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Stakeholders’ Education | Corporate Governance Research | Corporate Governance Score | Proxy Advisory
STAKEHOLDERS EMPOWERMENT SERVICES
1 | P A G E
SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
FCS Software Solutions Ltd. www.fcsltd.com
FCS Software Solutions Ltd 31st May, 2016 TABLE 1 - MARKET DATA (STANDALONE) (As on 31st May, 2016)
NSE Code - FCSSOFT NSE Market Price (₹) 0.30 NSE Market Cap. (₹ Cr.) 53.11
Sector - IT - Software Face Value (₹) 1.00 Equity (₹ Cr.) 165.96
52-week High/Low (₹) 0.60/0.20 Net worth (₹ Cr.) 585.19
Business Group - Indian Private TTM P/E 32.00 Traded Volume (Shares) 1,78,174
Year of Incorporation - 1993 TTM P/BV 0.00 Traded Volume (lacs) 0.53
Source - Capitaline
Corporate Office: COMPANY BACKGROUND
205, 2nd Floor, Agrawal Chamber
IV, FCS Software Solutions Ltd is a leading provider of IT services. The Company is engaged in
marketing and providing information technology (IT) and information technology enabled
services (ITeS) in the United States. The Company have a huge offshore center in India
that caters to a global clientele. The Company has two wholly owned subsidiaries, namely
FCS Software Solutions America Ltd. and FCS Software Middle East FZE. FCS Software
Solutions Ltd was incorporated on 5th May, 1993 as a private limited company with the
name Fateh Computer Services Pvt Ltd. In the year 1994, the company acquired a plot at
Noida for building their first delivery center. In April 2010, the company entered into
agreement with Dewas Udyog, a wholly owned unit of MP State Industries Corp Ltd for
work together on mutually exclusive basis for the identified projects. In June 2010, the
Company secured a three-year contract in Middle East. The three-year contract includes
data center consolidation, commissioning/ decommissioning managed services, space
optimization, energy management, network optimization, capacity planning, 24/7
monitoring, latency management, patch, anti-virus, backups, archiving and disaster
recovery management as its scope of work. In July 2010, the company launched mobile
applications division with ₹ 200 million planned investment for providing mobile
application services. In July 2010, the company inaugurated the international
development center which is spread over 25,000 sq. feet in the Noida Special Economic
Zone to cater to growing global demand.
27, Veer Sawarker Blok Vikas Road,
Delhi - 110092
Company Website:
www.fcsltd.com
TABLE 2 - PRICE PERFORMANCE
30th May,
2016
29th May,
2015
30th May,
2014
% Change CAGR for 2
years 2016 vs 2015 2015 vs 2014
Price (₹) 0.35 0.30 0.45 16.67% -33.33% -11.81%
Trading Volume (Shares)
(yearly avg.) 5,57,631 4,86,763 5,38,218 14.56% -9.56% -
NSE Market Cap. (in ₹ Cr.) 58.09 49.79 74.68 16.67% -33.33% -11.80%
Source - Money Control
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2 | P A G E
SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
FCS Software Solutions Ltd. www.fcsltd.com
TABLE 3 - FINANCIALS
(₹ Cr.) 2015 2014 2013 % Change CAGR for 2
years 2015 vs 2014 2014 vs 2013
Net Worth 585.19 581.63 542.36 0.61% 7.24% 3.87%
Current Assets 112.11 99.90 106.22 12.22% -5.95% 2.74%
Non-Current Assets 489.00 496.30 465.78 -1.47% 6.55% 2.46%
Total Assets 601.10 596.20 571.99 0.82% 4.23% 2.51%
Investments 497.71 468.72 451.92 6.18% 3.72% 4.94%
Finance Cost 0.84 0.88 1.06 -4.55% -16.98% -10.98%
Long Term Liabilities 0.63 0.59 0.52 6.78% 13.46% 10.07%
Current Liabilities 11.78 13.98 19.11 -15.74% -26.84% -21.49%
Turnover 54.85 83.08 57.46 -33.98% 44.59% -2.30%
Profit After Tax (PAT - ₹ Cr.) 0.86 -3.82 0.69 N.A. -6.54% 0.12%
EPS (₹) 0.01 -0.02 0.01 N.A. -3.00% -
Source - Money Control/Annual Report
AUDIT QUALIFICATIONS
Audit Qualifications in last 3 years: The Auditors have not made any qualification in their Reports for FY 2013, FY 2014 and
2015. However, the Auditors have mentioned in their report for FY 2014-15 in other matters that they did not audit the
financial statements of four subsidiaries, whose financial statements reflect total assets of ₹ 250.23 crores as at 31st March,
2015, total revenues of ₹ 16.83 crores and net cash flows amounting to ₹ 3.11 crores for the year ended on that date as
considered in the consolidated financial statements. These financial statements have been audited by other auditors whose
reports have been furnished to them by the management and their opinion on the consolidated financial statements, in so far
as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of sub-sections (3)
and (11) of Section 143 of the Act, insofar as it relates to the aforesaid subsidiaries, is based solely on the reports of the other
auditors.
