Your directors take great pleasure in presenting the Twenty Fifth Annual Report on thebusiness and operations of R Systems International Limited ("R Systems" or the"Company") together with the audited _nancial statements of accounts for theyear ended December 31 2018.
1. Financial Results
The _nancial statements are prepared in accordance with Indian Accounting Standards(Ind AS'). In accordance with the noti_cation issued by Ministry Corporate affairsthe Company has adopted Ind AS as noti_ed under the Companies (India Accounting Standards)Rules 2015. These are the Company's _rst Ind AS _nancial statement. The date oftransition is January 01 2017 accordingly _gures for the _nancial year 2017 has beenrestated in accordance with Ind AS.
a. Standalone _nancial results of R Systems
(Rs. in Millions)
|Particulars ||Financial Year ended |
| ||31.12.2018 ||31.12.2017 |
|Total Revenue ||3172.13 ||2637.53 |
|Pro_t before depreciation exceptional items and tax ||478.45 ||416.23 |
|Less : Depreciation and amortisation expense ||73.01 ||73.74 |
|Pro_t before tax ||405.44 ||342.49 |
|Less : Current tax ||99.35 ||133.41 |
|Less: MAT credit entitlement ||- ||(5.84) |
|Less : Deferred tax (credit) / expense ||(4.05) ||(13.16) |
|Pro_t after tax ||310.14 ||228.08 |
|Other comprehensive income ||(0.50) ||8.04 |
|Total comprehensive income for the year ||309.64 ||236.12 |
|Surplus in the statement of pro_t and loss || || |
|Balance as per last _nancial statement ||1900.20 ||1672.12 |
|Add: Pro_t for the current year ||310.14 ||228.08 |
|Less : Dividend paid ||85.49 ||- |
|Net surplus in statement of pro_t and loss ||2124.85 ||1900.20 |
|EPS-Basic ||2.52 ||1.85 |
b. Consolidated _nancial results of R Systems and its Subsidiaries
(Rs. in Millions)
|Particulars ||Financial Year ended |
| ||31.12.2018 ||31.12.2017 |
|Total Revenue ||6998.89 ||5926.38 |
|Pro_t before depreciation exceptional items and tax ||762.30 ||488.24 |
|Less : Depreciation and amortisation expense ||135.48 ||134.80 |
|Pro_t before tax ||626.82 ||353.44 |
|Less : Current tax ||124.22 ||149.89 |
|Less: MAT credit entitlement ||- ||(5.84) |
|Less : Deferred tax (credit) / expense ||(7.85) ||(15.95) |
|Pro_t after tax ||510.45 ||225.34 |
|Other comprehensive income ||93.55 ||(6.40) |
|Total comprehensive income for the year ||604.00 ||218.94 |
|Surplus in the statement of pro_t and loss || || |
|Balance as per last _nancial statement ||2007.25 ||1781.91 |
|Add: Pro_t for the current year ||510.45 ||225.34 |
|Less : Dividend paid ||85.49 ||- |
|Net surplus in statement of pro_t and loss ||2432.21 ||2007.25 |
|EPS-Basic ||4.14 ||1.83 |
2. Results of Operations Standalone Accounts
Total income during the year 2018 was Rs. 3172.13 mn. as compared to Rs. 2637.53 mn.during the year 2017 an increase of 21.27%.
Profit after tax was Rs. 310.14 mn. during the year 2018 as compared to Rs. 228.08 mn.during 2017 an increase of 35.98%.
Basic earnings per share (of face value of Re. 1/- each) was Rs. 2.52 for the year 2018as compared to Rs. 1.85 for the year 2017 an increase of 35.92%.
Consolidated total income during the year 2018 was Rs. 6998.89 mn. as compared to Rs.5926.38 mn. during the year 2017 an increase of 18.10%.
Profit after tax was Rs. 510.45 mn. during the year 2018 as compared to Rs. 225.34 mn.during 2017 an increase of 126.52%.
Basic earnings per share (of face value of Re. 1/- each) was Rs. 4.14 for the year 2018as compared to Rs. 1.83 for the year 2017 an increase of 126.43%.
The state of affairs of the Company is presented as part of Management Discussion andAnalysis Report forming part of this report.
3. Appropriations and Reserves Dividend
The members may also note that during the year 2018 the Board of Directors haddeclared an interim dividend of Re. 0.60 per equity share of Re. 1/- each i.e. 60% at itsmeeting held on May 04 2018. The said Dividend was paid to shareholders on June 01 2018.The Board of Directors (the "Board") has not recommended any _nal dividend forthe _nancial year ended December 31 2018.
