Prospectus of R Systems International Limited
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C M Y B PROSPECTUS Please read Section 60B of the Companies Act, 1956 Dated April 3, 2006 100% Book Building Issue R SYSTEMS INTERNATIONAL LIMITED (Originally incorporated as R Systems (India) Private Limited on May 14, 1993 under the Companies Act, 1956, with registration number 55-053579, with its registered office at B-104A, Greater Kailash - I, New Delhi - 110 048. Subsequently, the name was changed to R Systems (India) Limited on April 13, 2000. The name was changed to R Systems International Limited on August 7, 2000.) Registered Office: B-104A, Greater Kailash - I, New Delhi - 110 048. Corporate Office: C-40, Sector-59, Noida, Uttar Pradesh - 201 307. Tel.: +91 120 430 3500 Fax: +91 120 258 7123 Contact person: Mr. Nand Sardana, Company Secretary-cum-Compliance Officer Website: www.rsystems.com Email: [email protected] PUBLIC OFFER OF 4,408,355 EQUITY SHARES OF RS. 10 EACH FOR CASH AT A PREMIUM OF RS. 240 PER EQUITY SHARE AND AT A PRICE OF RS. 250 PER EQUITY SHARE AGGREGATING RS. 1102.09 MILLION, COMPRISING FRESH ISSUE OF 2,825,000 EQUITY SHARES OF RS. 10 EACH BY R SYSTEMS INTERNATIONAL LIMITED (REFERRED TO AS THE "COMPANY") AND AN OFFER FOR SALE OF AGGREGATE 1,583,355 EQUITY SHARES OF RS. 10 EACH BY THE SELLING SHAREHOLDERS (AS DEFINED HEREIN) (THE FRESH ISSUE AND THE OFFER FOR SALE ARE JOINTLY REFERRED TO HEREIN AS THE "OFFER"). THE OFFER COMPRISES OF A RESERVATION FOR EMPLOYEES OF 440,355 EQUITY SHARES OF RS. 10 EACH AND A NET OFFER TO THE PUBLIC OF 3,968,000 EQUITY SHARES OF RS. 10 EACH (THE "NET OFFER"). THE OFFER WOULD CONSTITUTE 32.57% OF THE FULLY DILUTED POST OFFER PAID-UP CAPITAL OF OUR COMPANY. ISSUE PRICE : RS. 250 PER EQUITY SHARE OF FACE VALUE RS. 10 EACH. THE OFFER PRICE IS 25 TIMES THE FACE VALUE In case of revision in the Price Band, the Bidding Period will be extended for three additional days after revision of the Price Band subject to the Bidding Period/Offer Period not exceeding 10 working days. Any revision in the Price Band and the revised Bidding Period, if applicable, will be widely disseminated by notification to the National Stock Exchange of India Limited and the Bombay Stock Exchange Limited, by issuing a press release, and also by indicating the change on the websites of the Book Running Lead Manager and at the terminals of the Syndicate. The Offer is being made through the 100% Book Building Process wherein up to 50% of the Net Offer to the public shall be allocated on a proportionate basis to Qualified Institutional Buyers, out of which 5% of the QIB Portion shall be available for allocation on a proportionate basis to Mutual Funds only, and the remainder of the QIB Portion shall be available for allocation on a proportionate basis to all Qualified Institutional Buyers, including Mutual Funds, subject to valid Bids being received at or above Offer Price. Further, at least 15% of the Net Offer to the public shall be available for allocation on a proportionate basis to Non-Institutional Bidders and at least 35% of the Net Offer to the public shall be available for allocation on a proportionate basis to Retail Individual Bidders, subject to valid Bids being received at or above the Offer Price. RISKS IN RELATION TO FIRST OFFER This being the first Offer of Equity Shares of the Company, there has been no formal market for the Equity Shares of the Company. The face value of the Equity Shares is Rs. 10 (Rupees Ten only) and the Offer Price is 25 times of the face value. The Offer Price (as determined by the Company and the Selling Shareholders, in consultation with the Book Running Lead Manager, on the basis of assessment of market demand for the Equity Shares by way of book building) should not be taken to be indicative of the market price of the Equity Shares after the Equity Shares are listed. No assurance can be given regarding an active and/or sustained trading in the Equity Shares of the Company nor regarding the price at which the Equity Shares will be traded after listing. GENERAL RISKS Investments in equity and equity-related securities involve a degree of risk and investors should not invest any funds in this Offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this Offer. For taking an investment decision, investors must rely on their own examination of the Company and the Offer including the risks involved. The Equity Shares offered in the Offer have not been recommended or approved by the Securities and Exchange Board of India ("SEBI"), nor does SEBI guarantee the accuracy or adequacy of this Prospectus. We have not obtained any grading for this Offer of Equity Shares. Specific attention of