Response Comment
Frequency of Qualifications - The Auditors have not made any qualification.
Have the auditors made any adverse
remark in last 3 years? -
The Auditors have not made any adverse remark in last 3
years.
Are the material accounts audited by the
Principal Auditors? Yes -
Do the financial statements include
material unaudited financial statements? No -
TABLE 4: BOARD PROFILE (As on 31st March, 2015)
Regulatory Norms Response
% of Independent Directors on the Board 50% 50%
% of Promoter Directors on the Board - 17%
Number of Women Directors on the Board At least 1 1
Classification of Chairman of the Board - Executive Promoter Director
Is the post of Chairman and MD/CEO held by the same person? - Yes
Average attendance of Directors in the Board meetings (%) - 72.22%
Source - Money Control/Annual Report
Composition of Board: As per Regulation 17(i)(b) of the Listing Regulations, 2015, the Company should have at least 50%
Independent Directors as the Company has executive promoter director the Chairman of the Board. The Board as on 31st March,
2015 consists of 50 % of Independent Directors and hence, it meets the regulatory requirements.
Board Diversity: The Company has 6 directors out of which 5 are male and 1 is female.
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SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
FCS Software Solutions Ltd. www.fcsltd.com
Holding of position of MD/ CEO & Chairman by same person: The Company has appointed Mr. Dalip Kumar as the Chairman
and Managing Director of the Company. Appointment of a single person as the Chairman and Managing Director of the
Company is not a good governance practice as it may lead to concentration of power in a single person.
TABLE 5 - FINANCIAL RATIOS
Ratios 2015 2014 2013 % Change
2015 vs 2014 2014 vs 2013
Turn
ove
r
Rat
ios
Inventory Turnover - 29.05 15.40 - 88.57%
Debtors Turnover 6.51 3.39 2.67 92.03% 26.96%
Fixed asset Turnover 0.11 0.17 0.12 -32.99% 35.70%
Current Asset Turnover 0.49 0.83 0.54 -41.17% 53.73%
Ret
urn
Rat
ios
Operating Profit Margin 2.41% -4.68% 0.37% N.A. -1381.15%
Net Profit Margin 1.57% -4.60% 1.20% N.A. -482.90%
Return on Assets (ROA) 0.14% -0.64% 0.12% N.A. -631.14%
Return on Equity (ROE) 0.15% -0.66% 0.13% N.A. -616.24%
Return on Capital Employed (ROCE) 1.26% N.A. 0.90% N.A. N.A.
Liq
uid
ity
Rat
ios
Current Ratio 9.52 7.15 5.56 33.18% 28.56%
Quick Ratio 9.52 6.94 5.36 37.11% 29.43%
Cash Ratio 8.80 5.19 4.24 69.67% 22.44%
Working Capital Turnover ratio 0.55 0.97 0.66 -43.46% 46.59%
Solv
ency
Rat
ios Debt to equity ratio 0.01 0.01 0.03 -28.87% -48.92%
Interest Coverage Ratio 2.57 N.A. 1.20 N.A. N.A.
Trad
ing
Rat
ios
Market Cap / Sales 1.12 0.74 1.07 51.47% -30.84%
Market Cap/ Net Worth 0.10 0.11 0.11 -0.61% -6.75%
Market Cap/PAT 71.41 N.A. 89.00 N.A. N.A.
Market Cap/EBITDA 9.86 150.66 13.62 -93.46% 1,006.31%
Trading Volume (shares)
(avg. of 1 year) 5,54,765 5,14,019 5,12,851 7.93% 0.23%
Trading Volume (shares)
(high in 1 year) 61,08,780 29,37,347 78,45,739 107.97% -62.56%
Trading Volume (shares)
(low in 1 year) 35,744 81,587 11,160 -56.19% 631.07%
Ratio - High/low trading volume 170.90 36.00 703.02 374.70% -94.88%
Ratio - High/average trading volume 11.01 5.71 15.30 92.69% -62.65%
Source - Money Control
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SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
FCS Software Solutions Ltd. www.fcsltd.com
TABLE 6 (A): OWNERSHIP & MANAGEMENT RISKS
Dec' 2015 Dec' 2014 Dec' 2013 Comments
Shar
eho
ldin
g
Promoter shareholding 20.24% 20.24% 14.76% The Company alloted 40 Crore Equity Shares of ₹
1/- each ranking pari-passu in lieu of 40
Convertible Warrants allotted on Preferential
Basis to the Promoter and non-promoter group
on 26th February, 2014. The promoter
shareholding increased from 14.76% in Dec' 2013
to 20.24% in Dec' 2015 due to allotment of 15.00
crore shares on conversion of warrants. The
shareholding of public institution decreased by
0.02% from Dec' 2013 to Dec' 2015 and that of
public others decreased from 85.19% in Dec'2013
to 79.73% in Dec' 2015. The promoters have not
pledged any shares
Public - Institutional shareholding
0.03% 0.03% 0.05%
Public - Others shareholding
79.73% 79.73% 85.19%
Non Promoter Non Public Shareholding
0.00% 0.00% 0.00%
TABLE 6 (B): OWNERSHIP & MANAGEMENT RISKS
Market Activity of Promoters No
Preferential issue to promoters Yes, preferential issue of warrants was made to the promoter’s shareholders
Preferential issue to others Yes, preferential issue of shares was also made to non-promoter shareholders
GDRs issued by the Company The Company did not issue any GDRs during last three years. The Company has issued GDR in FY 2009-10.
