R Systems International Ltd Directors Report.
Your directors take great pleasure in presenting the Twenty Sixth 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, 2019.
1. Financial Results
a. Standalone financial results of R Systems
(Rs. in million)
Financial Year ended
|Profit before depreciation, exceptional items and tax||717.49||478.45|
|Less : Depreciation and amortisation expense||85.91||73.01|
|Profit before tax||631.58||405.44|
|Less : Current tax||104.22||99.35|
|Less : Deferred tax (credit) / expense||12.41||(4.05)|
|Profit after tax||514.95||310.14|
|Other comprehensive income||(8.33)||(0.50)|
|Total comprehensive income for the year||506.62||309.64|
|Statement of change in Retained Earnings|
|Add: Profit for the current year||514.95||310.14|
|Less : Dividend paid||216.51||85.49|
b. Consolidated financial results of R Systems and its Subsidiaries
Financial Year ended
|Profit before depreciation, exceptional items and tax||868.21||762.30|
|Less : Depreciation and amortisation expense||148.86||135.48|
|Profit before tax||719.35||626.82|
|Less : Current tax||134.84||124.22|
|Less : Deferred tax (credit) / expense||3.27||(7.85)|
|Profit after tax||581.24||510.45|
|Other comprehensive income||27.29||93.55|
|Total comprehensive income for the year||608.53||604.00|
|Statement of change in Retained Earnings|
|Add: Profit for the current year||581.24||510.45|
|Less : Dividend paid||216.50||85.49|
2. Results of Operations Standalone Accounts
Total revenue during the year 2019 was Rs. 3,917.69 mn. as compared to Rs. 3,172.13 mn. during the year 2018, an increase of 23.50%.
Profit after tax was Rs. 514.95 mn. during the year 2019 as compared to Rs. 310.14 mn. during 2018, an increase of 66.04%.
Basic earnings per share (of face value of Rs. 1/- each) was Rs. 4.27 for the year 2019 as compared to Rs. 2.52 for the year 2018, an increase of 69.44%.
Total revenue during the year 2019 was Rs. 8,093.75 mn. as compared to Rs. 6,998.89 mn. during the year 2018, an increase of 15.64%.
Profit after tax was Rs. 581.24 mn. during the year 2019 as compared to Rs. 510.45 mn. during 2018, an increase of 13.87%.
Basic earnings per share (of face value of Rs. 1/- each) was Rs. 4.82 for the year 2019 as compared to Rs. 4.14 for the year 2018, an increase of 16.42%.
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
The members may also note that during the year 2019, the Board of Directors declared an interim dividend of Rs. 1.50 per equity share i.e. 150% of face value of Rs. 1/- each its meeting held on December 14, 2019. The said interim dividend has been paid to shareholders on January 06, 2020. The Board of Directors (the "Board") has not recommended any final dividend for the financial year ended December 31, 2019.
Transfer to Reserves
In order to augment resources, your Directors do not propose to transfer any amount to reserves.
R Systems is a global technology, AI/ Analytics services and knowledge services leader. We deliver Al-driven solutions to clients across industries, thus delivering on the promise
of digital transformation. Our technology offerings include product engineering, cloud enablement, QA testing and digital platforms and solutions. This includes solution offerings i.e. Microsoft, Infor, JDA and QlikView etc. through our IBIZ and ECnet subsidiaries in South East Asia.
AI/ Analytics services include advanced analytics, machine learning / artificial intelligence, business analytics and automation. R SystemsRs. design services include UX engineering, visual design and mobile user experience. 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 rapidly growing customer list includes a variety of Fortune 1000, government and mid-sized organizations across a wide range of industry verticals including Telecom, Technology, Healthcare & Life Science, Finance & Insurance and Retail & e-commerce.
R Systems maintains sixteen development and service centres to serve customers in North America, Europe and the Far East. There were no changes in the nature of the CompanyRs.s 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 CompanyRs.s subsidiaries please refer note number 14 relating to subsidiaries.
The Company has received an approval from Department of Commerce, Ministry of Commerce & Industry, Government of India on September 23, 2019 for setting up a new Special Economic ZoneRs. (SEZ - Unit II) unit located at Greater Noida West (NCR) having area of 30,706 sq. ft. located at Greater Noida West (NCR). Subsequent to the year ended on December 31, 2019, the said SEZ unit has become operational from February 04, 2020.
