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R Systems International
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Directors Report Year End : Dec '13    « Dec 12
Dear Shareholders,
 
 The directors take great pleasure in presenting the Twentieth Annual
 Report on the business and operations of R Systems International
 Limited (R Systems or the Company) together with the audited
 statements of accounts for the year ended December 31, 2013.
 
 1.  Financial Results
 
 a.  Standalone financial results of R Systems
 
                                                (Rs. in Millions)
 
 Particulars                        Financial Year ended
                                    31.12.2013     31.12.2012 
 
 Total income                         2,739.72       2,331.49
 
 Profit before depreciation,            589.30         369.66
 exceptional items and tax
 
 Less : Depreciation and                 47.81          62.40
 amortisation
 
 Profit before tax                      541.49         307.26
 
 Less : Current tax (net of MAT         188.29          95.40
 credit)
 
 Less : Deferred tax charge /           (12.32)          6.58
 (credit)
 
 Profit after tax                       365.52         205.28
 
 Surplus in the statement of 
 profit and loss
 
 Balance as per last financial          609.70         805.01
 statements
 
 Add: Profit for the current year       365.52         205.28
 
 Less: Appropriations
 
 Proposed dividend (refer note          120.70          94.26
 below)
 
 Tax on proposed dividend                21.24          15.29
 (refer note below)
 
 Interim dividend                       139.24         199.19
 
 Tax on interim dividend                 23.66          32.31
 
 Transfer to general reserve             36.55          59.53
 
 Total appropriations                   341.39         400.58
 
 Net surplus in the statement           633.83         609.70
 of profit and loss
 
 The Company has issued 50,100 shares pursuant to exercise of ESOP up to
 book closure date for distribution of dividend for the year 2012 and
 accordingly increased the appropriation in the current year by Rs. 0.38
 million and Rs. 0.06 million as dividend and tax on dividend
 respectively. Further, due to increase in surcharge rate under Finance
 Act, 2013 the Company has additionally appropriated Rs. 0.73 million
 towards tax on dividend proposed for the year 2012.
 
 b. Consolidated financial results of R Systems and its subsidiaries
 
                                                (Rs. in Millions)
 
 Particulars                        Financial Year ended
                                    31.12.2013     31.12.2012 
 
 Total income                         6,007.69       4,700.13
 
 Profit before depreciation,            819.97         389.43
 exceptional items and tax
 
 Less : Depreciation and                101.71         100.89
 amortisation
 
 Profit before tax                      718.26         288.54
 
 Less : Current tax (net of MAT         192.50          94.99
 credit)
 
 Less : Deferred tax charge /            (1.23)          9.93
 (credit)
 
 Profit after tax                       526.99         183.62
 
 Surplus in the statement of 
 profit and loss
 
 Balance as per last financial          582.14         799.11
 statements
 
 Add: Profit for the current year       526.99         183.62
 
 Less: Appropriations
 
 Proposed dividend                      120.70          94.26
 
 Tax on proposed dividend                21.24          15.29
 
 Interim dividend                       139.24         199.19
 
 Tax on interim dividend                 23.66          32.31
 
 Transfer to general reserve             36.55          59.53
 
 Total appropriations                   341.39         400.58
 
 Net surplus in the statement           767.74         582.14
 of profit and loss
 
 Previous Year figures have been regrouped / recanted, wherever
 
 necessary.
 
 2.  Results of Operations
 
 Standalone Accounts
 
 - Total income during the year 2013 increased to Rs. 2,739.72 million
 as against Rs. 2,331.49 million during the year 2012, a growth of
 17.51%.
 
 - Profit after tax was Rs. 365.52 million during the year 2013 as
 compared to Rs. 205.28 million during 2012, a growth of 78.06%.
 
 - Basic earnings per share (of face value of Re. 1/- each) was Rs. 2.90
 for the year 2013 as compared to Rs. 1.65 for the year 2012, a growth
 of 75.76%.
 