The register of members and share transfer books shall remain closed from May 24 2019to May 28 2019 both days inclusive.
Transfer to Reserves
In order to augment resources your Directors do not propose to transfer any amount toreserves.
R Systems is a global technology AI/ Analytics services and knowledge services leader.We deliver AI-driven solutions to clients across industries thus delivering on thepromise of digital transformation. Our technology offerings include product engineeringcloud enablement QA testing and digital platforms and solutions. This includes solutionofferings i.e. Microsoft Infor JDA and QlikView etc. through our IBIZ and ECnetsubsidiaries in South East Asia. AI/ Analytics services include advanced analyticsmachine learning / arti_cial intelligence business analytics and automation. R Systems'design services include UX engineering visual design and mobile user experience. Ourknowledge service offerings cover revenue cycle management back office service technicalsupport and customer care using multi-lingual capabilities and global delivery platform. RSystems rapidly growing customer list includes a variety of Fortune 1000 government andmid-sized organizations across a wide range of industry verticals including TelecomTechnology Healthcare & Life Science Finance & Insurance and Retail &e-commerce and has served twenty one million dollar plus customer during the year 2018. RSystems maintains sixteen development and service centres to serve customers in USAEurope and the Far East. There were no changes in the nature of the Company's business andgenerally in the classes of business in which the Company has an interest and in thebusiness carried on by the subsidiaries during the year under review. For details ofCompany's subsidiaries please refer note number 15 relating to subsidiaries.
During the year under review on November 20 2018 the Company has received approvalfrom Department of Commerce Ministry of Commerce & Industry Government of India forexpansion of existing Special Economic Zone' (SEZ) facility located at Greater NoidaWest (NCR) by addition of approx. 28105 sq. ft. located at Greater Noida West (NCR).
R Systems has continuously invested in processes people training informationsystems quality standards frameworks tools and methodologies to mitigate the risksassociated with execution of projects. Adoption of quality models and practices such asthe Capability Maturity Model Integration (CMMI) and People Capability Maturity Model(PCMM) practices for processes have ensured that risks are identi_ed and mitigated atvarious levels in the planning and execution process.
R Systems journey on various quality standards/models is as follows:
During the year 2018 The IT & BPO Division has been re-certi_ed with ISO27001:2013 standard.
In Addition for BPO division R Systems has got SOC2 Type 2 Reporting for one of themajor healthcare clients. HIPAA also has been implemented and tested with zeronon-compliance in one of the major clients in Healthcare Domain. The BPO division hasmigrated their QMS into ISO 9001:2015 version from the existing ISO 9001:2008 version.Apart from that R Systems IT Infrastructure along with the projects/process/applicationsin scope has got PCI DSS Certi_cation on latest version V3.2.1.
As of the date of this report Noida IT center is CMMI level 5 (Ver.1.3) PCMM Level 5ISO 9001:2015 ISO 27001:2013 certi_ed. Noida BPO center is PCMM Level 5 ISO 27001:2013certi_ed and also for speci_c client(s) it is SOC2 Type 2 HIPAA compliant and PCI-DSS(ver.3.2.1) certi_ed for (IT Infrastructure along with the projects/process/applicationsin scope).
To maintain and strengthen competitive strengths R Systems continues to makeinvestments in its unique and proprietary with best practices tools and methodologiesfor flawless execution and consistent delivery of high quality software.
The pSuite framework offers services along the entire software lifecycle that includestechnology consulting architecture design and development professional servicestesting maintenance customer care and technical support. R Systems expects that itstechnology focus investment in processes talent and methodologies will enable it todistinguish itself from competition as it seeks to provide services to technology /productcompanies.
6. Directors & Key Managerial Personnels (KMP)
Mr. Avirag Jain was appointed as Whole-time Director (Designated as Director and ChiefTechnology Officer) of the Company for a period of three years commencing from August 032017 at the 24th Annual General Meeting of the Company held on May 25 2018.
Pursuant to the provisions of Section 152 of the Companies Act 2013 ("Act")read with Articles of Association of the Company Mr. Avirag Jain Director and ChiefTechnology Officer is liable to retire by rotation at the ensuing Annual General Meeting(AGM) and being eligible offers himself for re-appointment.
The brief pro_le of Mr. Avirag Jain proposed to be re-appointed forms part of theCorporate Governance Report and Notice for convening the AGM.
During the year under review the Board of Directors appointed Mr. Bhasker Dubey asCompany Secretary & Compliance Officer w.e.f. February 10 2018 upon resignation ofMr. Ashish Thakur.
Further on December 19 2018 shareholders approval was accorded for re-appointment ofMr. Satinder Singh Rekhi as Managing Director for a period of 5 years w.e.f. January 012019.
