R Systems International Ltd Directors Report.

Dear Shareholders,

Your directors take great pleasure in presenting the Twenty Eighth Annual Report on the business and operations of R Systems International Limited ("R Systems" or the "Company") together with the audited financial statements of accounts for the year ended December 31,2021.

1. Financial Results

a. Standalone financial results of R Systems

(Rs. in million)

Particulars

Financial Year ended

31.12.2021 31.12.2020
Total Revenue 5,775.01 4,387.15
Profit before depreciation, exceptional items and tax 1,505.42 950.41
Less: Depreciation and amortisation expense 146.49 134.61
Profit before tax 1,358.93 815.80
Less: Current tax 245.27 149.86
Less: Deferred tax (credit)/expense (43.81) (31.13)
Profit after tax 1,157.47 697.07
Other comprehensive income/ (loss) 0.71 (11.01)
Total comprehensive income for the year 1,158.18 686.06
Statement of change in Retained Earnings
Opening Balance 3,116.03 2,423.29
Adjustment pursuant to Merger of RightMatch Holdings Limited - 19.22
Adjustment for adoption of Ind AS 116 - (10.49)
Adjusted opening balance 3,116.03 2,432.02
Add: Profit for the current year 1,157.47 697.07
Less: Buyback of Shares (including tax) 168.10 -
Less: Dividend paid 677.66 -
Less: Dividend paid by RightMatch Holdings Limited - 13.06
Closing Balance 3,427.74 3,116.03
EPS-Basic 9.70 5.83

b. Consolidated financial results of R Systems and its Subsidiaries

(Rs. in million)

Particulars

Financial Year ended

31.12.2021 31.12.2020
Total Revenue 11,556.39 8,805.91
Profit before depreciation, exceptional items and tax 1,977.65 1,236.90
Less: Depreciation and amortisation expense 276.93 256.04
Less: Exceptional Items - 18.65
Profit before tax 1,700.72 962.21
Less : Current tax 327.63 206.17
Less : Deferred tax (credit)/ expense (41.27) (61.95)
Profit after tax 1,414.36 817.99
Other comprehensive income/ (loss) (32.19) 75.92
Total comprehensive income for the year 1,382.17 893.91
Statement of change in Retained Earnings
Opening Balance 3,606.67 2,796.95
Adjustment pursuant to Merger of RightMatch Holdings Limited - 19.22
Adjustment on adoption of Ind-AS 116

-

(14.43)
Adjusted opening balance 3,606.67 2,801.74
Add: Profit for the current year 1,414.36 817.99
Less : Buyback of Shares (including tax) 168.10

-

Less : Dividend paid 677.66 -
Less : Dividend paid by RightMatch Holdings Limited

-

13.06
Closing Balance 4,175.27 3,606.67
EPS-Basic 11.85 6.84

2. Results of Operations Standalone Accounts

• Total revenue during the year 2021 was

5,775.01 mn. as compared to 4,387.15 mn. during the year 2020, an increase of 31.63%.

• Profit after tax was 1,157.47 mn. during the year 2021 as compared to 697.07 mn. during the year 2020, an increase of 66.05%.

• Basic earnings per share (of face value of 1/- each) was 9.70 for the year 2021 as compared to 5.83 for the year 2020, an increase of 66.38%.

Consolidated Accounts

• Total revenue during the year 2021 was

11,556.39 mn. as compared to 8,805.91 mn. during the year 2020, an increase of 31.23%.

• Profit after tax was 1,414.36 mn. during the year 2021 as compared to 817.99 mn. during the year 2020, an increase of 72.91%.

• Basic earnings per share (of face value of 1/- each) was 11.85 for the year 2021 as compared to 6.84 for the year 2020, an increase of 73.25%.

The state of affairs of the Company is presented as part of Management Discussion and Analysis Report forming part of this report.

3. Appropriations and Reserves Dividend

During the year 2021, the Board of Directors declared two interim dividends namely, Interim Dividend 2021 of 2.50/- per equity share i.e. 250% of face value of 1/- each at its meeting held on June 18, 2021 and Second Interim Dividend 2021 of 3.20/- per equity share i.e. 320% of face value of 1/- each at its meeting held on November 02, 2021. The said interim dividends have been paid to shareholders on July 14, 2021 and November 26, 2021, respectively. The Board of Directors has not recommended any final dividend for the financial year ended on December 31,2021.