 Consolidated Accounts
 
 - Consolidated total income during the year 2013 increased to Rs.
 6,007.69 million as against Rs. 4,700.13 during the year 2012, a growth
 of 27.82%.
 
 - Profit after taxes was Rs. 526.99 million during the year 2013 as
 compared to Rs. 183.62 million during 2012, a growth of 187%.
 
 - Basic earnings per share (of face value of Re. 1/- each) were Rs.
 4.18 for the year 2013 as compared to Rs. 1.48 for the year 2012, a
 growth of 182.43%.
 
 3.  Appropriations and Reserves
 
 Dividend
 
 During the year 2013, the Board declared two interim dividends namely,
 first interim dividend of Rs. 2.50 per equity share of Rs. 10/- each at
 its meeting held on July 27, 2013 and second interim dividend of Rs.
 8.50 per equity share of Rs. 10/- each at its meeting held on October
 25, 2013.
 
 Taking into consideration the operating profits for the year 2013 and a
 positive outlook for the future, the Board of Directors (the Board)
 is pleased to recommend a final dividend of Rs. 0.95 per equity share of
 Re. 1/- each (Rs. 9.50 per equity share of Rs. 10/- each before
 sub-division of equity shares), being 95% on the par value, to be
 appropriated from the profits of the Company for the financial year 2013
 subject to the approval of the shareholders at the ensuing Annual
 General Meeting.  Total dividend including two interim dividends
 already paid for the year 2013 comes to Rs. 2.05 per equity share of
 Re. 1/- each (Rs. 20.50 per equity share of Rs. 10/- each) i.e. 205%,
 as compared to total dividend including interim dividend in the form of
 special dividend paid for the year 2012 at Rs. 23.50 per equity shares
 of Rs. 10/- each i.e. 235%.
 
 The aforesaid final dividend for the year 2013 as recommended by the
 Board, if approved at the ensuing Annual General Meeting, will be paid
 to all the equity shareholders whose names appear in the Register of
 Members of the Company as of the opening business hours on May 02, 2014
 after giving effect to all valid share transfers in physical form which
 would be received by the Company''s registrar and share transfer agent
 M/s Link Intime India Private Limited up to the end of business hours
 on, May 01, 2014 and to those whose names appear as beneficial owners in
 the records of National Securities Depository Limited (NSDL) and
 Central Depository Services (India) Limited (CDSL) as of the said
 date.
 
 The register of members and share transfer books shall remain closed
 from May 02, 2014 to May 10, 2014, both days inclusive.
 
 Transfer to Reserves
 
 It is proposed to transfer a sum of Rs. 36,552,200/- (Rupees Thirty Six
 Million Five Hundred Fifty Two Thousand and Two Hundred only) from the
 current year profit in compliance with the Companies (Transfer of Profits
 to Reserves) Rules, 1975.
 
 4.  Business
 
 R Systems is a leading provider of outsourced product development
 services, business process outsource services and also offers own
 product suite in BFSI, Manufacturing & Logistic verticals. R Systems
 diversified offering includes:
 
 (IPLM Services Group
 
 Under IPLM Services, R Systems delivers solutions and services in the
 area of Information Technology and Information Technology enabled
 services. The IT services cover application development, systems
 integration and support and maintenance of applications.  Under the
 ITES we cover managed services, BPO services covering both technical
 support for IT and Hi-Tech electronic gadgets, high-end Quality Process
 Management and Revenue and Claims Management using our global delivery
 model in 20 languages.
 
 Products Group
 
 R Systems products group consists of two units. Indus® which address
 the retail lending, telecom and insurance industry and ECnet® which
 addresses supply chain, warehousing and inventory management.
 
 Indus offerings include an integrated enterprise muti-portfolio lending
 suite for banking and financial services in the Retail, Corporate and
 SME sectors, credit management and revenue collection for telecom
 companies, iPerSyst for insurance companies which helps in timely
 policy renewal and customer retention along with other IT services to
 banking and financial clients.
 