None of the directors of the Company is disquali_ed as per the provisions of Section164(2) of the Act. The Directors of R Systems have made necessary disclosures asrequired under various provisions of the Companies Act 2013 and Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015(Hereinafter referred as "Listing Regulations").
As required under Section 149 of the Companies Act 2013 and Listing Regulations allthe Independent Directors have submitted the declarations that they meet the criteria ofindependence as laid down therein.
7. Employees Stock Option Plans / Schemes
The industry in which R Systems operates is people intensive and R Systems believesthat human resources play a pivotal role in the sustainability and growth of the Company.R Systems has always believed in rewarding its employees with competitive compensationpackages for their dedication hard work loyalty and contribution towards betterperformance of the Company. To enable more and more employees to be a part of the _nancialsuccess of the Company retain them for future growth and attract new employees to pursuegrowth R Systems has set up employees stock option plans / schemes from time to time forits employees and for the employees of its subsidiaries. As on the date of this reportthe Company is having following stock option plans:
R Systems International Ltd. Employees Stock Option Plan
Year 2001 (Formerly known as Indus Software Employees Stock Option Plan - Year 2001):Initially formulated for the employees of Indus Software Private Limited which gotamalgamated with R Systems and the plan continued as per the scheme of amalgamationapproved by the Hon'ble High Courts of Delhi and Mumbai. As on December 31 2018 nostock options are in force under this plan.
R Systems International Limited Employee Stock Option
Scheme 2007: For the employees of R Systems and its subsidiaries. As on December 312018 there are 75000 stock options in force under this plan.
The aforesaid plans are in compliance with SEBI (Share Based Employee Bene_ts)Regulations 2014 ("Employee Bene_t Regulations") and there has been no materialchanges to these Plans during the Financial Year 2018. The summary information ofaforesaid Employee Stock Option Plans/ Schemes of the Company is provided under Notes toAccounts of Standalone Financial Statements of this Annual Report. Refer to Notes toaccounts of the Standalone Financial Statements of this Annual Report for details onaccounting policy. Disclosure as required under Employee Bene_ts Regulations read withSEBI circular no. CIR/CFD/POLICYCELL/2/2015 dated June 16 2015 are available onthe Company's website: https://www.rsystems. com/investors-info/annual-reports/. Noemployee was granted options under the aforesaid Plans/ Schemes during the year equal toor exceeding 1% of the issued capital.
8. Liquidity and Borrowings - Consolidated Financial Statement
The consolidated cash and cash equivalent as at December 31 2018 were Rs.841.17 mn. as against Rs. 929.02 mn. as on December 31 2017. Net cash generated fromoperating activities were Rs. 311.22 mn. for the year ended December 31 2018 comparedto Rs. 365.24 mn. for the year ended December 31 2017.
Cash used in investing activities were Rs. 350.45 mn. for the year ended December 312018 and comprised of Investment in long term deposit with bank Rs. 293.84 mn. (net)purchase of _xed assets of Rs. 165.87 mn. and Investment in liquid mutual fund Rs. 140 mn.as o_set by proceeds from redemption of debenture Rs. 175.12 mn. interest income Rs.64.62 mn. rental income from investment property Rs. 6.56 mn. and sale of _xed assets Rs.2.96 mn. Cash used in _nancing activities were Rs. 87.86 mn. for the year endedDecember 31 2018 and mainly consist of Rs. 85.49 mn. on account of payment of dividend(including CDT) (net).
R Systems' policy is to maintain sufficient liquidity to fund the anticipated capitalexpenditures operational expenses and investments for strategic initiatives. R Systemshas a credit facility from the Axis Bank Limited amounting to Rs. 380 mn. (includingnon-fund based credit limit of Rs. 180 mn. for currency derivatives). As at December31 2018 the total credit balance was nil under fund based line of credit. Loan payableas at December 31 2018 comprises of loan for motor vehicles purchased amounting to Rs.9.36 mn. and _nance lease obligation of Rs. 10.61 mn. for SEZ premises.
9. Changes in the Capital Structure
During the year under review the following changes took place in the capital structureof the Company: At the beginning of the _nancial year ended December 31 2018 theshare capital structure of the Company was as follows:
|Particulars ||Equity Shares of Re. 1/- each |
|Authorised Share Capital ||200000000 |
|Issued Subscribed and Paid up share Capital ||123952925 |
During the year under review the Company had issued 37500 equity shares of Re. 1/-each pursuant to exercise of employees stock options granted under the R SystemsInternational Limited Employees Stock Option Scheme - 2007. Consequent to the saidallotment the issued and paid up share capital of the Company was enhanced to Rs.123990425/- divided into 123990425 equity shares of face value of Re. 1/- each.