Transfer to Reserves

In order to augment resources, your Directors do not propose to transfer any amount to reserves.

4. Business

R Systems is a leading provider of technology, artificial intelligence, analytics and knowledge services. We partner with customers to enable or elevate their digital transformation with our diversified digital offerings. Our technology offerings include product engineering, cloud enablement, QA testing, Internet of Things (IoT), and digital platforms and solutions. This includes solution offerings i.e. Microsoft, Infor, Blue Yonder and QlikView through our subsidiaries in South East Asia.

AI/ Analytics services include advanced analytics, data monetization and modernization, machine learning/ artificial intelligence, business analytics, intelligent automation and modern data management. R Systems design services include UX engineering, visual design, mobile user experience and experience re-engineering. Our knowledge service offerings cover revenue cycle management, back office service, technical support, and customer care using multi-lingual capabilities and global delivery platform.

R Systems services and solutions span over five major business verticals i.e. Technology, Telecom, Healthcare & Life Science, Finance & Insurance and Retail & e-commerce. R Systems maintains eighteen development and service centres to serve customers in North America, Europe, and APAC. There were no changes in the nature of the Company business and generally in the classes of business in which the Company has an interest and in the business carried on by the subsidiaries during the year under review.

For details of Company subsidiaries please refer note number 12 relating to subsidiaries.

The outbreak of COVID-19 raised widespread concern and economic hardship for consumers, businesses and communities across the globe. However, the Indian IT Sector was largely successful in containing the impact of Covid -19 as the businesses have accelerated the digitization of their customer, supply-chain interactions and of their internal operations to function and transact. This acceleration in digital transformation has led to increase in demand for technology products and services.Therefore, the business outlook continues to be positive with strong demand environment, and we continue to invest in newer technologies, sales and marketing initiatives to fuel our growth engine.

We are still conscious of risk of COVID. Safety and wellbeing of our employees is paramount to us in evaluating our options for work-from-office or hybrid working in a phased manner while ensuring the smooth services to our custome

Subsequent to year ended December 31, 2021, the Company has received approval from Department of Commerce, Ministry of Commerce & Industry, Government of India for expansion of its existing Special Economic Zone units located at Greater Noida West (NCR) for additional space of approximate 48,320 sq. ft.

5. Quality

R Systems has continuously invested in processes, people, training, information systems, quality standards, frameworks, tools and methodologies to mitigate the risks associated with execution of projects. Adoption of quality models and practices such as the Capability Maturity Model Integration (CMMI) and People Capability Maturity Model (PCMM) practices for processes have ensured that risks are identified and mitigated at various levels in the planning and execution process. R Systems journey on various quality standards/ models is as follows:

During the year 2021, Noida IT as well as Knowledge Services (KS) Division became SOC2 compliant and got reappraised for PCMM Level 5.

As of the date of this report, Noida IT division is CMMI level 5 (Ver.1.3), PCMM Level 5, ISO 9001:2015, ISO 27001:2013 certified and SOC2 Type 2 compliant. Noida Knowledge Services (KS) Division is PCMM Level 5, ISO 27001:2013, ISO 9001:2015 certified and SOC2 Type 2 compliant. Apart from this, KS division is also HIPAA compliant for specific clients and PCI-DSS (ver.3.2.1) certified (for IT Infrastructure along with the projects/ process/ applications in scope).

To maintain and strengthen competitive strengths, R Systems continues to make investments for enhancing its competencies around latest technologies for flawless execution and consistent delivery of state of art Product and solutions for our custome The product engineering offerings include services along the entire software lifecycle that includes technology consulting, architecture, design and development, professional services, testing, maintenance, customer care and technical support. R Systems expects that its technology focus, investment in processes, talent and methodologies will enable it to distinguish itself from competition as it seeks to provide services to technology/ product companies.

6. Directors & Key Managerial Personnels (KMP)

During the year under review, the following changes took place in the office of directors of the Company:

• Mr. Avirag Jain was re-appointed as director, liable to retire by rotation, at the Annual General Meeting held on May 19, 2021.

• Lt. Gen. Baldev Singh (Retd.) was re-appointed as Whole-time Director, designated as President and Senior Executive Director of the Company for a period of two years commencing from April 01,2021 to March 31, 2023 at the Annual General Meeting held on May 19, 2021.