 ECnet Supply Chain products provide solutions for holistic management
 of the complex interaction between an organisation and its trading
 partners. The integrated solution aims to reduce all supply chain costs
 through improved collaboration and optimisation. The solutions are
 robust and scalable and give measurable ROI to clients within one year.
 Further, ECnet also operates as a channel partners for reselling and
 implementing several ERP products of one of the largest business
 software company to serve customers in a key customer segment: Small-
 to medium-sized businesses. These products present an opportunity to
 cross and up sell these solutions since these are adjunct to ECnet''s
 own product offerings.
 
 R Systems is focused on key business verticals – Telecom and Digital
 Media, Banking and Finance, Healthcare Services, Manufacturing and
 Logistics, and Government Services and invested in building
 capabilities and domain knowledge around these focused verticals. This
 has helped in providing innovative and cost efficient solutions and
 services under chosen verticals.
 
 Customers and Delivery Centers
 
 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 Banking and Finance, High Technology,
 Independent Software Vendors, Telecom and Digital Media, Government,
 HealthCare, Manufacturing and Logistic Industries. R Systems maintains
 thirteen development and service centers and using our global delivery
 model, we serve customers in the US, Europe, South America, the Far
 East, the Middle East, India and Africa.
 
 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 14 relating to subsidiaries.
 
 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 Software
 Engineering Institute''s – Capability Maturity Model Integrated
 (SEI-CMMi) and Six Sigma practices for processes have ensured that
 risks are identified and mitigated at various levels in the planning and
 execution process. R Systems journey for various quality certifications
 / standards for the development and service centers in India is
 provided below:
 
 In the year 2013, Noida BPO center was certified as PCI-DSS ver 2.0
 compliant for the Call Analytic Services provided to one of the major
 client.
 
 As of the date of this report, Noida IT centre is SEI-CMMi level 5,
 PCMM Level 5, ISO 9001 : 2008 and ISO 27001 : 2005 certified; Noida BPO
 centre is PCMM Level 5, ISO 9001 : 2008 and ISO 27001 : 2005 certified.
 Pune and Chennai development centers are SEI-CMM Level 5, ISO 9001 :
 2008 and ISO 27001 : 2005 certified.  The continuing compliance with
 these standards demonstrates the rigor of R Systems processes and
 differentiates us to keep our competitive edge in service and product
 offerings.
 
 To maintain and strengthen competitive strengths, R Systems continues
 to make investments in its unique and proprietary sputter,; with best
 practices, tools and methodologies for flawless execution and consistent
 delivery of high quality software.  The suite 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.  Acquisition
 
 During the year under review, ECnet Limited, Singapore, a subsidiary of
 the Company completed the acquisition of ERP business from Nikko
 Computers System(s) PTE Ltd. (NCS). NCS provides ERP implementation and
 support services primarily to Japanese companies located in Singapore
 and Malaysia.  This business acquisition will strengthen our ERP
 business and customer base in South East Asia under our subsidiary
 ECnet Limited, Singapore. The acquisition will provide a good Japanese
 client base and help to grow our business in the South East Asia
 region.
 
 7.  Directors
 
 During the year under review, the following changes took place in the
 once of directors of the Company.
 
 Mr. Raj Kumar Gogia and Mr. Gurbax Singh Bhasin were reappointed as
 directors liable to retire by rotation and Mr. Raj Swaminathan was
 further re-appointed as Director and Chief Operating Officer of the
 Company for a period of three years w.e.f. September 29, 2012 at the
 previous Annual General Meeting held on May 11, 2013.
 
 Pursuant to the approval of the Board at its meeting held on November
 29, 2013 and approval accorded by the shareholders by passing necessary
 resolution through postal ballot on January 14, 2014, Mr. Satinder
 Singh Rekhi has been re-appointed as Chairman & Managing Director of
 the Company for a period of five years i.e. w.e.f. January 01, 2014 to
 December 31, 2018 subject to the approval of the Central Government, if
 applicable.
 