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 2019, The IT & Knowledge Services Division got certified with ISO 9001:2015 standard through an integrated ISO 9001:2015 audit covering for IT & Knowledge Services division.
I n Addition, for Knowledge Services division, HIPAA compliance test was done with zero non-compliance in one of the major clients in Healthcare Domain. Apart from that, R Systems IT Infrastructure along with the projects/ process/ applications in scope was recertified on PCI DSS version V3.2.1.
As of the date of this report, Noida IT center is CMMI level 5 (Ver. 1.3), PCMM Level 5, ISO 9001:2015, ISO 27001:2013 certified. Noida Knowledge Services Division is PCMM Level 5, ISO 27001:2013, ISO 9001:2015 certified and also for specific client(s) it is HIPAA compliant and PCI-DSS (ver.3.2.1) certified for IT Infrastructure along with the projects/ process/ applications in scope.
To maintain and improve competitive strengths, R Systems continues to make investments in its unique and proprietary j&Jfte with best practices, tools and methodologies for flawless execution and consistent delivery of high quality software.
The pSuite framework offers 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 PersonnelRs.s (KMP)
During the year, there was no change in the Board of Directors and KMPs of the Company except that Mr. Avirag Jain was reappointed as director liable to retire by rotation at the Annual General Meeting held on May 28, 2019.
Details of the Directors proposed to be re-appointed at the ensuing Annual General Meeting are as follows:
a. Mr. Satinder Singh Rekhi was re-appointed as Managing Director of the Company by way of ordinary resolution passed by shareholders of the Company on December 19, 2018 for the period of five years commencing from January 01, 2019. As per the provisions of Section 196 of the Companies Act, 2013, no company shall continue the employment of any person as Managing Director who has attained the age of seventy years, except with the approval by shareholders through passing special resolution or with the approval of Central Government, as may be applicable. As Mr. Rekhi will attain the age of seventy years in January 2021, consent of the shareholders is required by way special resolution to continue Mr. Rekhi as Managing Director of the Company till the expiry of his present term i.e. December 31, 2023.
b. At the ensuing Annual General Meeting Lt. Gen. Baldev Singh (Retd.), President & Senior Executive Director of the Company is liable to retire by rotation in accordance with the provisions of Section 152 of the Companies Act, 2013, read with the Articles of Association of the Company and being eligible, offers himself for re-appointment as director of the Company.
c. The Board of Directors at its meeting held on February 09, 2020, on the recommendation made by the Nomination & Remuneration Committee, has approved the re-appointment of Mr. Avirag Jain as a Whole-time Director, designated as Director & Chief Technology Officer of the Company for a period of further three years commencing from August 03, 2020, subject to the approval of shareholders at the ensuing Annual General Meeting of the Company.
The brief profile of Mr. Satinder Singh Rekhi, Lt. Gen. Baldev Singh (Retd.) and Mr. Avirag Jain forms part of the Corporate Governance Report.
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 and Securities and Exchange Board 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, all the Independent Directors, have submitted necessary declarations that they meet the criteria of independence as laid down therein.
7. Employees Stock Option Plans / Schemes
The industry in which R Systems operates is people intensive and R Systems believes that 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 compensation packages for their dedication, hard work, loyalty and contribution towards better performance of the Company. To enable more and more employees to be a part of the financial success of the Company, retain them for future growth and attract new employees to pursue growth, R Systems has set up employees stock option plans / schemes from time to time for its employees and for the employees of its subsidiaries. As on December 31, 2019 the 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 got amalgamated with R Systems and the plan continued as per the scheme of amalgamation approved by the HonRs.ble High Courts of Delhi and Mumbai. As on the date of this report, no stock options are in force under this plan.
Further, subsequent to the year ended December 31, 2019, HonRs.ble National Company Law Tribunal, New Delhi, vide order dated January 28, 2020, has approved the reduction in share capital of the Company under Section 66 of the Companies Act, 2013, whereby 738,980 equity shares of the Company as held by R Systems Employees Welfare Trust shall be cancelled and extinguished.
R Systems International Limited Employee Stock Option Scheme 2007: For the employees of R Systems and its subsidiaries.
