R Systems International Ltd Management Discussions

Overview

The consolidated financial statements of the Group have been prepared in accordance with the Indian Accounting Standards (Ind-AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standard) Rules as amended from time to time. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis so that the financial statements reflect in a true and fair manner. The forms and substance of transactions and reasonably present the state of affairs, profits and cash flows for the year.

A. Industry Structure and Developments

An uncertain economic landscape has substantially influenced business decisions. Businesses now are more cautious in their IT expenditure and are leveraging technology to enhance their existing services and solutions, encourage enterprise collaboration and increase productivity—for sharpening their competitive edge. However, the IT market has witnessed robust growth in recent years, having grown to $9,039 billion in CY24 from $8,508 billion in CY23, at a CAGR of around 6.2%. Further, the information technology market size is expected to see strong growth in the next few years. It will grow to $12,417.21 billion in 2028 at a CAGR of 8.3%. With the surge in globalisation, cybersecurity innovations and digital transformation, the deployment of technologies in standardised processes to increase operational efficiency, is expected to remain a priority for businesses going forward.

Cloud, Artificial intelligence, Platform Engineering, Automation and Cybersecurity continue to drive the agenda for many digital transformations. With generative AI tools gaining prominence, the businesses are exploring how they can leverage these tools to enhance their opportunities and bridge existing gaps. Moreover, the increased usage of IoT is expected to drive the industry growth even further. Most companies are introducing the use of next generation language models to increase their revenues.

B. Company Overview

R Systems International Limited (the ‘Company or ‘the Parent Company) and its subsidiaries (hereinafter collectively referred to as ‘the Group) is a public Company domiciled in India having its registered office at New Delhi. Its shares are listed on National Stock Exchange of India Limited and BSE Limited. The Group is a leading global provider of technology, artificial intelligence, intelligent process automation services and solutions with knowledge services. It also delivers its tailored solutions to leading technology companies and businesses to enable their digital transformation. The Companys offerings encompass five major business verticals i.e. Independent Software Vendor (ISV), Healthcare, Manufacturing & Logistics, Telecom, Media & Entertainment (TME) and Banking, Finance & Insurance (BFSI).

The Company has the following subsidiaries:

	Holding as at
Name	December 31, 2023	December 31, 2022	Country of incorporation and other particulars
R Systems, Inc., USA	100%	100%	A company registered under the laws of California, USA in 1993 and subsidiary of the Company since January 2, 2001.
R Systems (Singapore) Pte Limited, Singapore	100%	100%	A company registered under the laws of Singapore in 1997 and subsidiary of the Company since September 19, 2000.
R Systems Technologies Limited, USA	100%	100%	A company registered under the laws of Delaware, USA in 1996 and subsidiary of the Company since April 1, 2002.
R Systems Consulting Services Limited Singapore	99.75%	99.75%	A company registered under the laws of Singapore in 1996. The company has acquired majority share on January 8, 2004. R Systems Consulting Services Limited, Singapore has subsidiaries in Malaysia, Thailand, China, Hong Kong Japan and Vietnam. The shareholding by the Company and R Systems (Singapore) Pte Limited is 69.37% and 30.38% respectively.
R Systems Computaris International Limited, UK	100%	100%	A company registered under the laws of U.K in 2006. The Company has acquired the entire share on January 26, 2011. R Systems Computaris International Limited, U.K. has subsidiaries in Romania, Poland, Moldova, Malaysia, Switzerland and Philippines.
RSYS Technologies Ltd., Canada	100%	100%	A company registered under the laws of Canada in 2012 and subsidiary of the Company since October 29, 2012.
IBIZ Consultancy Services India Private Limited, India (IBIZ India) (refer to Note a below)	-	-	A company registered under the laws of India in 2008 and subsidiary of the Company since April 30, 2015.
Velotio Technologies Private Limited (refer to Note b below)	100% outstanding equity capital	-	A private company registered under the Companies Act, 2013 in 2016 and the subsidiary of the Company since July 3, 2023.

a. During the previous year, IBIZ India had gone into voluntary liquidation under Section 59 of Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary Liquidation) Regulations, 2017. Honble National Company Law Tribunal, New Delhi ("NCLT"), vide its order dated April 24, 2023, has allowed the application for dissolution of IBIZ India filed by its Liquidator on completion of Voluntary Liquidation of IBIZ India under Section 59 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India (Voluntary

Liquidation Process) Regulations, 2017. As per aforesaid NCLT order, IBIZ India has been dissolved w.e.f. April 24, 2023.

b. As on July 3, 2023, Velotio Technologies Private Limited (Velotio) held 40% Equity shares of Scaleworx Technologies Private Limited and classified this as associates. Subsequenlty on December 1, 2023, Velotio has acquired balance 60% Equity shares from its preceding shareholders and consequently became wholly owned subsidiary.

