R Systems International Ltd Directors Report.

Dear Shareholders,

Your directors take great pleasure in presenting the Twenty Seventh 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, 2020.

1. Financial Results

a. Standalone financial results of R Systems

(Rs in Million)
Particulars Financial Year ended
31.12.2020 31.12.2019
Total revenue 4,387.15 3,917.69
Profit before depreciation and tax 954.31 717.49
Less: Depreciation and amortisation expense# 134.61 85.91
Profit before tax 819.70 631.58
Less: Current tax 149.86 104.22
Less: Deferred tax expense/(credit) (31.13) 12.41
Profit after tax 700.97 514.95
Other comprehensive income (11.19) (8.33)
Total comprehensive income for the year 689.78 506.62
Statement of change in Retained Earnings
Opening balance 2,423.29 2,124.85
Adjustment for adoption of Ind As 116 (10.49) -
Adjusted opening balance 2,412.80 2,124.85
Add: Profit for the year 700.97 514.95
Less: Dividend paid - 216.51
Closing balance 3,113.77 2,423.29
EPS-Basic 5.86 4.27

# Depreciation and Amortisation expense for the year 2019 were Pre- Ind As 116 Adoption.

b. Consolidated financial results of R Systems and its Subsidiaries

(Rs in Million)
Particulars Financial Year ended
31.12.2020 31.12.2019
Total revenue 8,805.91 8,093.75
Profit before depreciation,exceptional items and tax 1,240.80 868.21
Less: Depreciation and amortisation expense# 256.04 148.86
Less: Exceptional Items 18.65 -
Profit before tax 966.11 719.35
Less: Current tax 206.17 134.84
Less: Deferred tax expense/(credit) (61.95) 3.27
Profit after tax 821.89 581.24
Other comprehensive income 75.74 27.29
Total comprehensive income for the year 897.63 608.53
Statement of change in Retained Earnings
Opening balance 2,796.95 2,432.21
Adjustment on adoption of Ind-As 116 (14.43) -
Adjusted opening balance 2,782.52 2,432.21
Add: Profit for the year 821.89 581.24
Less: Dividend paid - 216.50
Closing balance 3,604.41 2,796.95
EPS-Basic 6.87 4.82

# Depreciation and Amortisation expense for the year 2019 were Pre- Ind As 116 Adoption.

2. Results of Operations

Standalone Accounts

Total revenue during the year 2020 was Rs 4,387.15 mn. as compared to Rs 3,917.69 mn. during the year 2019, an increase of 11.98%.

Profit after tax was Rs 700.97 mn. during the year 2020 as compared to Rs 514.95 mn. during 2019, an increase of 36.12%.

Basic earnings per share (of face value of Rs 1/- each) was Rs 5.86 for the year 2020 as compared to Rs 4.27 for the year 2019, an increase of 37.24%.

Consolidated Accounts

Total revenue during the year 2020 was Rs 8,805.91 mn. as compared to Rs 8,093.75 mn. during the year 2019, an increase of 8.80%.

Profit after tax was Rs 821.89 mn. during the year 2020 as compared to Rs 581.24 mn. during 2019, an increase of 41.40%.

Basic earnings per share (of face value of Rs 1/- each) was Rs 6.87 for the year 2020 as compared to Rs 4.82 for the year 2019, an increase of 42.53%.

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

The Board of Directors (the "Board") has not recommended any dividend for the financial year ended December 31, 2020.

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 global technology, AI/ Analytics services and knowledge services leader. We deliver AI-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 subsidiaries in South East Asia.

AI/ Analytics services include advanced analytics, machine learning / artificial intelligence, business analytics and automation. R Systems 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 Companys 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 Companys subsidiaries please refer note number 13 relating to subsidiaries.

The outbreak of COVID-19 was clearly an unprecedented event, the likes of which we have not experienced before. Some industries have experienced the worst impact due to social distances and travel restrictions under lock downs and the new normal. To handle these challenges, the businesses have accelerated the digitization of their customer, supply-chain interactions and of their internal operations to function and transact in this new normal. This acceleration in digital transformation has led to increase in demand for technology products and services.