• M Ruchica Gupta, Mr. Kapil Dhameja and Mr. Aditya Wadhwa, were re-appointed as NonExecutive Independent Director of the Company for a period of further five years commencing from June 29, 2021 to June 28, 2026 at the Annual General Meeting held on May 19, 2021.

There was no change in the KMP of the Company during the financial year ended on December 31,2021.

In terms of Section 152 of the Act, Lt. Gen. Baldev Singh (Retd.), President & Senior Executive Director, being liable to retire by rotation, shall retire at the ensuing AGM and being eligible for re-appointment, offers himself for reappointment.

The brief profile of Lt. Gen. Baldev Singh (Retd.) forms part of the Corporate Governance Report and the notice of the ensuing Annual General Meeting of the Company.

No director of the Company is disqualified as per the provisions of Section 164(2) of the Companies Act, 2013. The directors of R Systems have made necessary disclosures, as required under various provisions of the Companies Act, 2013 (Hereinafter referred as the "Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Hereinafter referred as "Listing Regulations").

On the basis of the declarations submitted by the Independent Directors of the Company, the Board of Directors have opined that all the Independent Directors of the Company fulfil the required criteria as defined under Section 149(6) of the Act and the Listing Regulations.

Further, the Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity.

7. Liquidity and Borrowings - Consolidated Financial Statement

The consolidated cash and cash equivalents as at December 31, 2021 were 2,043.68 mn. as against 2,135.84 mn. as on December 31, 2020. Net cash generated from operating activities was 873.15 mn. for the year ended on December 31, 2021 compared to 1,253.92 mn. for the year ended December 31, 2020. Cash inflow from investing activities was 211.89 mn. for the year ended on December 31, 2021 and mainly comprised of proceeds from long term deposit with bank 421.93 mn. (net), interest income of 67.81 mn. as offset by purchase of property, plant and equipment of 278.94 mn.

Cash used in financing activities was 1,159.17 mn. for the year ended December 31,2021 and mainly comprised of payment of interim dividends of 677.76 mn., Buyback of equity shares (including tax) of 369.80 mn. and payment of lease liabilities of 107.01 mn.

R Systems policy is to maintain sufficient liquidity to fund the anticipated capital expenditures, operational expenses and investments for strategic initiatives.

R Systems has taken credit facility (fund based as well as non-fund based) from Axis Bank Limited and ICICI Bank Limited. As of December 31,2021, the total credit balance was nil under fund based line of credit. Further, borrowings as on December 31, 2021 represent loan taken for motor vehicles amounting to 10.61 mn.

8. Changes in the Capital Structure

During the year under review, the following changes took place in the capital structure of the Company:

At the beginning of the financial year 2021, the share capital structure of the Company was as follows:

Particulars Equity Shares of 1/- each
Authorised Share Capital 206,000,000
Issued, Subscribed and Paid up share Capital 119,636,445

During the year under review, Honble National Company Law Tribunal, New Delhi vide order dated February 01,2021, approved the Scheme of Amalgamation of RightMatch Holdings Limited ("RightMatch") and R Systems International Limited and their respective shareholders and credito Pursuant to the said Order, on March 09, 2021, the Company had cancelled and extinguished 8,828,489 fully paid up equity share, held by RightMatch and allotted equivalent number of shares to the shareholders of RightMatch in the proportion of their shareholding in RightMatch.

Further, during the period under review, the Company had completed buyback of its 1,333,000 equity shares of 1/- each. At the end of the financial year ended December 31, 2021, the share capital structure of the Company was as follows:

Particulars Equity Shares of 1/- each
Authorised Share Capital 206,000,000
Issued, Subscribed and Paid up share Capital 118,303,445

9. Buyback

During the year ended December 31,2021, in compliance with the provisions of the Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018, applicable SEBI Circulars and the Companies Act, 2013, the Board of Directors of the Company at its meeting held on August 06, 2021 approved the Buyback of up to 1,333,000 fully paid-up equity shares of face value of 1/- each, from all the equity shareholders of the Company as on the record date i.e. August 27, 2021, on a proportionate basis, through the "tender offer" route using the "Mechanism for acquisition of shares through Stock Exchange" as notified by SEBI at a price of 225/- (Rupees Two Hundred Twenty Five Only) per equity share for an aggregate amount of up to 299,925,000/- (Rupees Twenty Nine Crore Ninety Nine Lakhs Twenty Five Thousand Only) (excluding buyback tax). The settlement of all valid bids was completed by the Indian Clearing Corporation Limited on October 12, 2021. The extinguishment of 1,333,000 equity shares (all in dematerialized form) accepted under the said Buyback was completed on October 14, 2021.