Further pursuant to the Scheme of Amalgamation between GM Solutions Private Limited("GM Solutions") and R Systems International Limited ("Company") asapproved by the Hon'ble National Company Law Tribunal ("NCLT") vide order datedDecember 07 2018 the following changes took place in the share capital of the Company:
1. Authorised Share Capital of the Company was enhanced with the Authorised Capital ofGM Solutions i.e. by Rs. 6000000/- (Rupees Sixty Lakhs only).
2. The Company has allotted 29746353 equity shares of Re. 1/- each on December21 2018 to the shareholders of GM Solutions in proportion to there respectiveshareholding in GM Solutions and cancelled/ extinguished 29746353 equity shares of Re.1/- each of the Company as held by GM Solutions upon aforesaid allotment. Therefore as onDecember 31 2018 the share capital structure of the Company is as follows:
|Particulars ||Equity Shares of Re. 1/- each |
|Authorised Share Capital ||206000000 |
|Issued Subscribed and Paid up Share Capital ||123990425 |
During the _nancial year ended December 31 2018 the Company has not issued any shareswith differential voting rights or any sweat equity shares. Therefore disclosure pursuantto Section 43(a)(ii) & Section 54(1)(d) of the Act are not applicable. Further nodisclosure is required under Section 67 (3) (c) of the Act in respect of voting rightsnot exercised directly by employees of the Company as the provisions of the said sectionare not applicable.
10. Scheme of Amalgamations and Arrangements a. During the year under review theCompany has received the order of the Hon'ble National Company Law Tribunal("NCLT") dated December 07 2018 approving the Scheme of Amalgamation between GMSolutions Private Limited and R Systems International Limited and their respectiveShareholders and Creditors. The appointed date of the scheme was January 01 2018. Thesaid order was _led with the Registrar of Companies NCT of Delhi & Haryana onDecember 21 2018. b. Subsequent to the year ended December 31 2018 the Company haswithdrawn the Scheme of Arrangement for re-organization and reduction of equity sharecapital of the Company under Section 230 of the Act between R Systems InternationalLimited and its Shareholders and Creditors and the Hon'ble National Company Law TribunalNew Delhi has allowed the Company to withdraw the Scheme vide order dated January 032019;
Subsequent to the year ended December 31 2018 the Board of Directors of the Companyat its meeting held on January 15 2019 approved the Buyback of up to 3690000(Thirty Six Lakhs Ninety Thousand) fully paid-up equity shares of face value of Re. 1/-each ("Equity shares") representing 2.98% of the total paid-up equity sharecapital of the Company from all the equity shareholders of the Company as on the recorddate i.e. Friday February 01 2019 on a proportionate basis through the "tenderoffer" route at a price of Rs. 65/- (Rupees Sixty Five only) per equity share for anaggregate amount of up to Rs. 239850000 (Rupees Twenty Three Crores Ninety Eight LakhsFifty Thousand Only).
The Corporate Action for extinguishment of aforesaid 3690000 equity shares has beencompleted on April 15 2019.
12. Registered Office
Subsequent to the year ended December 31 2018 the registered office of the Companyhas been sifted from B 104A Greater Kailash Part-I New Delhi-110048 to GF-1-A 6Devika Tower Nehru Place New Delhi-110019 on April 23 2019.
13. Material changes affecting the _nancial position of the Company
Except as detailed elsewhere in this report there was no other signi_cant eventsubsequent to the balance sheet date till the date of this report which would materiallyaffect the _nancial position of the Company.
14. Particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo
The particulars as prescribed under Section 134 (1) (m) of the Companies Act 2013read with rule 8 of Companies (Accounts) Rules 2014 for the year ended December 31 2018are as follows:
A. Conservation of Energy
Though Your Company does not have energy intensive operation every endeavor has beenmade to ensure the optimal usage of energy avoid wastage and conserve energy.
R Systems constantly evaluates new technologies and makes appropriate investments to beenergy efficient.
During the year ended December 31 2018 R Systems adopted various energy conservationoptions / technologies and took measures to reduce energy consumption by using energyefficient equipment and devices replacing existing CFL fittings with LEDs fittings toreduce power consumption timely preventive maintenance of all major and minor equipment.The air is conditioned with energy efficient compressors for central air conditioning andwith split air conditioning for localized areas.
R Systems is always in search of innovative and efficient energy conservationtechnologies and applies them prudently. However R Systems being in the softwareindustry its operations are not energy intensive and energy costs constitute a very smallportion of the total cost therefore the _nancial impact of these measures is notmaterial.