Issue of ESOPs/Issue of shares other than Preferential allotment
None
Source - Annual Report
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SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
FCS Software Solutions Ltd. www.fcsltd.com
Glossary
Equity: The equity shares capital of the Company
Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders’ funds of the Company
Turnover: The revenue earned from the operations of the Company
EPS: Earning Per Share is net profit earned by the Company per share
𝐸𝑃𝑆 =Profit After Tax
Number of outstanding shares
P/E ratio: It is the ratio of the Company’s share price to earnings per share of the Company
𝑃/𝐸 𝑟𝑎𝑡𝑖𝑜 =Price of each share
Earnings per share
Current Assets: Cash and other assets that are expected to be converted to cash in one year
Fixed Assets: assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land,
buildings, and equipment
Total Assets: Current Assets + Fixed Assets
Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the
future.
Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges
incurred during the year in relation to borrowed money.
Long Term Liabilities: Long-term liabilities are liabilities with a maturity period of over one year.
Current Liabilities: A company's debts or obligations that are due within one year.
Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over
a period.
𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Inventory
Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business
can turn its accounts receivable into cash during a period
𝐷𝑒𝑏𝑡𝑜𝑟𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Accounts recievables
Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets
𝐹𝑖𝑥𝑒𝑑 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Fixed Assets
Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =Sales Turnover
Current Assets
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SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
FCS Software Solutions Ltd. www.fcsltd.com
Operating Profit Margin: Operating margin is a measurement of what proportion of a Company’s revenue is left over after
paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company’s operating
income (also known as “operating profit”) during a given period by its sales during the same period.
𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =Operating profit
Sales Turnover
Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡 𝑀𝑎𝑟𝑔𝑖𝑛 =Net profit
Sales Turnover
Return on Assets: ROA tells you what earnings were generated from invested capital (assets)
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐴𝑠𝑠𝑒𝑡𝑠 =Net profit
Total Assets
Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders’
equity.
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐸𝑞𝑢𝑖𝑡𝑦 =Net profit
Net worth
Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability
and the efficiency with which its capital is employed.
𝑅𝑒𝑡𝑢𝑟𝑛 𝑜𝑛 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑑 =Net profit
Total Debt + Equity share capital
Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts
over the next 12 months. It compares a firm's current assets to its current liabilities.
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =Current Assets
Current Liabilities
Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities.
𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories
Current Liabilities
Cash ratio: The ratio of the liquid assets of a Company to its current liabilities.
𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =Current Assets − Inventories − Account Recievables
Current Liabilities
Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a
Company's effectiveness in using its working capital.
𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟 𝑟𝑎𝑡𝑖𝑜 =𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
Current Assets − Current Liabilities
Debt to Equity ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of
shareholders' equity and debt used to finance a company's assets.
𝐷𝑒𝑏𝑡 𝑡𝑜 𝐸𝑞𝑢𝑖𝑡𝑦 𝑟𝑎𝑡𝑖𝑜 =𝑆ℎ𝑜𝑟𝑡 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡 + 𝐿𝑜𝑛𝑔 𝑇𝑒𝑟𝑚 𝐷𝑒𝑏𝑡
𝑁𝑒𝑡 𝑊𝑜𝑟𝑡ℎ
Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a
Company can pay interest on outstanding debt.
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝐶𝑜𝑣𝑒𝑟𝑎𝑔𝑒 𝑅𝑎𝑡𝑖𝑜 =𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐵𝑒𝑓𝑜𝑟𝑒 𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑎𝑛𝑑 𝑇𝑎𝑥
𝐹𝑖𝑛𝑎𝑛𝑐𝑒 𝐶𝑜𝑠𝑡
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SECTOR: IT-SOFTWARE REPORTING DATE: 31ST MAY, 2016
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Market Cap/Sales ratio: Market Cap/sales ratio, Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated
by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per-share stock price by
the per-share revenue.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑆𝑎𝑙𝑒𝑠 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝑆𝑎𝑙𝑒𝑠 𝑇𝑢𝑟𝑛𝑜𝑣𝑒𝑟
Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝑁𝑒𝑡𝑤𝑜𝑟𝑡ℎ
Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝑃𝐴𝑇 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝑛𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡
Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company’s market cap to EBITDA.
𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝/𝐸𝐵𝐼𝑇𝐷𝐴 𝑟𝑎𝑡𝑖𝑜 =𝑀𝑎𝑟𝑘𝑒𝑡 𝐶𝑎𝑝
𝐸𝐵𝐼𝑇𝐷𝐴
Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year
Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year
Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year
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Research Analyst: Sumit Tank