The aforesaid plans are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 ("Employee Benefit Regulations") and there has been no changes to these Plans during the financial year 2019. The summary information of aforesaid Employee Stock Option Plans/ Schemes of the Company is provided under Notes to Accounts of Standalone Financial Statements of this Annual Report. Refer to Notes to accounts of the Standalone Financial Statements of this Annual Report for details on accounting policy. Disclosure as required under Employee Benefits Regulations read with SEBI circular no. CIR/CFD/POLICYCELL/2/2015 dated June 16, 2015 are available on the CompanyRs.s website: https://www.rsystems.com/investors-info/ corporate-governance/.
No employee of the Company was granted options under the aforesaid plans/ schemes, during the year, equal to or exceeding 1% of the issued capital.
8. Liquidity and Borrowings - Consolidated Financial Statement
The consolidated cash and cash equivalents as at December 31, 2019 were Rs. 1,103.11 mn. as against Rs. 841.17 mn. as on December 31, 2018. Net cash generated from operating activities was Rs. 642.90 mn. for the year ended December 31, 2019 compared to Rs. 311.22 mn. for the year ended December 31, 2018. Cash generated from investing activities was Rs. 60.60 mn. for the year ended December 31, 2019 and comprised of proceeds from long term deposit with bank Rs. 408.15 mn. (net), interest income Rs. 60.01 mn., rental income from investment property Rs. 6.72 mn. and sale of fixed assets Rs. 2.46 mn. as offset by purchase of fixed assets of Rs. 189.62 mn. and Investment in liquid mutual fund Rs. 125 mn. Amount paid for acquisition of Innovizant LLC, wholly owned subsidiary of R Systems Inc., USA, was Rs. 79.72 mn., payment of deferred compensation to erstwhile shareholders of subsidiary i.e. IBIZ Consulting Pte. Ltd. Rs. 22.40 mn. Cash used in financing activities was Rs. 459.61 mn. for the year ended December 31, 2019 and mainly comprised of Rs. 239.85 mn. on account of buy-back of equity shares, Rs. 217.61 mn. on account of payment of dividend (including CDT).
R SystemsRs. policy is to maintain sufficient liquidity to fund the anticipated capital expenditures, operational expenses and investments for strategic initiatives.
R Systems has a credit facility from the Axis Bank Limited amounting to Rs. 380 mn. (including non-fund based credit limit of Rs. 180 mn. for currency derivatives). As at December 31, 2019, the total credit balance was nil under fund based line of credit. Loan payable as at December 31, 2019 comprises of loan for motor vehicles purchased amounting to Rs. 13.20 mn. and finance lease obligation of Rs. 48.88 mn. for furniture and fixture and computer hardware and software taken on lease.
9. 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 ended December 31, 2019, the share capital structure of the Company was as follows:
|Particulars||Equity Shares of Rs. 1/- each|
|Authorised Share Capital||206,000,000|
|Issued, Subscribed and Paid up||123,990,425|
During the year under review, the Company had completed buyback of its 3,690,000 equity shares of Rs. 1/- each and alloted 37,500 equity shares of Rs. 1/- each pursuant to exercise of employees stock options granted under the R Systems International Limited Employees Stock Option Scheme - 2007.
Therefore, consequent to the said Buyback and allotment of equity shares of the Company, the following is share capital structure of the Company as on December 31,2019:
|Particulars||Equity Shares of|
|Rs. 1/- each|
|Authorised Share Capital||206,000,000|
|Issued, Subscribed and Paid up Share Capital||120,337,925|
Subsequent to the financial year ended December 31,2019, the National Company Law Tribunal, New Delhi, vide order dated January 28, 2020, has approved reduction in share
capital of the Company under Section 66 of the Companies Act, 2013. Pursuant to the said capital reduction, the paid up share capital of the Company would become Rs. 1 19,598,945/- divided into 1 1 9,598,945 equity shares of Rs. 1/ - each.
During the financial year ended December 31, 2019, the Company has not issued any shares with differential voting rights or any sweat equity shares. Therefore, disclosure pursuant to Section 43(a)(ii) & Section 54(1)(d) of the Companies Act, 2013 are not applicable. Further, no disclosure is required under Section 67 (3) (c) of the Companies Act, 2013, in respect of voting rights not exercised directly by employees of the Company as the provisions of the said section are not applicable.
10. Registered Office
During the year under review, the Company has changed its Registered Office from B-104A, Greater Kailash, Part-I, New Delhi-1 10048 to GF-1-A, 6, Devika Tower, Nehru Place, New Delhi-110019 w.e.f. April 23, 2019.