R Systems Consulting Services Limited , Singapore has following wholly owned subsidiaries:

	Holding as at
Name	December 31, 2023	December 31, 2022	Country of incorporation
R Systems Consulting Services (M) Sdn. Bhd.	100 %	100 %	Malaysia
R Systems Consulting Services (Thailand) Co., Ltd.	100 %	100 %	Thailand
R Systems Consulting Services (Shanghai) Co., Ltd.	100 %	100 %	Peoples Republic of China
R Systems Consulting Services (Hong Kong) Ltd.	100 %	100 %	Hong Kong
R Systems Consulting Services Kabushiki Kaisha	100 %	100 %	Japan
R Systems Consulting Services Company Limited (incorporated on October 17, 2022)	100 %	100 %	Vietnam

R Systems Computaris International Limited, UK has following wholly owned subsidiaries:

	Holding as at
Name	December 31, 2023	December 31, 2022	Country of incorporation
R Systems Computaris Europe SRL	100 %	100 %	Romania
R Systems Computaris Poland sp z o.o	100 %	100 %	Poland
R Systems Computaris S.R.L	100 %	100 %	Moldova
R Systems Computaris Malaysia Sdn. Bhd.	100 %	100 %	Malaysia
R Systems Computaris Philippines Pte. Ltd. Inc.	100 %	100 %	Philippines
R Systems Computaris Suisse Sarl	100 %	100 %	Switzerland

R Systems IBIZCS Pte. Ltd., Singapore is a wholly owned subsidiary of R Systems (Singapore) Pte Limited, Singapore w.e.f. April 30, 2015 and has following wholly owned subsidiaries:

	Holding as at
Name	December 31, 2023	December 31, 2022	Country of incorporation
IBIZ Consulting Services Pte Ltd	100 %	100 %	Singapore
(strike off w.e.f. January 08, 2024)
R Systems IBIZ Sdn. Bhd	100 %	100 %	Malaysia
PT. R Systems IBIZCS International	100 %	100 %	Indonesia
IBIZ Consulting (Thailand) Co. Ltd.	100 %	100 %	Thailand
IBIZ Consulting Service Limited (IBIZ HK)	100 %	100 %	Hong Kong
IBIZ Consulting Service Shanghai Co., Ltd	100% by IBIZ HK	100% by IBIZ HK	Peoples Republic of China

C. Opportunities

Growth in digital transformation:

Digital transformation services will continue witnessing an increase in the demand as a result of globalisation, cybersecurity innovations and more. The Companys expertise in digital product engineering and technology solutions will help them capitalise on this trend.

Shift of focus to AI and ML:

The Companys recent collaboration with a reputed Indian institution shows its focus towards AI from a strategic point of view. They can also integrate AI and ML into their services to provide more value to their clients.

New market expansion:

Despite having a global presence, the Company shows potential to expand into new and emerging markets required digitisation. Company

Managing cloud services:

With more businesses adopting to cloud computing, those entities also are in need of management and optimisation of their cloud systems. The Company can also provide cloud solutions to specific industries.

Threats:

Competition:

The IT industry is highly competitive. and R Systems needs to stay ahead of the learning and implementation curve in order to retain its competitive edge.

Talent acquisition and retention:

It is crucial to find talented individuals and to retain them. The Company should focus on developing a positive work culture, which would lead to lower attrition rates attract talented individuals to their organisation.

D. Segment-wise and Product-wise Performance

Detailed information about segment-wise and product-wise performance has been given in the Consolidated Financial Statements and Standalone Financial Statements.

E. Performance and Outlook

R Systems reported a consolidated revenue of H 16,845.18 million during the year 2023, as opposed to the revenue of H 15,158.31 million during 2022. The revenue grew by

11.13% during the year 2023.

Consolidated Profit after tax during the year 2023 was H 1,401.06 million as opposed to the net Profit for the year

2022 of H 1,396.81 million.

The basic earnings per share (based on the consolidated financial statement) during the year 2023 was H 11.84 per share as against H 11.81 per share in 2022 of the face value of H 1 each.

R Systems maintains a solid financial position with equity attributable to equity shareholders of H 6,114.37 million, including net cash and bank balance of H 1,338.32 million as

F. Risk and Concerns

At R Systems, risk management is a dynamic process. It attempts to constantly identify all the emerging risks and propose mitigation strategies. This is further explained in detail in Risk Management Report.