B. Technology absorption
1. E_orts made towards technology absorption
The Company has established center of excellence in speci_c digital technologies likeCloud Analytics RPA etc. to strengthen competencies and enhance offerings across focusedverticals i.e. Technology Telecom Healthcare & Life Science Banking & Insuranceand Retail & e-commerce.
2. Bene_ts derived as a result of the above efforts
Our investment in digital technologies is helping us to enhance market reach andsupport our revenue growth.
3. Technology imported during the last 3 years
Not applicable as no technology has been imported by the Company.
4. Expenditure incurred on Research and development Driven by our core value ofinnovation we believe that innovation is not just a practice but an essential componentembedded within R Systems organizational DNA. We are now operating in a digital world.Digital transformation is one of our core areas where we partner with businesses to makethem competitive and successful in today's hyper-changing environment. Over the year endedDecember 31 2018 your Company has invested in research and development in the area ofdigital technologies like Cloud Analytics RPA etc. in addition to strengthening andup-grading proprietary solutions and frameworks.
C. Foreign Exchange Earnings and Outgo (Accrual Basis)
A signi_cant percentage of R Systems revenues are generated from exports. Thedevelopment and service centre in Noida is registered with the Software Technology Park ofIndia as 100% Export Oriented Undertaking. All efforts of the Company are geared toincrease the business of software exports in different products and markets. We have madeinvestments in sales and marketing activities in various growing markets. The totalforeign exchange used and earned by R Systems during the year as compared with theprevious year is as follows:
(Rs. in Millions)
| ||31.12.2018 ||31.12.2017 |
|(a) Earnings (Accrual Basis) ||3104.51 ||2586.04 |
|(b) Expenditure (Accrual Basis) ||456.94 ||343.98 |
|(c) CIF value of imports ||54.65 ||26.68 |
As on December 31 2018 R Systems has twenty _ve subsidiaries. The name and country ofincorporation of those subsidiaries are as follows:
|S. No. ||Name of the Subsidiaries ||Country of Incorporation |
|1. ||R Systems (Singapore) Pte. Ltd ||Singapore |
|2. ||R Systems Inc. ||U.S.A. |
|3. ||R Systems Technologies Ltd. (Formerly known as Indus Software Inc.) ||U.S.A. |
|4. ||RSYS Technologies Limited (Formerly Systmes R. International Lte) ||Canada |
|5. ||Computaris International Limited ||U.K. |
|6. ||ECnet Limited ||Singapore |
|7. ||ECnet (M) Sdn. Bhd.# ||Malaysia |
|8. ||ECnet Inc.#$ ||U.S.A. |
|9. ||ECnet (Hong Kong) Limited# ||Hong Kong |
|10. ||ECnet Systems (Thailand) Co. Ltd.# ||Thailand |
|11. ||ECnet Kabushiki Kaisha# ||Japan |
|12. ||ECnet (Shanghai) Co. Ltd.# ||People's Republic |
| || ||of China |
|13. ||ICS Computaris International Srl@ ||Moldova |
|14. ||Computaris Malaysia Sdn. Bhd.@ ||Malaysia |
|15. ||Computaris Polska sp zo.o.@ ||Poland |
|16. ||Computaris Romania SRL@ ||Romania |
|17. ||Computaris Philippines Pte. Ltd. ||Philippines |
| ||Inc. @ || |
|18. ||Computaris Suisse Sarl@ ||Switzerland |
|19. ||IBIZ Consulting Pte. Ltd. (Formerly ||Singapore |
| ||known as IBIZCS Group Pte. Ltd.)* || |
|20. ||IBIZ Consulting Services Pte Ltd.^ ||Singapore |
|21. ||IBIZ Consulting Services Sdn. Bhd.^ ||Malaysia |
|22. ||PT. IBIZCS Indonesia^ ||Indonesia |
|23. ||IBIZ Consultancy Services India Private Limited^ ||India |
|24. ||IBIZ Consulting Services Limited^ ||Hong Kong |
|25. ||IBIZ Consulting Services (Shanghai) Co. Ltd. % ||People's Republic of China |
# Wholly-owned subsidiaries of ECnet Limited Singapore being 99.75% subsidiary of RSystems (The shareholding held by the Company and R Systems (Singapore) Pte Limited is69.37% and 30.38% respectively).
@ Wholly-owned subsidiaries of Computaris International Limited being 100% subsidiaryof R Systems.
* Wholly-owned subsidiary of R Systems (Singapore) Pte Limited being 100% subsidiary ofR Systems.