11. Scheme of Amalgamations and Arrangements
(a) At the begining of the year, the Company has withdrawn the Scheme of Arrangement for reorganization and reduction of equity share capital of the Company under Section 230 of the Companies Act, 2013 between R Systems International Limited and its Shareholders and Creditors. The HonRs.ble National Company Law Tribunal, New Delhi vide order dated January 03, 2019, has allowed the Company to withdraw the said Scheme.
(b) The Board of Directors of R Systems International Limited at its meeting held on May 02, 2019, approved the Scheme of Reduction of Share Capital pursuant to the provisions of section 66 of the Companies Act, 2013. The scheme provided for re-organization and reduction of equity share capital of R Systems. The said scheme had been approved by Shareholders of the Company on May 28, 2019. Subsequent to the financial year ended December 31, 2019, the National Company Law Tribunal, New Delhi vide order dated January 28, 2020, has approved the reduction in share capital of the Company. Pursuant to the aforesaid capital reduction the paid up share capital of the Company shall be reduced from Rs. 1 20,337,925/- divided into 120,337,925 fully paid up equity shares of Rs. 1/- each to Rs. 1 19,598,945/- divided into 1 19,598,945 fully paid up equity shares of Rs. 1/- each.
(c) Subject to necessary approvals of Shareholders, creditors, Stock Exchanges, National Company Law Tribunal or any other appropriate authority, the Board of Directors of your Company at its meeting held on October 25 201 9, has approved the Scheme of Amalgamation under Section 230-232, 234 and other applicable provisions of the Companies Act, 2013 between RightMatch Holdings Limited ("RightMatch") and R Systems International Limited and their respective shareholders and creditors ("Scheme"). RightMatch forms part of the promoter and promoter group of R Systems. RightMatch presently holds 8,828,489 equity shares of Rs. 1/- each constituting about 7.38% of total paid up equity share capital of R Systems. Pursuant to the proposed amalgamation, individual shareholders of RightMatch who are part of the promoter and promoter group of R Systems would be issued equivalent shares in R Systems which are held by RightMatch in the proportion of their respective shareholding in RightMatch. The Company has applied to relevant authorities for their necessary directions and sanctions. All the cost, charges or expense related to the said Amalgmation, shall be borne by the Promoters of R Systems and/ or RightMatch.
During the year ended December 31, 2019, the Board of Directors of the Company at its meeting held on January 15, 2019 approved the Buyback of up to 3,690,000 fully paid-up equity shares of face value of Rs. 1/- each, representing 2.98% of the total paid-up equity share capital of the Company, from all the equity shareholders of the Company as on the record date i.e. February 01, 2019, on a proportionate basis, through the "tender offer" route, at a price of Rs. 65/- (Rupees Sixty Five Only) per equity share for an aggregate amount of up to Rs. 239,850,000 (Rupees Twenty Three Crores Ninety Eight Lakhs Fifty Thousand Only). The settlement of all valid bids was completed by the Indian Clearing Corporation Limited on April 09, 2019. The extinguishment of 3,690,000 equity shares (all in dematerialized form) accepted under the said Buyback was completed on April 15, 2019.
13. 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 Companies (Accounts) Rules, 2014 for the year ended December 31,2019 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 31,2019, 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 equipments. 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 generators.