G. Internal Control Systems and Their Adequacy

Internal control systems are a set of policies, processes and procedures put in place to help achieve the strategic objectives of an organisation. The Companys Internal Control System is commensurate with the size, scale and complexity of its operations. It has been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance with corporate policies. In addition, the Company has identified and documented the key risks and controls for each process that has a relationship to the financial operations and reporting. Internal teams test identified vital controls at regular intervals to ensure their existence and operating effectiveness. Further, the internal auditors also perform an independent check of the effectiveness of key controls in identified areas of internal financial control reporting. The Statutory Auditors Report also includes an unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

The CEO/CFO certification provided in this report places responsibility on the CEO and CFO to continuously ensure the adequacy of the Companys internal control systems and procedures.

H. Material Development in Human Resources / Industrial Relations Front, including Number of People Employed

R Systems identifies its associates as its most valued assets. It recognises its commitment to the growth journey of the organisation. It is critical to attract, develop, deploy and retain talent in the IT and ITES industry. Therefore, R Systems has also defined and implemented a people management initiative, in line with the industry best practices and the People Capability Maturity Model (People CMM). It effectively manages the life cycle to ensure that individuals are committed to the broader organisational goals and show pro-activeness at the workplace.

As of FY2023, R Systems has a talent pool of 4,191 associates, including 548 sales and support associates.

I. Discussion on financial performance with respect to operational performance.

Financial Position as of December 31, 2023

1. Property, Plant and Equipment (PPE), Right-to use Assets (ROU) and Intangible Assets

PPE includes building, leasehold improvement, computer hardware, furniture & fittings, vehicle, office and electrical equipment. ROU includes land, building, computer hardware, computer software, vehicle and furniture & fittings. Intangible assets include Goodwill on consolidation, computer software, non-compete and customer contracts.

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Property, plant and equipment (net)	607.41	705.95	450.65	547.67
Right-to-use assets	628.55	692.40	473.82	539.68
Intangible assets
- Goodwill on Consolidation	2,836.58	108.62	-	-
- Other intangible assets (net)	2,181.20	31.39	5.94	9.11
Capital work in progress	1.64	25.38	-	25.06
Total	6,255.38	1563.74	930.41	1,121.52

Details of total additions to gross block during the year in:

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Property, plant and equipment	149.41	330.60	95.09	270.96
Right-to-use assets	36.51	269.12	(19.56)	247.27
- Other intangible assets	0.56	10.60	0.49	9.61

Note: Refer Consolidated Financial Statement and Standalone Financial Statement for head wise details.

Details of total additions in consolidated financial statement through acquisition during the year ended December 31, 2023 is as follow

(H in million)

Particulars	Gross Block	Net block
Property, plant and equipment	63.24	29.92
Right-to-use assets Intangible assets	43.38	25.05
- Goodwill	2,725.46	2,725.46
- Other intangible assets	2,301.87	2,297.60

 

	Note: For detail, please refer to Note no. 37 Consolidated Financial Statement
2.	Investment Property
	Investment Property represents the land and building in Pune, which have been given on lease. Investment Property value (net) as of December 31, 2023, was H 15.96 million as against H 17.43 million as of December 31, 2022.
3.	Non-Current Investment
	(H in million)

 

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Investment in subsidiaries	-	-	3,727.55	1,033.81
Other investment	0.03	0.03	0.03	0.03
Total	0.03	0.03	3,727.58	1,033.84

Increase in Investment in subsidiaries represent the investment in Velotio Technologies Private Limited made during the year.

4. Other Non-Current Financial Assets

(H in million)

Particulars	2023	2022	2023	2022
Security deposits	47.43	34.96	28.84	27.14
Margin money deposits	66.98	30.20	0.57	5.86
Interest accrued on bank deposits	0.68	0.36	0.01	0.36
Staff advance	0.05	0.05	0.05	0.05
Total	115.14	65.57	29.47	33.41

5. Deferred Tax Liability/Assets (Net)

Deferred tax reflects the timing differences between the financials and tax books arising mainly from employees benefit provisions, difference in book values and tax base values of right-of-use assets and lease liabilities. Provision for doubtful debts, tax losses, M2M loss on derivative instruments, MAT credit entitlement (results in deferred tax assets), differences between accounting base and tax base for depreciable assets, the net gain arising on financial assets measured at FVTPL and M2M gain on derivative instruments (results into deferred tax liability).