10. Scheme of Amalgamations and Arrangements

Honble National Company Law Tribunal, New Delhi vide its order dated February 01, 2021 approved the Scheme of Amalgamation of RightMatch Holdings Limited ("RightMatch") and R Systems International Limited and their respective shareholders and creditors ("Scheme"). The said scheme was also approved by the Statutory Authorities of Mauritius. The Scheme was effective w.e.f. March 09, 2021.

Pursuant to the said Scheme, RightMatch (part of Promoter and Promoter Group of R Systems) was amalgamated into R Systems International Limited and 8,828,489 fully paid up equity shares of R Systems International Limited as held by RightMatch were extinguished and equivalent number of shares were allotted to the shareholders of RightMatch (who were also part of Promoter and Promoter Group of R Systems) in the proportion of their shareholding in RightMatch.

Therefore, there was no change in the Promoter and Promoter Group shareholding of R Systems as a result of amalgamation of RightMatch into R Systems.

The said amalgamation not only led to simplification of the shareholding structure and reduction of shareholding tiers but also demonstrated the Promoters direct commitment to and engagement with R Systems.

11. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 134 (1) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 for the year ended December 31,2021 are as follows:

A. Conservation of Energy

Though your Company does not have energy intensive operation, every endeavor has been made to ensure the optimal usage of energy, avoid wastage and conserve energy.

R Systems constantly evaluates new technologies and makes appropriate investments to be energy efficient.

During the year ended December 31, 2021, R Systems adopted various energy conservation options/ technologies and took measures to reduce energy consumption by using energy efficient equipment and devices, replacing existing CFL fittings with LEDs fittings to reduce power consumption, timely preventive maintenance of all major and minor equipment. The air is conditioned with energy efficient compressors for central air conditioning and with split air conditioning for localized areas. The Company is endeavoring to convert its Diesel generators to GAS based generato

R Systems is always in search of innovative and efficient energy conservation technologies and applies them prudently. Being in the software industry, R Systemss operations are not energy intensive and energy costs constitute a very small portion of the total cost, therefore, the financial impact of these measures is not material.

B. Technology absorption

1. Efforts made towards technology absorption

The Company has established centre of excellence in specific digital technologies like Cloud, Mobility, IOT, Analytics, RPA/ IPA etc. to strengthen competencies and enhance offerings across focused verticals i.e. Technology, Telecom, Healthcare & Life Science, Banking & Insurance and Retail & e-Commerce.

2. Benefits derived as a result of the above efforts

Our investment in digital technologies is helping us to enhance market reach and support 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 of innovation, we believe that innovation is not just a practice but an essential component embedded within R Systems organizational DNA. We are now operating in a digital world. Digital transformation is one of our core areas where R Systems partner with businesses to make them competitive and successful in todays hyper-changing environment. Over the year ended December 31,2021, your Company has invested in research and development around all leading digital technologies. Further, R Systems has also strengthened its proprietary solutions and frameworks optimizing the integration with digital technologies.

C. Foreign Exchange Earnings and Outgo (Accrual Basis)

A significant percentage of R Systems revenues are generated from exports. The development and service centre in Noida is registered with the Software Technology Park of India as 100% Export Oriented Undertaking. All efforts of the Company are geared to increase the business of software exports in different products and markets. We have made investments in sales and marketing activities in various growing markets.

