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आर सिस्टम्स इंटरनैशनल निदेशकों की रिपोर्ट, आर सिस्टम्स इंटरनैशनल निर्देशकों द्वारा रिपोर्ट

आर सिस्टम्स इंटरनैशनल

बीएसई: 532735  |  NSE: RSYSTEMS  |  ISIN: INE411H01032  |  Computers - Software Medium & Small

खोजें आर सिस्टम्स इंटरनैशनल कनेक्शन Dec 16
निदेशकों की रिपोर्ट वर्षांत : Dec '18

Dear Shareholders,

The directors take great pleasure in presenting the Twenty Fifth 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, 2018.

1. Financial Results

The financial statements are prepared in accordance with Indian Accounting Standards (‘Ind AS’). In accordance with the notification issued by Ministry Corporate Affairs, the Company has adopted Ind AS as notified under the Companies (India Accounting Standards) Rules, 2015. These are the Company’s first Ind AS financial statement. The date of transition is January 01, 2017, accordingly, figures for the financial year 2017 has been restated in accordance with Ind AS.

a. Standalone financial results of R Systems

(Rs. in Millions)

Particulars

Financial Year ended

31.12.2018

31.12.2017

Total Revenue

3,172.13

2,637.53

Profit before depreciation, exceptional items and tax

478.45

416.23

Less : Depreciation and amortisation expense

73.01

73.74

Profit before tax

405.44

342.49

Less : Current tax

99.35

133.41

Less: MAT credit entitlement

-

(5.84)

Less : Deferred tax (credit) / expense

(4.05)

(13.16)

Profit after tax

310.14

228.08

Other comprehensive income

(0.50)

8.04

Total comprehensive income for the year

309.64

236.12

Surplus in the statement of profit and loss

Balance as per last financial statement

1,900.20

1,672.12

Add: Profit for the current year

310.14

228.08

Less : Dividend paid

85.49

-

Net surplus in statement of profit and loss

2,124.85

1,900.20

EPS-Basic

2.52

1.85

b. Consolidated financial results of R Systems and its Subsidiaries

(Rs. in Millions)

Particulars

Financial Year ended

31.12.2018

31.12.2017

Total Revenue

6,998.89

5,926.38

Profit before depreciation, exceptional items and tax

762.30

488.24

Less : Depreciation and amortisation expense

135.48

134.80

Profit before tax

626.82

353.44

Less : Current tax

124.22

149.89

Less: MAT credit entitlement

-

(5.84)

Less : Deferred tax (credit) / expense

(7.85)

(15.95)

Profit after tax

510.45

225.34

Other comprehensive income

93.55

(6.40)

Total comprehensive income for the year

604.00

218.94

Surplus in the statement of profit and loss

Balance as per last financial statement

2,007.25

1,781.91

Add: Profit for the current year

510.45

225.34

Less : Dividend paid

85.49

-

Net surplus in statement of profit and loss

2,432.21

2,007.25

EPS-Basic

4.14

1.83

2. Results of operations Standalone Accounts

- Total income during the year 2018 was Rs. 3,172.13 mn. as compared to Rs. 2,637.53 mn. during the year 2017, an increase of 21.27%.

- Profit after tax was Rs. 310.14 mn. during the year 2018 as compared to Rs. 228.08 mn. during 2017, an increase of 35.98%.

- Basic earnings per share (of face value of Re. 1/- each) was Rs. 2.52 for the year 2018 as compared to Rs. 1.85 for the year 2017, an increase of 35.92%.

Consolidated Accounts

- Consolidated total income during the year 2018 was Rs. 6,998.89 mn. as compared to Rs. 5,926.38 mn. during the year 2017, an increase of 18.10%.

- Profit after tax was Rs. 510.45 mn. during the year 2018 as compared to Rs. 225.34 mn. during 2017, an increase of 126.52%.

- Basic earnings per share (of face value of Re. 1/- each) was Rs. 4.14 for the year 2018 as compared to Rs. 1.83 for the year 2017, an increase of 126.43%.