R Systems is always in search of innovative and efficient energy conservation technologies and applies them prudently. Being in the software industry, R SystemsRs.s 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 etc. to strengthen competencies and enhance offerings across focused verticals i.e. Technology, Telecom, Healthcare & Life Science, Banking and Insurance, & Retail and 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 todayRs.s hyper-changing environment. Over the year ended December 31, 2019, 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)
Financial Year ended
|(b) Expenditure (Accrual Basis)||537.80||456.94|
|(c) CIF value of imports||84.90||54.65|
As on December 31, 2019, R Systems has twenty six subsidiaries. The name and country of incorporation of those subsidiaries are as follows:
|Name of the Subsidiaries||Country of Incorporation|
|1. R Systems, Inc.||U.S.A.|
|2. Innovizant LLC$||U.S.A.|
|3. R Systems Technologies Ltd.||U.S.A.|
|4. RSYS Technologies Limited||Canada|
|5. IBIZ Consultancy Services India Private Limited||India|
|6. ECnet Limited||Singapore|
|7. ECnet (M) Sdn. Bhd.#||Malaysia|
|8. ECnet (Hong Kong) Limited#||Hong Kong|
|9. ECnet Systems (Thailand) Co. Ltd.#||Thailand|
|10. ECnet Kabushiki Kaisha#||Japan|
|11. ECnet (Shanghai) Co. Ltd.#||PeopleRs.s Republic of China|
|12. Computaris International Limited||U.K.|
|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. Inc.@||Philippines|
|18. Computaris Suisse Sarl@||Switzerland|
|19. R Systems (Singapore) Pte. Ltd||Singapore|
|20. IBIZ Consulting Pte. Ltd.*||Singapore|
|21. IBIZ Consulting Services Pte Ltd."||Singapore|
|22. IBIZ Consulting Services Sdn. Bhd."||Malaysia|
|23. PT. IBIZCS Indonesia, Indonesia"||Indonesia|
|24. IBIZ Consulting Services Limited"||Hong Kong|
|25. IBIZ Consulting Services (Shanghai) Co., Ltd.%||PeopleRs.s Republic of China|
|26. IBIZ Consulting ( Thailand) Co Ltd."||Thailand|
$ wholly owned subsidiary of R Systems, Inc.
# wholly owned subsidiaries of ECnet Limited, Singapore being 99.75% subsidiary of R Systems (The shareholding held by the Company and R Systems (Singapore) Pte Limited is 69.37% and 30.38% respectively).
@ wholly owned subsidiaries of Computaris International Limited being 100% subsidiary of R Systems.
* wholly owned subsidiary of R Systems (Singapore) Pte Limited being 100% subsidiary of R Systems.
Awholly owned subsidiaries of IBIZ Consulting 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 IBIZ Consulting Pte. Ltd.
During the financial year ended December 31, 2019, R Systems Inc., USA, wholly-owned subsidiary of the Company, acquired 100% interest in Innovizant LLC w.e.f. January 01, 2019. Innovizant LLC is a USA based Company engaged in analytical, data science, data engineering and other IT services.
Further, ECnet Inc. (step down subsidiary of the Company) was dissolved w.e.f. January 28, 2019.
IBIZ Consulting (Thailand) Co. Ltd., became a subsidiary of IBIZ Consulting Pte Ltd., Singapore, a wholly owned subsidiary of the Company w.e.f. June 21, 2019.
During the year under review, the Company has acquired all the shares of IBIZ Consulting Services India Private Limited from its wholly owned subsidiary IBIZ Consulting Pte. Ltd., Singapore. Consequent to the said acquisition,
IBIZ Consulting Services India Private Limited became a direct subsidiary of the Company w.e.f. July 01, 2019.
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, no other corporate restructuring activity, except as stated in this report was done by the Company.
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 2019, the Company has 3 unlisted material subsidiaries namely, R Systems, Inc., U.S.A. R Systems (Singapore) Pte. Ltd., Singapore and Computaris International Limited, UK, all incorporated and based outside India.
A statement containing the salient features of the financial statement 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 hours. The same will also be hosted on R SystemsRs. website i.e. www.rsystems.com.
15. Particulars of employees
The details required under Section 197(12) of the Companies Act, 2013 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.
16. DirectorsRs. responsibility statement
Pursuant to the requirement of Section 134 (3) (c) read with Section 134(5) of the Companies Act, 2013 with respect to directorsRs. responsibility statement, your directors hereby confirm that:
1) In the preparation of the annual accounts for the financial year ended December 31, 2019, 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 the Companies Act, 2013 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, 2019 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.
17. Auditors and Audit Report
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [FirmRs.s 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 Twenty Eighth AGM of the Company to be held in the year 2022. The Ministry of Corporate Affairs vide notification dated May 07, 2018 has obliterated the requirement of seeking MembersRs. ratification at every AGM on appointment of statutory auditors during their tenure of five years.
M/s. Deloitte Haskins & Sells LLP has confirmed that they are not disqualified from continuing as Auditors of the Company.
Further, the auditorsRs. report and Financial Statements being self-explanatory, do not call for any further comments by the Board of Directors as there are no qualifications, reservation or adverse remark or disclaimer. During the year 2019, the Statutory Auditor has not reported any matter under Section 143(12) of the Companies Act, 2013.
18. Audit committee
R Systems has a qualified and independent Audit Committee. During the year under review there was no change in the composition of Audit Committee.