The total foreign exchange used and earned by R Systems during the year as compared with the previous year is as follows:

(Rs. in million)

Particulars Financial Year ended
31.12.2021 31.12.2020
(a) Earnings (Accrual Basis) 5,770.20 4,272.28
(b) Expenditure (Accrual Basis) 695.83 519.17
(c) CIF value of imports 64.27 61.78

12. Subsidiaries

As on December 31, 2021, R Systems has twenty five subsidiaries. The name and country of incorporation of those subsidiaries are as follows:

S. Name of the Subsidiaries No. Country of Incorporation
1. R Systems, Inc. U.S.A.
2. R Systems Technologies Ltd. U.S.A.
3. RSYS Technologies Limited Canada
4. R Systems Consulting Services Limited (Formerly known as ECnet Limited) Singapore
5. R Systems Consulting Services (M) Sdn. Bhd. (Formerly known as ECnet (M) Sdn. Bhd.)# Malaysia
6. R Systems Consulting Services (Hong Kong) Limited (Formerly known as ECnet (Hong Kong) Limited)# Hong Kong
7. R Systems Consulting Services (Thailand) Co. Ltd. (Formerly known as ECnet Systems (Thailand) Co. Ltd.)# Thailand
8. R Systems Consulting Services Kabushiki Kaisha (Formerly known as ECnet Kabushiki Kaisha)# Japan
9. R Systems Consulting Services (Shanghai) Co., Ltd. (Formerly known as ECnet (Shanghai) Co. Ltd.)# Peoples Republic of China
10. R Systems Computaris International Limited (Formerly known as Computaris International Limited) U.K.
11. R Systems Computaris S.R.L. (Formerly known as ICS Computaris International Srl)@ Moldova
12. R Systems Computaris Malaysia Sdn. Bhd. (formerly known as Computaris Malaysia Sdn. Bhd.)@ Malaysia
13. R Systems Computaris Poland Sp. Z o.o. (Formerly known as Computaris Polska Sp Z.o.o.)@ Poland
14. R Systems Computaris Europe S.R.L (Formerly known as Computaris Romania SRL)@ Romania
15. R Systems Computaris Philippines Pte. Ltd. Inc. (Formerly known as Computaris Philippines Pte. Ltd. Inc.)@ Philippines
16. R Systems Computaris Suisse Sarl (Formerly known as Computaris Suisse Sarl)@ Switzerland
17. R Systems (Singapore) Pte. Ltd. Singapore
18. R Systems IBIZCS Pte. Ltd. (Formerly known as IBIZ Consulting Pte. Ltd.)* Singapore
19. IBIZ Consulting Services Pte Ltd.A Singapore
20. R Systems IBIZCS Sdn. Bhd. (Formerly kown as IBIZ Consulting Services Sdn. Bhd.)A Malaysia
21. PT. RSystems IBIZCS International (Formerly known as PT. IBIZCS Indonesia)A Indonesia
22. IBIZ Consulting Services LimitedA Hong Kong
23. IBIZ Consulting Services (Shanghai) Co., Ltd.% Peoples Republic of China
24. IBIZ Consulting ( Thailand) Co. Ltd.A Thailand
25. IBIZ Consultancy Services India Private Limited India

# wholly owned subsidiaries of ECnet Limited, Singapore being 99.75% subsidiary of R Systems (The shareholding held by R Systems International Limited and R Systems (Singapore) Pte. Limited is 69.37% and 30.38%, respectively).

 

@ wholly owned subsidiaries of R Systems Computaris International Limited being 100% subsidiary of R Systems.

* wholly owned subsidiary of R Systems (Singapore) Pte Limited being 100% subsidiary of R Systems.

 

A wholly owned subsidiaries of R Systems IBIZCS Pte. Ltd. being 100% Subsidiary of R Systems (Singapore) Pte. Limited.

% wholly owned subsidiary of IBIZ Consulting Services Limited - Hong Kong being 100% Subsidiary of R Systems IBIZCS Pte. Ltd.

As on date of this report, all the subsidiaries of the Company except IBIZ Consultancy Services India Private Limited were incorporated and based outside India. In addition to provide services to various international clients these subsidiaries also help to generate revenues for R Systems.

During the year under review, Innovizant LLC, wholly- owned step-down subsidiary of the Company has been merged with R Systems, Inc., wholly owned subsidiary of the Company w.e.f. August 31,2021.

During the year under review, the name of some of the subsidiaries as mentioned above has been changed to operationalize various synergies across the group Companies.

During the year, no other corporate restructuring activity was done by the Company, except as stated in this report.

The Board of Directors of the Company regularly reviews the affairs of these subsidiaries. Policy for determining material subsidiaries of the Company is available on the website of the Company at https://www.rsystems.com/ investors-info/corporate-governance/.