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

3. Appropriations and Reserves

Dividend

The members may also note that during the year 2018, the Board of Directors had declared an interim dividend of Re. 0.60 per equity share of Re. 1/- each i.e. 60% at its meeting held on May 04, 2018. The said Dividend was paid to shareholders on June 01, 2018. The Board of Directors (the “Board”) has not recommended any final dividend for the financial year ended December 31, 2018.

The register of members and share transfer books shall remain closed from May 24, 2019 to May 28, 2019 both days inclusive.

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 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 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 and has served twenty one million dollar plus customer during the year 2018. R Systems maintains sixteen development and service centres to serve customers in USA, Europe and the Far East.

There were no changes in the nature of the Company’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 Company’s subsidiaries please refer note number 15 relating to subsidiaries.

During the year under review, on November 20, 2018, the Company has received approval from Department of Commerce, Ministry of Commerce & Industry, Government of India for expansion of existing ‘Special Economic Zone’ (SEZ) facility located at Greater Noida West (NCR) by addition of approx. 28,105 sq. ft. located at Greater Noida West (NCR).

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 2018, The IT & BPO Division has been re-certified with ISO 27001:2013 standard.

In Addition, for BPO division, R Systems has got SOC2 Type 2 Reporting for one of the major healthcare clients. HIPAA also has been implemented and tested with zero non-compliance in one of the major clients in Healthcare Domain. The BPO division has migrated their QMS into ISO 9001:2015 version from the existing ISO 9001:2008 version. Apart from that, R Systems IT Infrastructure along with the projects/process/applications in scope has got PCI DSS Certification on latest version V3.2.1.

As of the date of this report, Noida IT center is CMMI level 5 (Ver.1.3), PCMM Level 5, ISO 9001:2015, ISO 27001:2013 certified. Noida BPO center is PCMM Level 5, ISO 27001:2013 certified and also for specific client(s) it is SOC2 Type 2, 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 in its unique and proprietary ®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 Personnels (KMP)

Mr. Avirag Jain was 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, 2017 at the 24th Annual General Meeting of the Company held on May 25, 2018.

Pursuant to the provisions of Section 152 of the Companies Act, 2013 (“Act”) read with Articles of Association of the Company, Mr. Avirag Jain, Director and Chief Technology Officer, is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible offers himself for re-appointment.

The brief profile of Mr. Avirag Jain proposed to be re-appointed forms part of the Corporate Governance Report and Notice for convening the AGM.

During the year under review, the Board of Directors appointed Mr. Bhasker Dubey as Company Secretary & Compliance Officer w.e.f. February 10, 2018 upon resignation of Mr. Ashish Thakur.

Further, on December 19, 2018, shareholders approval was accorded for re-appointment of Mr. Satinder Singh Rekhi as Managing Director for a period of 5 years w.e.f. January 01, 2019.

None of the directors of the Company is disqualified as per the provisions of Section 164(2) of the Act. 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 the 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 the date of this report, 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 ofamalgamation approved by the Hon’ble High Courts of Delhi and Mumbai. As on December 31, 2018, no stock options are in force under this plan.

- R Systems International Limited Employee Stock Option Scheme 2007: For the employees of R Systems and its subsidiaries. As on December 31, 2018, there are 75,000 stock options in force under this plan.

The aforesaid plans are in compliance with SEBI (Share Based Employee Benefits) Regulations, 2014 (“Employee Benefit Regulations”) and there has been no material changes to these Plans during the Financial Year 2018. 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 Company’s website: https://www.rsystems. com/investors-info/annual-reports/.