^ Wholly-owned subsidiaries of IBIZ Consulting Pte. Ltd. (Formerly known as IBIZCSGroup Pte. Ltd.) being 100% subsidiary of R Systems (Singapore) Pte Limited being 100%subsidiary of R Systems.
% Wholly-owned subsidiary of IBIZ Consulting Services Limited - Hong Kong being 100%Subsidiary of IBIZ Consulting Pte. Ltd.
$ Liquidated w.e.f. January 28 2019.
During the year ended December 31 2018 the Company has invested CAD 1000000(Canadian Dollar One Million only) in RSYS Technologies Limited towards equitycontribution. Computaris Suisse Sarl Switzerland wholly-owned subsidiary of ComputarisInternational Limited was incorporated on April 27 2018. Computaris USA Inc. U.S.A.wholly-owned subsidiary of Computaris International Limited was liquidated on October22 2018. Subsequent to the _nancial year ended December 31 2018 R Systems Inc.USA wholly-owned subsidiary of the Company acquired 100% interest in Innovizant LLC aChicago (USA) w.e.f. January 01 2019.
Further Subsequent to the year ended ECnet Inc. USA wholly-owned subsidiary of theECnet Ltd. was dissolved w.e.f. January 28 2019.
As on date of this report all the twenty _ve subsidiaries except IBIZ ConsultancyServices India Private Limited were incorporated and based outside India. In addition toproviding services to various international clients these subsidiaries also help togenerate revenues for R Systems.
During the year under review no other corporate restructuring activity except asstated in this report was done by the Company.
The Board of Directors of the Company regularly reviews the affairs of thesesubsidiaries. Policy for determining material subsidiaries of the Company is available onthe website of the Company athttps://www.rsystems.com/investors-info/corporate-governance/
As per the Listing Regulations the Company has two unlisted material subsidiarynamely R Systems Inc. U.S.A. and Computaris International Limited U.S.A.
A statement containing the salient features of the _nancial statement of oursubsidiaries in the prescribed Form AOC-1 is attached at the end of consolidated_nancial statements of the Company. The statement also provides the details ofperformance _nancial position of each of the subsidiaries. Further the audited annualaccounts and related detailed information of our subsidiaries where applicable will bemade available to shareholders seeking such information at any point of time. The annualaccounts of the subsidiary companies will also be available for inspection by anyshareholder at Registered Office of R Systems i.e. GF-1-A 6 Devika Tower Nehru PlaceNew Delhi-110019 and Corporate Office of R Systems i.e. C-40 Sector 59 Noida (U.P.) 201307 and Registered Offices of the subsidiary companies concerned during businesshours. The same will also be hosted on R Systems' website i.e. www.rsystems.com.
16. Particulars of employees
The details required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are annexedas Annexure A and forms part of this report. Further as required under theprovisions of Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the name and other particulars of employees are set out in AnnexureB and forms part of this report.
17. Directors' responsibility statement
Pursuant to the requirement of Section 134 (3) (c) read with Section 134(5) of the Actwith respect to directors' responsibility statement your directors hereby con_rm that:
1) In the preparation of the annual accounts for the _nancial year ended December 312018 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
2) the directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the _nancial year endedDecember 31 2018 and of the pro_t and loss of the Company for that period;
3) the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
4) the directors had prepared the annual accounts for the _nancial year ended December31 2018 on a going concern basis;
5) the directors had laid down internal _nancial controls to be followed by theCompany and that such internal _nancial controls are adequate and were operatingeffectively;
6) the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
M/s. Deloitte Haskins & Sells LLP Chartered Accountants [Firm's Registration No.117366W/ W-100018] were appointed as the Statutory Auditors of your Company in the AnnualGeneral Meeting held on May 15 2017 for a term of _ve years until the conclusion of the28th AGM of the Company to be held in the year 2022. The Ministry of Corporateaffairs vide noti_cation dated May 07 2018 has obliterated the requirement of seekingMembers' rati_cation at every AGM on appointment of statutory auditors during their tenureof _ve years. M/s. Deloitte Haskins
& Sells LLP have con_rmed that they are not disquali_ed from continuing as Auditorsof the Company.
Further the auditors' report and Financial Statements being self-explanatory do notcall for any further comments by the Board of Directors as there are no quali_cationsreservation or adverse remark or disclaimer. During the year 2018 the Auditors has notreported any matter under Section 143(12) of the Act.
19. Audit committee
R Systems has a quali_ed and independent Audit Committee. During the year under reviewthere was no change in the composition of Audit Committee.
The constitution of the Committee is in compliance with the provisions of the Act andthe Listing Regulations.