During the year 2021, the Company had three material Subsidiaries, namely, R Systems, Inc., R Systems (Singapore) Pte. Ltd., R Systems Computaris Europe

S.R.L., all incorporated and based outside India.

A statement containing the salient features of the financial statements of our subsidiaries in the prescribed Form AOC-1 is attached at the end of consolidated financial statements of the Company. The statement also provides the details of performance, financial position of each of the subsidiaries.

Further, the audited annual accounts and related detailed information of our subsidiaries, wherever applicable, will be made available to shareholders seeking such information at any point of time. The annual accounts of the subsidiary companies will also be available for inspection by the shareholders at Registered Office of R Systems i.e. GF-1-A, 6, Devika Tower, Nehru Place, New 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 business hou The same will also be hosted on R Systems website i.e. www.rsystems.com.

13. Particulars of employees

The details required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure A and forms part of this report. Further, as required under the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the name and other particulars of employees are set out in Annexure B and forms part of this report.

14. Directors responsibility statement

Pursuant to the requirement of Section 134 (3) (c) read with Section 134(5) of the Companies Act, 2013 with respect to directors responsibility statement, your directors hereby confirm that:

1) in the preparation of the annual accounts for the financial year ended December 31, 2021, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the Company for that period;

3) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4) the directors had prepared the annual accounts for the financial year ended December 31, 2021 on a going concern basis;

5) the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

6) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

15. Auditors and Audit Report

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [Firms Registration No. 117366W/W-100018], were appointed as the Statutory Auditors of your Company in the Annual General Meeting held on May 15, 2017 for a term of five years until the conclusion of the 28th Annual General Meeting of the Company.

In terms of provisions of Sections 139 and 141 of the Act, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, are eligible to be re-appointed for a further term of 5 (five) yea

The Board of Directors in their meeting held on February 18, 2022, on the recommendation of the Audit Committee and subject to approval of the Shareholders of the Company at the ensuing AGM, have approved the re-appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, having Firm Registration No. 117366W/W-100018, as the Statutory Auditors of the Company from the conclusion of 28th Annual General Meeting till the conclusion of 33rd Annual General Meeting of the Company.

The Company has received written consent and certificate of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules issued thereunder, from M/s. Deloitte Haskins & Sells LLP They have confirmed to hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) as required under the Listing Regulations.

The Auditors have issued an unmodified opinion on the Financial Statements, both standalone and consolidated, for the financial year ended December 31,2021. During the year 2021, the statutory auditors has not reported any matter under Section 143(12) of the Act. The said Auditors Report(s) for the financial year ended December 31, 2021 on the financial statements of the Company forms part of the Annual Report.

16. Audit committee

R Systems has a qualified and independent Audit Committee. During the year under review, there was no change in the composition of the Audit Committee.

The constitution of the Committee is in compliance with the provisions of the Act and the Listing Regulations.

Detailed description of the Audit Committee has been given in Corporate Governance Report. The terms of reference and role of the Committee are as per the guidelines set out in the Listing Regulations and Section 177 of the Act and rules made thereunder and includes 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 the provisions of the Act and Listing Regulations. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Audit Committee.

17. 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 environment irrespective of gender, caste, creed or social class of the employees. We value every individual and are committed to protect the dignity and respect of every individual. The Company has always endeavored for providing a better and safe environment free of sexual harassment at all its work places. Consequent to the enactment of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules made thereunder, the Management of R Systems International Limited has constituted an Internal Complaints Committee ("ICC") to deal with any complaints or issues that may arise, in the nature of sexual harassment of women employees. The Company has also prepared and implemented Policy for Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace. During the year ended December 31,2021, there was one case reported to ICC, which was dully investigated and resolved by the ICC.

18. Corporate Governance

As required under the Listing Regulations, the detailed report on corporate governance is given as Annexure C to this report and the certificate obtained from M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [Firms Registration No. 117366W/W-100018], Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance as stipulated in the Listing Regulations is annexed as Annexure D to this report.

19. Customer relations

R Systems recognizes that the customers have a choice of service providers and the directors would like to place on record their gratitude on behalf of the Company for the business provided by them. The Company quality policy mandates that the voice of the customer is obtained on a regular basis. We constantly review the feedback and incorporate its impact into our delivery systems and communications.