the investors is invited to the summarized and detailed statements in Risk Factors beginning on page no. iii. COMPANY'S ABSOLUTE RESPONSIBILITY The Company, having made all reasonable inquiries, accepts responsibility for and confirms that this Prospectus contains all information with regard to the Company and the Offer, which is material in the context of the Offer, that the information contained in this Prospectus is true and correct in all material aspects and is not misleading in any material respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Prospectus as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect. LISTING ARRANGEMENT The Equity Shares offered through this Prospectus are proposed to be listed on the NSE and BSE. We have received in-principle approval from these Stock Exchanges for the listing of our Equity Shares pursuant to letters dated March 6, 2006 and March 10, 2006 respectively. For purposes of this Offer, the Designated Stock Exchange is NSE. BOOK RUNNING LEAD MANAGER REGISTRAR TO THE ISSUE IL&FS Investsmart Limited Intime Spectrum Registry Limited The IL&FS Financial Centre C-13, Pannalal Silk Mills Compound, Plot No. C-22, G Block, Bandra Kurla Complex, L B S Marg, Bhandup (W), Bandra (East), Mumbai – 400 051. Mumbai – 400 078. Tel.: +91 22 2653 3333 Fax: +91 22 5693 1862 Tel.: +91 22 2596 0320 Fax: +91 22 2596 0329 Email: [email protected] Email: [email protected] Website: www.investsmartindia.com Website: www.intimespectrum.com OFFER PROGRAMME BID / OFFER OPENED ON : MARCH 28, 2006 BID / OFFER CLOSED ON : MARCH 31, 2006 C M Y B TABLE OF CONTENTS Page No DEFINITIONS AND ABBREVIATIONS DEFINITIONS ................................................................................................................................................................ A CONVENTIONAL AND GENERAL TERMS .................................................................................................................. A OFFER RELATED TERMS ........................................................................................................................................... C COMPANY/INDUSTRY RELATED TERMS .................................................................................................................. F RISK FACTORS CERTAIN CONVENTIONS: USE OF FINANCIAL AND MARKET DATA .................................................................... i FORWARD LOOKING STATEMENTS ......................................................................................................................... ii RISK FACTORS............................................................................................................................................................. iii INTRODUCTION SUMMARY ..................................................................................................................................................................... 1 THE OFFER ................................................................................................................................................................... 3 SUMMARY OF UNCONSOLIDATED FINANCIAL DATA ............................................................................................. 4 GENERAL INFORMATION ........................................................................................................................................... 6 CAPITAL STRUCTURE ................................................................................................................................................. 11 OBJECTS OF THE OFFER ........................................................................................................................................... 27 OFFER STRUCTURE .................................................................................................................................................... 37 BASIS FOR THE OFFER PRICE .................................................................................................................................. 39 STATEMENT OF TAX BENEFITS ................................................................................................................................ 41 ABOUT THE COMPANY INDUSTRY OVERVIEW ................................................................................................................................................ 47 BUSINESS OVERVIEW ................................................................................................................................................ 47 KEY INDUSTRY - REGULATION ................................................................................................................................