Detailed description of the Audit Committee has been given in Corporate GovernanceReport. The terms of reference and role of the Committee are as per the guidelines set outin the Listing Regulations and Section 177 of the Act and rules made thereunder andincludes such other functions as may be assigned to it by the Board from time to time.
The Committee has adequate powers to play an effective role as required under theprovisions of the Act and Listing Regulations. During the year under review the Board ofDirectors of the Company had accepted all the recommendations of the Audit Committee.
20. Prevention and prohibition of sexual harassment of women at work place
At R Systems it is our desire to promote a healthy and congenial working environmentirrespective of gender caste creed or social class of the employees. We value everyindividual and are committed to protect the dignity and respect of every individual. TheCompany has always endeavored for providing a better and safe environment free of sexualharassment at all its work places. Consequent to the enactment of Sexual Harassment ofWomen at Workplace (Prevention Prohibition and Redressal) Act 2013 and Rules madethereunder the Management of R Systems International Limited has constituted an InternalComplaints Committee (ICC) to deal with any complaints or issues that may arise in thenature of sexual harassment of women employees. The Company has also prepared andimplemented Policy for Prevention Prohibition and Redressal of Sexual Harassment of Womenat Workplace. During the year ended December 31 2018 there was 1 (one) casereported to ICC of sexual harassment which was dully investigated and resolved by theICC.
21. Corporate Governance
As required under Listing Regulations the detailed report on corporate governance isgiven as Annexure C to this report and the certi_cate obtained from a PractisingCompany Secretary regarding compliance of the conditions of corporate governance asstipulated in the said clause is annexed as Annexure D to this report.
The Company has neither invited nor accepted any deposits from the public within thepurview of the Act and the Rules made thereunder no amount of principal or interest wasoutstanding on the date of the balance sheet.
23. Customer relations
R Systems recognises that the customers have a choice of service providers and thedirectors would like to place on record their gratitude on behalf of the Company for thebusiness provided by them. The Company's quality policy mandates that the voice of thecustomer is obtained on a regular basis. We constantly review the feedback and incorporateits impact into our delivery systems and communications.
24. Stakeholder's relations
R Systems is inspired by its customers and its employees transform that inspiration andcustomers' needs into value for all stakeholders. We thank all R Systems employeesworldwide for their hard work commitment dedication and discipline that enables theCompany to accomplish its customer commitments and commitments to all its stakeholders.
R Systems conducts regular employee satisfaction surveys and open house meetings to getemployee feedback. R Systems is constantly validating key employee data with industry andpeer group business. These practices have helped the Company to achieve many of itsbusiness goals and have been recognised in many industry surveys over the last few years.The open door policy of our senior management team ensures that the feedback loop iscompleted promptly. We thank our shareholders for their continuous support and con_dencein R Systems. We are aware of our responsibilities to our shareholders to provide fullvisibility of operations corporate governance and creating superior shareholder value andwe promise to ful_ll the same.
25. Management discussion and analysis report
In terms of the Listing Regulations management discussion and analysis report is givenas Annexure E to this report.
26. Secretarial Report and Compliance with the Secretarial Standards
M/s. Chandrasekaran Associates Company Secretaries has been appointed by the Board ofDirectors of the Company to carry out the Secretarial Audit under the provision of Section204 of the Act for the _nancial year ended December 31 2018.
The Secretarial Audit report for _nancial year ended on December 31 2018 is enclosedas Annexure F.
Further the Secretarial auditors' report being self-explanatory does not call for anyfurther comments by the Board of Directors as there are no quali_cations reservation oradverse remark or disclaimer made in the audit report for the _nancial year ended December31 2018.
During the year 2018 the Company has complied with the applicable SecretarialStandards issued by the Institute of Companies Secretaries of India.
27. Maintenance of Cost Records
The Company is not required to maintain Cost records under Section 148(1) of the Act.
28. Vigil Mechanism / Whistle Blower Policy
In order to provide a mechanism to employees of the Company to disclose any unethicaland improper practices or any other alleged wrongful conduct in the Company and toprohibit managerial personnel from taking any adverse action against those employees theCompany has laid down a Vigil Mechanism also known as Whistle Blower Policy to deal withinstance of fraud and mismanagement if any. The details of the Vigil Mechanism or WhistleBlower Policy is explained in the Corporate Governance Report and also posted on thewebsite of the Company.
29. Criteria for selection of candidates for Membership on the Board of Directors andthe Remuneration Policy
As per the provisions of Section 178 of the Act and other relevant provisions and onthe recommendation of Nomination & Remuneration Committee the Board has framed acriteria for selection of Directors a policy for remuneration of directors keymanagerial personnel ("KMP") senior management personnel ("SMP") andother employees. The Criteria for selection of candidates for Membership on the Board ofDirectors and the remuneration policy are stated in the Corporate Governance Report.