Deferred tax assets and deferred tax liabilities across various tax jurisdictions, which cannot offset against each other, are presented separately.

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Deferred Tax Assets (net)	313.44	219.87	220.22	175.03

6. Income Tax Assets/Liability

Income tax assets represent the excess of tax paid over liability. It has been classified as non-current tax assets in the financial statement. Income tax liability represents the excess of tax liability over advance tax. It has been classified as current tax liability in a financial statement as the Company is required to settle the same within 12 months from reporting date.

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Income tax assets (net)	58.12	53.46	26.45	27.81
Income tax liability (net)	137.00	50.17	112.95	26.39

Income tax assets/liabilities across various tax jurisdictions which cannot offset against each other are presented separately.

7. Other Non-Current Assets

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Capital advances	70.40	16.07	45.74	8.80
Prepaid expenses	56.19	92.84	52.83	80.29
Total	126.59	108.91	98.57	89.09

The Capital Advance represents primarily the advance given to the vendor for the procurement of capital assets.

8. Current Investments

Current investments as of December 31, 2023, were Nil as against H 138.65 million as of December 31, 2022, mainly due to redemption of Debt Liquid Mutual Fund during the year ended December 31, 2023.

9. Trade Receivables

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Trade receivables (gross)	2,630.23	2,636.05	1,136.18	1,228.37
Less : Allowance for doubtful debts (expected	126.24	65.17	104.85	49.67
credit loss allowance)
Trade receivables (net)	2,503.99	2,570.88	1,031.33	1,178.70

10. Cash and Bank Balance

Cash and cash equivalents comprise cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Cash and cash equivalents
Cash on hand	0.90	0.89	0.03	0.20
Balances with scheduled banks	238.04	737.32	77.82	714.85
Balances with other banks	1,334.56	1,324.09	116.71	110.65
Cash and cash equivalents (A)	1,573.50	2,062.30	194.56	825.70
Other bank balances
Deposit with an original maturity of more than	136.70	240.34	133.42	2.10
3 months but less than 12 months
Balances in unclaimed dividend account	2.53	2.56	2.53	2.56
Bank balance towards interim dividend	804.46		804.46
Other bank balances (B)	943.69	242.90	940.41	4.66
Total Cash and Bank Balance (A+B)	2,517.19	2,305.20	1,134.97	830.36

Note: For detailed movement in cash and cash equivalent, please refer to the Consolidated and Standalone statement of cash flow.

11. Other Current Financial Assets

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Staff advance	11.99	9.30	2.98	2.37
Recoverable from related parties	-	-	3.08	18.17
Unbilled revenue other than from fixed bid contract	632.44	635.51	469.87	503.47
Securities deposit	4.94	10.51	0.89	2.90
Bank deposits with original maturity of more than 12 months	112.74	232.12	112.74	232.12
Mark-to-market gain on derivative instruments	9.86	-	9.86	-
Interest accrued on bank deposits	0.22	1.69	0.05	0.02
Other	33.33	21.95	3.95	0.16
Total	805.52	911.08	603.42	759.21

Unbilled revenue constitutes amounts that are not billed to customers at year-end. It is expected to be billed in due course in accordance with the contract with the respective customers.

12. Other Current Assets

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Balances with indirect tax authorities	105.07	74.06	71.44	68.68
Unbilled revenue from fixed bid contract	86.51	70.86	11.24	10.48
Prepaid expenses	225.61	220.59	142.90	147.97
Advance to vendors	15.11	6.99	13.96	6.33
Tour and travel advance	2.76	3.17	2.76	3.17
Total	435.06	375.67	242.30	236.63

13. Share Capital

The Companys authorised share capital is H 206 million as of December 31, 2023 and December 31, 2022. The Companys issued, subscribed and paid-up capital as of December 31, 2023 and December 31, 2022, is H118.31 million.

Detailed information about the movements in share capital has been given in Note no. 11 of notes to the Consolidated Financial Statements.

14. Other Equity

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Reserve and Surplus
Capital reserve under common control	(0.34)	(0.34)	(0.34)	(0.34)
Capital reserve other	0.03	0.03	-	-
Capital redemption reserve	5.02	5.02	5.02	5.02
Retained earnings	5,386.98	4,796.39	4,704.66	3,779.16
Other Comprehensive Income
Foreign currency translation reserve	604.37	535.28	-	-
Total Other Equity	5,996.06	5,336.39	4,709.34	3,783.84

The Board of Directors at its meeting held on December 13, 2023, has declared an interim dividend of H 6.80/- per equity share of face value of H 1/- each aggregating to H 804.46 million. As at December 31, 2023, the Company has transferred the interim dividend amount to a separate bank account. Subsequent to the year ended December 31, 2023, the aforesaid interim dividend has been paid on January 09, 2024.