 Further, Mr. Anuj Kanish, who was appointed by the Board of Directors
 at its meeting held on May 11, 2013 as an Additional Director to hold
 office till the ensuing Annual General Meeting of the Company, has
 expressed his unwillingness to be re-appointed and hence the Board has
 not proposed his appointment at the ensuing Annual General Meeting.  At
 the ensuing Annual General Meeting, Mr. Suresh Paruthi and Lt. Gen.
 Baldev Singh (Retd.) directors of the Company are liable to retire by
 rotation in accordance with the provisions of Section 255 and 256 of
 the Companies Act, 1956 read with the Articles of Association of the
 Company and being eligible, offer themselves for reappointment as
 directors of the Company.
 
 None of the directors of the Company are disqualified as per the
 provisions of Section 274(1)(g) of the Companies Act, 1956.  The
 directors of R Systems have made necessary disclosures, as required
 under various provisions of the Act and Clause 49 of the Listing
 Agreement.
 
 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 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 prevailing stock option plans of R Systems are as
 follows:
 
 (a) R Systems International Ltd. - Year 2004 Employee Stock Option Plan
 : For the employees of R Systems and its subsidiaries other than ECnet
 Limited.
 
 (b) R Systems International Ltd. - Year 2004 Employee Stock Option Plan
 – Ecnet : For the employees of ECnet Limited, a subsidiary of R
 Systems.
 
 (c) 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 continues as per the scheme
 of amalgamation approved by the Hon''ble High Courts of Delhi and
 Mumbai. As on the date of this report, no stock options are in force
 under this plan.
 
 (d) R Systems International Limited Employee Stock Option Scheme 2007 :
 For the employees of R Systems and its subsidiaries.
 
 As required under the Securities and Exchange Board of India (Employee
 Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines,
 1999 as amended, details relating to options approved, granted, vested,
 exercised, lapsed, in force etc. under the prevailing employees stock
 option plans / schemes during the year ended December 31, 2013 are as
 follows:
 
 S.  Particulars          R Systems                R Systems
 No.                      International Ltd.       International
                          Year - 2004              Ltd. - Year 2004
                          Employee Stock           Employee Stock
                          Option Plan              Option Plan - ECnet
                         (a) #                    (b) #
 
 a.  Total number of
     shares               199,500                  200,000 
     covered under the 
     plan
 
 b.  Pricing Formula      Prevailing Price         Prevailing Price
                          once the Company''s       once the Company''s
                          shares are listed and    shares are listed and
                          at the Fair Market       at the Fair Market
                          Value as per the         Value as per the
                          terms of R Systems       terms of R Systems
                          International Ltd.  -    International Ltd.  -
                          Year 2004 Employees      Year 2004 Employees
                          Stock Option Plan on     Stock Option Plan
                          the date such option     - ECnet on the
                          is granted when the      date such option is
                          Company''s shares         granted when the
                          are not listed.          Company''s shares are
                                                   not listed.
 
 
 Particulars         Indus Software          R Systems International 
                                             Limited
                     Employees Stock         Employee Stock Option
                                             Scheme
                     Option Plan Year        2007
                     2001
                    (c) #                   (d) #
 
 Total number of 
 shares covered the      73,898                      650,000
 plan
 
 Pricing formula     As approved under      Exercise Price means the 
                                             market
                     the Scheme of          price which is payable for
                                             exercising
                     Amalgamation           the options and Market
                                             Price
                     of Indus Software       means the latest available
                                             closing
                     Private Limited with    price, prior to the date 
                                             of the
                     the Company by          meeting of the Board of
                                             Directors /
                     the Hon''ble High        Compensation Committee, in
                                             which
                     Courts of Delhi and     options are granted, on the
                                             stock
                     Mumbai.                 exchange on which the
                                             shares of the Company are
                                             listed. If the shares
                                             are listed on more than 
                                             one stock exchange, then 
                                             the stock exchange
                                             where there is highest 
                                             trading volume on the said
                                             date shall be considered.
 