30. Meetings of the Board
The Board of the Company and its Committees meet at regular intervals to discussdecide and supervise the various business policies business strategy Company'sperformance and other statutory matters. During the year under review the Board has meteight times. The details of the meeting of the Board and its Committees are given inCorporate Governance Report. The intervening gap between two Board Meetings did not exceed120 days.
31. Board Evaluation
Pursuant to the provisions of the Act and the Listing Regulations the Board hascarried out an annual performance evaluation of its own performance its committees andthe individual directors. The manner in which the evaluation has been carried out has beenexplained in the Corporate Governance Report.
32. Particulars of Loans Guarantees or investments under Section 186 of the CompaniesAct 2013
During the year ended December 31 2018 the Company has invested CAD 1000000(Canadian Dollar One Million only) in RSYS Technologies Limited by way of acquisition ofadditional shares. Details of loan guarantees and investments covered under section 186of the Companies Act 2013 forms part of the notes to accounts of the _nancial statements.
33. Related Party Disclosure
All the Related Party Transactions entered during the year were in the ordinary courseof business and on arm's length basis.
There are no materially signi_cant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential con_ict of interest with the company at large. All the related partytransactions are presented to the Audit Committee and the Board. Omnibus approval isobtained for the transactions which are foreseen and repetitive in nature. A statement ofall related party transactions is presented before the Audit Committee on quarterly basisspecifying the terms & conditions of the transactions. The policy on Related PartyTransactions as approved by the Board is uploaded on the Company's website at the weblinkas mentioned in the Corporate Governance Report. Details of particulars of contracts orarrangements with related parties referred to in sub-section (1) of Section 188 of the Actin form AOC-2 has been enclosed herewith as Annexure G.
34. Risk Management
The Company is not required to form a Risk Management Committee. The Company hasdeveloped and implemented a risk management policy for identifying the risk associatedwith business of the Company and measures to be taken by including identi_cation ofelements of risk and measures to control them.
35. Corporate Social Responsibility
In compliance with the provisions of Section 135 of the Act read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has constituted aCorporate Social Responsibility Committee (CSR Committee').
During the year under review there was no change in the composition of CSR Committee.
The detailed terms of reference of the CSR Committee has been provided in the CorporateGovernance Report. In pursuit of the responsibilities entrusted to the CSR Committee apolicy on Corporate Social Responsibility has been prepared and adopted by the Board whichis available at the website of the Company at following link: https://www.rsystems.com/investors-info/corporate-governance/AnnualReport on CSR activities of the Company in format prescribed in Companies (CorporateSocial Responsibility Policy) Rules 2014 is enclosed as Annexure H and forms partof this report.
36. Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT - 9 isenclosed as Anneuxre I to this Report.
37. Internal Control System and Internal Financial Controls
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Internal Auditors and the management monitors andevaluates the efficacy and adequacy of the internal control system in the Company itscompliance with operating accounting procedures and policies at all locations of theCompany. Audit observations of Internal Auditors and corrective actions thereon arepresented to the Audit Committee of the Board. To maintain its objectivity andindependence the Internal Auditor reports to the Audit Committee.
The Board of your Company has laid down internal _nancial controls to be followed bythe Company and that such internal _nancial controls are adequate and operatingeffectively. M/s. Deloitte Haskins & Sells LLP Chartered Accountants the statutoryauditors of the Company has audited the financial statements included in this annualreport and have issued unmodified opinion on the adequacy and operating effectiveness ofthe Company's internal financial controls over financial reporting.
38. Signi_cant and Material Orders Passed by the Regulators or Courts
There are no signi_cant or material orders passed by the Regulators/ Courts which wouldimpact the going concern status of the Company and it's operations in future.
Your directors once again take this opportunity to thank the employees investorsclients vendors banks business associates regulatory authorities including stockexchanges Software Technology Park of India Department of Commerce the CentralGovernment State Government of Delhi Uttar Pradesh Tamil Nadu for the business supportvaluable assistance and co-operation continuously extended to R Systems. Yourdirectors gratefully acknowledge the trust and con_dence and look forward for theircontinued support in the future.
| ||On behalf of the Board |
| ||ForR Systems International Limited |
|Sd/- ||Sd/- |
|Satinder Singh Rekhi ||Lt. Gen. Baldev Singh (Retd.) |
|(DIN: 00006955) ||(DIN: 00006966) |
|(Managing Director) ||(President & Senior Executive Director) |
|Place : Singapore ||Place : NOIDA (U.P.) |
|Date : May 02 2019 ||Date : May 02 2019 |