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The past several months have been undoubtedly the most challenging times for Ricoh India and all our stakeholders. We, part of the Ricoh Group, known for our stellar record in Corporate Social Responsibility, Ethics & Integrity and Governance, became a victim of fraud and mismanagement. What followed was a series of protracted investigations, which took almost a year to conclude. In the process, the company failed to submit, its financial results for the September and December of 2015 quarters to the stock exchange, and as a result share trading was suspended in May 2016.
The Company, along with the strong support of our parent Ricoh Company Limited, acted quickly to identify the issues and initiate corrective actions. In March 2016 the Board directed the former leadership team to proceed on leave. The new management team was put in place to ensure Business
Continuity and expedite investigations. Meanwhile, the company voluntarily alerted the regulators about the suspected falsification of accounts, with requests to investigate the situation and punish the wrongdoers.
Given the magnitude of the problems and the complexities involved, we realized that the investigations might take time to conclude. Hence, without waiting for the investigations and audit to be completed, we worked swiftly on making an unaudited estimate of the total losses made by the company for the year ended 31 March 2016. Ricoh Company Limited agreed to infuse funds into the Company equivalent to this estimated loss, an action which was unprecedented in the history of corporate governance and responsibility. However, this posed another challenge to Ricoh Company Limited, considering the existing shareholding patterns where promoters held 73.6% of the shares - any additional capital infusion would have resulted in a compulsory delisting of shares, which would have put the minority shareholders at a disadvantage. In order to ensure that there is no liability on minority shareholders and the shareholding pattern remained unchanged Ricoh Company Limited petitioned the National Company Law Tribunal to allow the existing shares of the Promoters to be cancelled without reduction in capital and to be simultaneously recapitalized to the extent of its cancelled capital with premium to the extent of the estimated losses suffered. As soon as this was approved by the National Company Law Tribunal and shareholders, Rs 1,123 Crores were infused, which has helped to ensure stability and the ongoing viability of Ricoh India for all stakeholders - our customers, our suppliers, our bankers, our employees and our shareholders.
Clearly, it was time to introspect and review our Company’s governance processes and internal controls. We have been working on identifying the root causes of these problems so as to ensure that such an incident will never re-occur. Measures have been initiated for making our financial systems robust, tamper proof and transparent, for which Ricoh’s global best practices are being replicated. We have been strengthening our policies, processes and internal controls, and enhancing our internal IT infrastructure and automation. We are also strengthening the leadership and organization structure, with focus on functions such as Compliance, Finance and Internal Audit. We are now working expeditiously to complete the financial results for pending periods. With all necessary filings in place, we will initiate the process of re-instating the trading in our shares.
In spite of the existing challenges in the domestic and global economic scenario, the Indian economy continues to be one of the fastest growing economies in the world. With its wide range of products and solutions, spanning across Printing & Document Management, IT Services and Visual Communications Solutions, Ricoh India is uniquely positioned to capture the market opportunities, providing customized solutions to meet our customers’ unique needs based on their Industry Verticals. We will drive our business strategies to continue to deliver superior technology, products and services to enhance employee productivity and office efficiency.
Although it may take some time for this blot on our name to completely go away, the significant point is that the fundamentals of the Company continues to remain intact. We continue to provide the same cutting edge technology solutions that helps our customers to transform the way they work and improve productivity. We will continue to benefit from Ricoh’s global presence, experience and relationships. We have an established network and infrastructure that can provide customized solutions based on the customer''s specific needs anywhere in India, and across the globe, with a single contact point of contact and service standards. We continue to have a strong and loyal partner base across our business who share our values and beliefs. Last but not the least, our employees who represent an immense wealth of knowledge and experience in-house, continue to work tirelessly to deliver value to all our stakeholders.
We will be guided by the Ricoh Group’s founding principles, called The spirit of Three Loves, “Love your neighbor”, “Love your work”, “Love your country”, so as to constantly improve and contribute to the wellbeing of our stakeholders, including our employees, customers, shareholders, and society at large. While we continue to build the foundation for a new Ricoh India for future growth and sustainability, our top priority now is to make our business profitable. We will continuously challenge ourselves to look at all opportunities around us to improve productivity and efficiency.
Our journey during the past few months has been an arduous one - there have been moments of anxiety and frustration. But what kept us going was the immense confidence, understanding and patience shown by our stakeholders.
Thank you all for your trust and confidence in us. I am now more than convinced that we will come out of this difficult times soon - stronger, wiser and tougher.
A T Rajah