During the year ended December 31, 2022, the Company paid interim dividend of H 6.50/- per equity share of face value of H 1/- each aggregating to H 768.97 million.

15. Non-Controlling Interest

Non-controlling interest as of December 31, 2023, were H 2,407.00 million as against NIL as of December 31, 2022.

Detailed information regarding non-controlling interest has been given in Note no. 37 of notes to the Consolidated Financial Statements.

16. Secured Borrowings (Standalone & Consolidated)

(H in million)

	2023	2022
Term loans for Motor vehicles Loan from non-banking financial company
Non-Current Portion	16.94	13.23
Current Portion	10.64	7.21
Cash credit facility from scheduled banks	551.60	-
Total Borrowings	579.18	20.44

17. Lease liabilities

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Non-current	631.14	666.11	554.88	576.56
Current	101.45	84.69	16.60	13.24
Total Lease liabilities	732.59	750.80	571.48	589.80

18. Other Non-Current Financial Liabilities

Other Non-Current Financial Liabilities represent the Security deposits received which is required to be paid after the 12 months form the reporting date based on contractual agreement. Security deposit as of December 31, 2023, was H 12.01 million as against of H 8.76 million as of December 31, 2022.

19. Provisions (Long Term)

(H in million)

Particulars	2023	2022	2023	2022
Provision for Employee benefit - Gratuity	282.00	207.95	246.04	207.95
20. Trade Payables
				(H in million)
	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Trade Payable	370.76	355.87	109.98	67.60
21. Other Current Financial Liabilities
				(H in million)
	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Payable to subsidiary Company	T>-	-	50.87	54.66
Security deposits received	12.31	9.96	12.31	9.96
Unclaimed dividend	2.53	2.56	2.53	2.56
Employee benefits payable	746.87	438.01	290.59	256.26
Capital creditors	0.65	21.97	-	21.97
Advance from Customer	15.14	8.65	6.77	0.34
Other financial liabilities	8.00	9.50	3.32	3.45
Mark-to-market loss on derivative instruments	0.46	98.07	-	98.06
Interest accrued but not due	2.97	-	2.97	-
Interim dividend payable	689.55	-	689.55	-
Payable for acquisition of subsidiary	56.67	-	56.67	-
Total	1,535.15	588.72	1,115.58	447.26
22. Provisions (Short Term)
				(H in million)
	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Provision for employee benefits
-Gratuity	23.34	24.43	18.68	24.43
-Compensated absences	317.05	279.27	217.50	182.51
-Provision for CSR	1.76	-	-	-
Total	342.15	303.70	236.18	206.94
23. Other Current Liabilities
				(H in million)
	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Tax deducted on dividend	114.91	-	114.91	-
Other statutory dues payable	221.85	199.42	93.36	93.79
Unearned revenues	297.45	389.96	41.36	70.60
Total	634.21	589.38	249.63	164.39

24. Liquidity The consolidated cash and cash equivalents as at December 31, 2023 were H 1,573.50 million as against H 2,062.30 million as on December 31, 2022.

Net cash generated from operating activities was H 2,113.64 million for the year ended December 31,

2023 compared to H 963.86 million for the year ended December 31, 2022.

Cash used in investing activities was H 2,227.85 million for the year ended December 31, 2023 and mainly comprised of net cash outflow on acquisition of subsidiary amounting to H 2,484.54 million and purchase of fixed assets of H 202.13 million, as offset by proceeds from investment in term deposit with bank H 225.85 million and proceeds from mutual fund redemption of H 143.27 million.

Cash used in financing activities was H 409.09 million for the year ended December 31, 2023. Interim Dividend paid during the year was H 804.46 million as offset by Proceeds from short-term borrowings H 551.60 million.

R Systems policy is to maintain sufficient liquidity to fund the anticipated capital expenditures, operational expenses and investments for strategic initiatives. R Systems has a credit facility (fund based as well as non-fund based) from the Axis Bank Limited and ICICI Bank Limited as at December 31, 2023, the total credit balance was H 551.60 million along with term loan amounting to H 27.58 million with respect to motor vehicles purchased.

Analysis and Discussions of Operating Performance for the Year Ended December 31, 2023

The following section discusses in detail the composition of different items in the Consolidated and Standalone Statement of Profit and Loss Account.