No employee 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 equivalent as at December 31, 2018 were Rs. 841.17 mn. as against Rs. 929.02 mn. as on December 31, 2017. Net cash generated from operating activities were Rs. 311.22 mn. for the year ended December 31, 2018 compared to Rs. 365.24 mn. for the year ended December 31, 2017. Cash used in investing activities were Rs. 350.45 mn. for the year ended December 31, 2018 and comprised of Investment in long term deposit with bank Rs. 293.84 mn. (net), purchase of fixed assets of Rs. 165.87 mn. and Investment in liquid mutual fund Rs. 140 mn. as offset by proceeds from redemption of debenture Rs. 175.12 mn., interest income Rs. 64.62 mn., rental income from investment property Rs. 6.56 mn. and sale of fixed assets Rs. 2.96 mn. Cash used in financing activities were Rs. 87.86 mn. for the year ended December 31, 2018 and mainly consist of Rs. 85.49 mn. on account of payment of dividend (including CDT) (net).

R Systems’ policy is to maintain sufficient liquidity to fund the anticipated 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, 2018, the total credit balance was nil under fund based line of credit. Loan payable as at December 31, 2018 comprises of loan for motor vehicles purchased amounting to Rs. 9.36 mn. and finance lease obligation of Rs. 10.61 mn. for SEZ premises.

9. Changes in the Capital Structure

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

At the beginning of the financial year ended December 31, 2018, the share capital structure of the Company was as follows:

Particulars

equity Shares

of Re. 1/- each

Authorised Share Capital

200,000,000

Issued, Subscribed and Paid up

123,952,925

share Capital

During the year under review, the Company had issued 37,500 equity shares of Re. 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. 123,990,425/- divided into 123,990,425 equity shares of face value of Re. 1/- each.

Further, pursuant to the Scheme of Amalgamation between GM Solutions Private Limited (“GM Solutions”) and R Systems International Limited (“Company”) as approved by the Hon’ble National Company Law Tribunal (“NCLT”) vide order dated December 07, 2018, the following changes took place in the share capital of the Company:

1. Authorised Share Capital of the Company was enhanced with the Authorised Capital of GM Solutions i.e. by Rs. 6,000,000/- (Rupees Sixty Lakhs only).

2. The Company has allotted 29,746,353 equity shares of Re. 1/- each on December 21, 2018 to the shareholders of GM Solutions in proportion to there respective shareholding in GM Solutions and cancelled/ extinguished 29,746,353 equity shares of Re. 1/- each of the Company as held by GM Solutions upon aforesaid allotment.

Therefore, as on December 31, 2018, the share capital structure of the Company is as follows:

Particulars

equity Shares

of Re. 1/- each

Authorised Share Capital

206,000,000

Issued, Subscribed and Paid

123,990,425

up Share Capital

During the financial year ended December 31, 2018, 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.

10. Scheme of Amalgamations and Arrangements

a. During the year under review, the Company has received the order of the Hon’ble National Company Law Tribunal (“NCLT”) dated December 07, 2018 approving the Scheme of Amalgamation between GM Solutions Private Limited and R Systems International Limited and their respective Shareholders and Creditors. The appointed date of the scheme was January 01, 2018. The said order was filed with the Registrar of Companies, NCT of Delhi & Haryana on December 21, 2018.

b. Subsequent to the year ended December 31, 2018, the Company has withdrawn the Scheme of Arrangement for re-organization and reduction of equity share capital of the Company under Section 230 of the Act between R Systems International Limited and its Shareholders and Creditors and the Hon’ble National Company Law Tribunal, New Delhi has allowed the Company to withdraw the Scheme vide order dated January 03, 2019;

11. Buyback

Subsequent to the year ended December 31, 2018, the Board of Directors of the Company at its meeting held on January 15, 2019 approved the Buyback of up to 3,690,000 (Thirty Six Lakhs Ninety Thousand) fully paid-up equity shares of face value of Re. 1/- each (“Equity shares”), representing 2.98% of the total paid-up equity share capital of the Company, from all the equity shareholders of the Company as on the record date i.e. Friday, 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 Corporate Action for extinguishment of aforesaid 3,690,000 equity shares has been completed on April 15, 2019.