 
 S.  Particulars    R Systems    R Systems   Indus Software   R Systems
                                                              Internatio
                                                              nal
                                                              Limited
 No.                Internatio
                    nal Ltd.     Internatio
                                 nal         Employees Stock  Employee
                                                              Stock
                                                              Option
                                                              Scheme
                    Year - 2004  Ltd. - Year 
                                 2004        Option Plan Year 2007
                    Employee 
                    Stock        Employee 
                                 Stock       2001
                    Option Plan  Option Plan 
                                 - ECnet
                   (a) #        (b) #        (c) #           (d) #
 
 c.  Options 
     granted 
     during              Nil         Nil           Nil           Nil 
     the year
 
 d.  Options 
     vested during       Nil         Nil           Nil           Nil 
     the year
 
 e.  Options
     exercised
     during              Nil         Nil           Nil         144,750
     the year
 
 f.  The total 
     number of           Nil         Nil           Nil         144,750
     shares 
     arising as 
     a result
     of exercise
     of options 
     during the 
     year
 
 g.  Options 
     lapsed 
     during              4,495       Nil           Nil           6,000
     the year
 
 h.  Variation 
     of terms of         Nil         Nil           Nil           Nil
     options 
     during the 
     year 
 
 i.  Money 
     realised by         Nil         Nil           Nil      17,471,325
     exercise of
     options
     during the
     year (Rs.) 
 
 j.  Total number
     of options         51,540      6,200          Nil         104,928
     in force at 
     the end of the
     year 
 
 k.  Employee wise 
     details of 
     options 
     granted to
    (during the
     year)
 
 (i) Senior  
     managerial          Nil         Nil           Nil           Nil
     personnel 
 
 (i
 i)  Any other 
     employee            Nil         Nil           Nil           Nil
     who receives 
     a grant in
     any one year
     of options
     amounting to 
     5% or more of 
     options 
     granted
     during that 
     year 
 
 (i
 ii) Identifed 
     employees           Nil         Nil           Nil           Nil
     who were
     granted
     options,
     during any
     one year, 
     equal to or
     exceeding 1%
     of the issued 
     capital
     (excluding
     outstanding 
     warrants
     and 
     conversions) 
     of the Company
     at the time of
     grant 
 
 l.  Diluted 
     Earnings Per        N.A.        N.A.          N.A.           2.90*
     Share (EPS)
     pursuant
     to issue of
     shares on
     exercise of
     options
 
 # Please note that the details given above for plan (a), (b) and (c)
 are after making the required adjustments in relation to consolidation
 of each of the 5 equity shares of Rs. 2 each into 1 equity share of Rs.
 10 each as approved by the shareholders in the year 2006 and before
 sub-division of each of the equity shares of Rs. 10 each into 10 equity
 shares of Re. 1 each as per record date of February 28, 2014.
 
 * EPS is per equity share of Re. 1 each i.e. after giving into effect
 sub-division of equity shares of Rs. 10 each into equity shares of Re.
 1 each as per record date of February 28, 2014.
 
 During the year ended December 31, 2013, R Systems had not granted any
 options under any of the aforementioned plans.
 
 All options granted under Indus Software Employees Stock Option Plan -
 Year 2001 have already been vested and exercised or lapsed and no
 options were in force as on December 31, 2013.
 
 For options granted during the earlier years under plan (a), (b) and
 (c), R Systems used the fair value of the stock options for calculating
 the employees compensation cost.
 
 For the purpose of valuation of the options granted during earlier
 years, the management obtained fair value of the options at the date of
 grant under respective schemes from a firm of Chartered Accountants, to
 determine accounting impact, if any, of options granted over the
 periods. In the considered opinion of the value, the fair value of
 option determined using ''Black Scholes Valuation Model'' under each of
 above schemes is Nil and thus no accounting thereof is required.
 