The constitution of the Committee is in compliance with the provisions of the Companies Act, 2013 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 Companies Act, 2013 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 Companies Act, 2013 and Listing Regulations. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Audit Committee.
19. 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, 2019, there was no case reported to ICC of sexual harassment.
20. Corporate Governance
As required under 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, [FirmRs.s
Registration No. 1 17366W/ 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.
The Company has neither invited nor accepted any deposits from the public within the purview of the Companies Act, 2013 and the Rules made thereunder, no amount of principal or interest was outstanding on the date of the balance sheet.
22. Customer relations
R Systems recognises 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 CompanyRs.s 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.
23. StakeholderRs.s relations
R Systems is inspired by its customers and its employees transform that inspiration and customersRs. needs into value for all stakeholders. 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 stakeholders. R Systems conducts regular employee satisfaction surveys and open house meetings to get employees 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 years. 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.
24. Management discussion and analysis report
In terms of the Listing Regulations management discussion and analysis report is given as Annexure E to this report.
25. Business Responsibility Report
The Business Responsibility Report of the Company for the
26. Secretarial Audit Report and compliance with Secretarial Standards
Mr. Jitender Singh, Company Secretary in Practice, was appointed by the Board of Directors of the Company to carry out the Secretarial Audit under the provision of Section 204 of the Companies Act, 2013 for the financial year ended December 31, 2019. The Secretarial Audit report for financial year ended on December 31, 2019 is enclosed as Annexure G.
Further, the Secretarial auditorsRs. 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, 2019.
During the year under review, the Company has complied with the applicable Secretarial Standards issued by ICSI.
27. Maintenance of Cost Records
The Company is not required to maintain Cost records under Section 148(1) of the Companies Act, 2013.
28. 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 instances 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.
29. 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 Companies Act, 2013 and other relevant provisions and on the recommendation of Nomination & Remuneration Committee, the Board has framed a criteria for selection of Directors, a policy for remuneration of directors, key managerial 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.
30. 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, CompanyRs.s performance and other statutory matters. 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 Corporate Governance Report. The intervening gap between two Board Meetings did not exceed 120 days.
31. Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, the Board has carried out an annual performance evaluation of its own performance, its committees and the individual directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
32. Particulars of Loans, Guarantees or investments under Section 186 of the Companies Act, 2013
During the year under review, the Company has acquired all the shares of IBIZ Consulting Services India Private Limited for an aggregate amount of INR 468,500/- from its wholly owned subsidiary IBIZ Consulting Pte. Ltd., Singapore. Consequent to the said acquisition, IBIZ Consulting Services India Private Limited became a direct wholly- owned subsidiary of the Company w.e.f. July 01, 2019.
Details of loan, guarantees and investments covered under section 186 of the Companies Act, 2013 are provided in the notes to accounts of the financial statements.
33. Related Party Disclosure
All the Related Party Transactions entered during the year were in the ordinary course of business and on armRs.s length basis and in compliance with the applicable provisions of the Companies Act, 2013 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. Omnibus approval is obtained for the transactions which are foreseen and 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 CompanyRs.s website at the weblink 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 Companies Act, 2013 in form AOC-2 has been enclosed herewith as Annexure H.
34. Risk Management
The Company is not required to form a Risk Management Committee. The Company has developed and implemented a risk management policy for identifying the risk associated with business of the Company and measures to be taken by including identification of elements of risk and measures to control them.
35. Extract of Annual Return
The details forming part of the extract of the Annual Return in form MGT - 9 is enclosed as Annexure I to this Report.
36. Corporate Social Responsibility
In compliance with the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a Corporate Social Responsibility Committee (CSR CommitteeRs.). 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 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 Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure J and forms part of this report.
37. 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 of the Board. 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, 2019 and have issued unmodified opinion on the adequacy and operating effectiveness of the CompanyRs.s internal financial controls over financial reporting.
38. Significant and Material Orders Passed by the Regulators or Courts
There are no significant or material orders passed by the Regulators / Courts which would impact the going concern status of the Company and itRs.s operations in future.
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 and Maharashtra 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
|Satinder Singh Rekhi||Lt. Gen. Baldev Singh (Retd.)|
|(Managing Director)||(President & Senior Executive Director)|
|(DIN: 00006955)||(DIN: 00006966)|
|Place : Frankfurt, Germany||Place : NOIDA|
|Date : February 09, 2020||Date : February 09, 2020|