12. Registered office

Subsequent to the year ended December 31, 2018, the registered office of the Company has been sifted from B 104A, Greater Kailash, Part-I, New Delhi-110048 to GF-1-A, 6, Devika Tower, Nehru Place, New Delhi-110019 on April 23, 2019.

13. Material changes affecting the financial position of the Company

Except as detailed elsewhere in this report, there was no other significant event subsequent to the balance sheet date till the date of this report which would materially affect the financial position of the Company.

14. 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, 2018 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, 2018, 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.

R Systems is always in search of innovative and efficient energy conservation technologies and applies them prudently. However, R Systems being in the software industry, its 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 center of excellence in specific digital technologies like Cloud, Analytics, RPA 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 we partner with businesses to make them competitive and successful in today’s hyper-changing environment. Over the year ended December 31, 2018, your Company has invested in research and development in the area of digital technologies like Cloud, Analytics, RPA etc. in addition to strengthening and up-grading proprietary solutions and frameworks.

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 Millions)

S. No.

Particulars

Financial Year ended

31.12.2018

31.12.2017

(a)

Earnings (Accrual Basis)

3,104.51

2,586.04

(b)

Expenditure (Accrual Basis)

456.94

343.98

(c)

CIF value of imports

54.65

26.68

15. Subsidiaries

As on December 31, 2018, R Systems has twenty five subsidiaries. The name and country of incorporation of those subsidiaries are as follows:

S. No.

Name of the Subsidiaries

Country of incorporation

1.

R Systems (Singapore) Pte. Ltd

Singapore

2.

R Systems, Inc.

U.S.A.

3.

R Systems Technologies Ltd. (Formerly known as Indus Software, Inc.)

U.S.A.

4.

RSYS Technologies Limited (Formerly Systemes R. International Ltee)

Canada

5.

Computaris International Limited

U.K.

6.

ECnet Limited

Singapore

7.

ECnet (M) Sdn. Bhd.#

Malaysia

8.

ECnet, Inc.#5

U.S.A.

9.

ECnet (Hong Kong) Limited#

Hong Kong

10.

ECnet Systems (Thailand) Co. Ltd.#

Thailand

11.

ECnet Kabushiki Kaisha*

Japan

12.

ECnet (Shanghai) Co. Ltd.#

People’s Republic of China

13.

ICS Computaris International Srl@

Moldova

14.

Computaris Malaysia Sdn. Bhd.@

Malaysia

15.

Computaris Polska sp zo.o.@

Poland

16.

Computaris Romania SRL@

Romania

17.

Computaris Philippines Pte. Ltd. Inc. @

Philippines

18.

Computaris Suisse Sarl@

Switzerland

19.

IBIZ Consulting Pte. Ltd. (Formerly known as IBIZCS Group Pte. Ltd.)*

Singapore

20.

IBIZ Consulting Services Pte Ltd.”

Singapore

21.

IBIZ Consulting Services Sdn. Bhd.”

Malaysia

22.

PT. IBIZCS Indonesia”

Indonesia

23.

IBIZ Consultancy Services India Private Limited”

India

24.

IBIZ Consulting Services Limited”

Hong Kong

25.

IBIZ Consulting Services

People’s Republic

(Shanghai) Co. Ltd. %

of China

# 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.

A Wholly-owned subsidiaries of IBIZ Consulting Pte. Ltd. (Formerly known as IBIZCS Group Pte. Ltd.) being 100% subsidiary of R Systems (Singapore) Pte Limited being 100% subsidiary of R Systems.

% Wholly-owned subsidiary of IBIZ Consulting Services Limited - Hong Kong being 100% Subsidiary of IBIZ Consulting Pte. Ltd.

$ Liquidated w.e.f. January 28, 2019.

During the year ended December 31, 2018, the Company has invested CAD 1,000,000 (Canadian Dollar One Million only) in RSYS Technologies Limited towards equity contribution. Computaris Suisse Sarl, Switzerland, wholly-owned subsidiary of Computaris International Limited, was incorporated on April 27, 2018. Computaris USA Inc., U.S.A., wholly-owned subsidiary of Computaris International Limited, was liquidated on October 22, 2018.