Consolidated Statement of Profit and Loss for the year:

(H in million)

Particulars	2023	% of Total Income	2022	% of Total Income	Change %
Income
Revenue from operations	16,845.18	99.32	15,158.31	99.33	11.13
Other income	115.33	0.68	102.89	0.67	12.09
Total income	16,960.51	100.00	15,261.20	100.00	11.13
Expenses
Employee benefits expense	11,335.35	66.83	10,194.05	66.80	11.20
Finance costs	89.50	0.53	48.98	0.32	82.73
Depreciation and amortisation expense	544.04	3.21	349.78	2.29	55.54
Other expenses	2,986.36	17.61	2,966.82	19.44	0.66
Total expenses	14,955.25	88.18	13,559.63	88.85	10.29
Profit before tax and Share in Profit / (Loss) of Associate	2,005.26	11.82	1,701.57	11.15	17.85
Share of net profit / (loss) of associates accounted for using the equity method	(5.04)	(0.03)	-
Profit before tax	2,000.22	11.79	1,701.57	11.15	17.55
Tax expense	599.16	3.53	304.76	2.00	96.60
Net Profit for the year	1,401.06	8.26	1,396.81	9.15	0.30
Other comprehensive income / (loss)	63.08	0.37	223.89	1.47	(71.83)
Total comprehensive income for the year	1,464.14	8.63	1,620.70	10.62	(9.66)

Standalone Statement of Profit and Loss for the year:

Particulars	2023	% of Total Income	2022	% of Total Income	Change %
Income
Revenue from operations	9,038.87	92.75	8,138.90	99.14	11.06
Other income	706.42	7.25	70.44	0.86	902.87
Total income	9,745.29	100.00	8,209.34	100.00	18.71
Expenses
Employee benefits expense	6,014.41	61.72	5,533.61	67.41	8.69
Finance costs	81.18	0.83	42.64	0.52	90.38
Depreciation and amortisation expense	239.95	2.46	195.83	2.39	22.53
Other expenses	1,227.87	12.61	1,096.77	13.36	11.95
Total expenses	7,563.41	77.61	6,868.85	83.67	10.11
Profit before tax	2,181.88	22.39	1,340.49	16.33	62.77
Tax expense	447.31	4.59	213.38	2.60	109.63
Net Profit for the year	1,734.57	17.80	1,127.11	13.73	53.90
Other comprehensive income	(4.61)	(0.05)	4.37	0.05	(205.49)
/ (loss)
Total comprehensive income for the year	1,729.96	17.76	1,131.48	13.78	52.89

1. Revenue

1.1 Revenue from Operations

R Systems derives revenue primarily from Information Technology services and Business Process Outsourcing services (knowledge services). Revenue is recognised when the performance obligations as promised have been satisfied with a transaction price and when where there is no uncertainty as to the measurement or collectability of the consideration.

1.1.1 Based on Consolidated Financial Statement

(H in million)

Particulars	Year ended December 31, 2023	%	Year ended December 31, 2022	%	change %
Information technology services	15,123.17	89.78	13,997.18	92.34	8.04
Business process outsourcing services	1,722.01	10.22	1,161.13	7.66	48.30
Total	16,845.18	100.00	15,158.31	100.00	11.13

1.1.2 Based on Standalone Financial Statement

(H in million)

Particulars	Year ended December 31, 2023	%	Year ended December 31, 2022	%	change %
Information technology services	7,255.31	80.27	6,930.61	85.15	4.69
Business process outsourcing services	1,783.56	19.73	1,208.29	14.85	47.61
Total	9,038.87	100.00	8,138.90	100.00	11.06

1.1.3 Consolidated Revenue by Geography

R Systems earns income from four principal geographic territories, namely North America, Europe, South East Asian countries ("SEAC"), India and others. A significant proportion of the revenues were derived from clients located in North America. The geographic breakdown is given below:

	Year ended
Geography	December 31, 2023	December 31, 2022
North America	73.99%	74.20%
Europe	10.05%	10.39%
SEAC	12.78%	12.54%
India	1.88%	1.88%
Others	1.30%	0.99%
	100.00%	100.00%

1.1.4 Consolidated Revenue by Client Concentration

The breakdown of R Systems consolidated revenue based on client concentration for the year ended December 31, 2023 and 2022 is as follows:

	Year ended
Revenue from Top 10 Clients	December 31, 2023	December 31, 2022
Top 10 Clients	23.70%	22.81%
Top 5 Clients	16.87%	15.25%
Top 3 Clients	12.73%	11.59%
Largest Client	6.55%	6.66%

