story. I thank our customers shareholders bankers the stock exchangesSecurities and Exchange Board of India (SEBI) the Software Technology Parks of India(STPI) various government agencies industry associations and all other organizationsfor their invaluable support.
I would also like to express my gratitude to my colleagues at R Systems across all ourglobal centres for their support and contribution in making R Systems a truly successfulorganization. Their support has been paramount in our quest to deliver value to our globalcustomers shareholders and the diverse communities we serve.
I would like to assure you that your company will continue on its growth path and beguided by our global philosophy of being "Caring Innovating and Transforming."With the enthusiasm and zeal with which we are moving forward I am confident that yourcompany will continue to set new benchmarks of excellence and continue in its journey toemerge as a global leader. We remain committed to Value Engineering through Innovation.Quite like the Oyster delivering the Pearl!
Satinder Singh Rekhi
From the Desk of SARTAJ REKHI
Yet another exciting year has passed by at R Systems "the Oyster that deliversthe Pearl." Over the past year we have witnessed some very interesting changes inthe R Systems Group across our global locations.
Our growth as a mature global player has become possible because of our continuousfocus on three distinct areas-people processes and technologies. These three elementswork in tandem and enable us to deliver value to our increasing global customers. Ourfocus on these areas is centred on innovation a critical component that has enabled us tocontinuously enrich ourselves by deploying industry-best practices in several of our corefunctions including engineering human resources marketing and sales.
Our engineering team has grown in capability over the past year. In 2015 we expandedour capabilities by acquiring IBIZ a Microsoft dynamics player in Singapore. OurEuropean subsidiary has made some inroads into new markets and are rapidly expandingtheir capabilities. ECnet our supply chain subsidiary is rapidly expanding its servicesto an increasing number of customers across the APAC region.
In 2015 we initiated a specialized engineering division for developing powerfulsolutions in the area of Big Data and Analytics. Our team is currently working to developanalytical solutions for the Banking & Finance domain primarily in wealth managementasset management and hedge fund management. These analytic solutions will expand in thefuture to Telecom and Healthcare verticals.
Our employees are our greatest assets and they come from diverse cultures across NorthAmerica Asia Pacific and Europe. Our HR departments are continuously reinventingthemselves so as to help employees realize an enabling work environment. In 2015 ourglobal development centre at Noida was recertified at PCMM Level 5 for the third time ina row making us amongst the few global IT services player with such high people maturitypractices. In 2015 our HR Department in Noida received the Corporate Excellence Awardfrom the Minister of State for Foreign Affairs Govt. of India for our contribution tothe cause of Academia-Industry interface. The HR departments across all group companieshave also initiated several new employee-engagement practices to enable employees toharness their potential even further.
Driven by our focus to further enhance our workforce capabilities we have recruitedsome of the best minds in the industry. In 2015 we recruited a sizeable number ofemployees from the prestigious IIT's in India through our campus drives and will continueto do so in 2016. Our group companies in APAC Europe and North America have alsoundertaken similar initiatives to ensure that they employ an equally diverse and competentworkforce.
Our global Marketing and Sales departments have also witnessed some interestingchanges. The Global Marketing team is currently focused on highlighting our rich legacyand competitiveness in offering IT solutions and services. In addition our Sales team hasdiversified further and is reaching out to new customers who are seeking cutting-edgesolutions and services that guarantee higher ROI and business growth. I am proud toacknowledge that our innovation quotient and competence is acclaimed in the industry asseveral new global customers have chosen us as their partners for growth.
I would like to take this opportunity to extend my heartfelt best wishes to all ourassociates and their families across the world our esteemed global customers and ourshareholders for making R Systems such a vibrant organization that it is today.