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 2020, HIPAA compliance test was done with zero non-compliance in one of the major clients in Healthcare Domain for Knowledge Services division. 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 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 customers.

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. Ensuring Employee Safety and Business Continuity during COVID 19 Outbreak

COVID-19 has impacted every country and caused immense challenges for the humanity. Towards the start of the pandemic, R Systems also faced various challenges like slowdown in global economy, taking care of health & safety of our employees while ensuring the continuity of services to our customers.

In accordance with the applicable Government directives in respective countries where we operate, starting from mid of March 2020, the Company assessed the situation and timely initiated the Business Continuity Plan (BCP). Under the BCP all the employees (except very few employees providing essential services) are Working From Home (WFH). As a part of BCP, R Systems has commissioned a taskforce with representatives from various functions like IT, HR, Admin etc. to monitor the situation and to take timely actions to safeguard the health & safety of employees while maintaining seamless services to our customers which includes:

Ensuring business productivity and client satisfaction under WFH environment.

Upgradation of network Infrastructure to have safe and seamless connectivity.

Frequent sanitization and disinfection of office spaces.

Adhering to Government guidelines for domestic and international travel.

Compliance with the guidelines of the Governments across the globe.

Because of the efforts made by the task force and the support of each employee, more than 95% of your Companys workforce has been Working From Home since the Lockdown was imposed with achieving almost 100% of client satisfaction and is also able to meet all the committed deliverables to the clients.

7. Directors & Key Managerial Personnels (KMP)

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

Lt. Gen. Baldev Singh (Retd.) was re-appointed as director liable to retire by rotation at the Annual General Meeting held on June 30, 2020.

Mr. Avirag Jain was re-appointed as Whole-time Director (Designated as Director and Chief Technology Officer) of the Company for a period of three years commencing from August 03, 2020 at the Annual General Meeting held on June 30, 2020.

During the period under review, shareholders vide special resolution at the Annual General Meeting held on June 30, 2020, approved the continuation of Mr. Satinder Singh Rekhi as Managing Director of the Company.

Further, the Board of Directors at their meeting held on November 03, 2020 has appointed, Mr. Satinder Singh Rekhi as Chief Executive Officer of the Company and redesignated him as Managing Director & Chief Executive Officer of the Company w.e.f. November 03, 2020.

Details of Directors proposed to be re-appointed at the ensuing Annual General Meeting are as follows:

a. At the ensuing Annual General Meeting, Mr. Avirag Jain, Director & Chief Technology Officer 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 reappointment as director of the Company.

b. Mrs. Ruchica Gupta, Mr. Kapil Dhameja and Mr. Aditya Wadhwa, Non- Executive Independent Directors of the Company are proposed to be reappointed as Non-Executive Independent Directors of the Company, pursuant to the provisions of Section 149 of the Companies Act, 2013 and rules made thereunder and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Hereinafter referred as "Listing Regulations") at the ensuing Annual General Meeting for the second term of five years commencing from June 28, 2021.

c. On the recommendation of the Nomination & Remuneration Committee, the Board of Director of the Company, has re-appointed Lt. Gen Baldev Singh (Retd.) as President and Senior Executive Director of the Company for a period of two years i.e. w.e.f. April 01, 2021 to March 31, 2023, subject to the approval of the shareholders at the ensuing Annual General Meeting of the Company.

The brief profiles of Lt. Gen. Baldev Singh (Retd.), Mr. Avirag Jain, Mrs. Ruchica Gupta, Mr. Kapil Dhameja and Mr. Aditya Wadhwa 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 Listing Regulations.

On the basis of the declarations submitted by all 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.

8. 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 had 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, 2020, the Company does not have any stock option plan in force.