1.1.5 Consolidated Revenue by Customer industry type

1.2 Other Income

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Interest income	67.34	40.45	54.02	34.96
Dividend From subsidiary companies	-	-	573.90	3.40
Rental income from investment property	6.72	6.72	6.72	6.72
Foreign exchange fluctuation (net)	23.15	-	64.37	-
Liability no longer required written back	5.38	-	-	-
Lease rent concession	-	7.47	-	7.10
Profit on sale of property, plant and equipment (net)	-	3.28	-	1.13
Profit on cancellation of leases (net)	-	0.20	-	0.20
Net gain arising on financial assets measured at FVTPL	4.62	6.40	4.62	6.40
Net gain on fair value of Investment in associates	2.04	-	-
Gain on Liquidation of subsidiary	-	-	-	0.15
Fair Value Adjustment on Investment	-	25.79	-	-
Miscellaneous income	6.08	12.58	2.79	10.38
Total other income	115.33	102.89	706.42	70.44

2. Expenditures 2.1 Personnel Expenses

Personnel expenses primarily consist of salaries, wages, bonus, Provision for compensated absences, gratuity benefits, contribution towards provident and other funds and staff welfare expenses.

2.1.1 Based on Consolidated Financial Statement:

(H in million)

Particulars	2023	% of Total Income	2022	% of Total Income	Change %
Salaries, wages and bonus	10,464.39	61.70	9,408.89	61.65	11.22
Gratuity expenses	62.35	0.37	49.00	0.32	27.24
Contribution to provident	529.27	3.12	478.19	3.13	10.68
and other funds
Staff welfare expenses	279.34	1.65	257.97	1.69	8.28
Total	11,335.35	66.83	10,194.05	66.80	11.20

2.1.2 Based on Standalone Financial Statement:

(H in million)

Particulars	2023	% of Total Income	2022	% of Total Income	Change %
Salaries, wages and bonus	5,629.39	57.77	5,174.12	63.03	8.80
Gratuity expenses	55.88	0.57	49.00	0.60	14.04
Contribution to provident	208.01	2.13	192.84	2.35	7.87
and other funds
Staff welfare expenses	121.13	1.24	117.65	1.43	2.96
Total	6,014.41	61.72	5,533.61	67.41	8.69

2.2 Finance costs (Interest expenses)

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
On borrowings	24.25	1.16	24.25	1.16
On lease liabilities	62.05	46.80	56.47	41.40
On fair value of contingent consideration	-	0.77	-	-
On income tax	3.20	0.25	0.46	0.08
Total	89.50	48.98	81.18	42.64

2.3 Depreciation and Amortisation Expense

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Depreciation of property, plant and equipment	263.37	216.05	188.52	155.23
Depreciation of investment property	1.47	1.47	1.47	1.47
Depreciation on right-of-use assets	131.50	111.01	46.30	36.56
Amortisation of intangible assets	147.70	21.25	3.66	2.57
Total Depreciation and Amortisation	544.04	349.78	239.95	195.83
% of Total income	3.21	2.29	2.46	2.39

2.4 Operational and other expenses

Operational and other expenses include power and fuel, expenses on travelling and conveyance, software subscription charges, non-capitalised lease rent, commission, communication, legal and professional expenses including subcontractor costs, cost of third party items, audit fees, the provision for doubtful debts (net), Foreign exchange fluctuation loss (net), advance written off, contributions towards corporate social responsibility and other miscellaneous items.

2.4.1 Based on Consolidated Financial Statement:

(H in million)

Particulars	2023	% of Total Income	2022	% of Total Income	Change %
Power and fuel	55.00	0.32	52.59	0.34	4.58
Rent - premises	62.63	0.37	62.08	0.41	0.88
Software subscription charges	216.53	1.28	174.75	1.15	23.91
Repair and maintenance	73.98	0.44	72.35	0.47	2.25
Commission	4.66	0.03	7.64	0.05	(39.00)
Travelling and conveyance	252.42	1.49	201.89	1.32	25.03
Communication costs	115.65	0.68	129.61	0.85	(10.77)
Legal and professional fees	1,437.77	8.48	1,495.80	8.82	(3.88)
Cost of third party items	295.01	1.74	267.83	1.75	10.15
Auditors remuneration	29.08	0.17	24.66	0.14	17.92
Provision for doubtful debts (net)	68.98	0.41	51.87	0.34	32.98
Loss on sale / discarding of property, plant and equipment (net)	4.48	0.03	-	-	100.00
Contribution towards corporate social responsibility	23.27	0.14	17.60	0.12	32.22
Foreign exchange fluctuation (net)	-	-	79.47	0.52	(100.00)
Miscellaneous expenses	346.90	2.05	328.68	2.15	5.54
Total	2,986.36	17.61	2,966.82	19.44	0.66