20. Stakeholders relations

R Systems is inspired by its customers and its employees transform that inspiration and customers needs into value for all stakeholde We thank all R Systems employees worldwide for their hard work, commitment, dedication and discipline that enables the Company to accomplish its customer commitments and commitments to all its stakeholde R Systems conducts regular employee satisfaction surveys and open house meetings to get employee feedback. R Systems is constantly validating key employee data with industry and peer group business. These practices have helped the Company to achieve many of its business goals and have been recognised in many industry surveys over the last few yea The open door policy of our senior management team ensures that the feedback loop is completed promptly. We thank our shareholders for their continuous support and confidence in R Systems. We are aware of our responsibilities to our shareholders to provide full visibility of operations, corporate governance and creating superior shareholder value and we promise to fulfill the same.

21. Management discussion and analysis report

In terms of the Listing Regulations, Management Discussion and Analysis Report is given as Annexure E to this report.

22. Business Responsibility Report

The Business Responsibility Report of the Company for the financial year ended December 31,2021 as required under Regulation 34(2)(f) of the Listing Regulations forms part of this Report as Annexure F.

23. Secretarial Auditor and Secretarial Audit Report

M/s. Sanjay Grover & Associates, Company Secretaries, was appointed by the Board of Directors of the Company to carry out the Secretarial Audit under the provision of Section 204 of the Act for the financial year ended December 31, 2021. The Secretarial Audit report for financial year ended December 31, 2021 is enclosed as Annexure G.

Further, the Secretarial auditors report being selfexplanatory, does not call for any further comments by the Board of Directors as there are no qualifications, reservation or adverse remark or disclaimer made in the audit report for the financial year ended December 31,2021.

24. Vigil Mechanism/ Whistle Blower Policy

In order to provide a mechanism to employees of the company to disclose any unethical and improper practices or any other alleged wrongful conduct in the Company and to prohibit managerial personnel from taking any adverse action against those employees, the Company has laid down a Vigil Mechanism also known as Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Vigil Mechanism or Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

25. Criteria for selection of candidates for Membership on the Board of Directors and the Remuneration Policy

As per the provisions of Section 178 of the Act and other relevant provisions and on the recommendation of the Nomination and Remuneration Committee, the Board has framed a criteria for selection of Directors, a policy for remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees. The Criteria for selection of candidates for Membership on the Board of Directors and the remuneration policy are stated in the Corporate Governance Report.

26. Meetings of the Board

The Board of the Company and its Committees meet at regular intervals to discuss, decide and supervise the various business policies, business strategy, Company performance and other statutory matte During the year under review, the Board has met seven times. The details of the meeting of the Board and its Committees are given in the Corporate Governance Report. The intervening gap between two Board Meetings did not exceed 120 days.

27. Committees of the Board

The Board of Company has constituted the following Committees to focus on specific areas and take informed decisions in the best interests of the Company within authority delegated to each of the Committees:

(a) Audit Committee

(b) Nomination and Remuneration Committee

(c) Stakeholders Relationship Committee

(d) Corporate Social Responsibility Committee

(e) Risk Management Committee

(f) Compensation Committee

The details of composition of the said Committee(s), their terms of reference, meetings held and attendance of the Committee members, during the financial year 2021 are provided in the Corporate Governance Report.

28. Board Evaluation

Pursuant to the provisions of the Act and the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, its committees and the individual directo The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

29. Particulars of Loans, Guarantees or investments

During the year under review, the Company has made no investment under Section 186 of the Companies Act, 2013. Further details of loan, guarantees and investments covered under Section 186 of the Act are provided in the notes to accounts of the financial statements.

30. Related Party Disclosure

All the related party transactions entered during the year were in the ordinary course of business and on arms length basis and in compliance with the applicable provisions of the Act and Listing Regulations. There are no materially significant related party transactions made by the Company with its Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict of interest with the Company at large. All the related party transactions are presented to the Audit Committee and the Board, as required. Omnibus approval is obtained for the transactions which are repetitive in nature.

A statement of all related party transactions is presented before the Audit Committee on quarterly basis, specifying the terms & conditions of the transactions. The policy on Related Party Transactions, as approved by the Board is uploaded on the Company website at the web link as mentioned in the Corporate Governance Report. Details of particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Act in form AOC-2 has been enclosed as Annexure H.