During the year under review, following ESOP/ ESOS plans of the Company have been completed/ lapsed:

R Systems International Ltd. Employees Stock Option Plan Year 2001 (Formerly known as Indus Software Employees Stock Option Plan - Year 2001). Honble National Company Law Tribunal, New Delhi, ("NCLT") vide order dated January 28, 2020, has approved the reduction in share capital of the Company under Section 66 of the Act, whereby 738,980 equity shares of the Company as held by R Systems Employees Welfare Trust have been cancelled and extinguished. Therefore, R Systems International Ltd. Employees Stock Option Plan Year 2001 (Formerly known as Indus Software Employees Stock Option Plan - Year 2001) has been lapsed completely as there are no shares left for allotment.

R Systems International Limited Employee Stock Option Scheme 2007: For the employees of R Systems and its subsidiaries.

During the year under review, all the options granted under the R Systems International Limited Employee Stock Option Scheme 2007 have been exercised and there is no stock option in force.

The summary information of aforesaid Employee Stock Option Plans/ Schemes of the Company is provided under Notes to Accounts of Standalone Financial Statements for the financial year ended December 31, 2020. Refer to Notes to accounts of the Standalone Financial Statements for the financial year ended December 31, 2020 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 Companys website: https://www. rsystems.com/investors-info/annual-reports/.

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.

9. Liquidity and Borrowings - Consolidated Financial Statement

The consolidated cash and cash equivalents as at December 31, 2020 were Rs 2,132.21 mn. as against

Rs 1,103.11 mn. as on December 31, 2019.

Netcashgeneratedfromoperatingactivitieswas1,243.59 mn. for the year ended December 31, 2020 compared to

Rs 642.90 mn. for the year ended December 31, 2019.

Cash used in investing activities was Rs 382.52 mn. for the year ended December 31, 2020 and mainly comprised of investment in long term deposit of Rs 465.64 mn. (net) with bank, purchase of fixed assets of Rs 179.56 mn., as offset by redemption of liquid mutual fund of Rs 226.86 mn. along with interest income of Rs 28.61 mn.

Cash from financing activities was Rs 110.31 mn. for the year ended December 31, 2020, mainly comprised of receipt of Paycheck Protection Program (PPP) forgivable Loan of Rs 225.19 mn. as offset by payment of lease liabilities of Rs 117.52 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 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, 2020, the total credit balance was nil under fund based line of credit. Loan payable as at December 31, 2020 comprises of loan for motor vehicles purchased amounting to Rs 8.12 mn. and PPP forgivable Loan of Rs 222.05 mn.

10. 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, 2020, 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 share Capital 120,337,925

During the year under review, NCLT, vide order dated January 28, 2020, has approved reduction in share capital of the Company under Section 66 of the Act. Pursuant to the said capital reduction, the paid up share capital of the Company was reduced to Rs 119,598,945/- divided into 119,598,945 equity shares of face value of Rs 1/- each.

Further, during the year under review, the Company issued 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. Consequent to the said allotment, the issued and paid up share capital of the Company was enhanced to Rs 119,636,445/- divided into 119,636,445 equity shares of face value of Rs 1/- each.

At the end of the financial year ended December 31, 2020, 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 119,636,445
Paid up share Capital

During the financial year ended December 31, 2020, 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 Act are not applicable. Further, 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.

11. Scheme of Amalgamations and Arrangements

(a) The NCLT vide order dated January 28, 2020, has approved the reduction in share capital of the Company under Section 66 of the Act, whereby 738,980 equity shares of the Company as held by R Systems Employees Welfare Trust were cancelled and extinguished.

(b) Subject to necessary approvals of Shareholders, creditors, Stock Exchanges, NCLT or any other appropriate authority, the Board of Directors of your Company at its meeting held on October 25, 2019, has approved the Scheme of Amalgamation under Section 230-232, 234 and other applicable provisions of the Act 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 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 shall be issued equivalent shares in R Systems which are held by RightMatch in the proportion of their respective shareholding in RightMatch. All the cost, charges or expense related to the said Amalgmation, shall be borne by the Promoters of R Systems and/ or RightMatch. As on date of this report, NCLT has approved the Scheme vide order dated February 01, 2021 and the approval of Statutory Authorities in Mauritius is awaited.

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

The particulars as prescribed under Section 134 (1) (m) of the Act read with Rule 8 of Companies (Accounts) Rules, 2014 for the year ended December 31, 2020 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, 2020, 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 generators.