2.4.2 Based on Standalone Financial Statement:

Particulars	2023	% of Total Income	2022	% of Total Income	Change %
Power and fuel	34.02	0.35	33.35	0.41	2.01
Rent - premises	29.69	0.30	30.76	0.37	(3.48)
Software subscription charges	171.36	1.76	138.62	1.69	23.62
Repair and maintenance	53.75	0.55	53.45	0.65	0.56
Commission	4.66	0.05	7.62	0.09	(38.85)
Travelling and conveyance	171.91	1.76	128.32	1.56	33.97
Communication costs	81.13	0.83	95.05	1.16	(14.64)
Legal and professional fees	358.42	3.68	302.15	3.68	18.62
Auditors remuneration	6.87	0.07	6.30	0.08	9.05
Provision for doubtful debts (net)	68.87	0.71	46.72	0.57	47.41
Loss on sale / discard of property, plant and equipment (net)	0.10	0.00	-	-	100.00
Contribution towards corporate social responsibility	23.27	0.24	17.60	0.21	32.22
Foreign exchange fluctuation (net)	-	-	47.77	0.58	(100.00)
Miscellaneous expenses	223.82	2.30	189.06	2.30	18.39
Total	1,227.87	12.60	1,096.77	13.36	11.95

2.5 Tax expense

Tax expense comprises current tax and deferred tax.

(H in million)

	Consolidated		Standalone
Particulars	2023	2022	2023	2022
Profit Before Tax	2,000.22	1,701.57	2,181.88	1,340.49
Current tax	613.59	387.19	485.60	296.55
Deferred tax credit	(14.43)	(82.43)	(38.29)	(83.17)
Total Tax Expense	599.16	304.76	447.31	213.38
Effective Tax Rate (%)	29.95	17.91	20.50	15.92

Effective Tax Rate in Consolidated Financial Statement is increased due to amortisations of intangibles acquired via acquisitions which is non tax deductible.

J. Details of significant changes i.e. change of 25% or more as compared to the immediately previous financial year, in key financial ratios, along with detailed explanations therefore, including:

		Consolidated			Standalone
Ratio	2023	2022	Variance	2023	2022	Variance
Debtors Turnover (in days)	55	52	5.0%	44	46	(3.6)%
Inventory Turnover	NA	NA		NA	NA
Interest Coverage*	22.12	33.64	(34.3)%	19.18	30.79	(37.7)%
Current Ratio&	1.70	3.18	-46.58%	1.25	3.37	(62.80)%
Debt Equity Ratio@	0.21	0.14	51.74%	0.24	0.16	52.41%
Operating Profit Margin	11.8%	10.9%	8.1%	17.2%	16.1%	6.8%
Net Profit Margin#	8.32%	9.21%	(9.74)%	19.19%	13.85%	38.57%
Return on Net worth	24.22%	27.78%	(12.80)%	37.85%	30.65%	23.48%

^* Interest coverage ratio has decreased mainly due to increase in finance cost on short term borrowings.

& Current ratio has decreased due to increase in short-term borrowings

@ Debt equity ratio has increased due to increase in short-term borrowings

# Increase in Standalone net profit margins is mainly due to dividend received from subsidiaries during last year.

Note:

Debtors Turnover = Average Trade Receivables /	Debt Equity Ratio = Total Debt
Revenue from operations * 360	(borrowings + lease liabilities) / Shareholders equity
Operating Profit = Profit before tax (PBT)	Operating Profit Margin = Operating profit / Revenue
less Finance cost, exceptional items and other income	Net Profit Margin = Profit after tax (PAT) / Revenue
Interest Coverage = Operating profit / Finance cost	Return on Net worth = Profit after tax (PAT) /
Current Ratio = Current Assets / Current Liability	Average shareholders equity.

On behalf of the Board

For R SYSTEMS INTERNATIONAL LIMITED

Ruchica Gupta	Nitesh Bansal
(DIN: 06912329)	(DIN: 10170738)
(Chairperson & Non-Executive	(Managing Director &
Independent Director)	Chief Executive Officer)
Place : Delhi	Place : Frisco Tx, USA
Date : May 02, 2024	Date : May 02, 2024