 The assumptions used for the purpose of determination of fair value are
 stated below:
 
 Assumptions     Unit     Scheme 
                         (a) *    Scheme
                                 (b) **    Scheme 
                                          (c)***   Comments by the value
 
 Strike price     Rs.        42      154     26
 
 Current share 
 price            Rs.        16      140     16    Taken on the basis of
                                                   NAV and PECV method
                                                   of valuation.
 
 Expected 
 option life     No. of 
                 Years        5      2.5      5    Being half of the 
                                                   maximum option life.
 
 Volatility        %          1      0.5      1    In case of unlisted
                                                   shares, the 
                                                   volatility may be 
                                                   taken as zero. 
                                                   Verma committee also
                                                   recommends this.
 
 Risk free 
 return            %          7     11.3      7    Zero coupon rate
                                                   estimated from
                                                   trading government
                                                   securities for a 
                                                   maturity 
                                                   corresponding to 
                                                   expected life of
                                                   option - taken from
                                                   sites of NSE and /
                                                   or BSE.
 
 Expected 
 dividend          %          -       15      -    Company has no set 
                                                   policy so dividend
                                                   taken as
 Yield                                             zero.
 
                                                   In case of Indus
                                                   plan, as the
                                                   dividend had been
                                                   paid by the erstwhile
                                                   company, it has been
                                                   assumed at 15%.
 
 * R Systems International Ltd. - Year 2004 Employee Stock Option Plan
 under which the price was based on Rs. 2 per share.
 
 ** Indus Software Employees Stock Option Plan - Year 2001 under which
 originally the price was based on Rs. 10 per share for 21,967 shares.
 As a result of amalgamation of Indus Software Private Limited into R
 Systems, R Systems had issued 206,822 equity shares of Rs. 2 each
 pursuant to the swap ratio approved by Hon''ble High Courts of Delhi and
 Mumbai.
 
 *** R Systems International Ltd. - Year 2004 Employee Stock Option Plan
 - ECnet under which the price was based on Rs. 2 per share.
 
 Please note that the details given above for plan (a), (b) and (c) are
 after making the required adjustments in relation to consolidation of
 each of the 5 equity shares of Rs. 2 each into 1 equity share of Rs. 10
 each as approved by the shareholders in the year 2006 and before
 sub-division of each of the equity shares of Rs. 10 each into 10 equity
 shares of Re. 1 each as per record date of February 28, 2014.
 
 Further, for the purpose of valuation of the options granted during the
 year 2005 under R Systems International Ltd. - Year 2004 Employee Stock
 Option Plan, the management obtained fair value of the options at the
 date of grant from a firm of Chartered Accountants, to determine
 accounting impact, if any, of options granted. In the considered
 opinion of the value, the fair value of these options determined using
 ''Black Scholes Valuation Model'' is Nil and thus no accounting thereof
 is required.
 
 The assumptions used by the value for the purpose of determination of
 fair value are stated below:
 
 Assumptions   Unit    Scheme    Comments by the value
 
 Strike price  Rs.         42
 
 Current share 
 price         Rs.      13.58    Taken on the basis of NAV and PECV
                                 method of valuation.
 
 Expected 
 option life   No. of
               Years        5    Being half of the maximum option
                                 life.
 
 Volatility    %            1    In case of unlisted shares, the
                                 volatility may be taken as zero. Verma
                                 committee also recommends this.  
 
 Risk free 
 return        %         7.42    Zero coupon rate estimated from trading
                                 government securities for a maturity
                                 corresponding to expected life of 
                                 option - taken from site of NSE.
 
 Expected 
 dividend      %          -      Company has no set policy so dividend
                                 taken as zero.
 Yield
 
 The above information is based on Rs. 2 per share prior to
 consolidation of 5 equity shares of Rs. 2 each into one equity share of
 Rs. 10 and subsequent allotment of bonus shares in the ratio of 1 : 1.
 