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 and Intelligent Automation etc. to further 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. Further, the pandemic has shown the value of digital initiatives in e-commerce, deliveries, supply chain virtualization, process automation and other activities, especially where physical activities are restrictive. Organizations across industries are adapting new technology to operate in this new normal.

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, 2020, 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

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 Millions)

Particulars Financial Year ended 31.12.2019
31.12.2020
(a) Earnings (Accrual Basis) 4,272.28 3,837.70
(b) Expenditure (Accrual Basis) 515.27 537.80
(c) CIF value of imports 61.78 84.90

13. Subsidiaries

As on December 31, 2020, R Systems has twenty six subsidiaries. The name and country of incorporation of those subsidiaries are as follows:

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

 $ wholly owned subsidiary of R Systems, Inc.

 # wholly owned subsidiaries of R Systems Consulting Services 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.

^ 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 being 100% Subsidiary of IBIZ Consulting 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, the name of subsidiaries as mentioned above has been changed to operationalise 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 2020, the Company had 2 unlisted material subsidiaries namely, R Systems, Inc., U.S.A. and R Systems (Singapore) Pte. Ltd., Singapore, both 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, Corporate Office of R Systems i.e. C-40, Sector 59, Noida (U.P.) – 201307 and Registered Offices of the respective subsidiary companies during business hours. The same has been hosted on R Systems website i.e. www.rsystems.com.

14. 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.

15. Directors Responsibility Statement

Pursuant to the requirement of Section 134 (3) (c) read with Section 134(5) of the Act 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, 2020, 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, 2020 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.

16. 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 Twenty Eighth Annual General Meeting 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 Members 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 auditors 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 2020, the Statutory Auditor has not reported any matter under Section 143(12) of the Act.

17. 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 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.

18. 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, 2020, there was no case reported to ICC regarding sexual harassment.

19. 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, [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.

20. Deposits

The Company has neither invited nor accepted any deposits from the public within the purview of the Act and the Rules made thereunder, no amount of principal or interest was outstanding as on the date of this report.

21. 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 Companys 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.

22. Stakeholders Relations

R Systems is inspired by its customers and its employees transform that inspiration and customers 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 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 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.

23. Management Discussion and Analysis Report

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

24. Business Responsibility Report

The Business Responsibility Report of the Company for the financial year ended December 31, 2020 as required under Regulation 34(2)(f) of the Listing forms part of this Report as Annexure F.

25. Secretarial Audit Report

M/s. Sanjay Grover & Associates, Company Secretaries 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 Act for the financial year ended December 31, 2020. The Secretarial Audit report for financial year ended on December 31, 2020 is enclosed as Annexure G.

Further, the Secretarial auditors report being self-explanatory, 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, 2020.

During the year under review, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

26. Maintenance of Cost Records

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

27. 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.

28. 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 Nomination & 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.

29. 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, Companys performance and other statutory matters. During the year under review, the Board has met five 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.

30. 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 directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

31. Particulars of Loans, Guarantees or Investments

During the year under review, the Company has invested CAD 500,000 in RSYS Technologies Limited, Canada, by way of equity contribution. Details of loan, guarantees and investments covered under section 186 of the Act are provided in the notes to accounts of the financial statements.

32. 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. 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 Companys 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 herewith as Annexure H.

33. 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.

34. Extract of Annual Return

The extract of annual return in Form MGT 9 as required under Section 92(3) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure I to this Report and is also available on the website of the Company at the following link: https://www.rsystems.com/investors-info/annual-reports/

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 a Corporate 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 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 atthewebsiteoftheCompanyatfollowinglink: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.

36. 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, 2020 and has issued unmodified opinion on the adequacy and operating effectiveness of the Companys internal financial controls over financial reporting.

37. Material Changes affecting the Financial Position of the Company

There were no significant events subsequent to the financial year ended December 31, 2020 till the date of this report which would materially affect the financial position of the Company.

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 its operations in future.

39. 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 and 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/-
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 16, 2021 Date: February 16, 2021