Subsequent to the financial year ended December 31, 2018, R Systems Inc., USA, wholly-owned subsidiary of the Company, acquired, 100% interest in Innovizant LLC, a Chicago (USA) w.e.f. January 01, 2019.

Further, Subsequent to the year ended, ECnet Inc., USA, wholly-owned subsidiary of the ECnet Ltd., was dissolved w.e.f. January 28, 2019.

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

During the year under review, 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/ As per the Listing Regulations, the Company has two unlisted material subsidiary namely, R Systems, Inc., U.S.A. and Computaris International Limited, U.S.A.

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, where 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 any shareholder 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 Systems’ website i.e. www.rsystems.com.

16. Particulars of employees

The details required under Section 197(12) of the Act read with Rule 5(1) of 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.

17. 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, 2018, 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 ended December 31, 2018 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 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, 2018 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.

18. Auditors

M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [Firm’s Registration No. 117366W/ W-100018], were appointed as the Statutory Auditors of your Company in the Annual General Meeting held on May 15, 2017 for a term of five years until the conclusion of the 28th 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 Members’ ratification at every AGM on appointment of statutory auditors during their tenure of five years. M/s. Deloitte Haskins & Sells LLP have 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 2018, the Auditors has not reported any matter under Section 143(12) of the Act.

19. 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.

20. Prevention and prohibition of sexual harassment of women at work place

At R Systems, it is our desire to promote a healthy and congenial working 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, 2018, there was 1 (one) case reported to ICC of sexual harassment, which was dully investigated and resolved by the ICC.

21. 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 a Practising Company Secretary regarding compliance of the conditions of corporate governance as stipulated in the said clause is annexed as Annexure D to this report.

22. 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 on the date of the balance sheet.

23. 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 Company’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.

24. Stakeholder’s 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.

25. Management discussion and analysis report

In terms of the Listing Regulations management discussion and analysis report is given as Annexure E to this report.

26. Secretarial Report and Compliance with the Secretarial Standards

M/s. Chandrasekaran Associates, Company Secretaries, has been appointed by the Board 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, 2018. The Secretarial Audit report for financial year ended on December 31, 2018 is enclosed as Annexure F.

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, 2018.

During the year 2018, the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India.

27. Maintenance of Cost Records

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

28. Vigil Mechanism / Whistle Blower Policy

In order to provide a mechanism to employees of the Company to disclose any 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.

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 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 (“KMP”), senior management personnel (“SMP”) 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, Company’s performance and other statutory matters. During the year under review, the Board has met eight 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 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.

32. Particulars of Loans, Guarantees or investments under Section 186 of the Companies Act, 2013

During the year ended December 31, 2018, the Company has invested CAD 1,000,000 (Canadian Dollar One Million only) in RSYS Technologies Limited by way of acquisition of additional shares.

Details of loan, guarantees and investments covered under section 186 of the Companies Act, 2013 forms part of 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 arm’s length basis.

There are no materially significant related party transactions made by the Company with 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 Company’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 Act in form AOC-2 has been enclosed herewith as Annexure G.

34. Risk Management

The Company is not required to form a Risk Management Committee. The Company 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. 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 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 H and forms part of this report.

36. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT - 9 is enclosed as Anneuxre i to this Report.

37. internal Control System and internal Financial Controls

The Company has an Internal Control System, commensurate with the size, scale 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 included in this annual report and have issued unmodified opinion on the adequacy and operating effectiveness of the Company’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 it’s 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, Department of Commerce, 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/-

Satinder Singh Rekhi Lt. Gen. Baldev Singh (Retd.)

(DIN: 00006955) (DIN: 00006966)

(Managing Director) (President & Senior Executive Director)

Place : Singapore Place : NOIDA (U.P.)

Date : May 02, 2019 Date : May 02, 2019

स्रोत: रेलीगरे टेचनोवा

न्यूज़ फ़्लैश

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