 For the purpose of valuation of the options granted during the year
 ended December 31, 2007 under R Systems International Limited Employee
 Stock Option Scheme 2007, the compensation cost relating to Employee
 Stock Options, calculated as per the intrinsic value method is nil.
 
 The management obtained fair value of the options at the date of grant
 from a firm of Chartered Accountants. In the considered opinion of the
 value, the fair value of these options determined using ''Black Scholes
 Valuation Model'' is Rs. 50.73 per option.
 
 The assumptions used by the valuer for the purpose of determination of
 fair value are stated below:
 
 Assumptions    Unit     Scheme    Comments by the valuer
 
 Strike price   Rs.      120.70
 
 Current share 
 price          Rs.      118.50    Price on the date of grant by Board of
                                   Directors i.e. closing price on July
                                   11, 2007.
 
 Expected 
 option         No. of 
                Years         4    Being the vesting period.
 life
 
 Volatility     %            44    On the basis of industry average.
 
 Risk free
 return         %             7    Zero coupon rate estimated from 
                                   trading government securities for a
                                   maturity corresponding to expected 
                                   life of option - taken from site of
                                   NSE.
 
 Expected 
 dividend       %          0.86    Company has declared Dividends of 
                                   12% in the past. Assuming that it 
                                   will continue 
 Yield                             declaring similar dividends in future.
 
 The stock based compensation cost calculated as per the intrinsic value
 method for the financial year 2012 and 2013 was nil. If the stock based
 compensation cost was calculated as per fair value method prescribed by
 SEBI, the total cost to be recognised in the financial statements for
 the year 2013 would be nil (Previous year nil). The effect of adopting
 the fair value method on the net income and earnings per share is
 presented below:
 
 Pro Forma adjusted Net Income and Earnings Per Share
 
                                              (Amount in Rs.) 
 Particulars                              Year ended    Year ended
                                          December 31,
                                          2013          December 31, 
                                                        2012 
 
 Net Income as reported                   365,521,996    205,277,009
 
 Add : Intrinsic Value Compensation Cost         -              -
 
 Less : Fair Value Compensation Cost*            -              -
 
 Adjusted Pro-forma Net Income            365,826,370    206,063,305
 
 Earnings `Per Share (Face Value of 
 Re. 1/-) 
 
 Basic (Face Value of Re. 1/-)
 
 - As reported                                   2.90           1.65
 
 - Proforma                                      2.90           1.65 
 
 Diluted (Face Value of Re. 1/-)
 
 - As reported                                   2.90           1.65
 
 - Proforma                                      2.90           1.65 
 
 * all granted options have been vested during earlier years.
 
 Weighted average exercise price of options granted during the year
 
 S.  Particulars              Scheme   Scheme   Scheme   Scheme
 No.                         (a)      (b)      (c)      (d)
 
 1.  Exercise price equals  
     market price               N.A.     N.A.     N.A.     N.A.
 
 2.  Exercise price is 
     greater than               N.A.     N.A.     N.A.     N.A.  
     market price
 
 3.  Exercise price is less 
     than market                N.A.     N.A.     N.A.     N.A.  
     price
 
 Weighted average fair value of the options granted during the year
 
 S.  Particulars                  Scheme   Scheme   Scheme   Scheme
 No.                             (a)      (b)      (c)      (d)
 
 1.  Exercise price equals 
     market price                   N.A.     N.A.     N.A.    N.A.
 
 2.  Exercise price is  
     greater than                   N.A.     N.A.     N.A.    N.A.  
     market price
 
 3.  Exercise price is less 
     than market                    N.A.     N.A.     N.A.    N.A.  
     price
 
 Scheme (a): R Systems International Ltd. - Year 2004 Employee Stock
 Option Plan.
 