31. Risk Management

In view of growing level of operations of the Company and in terms of the Listing Regulations, the Board of Directors of the Company constituted the Risk Management Committee to identify elements of risk in different areas of operations, comprising of the members of the Board of Directors of the Company.

The Company has developed and implemented a comprehensive Risk Management Policy including Cyber security for identification, assessment and monitoring of key risks that could negatively impact the Company goals and objectives. This policy is periodically reviewed and enhanced under the oversight of the Risk Management Committee of the Board.

32. Annual Return

The Annual Return of the Company as on December 31, 2021 in Form MGT - 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.rsystems.com/investors-info/annual-reports/.

33. 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 a Corporate Social Responsibility Committee (CSR Committee). During the year under review, there was no change in the composition of the CSR Committee.

The detailed terms of reference of the CSR Committee has been provided in the Corporate Governance Report. In pursuit of the responsibilities entrusted to the CSR Committee, a policy on Corporate Social Responsibility has been prepared and adopted by the Board which is available at the website of the Company at following link: https://www.rsystems.com/investors-info/corporate- governance/.

Annual Report on CSR activities of the Company in format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure I and forms part of this report.

34. Dividend Distribution Policy

The Board of Directors of the Company had approved the dividend distribution policy in line with Regulation 43A of the Listing Regulations. The Policy broadly specify the external and internal factors including financial parameters that shall be considered while declaring dividend and the circumstances under which the shareholders of the Company may or may not expect dividend and how the retained earnings shall be utilized, etc. The Dividend Distribution policy is available on the Company website at https://www. rsystems.com/wp-content/uploads/2021/05/ Dividend-Distribution-Policv.pdf.

35. Internal Control System and Internal Financial Controls

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Auditors and the management monitors and evaluates the efficacy and adequacy of the internal control system in the Company, its compliance with operating, accounting procedures and policies at all locations of the Company. Audit observations of Internal Auditors and corrective actions thereon are presented to the Audit Committee. To maintain its objectivity and independence, the Internal Auditor reports to the Audit Committee. The Board of your Company has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively.

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, the statutory auditors of the Company, has audited the financial statements for the financial year ended December 31, 2021 and has issued unmodified opinion on the adequacy and operating effectiveness of the Company internal financial controls over financial reporting.

36. Other Disclosures

During the financial year under review:

• the Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to Meetings of the Board of Directors and General Meetings, respectively.

• the Company does not have any stock option plan in force.

• the Company has neither invited nor accepted any deposits from the public within the purview of the Act and the Rules made thereunder, and accordingly no amount on account of principal or interest on public deposits was outstanding as on December 31,2021.

• the Company has not issued shares with differential voting rights and sweat equity shares.

• no disclosure is required under Section 67 (3) (c) of the Act in respect of voting rights not exercised directly by employees of the Company, as the provisions of the said section are not applicable.

• the Company is not required to maintain Cost records under Section 148(1) of the Act.

• no significant or material orders were passed by the regulators or courts or tribunals which could impact the going concern status of the Company and its future operations.

• no material changes and commitments have occurred after the close of the year till the date of this report which may affect the financial position of the Company.

• during the year under review, there are no proceedings, either filed by the Company or filed against Company, pending under the Insolvency and Bankruptcy Code, 2016, before Honble National Company Law Tribunal or other Court.

• details of unclaimed dividends and equity shares transferred to the Investor Education and Protection Fund authority during the year 2021 have been provided as part of the Corporate Governance report.

37. Acknowledgments

Your directors once again take this opportunity to thank the employees, investors, clients, vendors, banks, business associates, regulatory authorities including Stock Exchanges, Software Technology Park of India, the Central Government, State Government of Delhi, Uttar Pradesh, Tamil Nadu for the business support, valuable assistance and co-operation continuously extended to R Systems. Your directors gratefully acknowledge the trust and confidence and look forward for their continued support in the future.

On behalf of the Board
For R Systems International Limited
Sd/- Sd/-
Dr. Satinder Singh Rekhi Lt. Gen. Baldev Singh (Retd.)
(DIN: 00006955) (DIN: 00006966)
(Managing Director & Chief Executive Officer) (President & Senior Executive Director)
Place : Singapore Place : NOIDA
Date : February 18, 2022 Date : February 18, 2022