 Scheme (b): Indus Software Employees Stock Option Plan -Year 2001.
 
 Scheme (c): R Systems International Ltd. - Year 2004 Employee Stock
 Option Plan -ECnet.
 
 Scheme (d): R Systems International Limited Employee Stock Option
 Scheme 2007.
 
 As no options are granted during the year under Scheme (a), Scheme (b),
 Scheme (c) and Scheme (d), hence the required information is not
 applicable.
 
 9.  Liquidity and Borrowings - Consolidated Financial Statement
 
 Cash and bank balance, including bank deposits, debt mutual funds as of
 December 31, 2013 was Rs. 1,115.20 mn against Rs. 889.39 mn as of
 December 31, 2012. Increase was mainly on cash generated from
 operations and mainly offset by cash used for purchase of fixed assets
 and payment of dividends.
 
 The consolidated cash and cash equivalent as at December 31, 2013 were
 Rs. 795.19 mn as against Rs. 524.14 mn as on December 31, 2012.
 
 Net cash generated from operating activities is Rs. 481.02 mn for the
 year ended December 31, 2013 compared to Rs. 345.18 mn for the year
 ended December 31, 2012.
 
 Cash flow generated from operating activities is the significant source
 of funding for investing and financing activities.
 
 Cash used in investing activities during the year 2013 includes
 purchase of fixed assets of Rs. 168.66 mn, investment in in SBI debt
 fund Rs. 10.00 mn as offset by increase in proceeds from maturity of
 long term fixed deposits Rs. 71.07 mn, interest income on fixed deposits
 of Rs. 45.40 mn and receipt on sale of fixed assets of Rs. 2.82 mn.
 
 Cash used in financing activities during the year 2013 includes Rs.
 233.15 mn for payment of dividend, Rs. 39.69 mn for dividend
 distribution tax and Rs. 1.22 mn as payment of interest on loans as
 offset by proceeds from other non-current assets (margin money) Rs.
 35.85 mn, proceeds from issuance of share capital pursuant to exercise
 of employee stock options amounting to Rs. 17.47 mn and net increase in
 long term loan of Rs. 8.25 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. 200 mn (including non-fund based credit limit of Rs. 185 mn). As at
 December 31, 2013, the total credit balance was Rs. Nil under fund
 based line of credit. The total liability of R Systems against the loan
 for motor vehicles purchased was Rs. 6.78 mn and for equipment
 purchased was Rs. 7.76 mn as at December 31, 2013. R Systems primary
 bankers in India are Axis Bank Limited, State Bank of India, ICICI Bank
 Limited and HDFC Bank Limited. In U.S.A., U.K., Singapore, Netherland
 and Japan, the primary bankers are California Bank & Trust, Natwest
 Bank, Citibank N.A., ABN Amro Bank N.V. and Sumitomo Mitsui Banking
 Corporation respectively.
 
 10. Changes in the Capital Structure
 
 As of December 31, 2013, the authorised share capital of the Company
 was Rs. 200,000,000 divided into 20,000,000 equity shares of Rs. 10
 each and the issued, subscribed and paid up share capital was Rs.
 126,654,580/- divided into 12,665,458 equity shares of Rs. 10 each.
 During the year under review, the Company has allotted 144,750 equity
 shares of Rs. 10 each pursuant to exercise of Stock Options under R
 Systems International Limited Employee Stock Options Scheme 2007, at an
 exercise price of Rs. 120.70 per share.
 
 Subsequent to the closing of the year 2013, shareholders of the company
 by passing necessary resolution through postal ballot on January 14,
 2014 approved the sub-division of equity shares of the company of face
 value of Rs. 10 each into equity shares of Re. 1 each. The Board of
 directors had fixed February 28, 2014 as record date to give efect to
 the said sub-division to the existing shareholders. Hence after the
 said sub-division, the authorised share capital of the Company was Rs.
 200,000,000 divided into 200,000,000 equity shares of Re. 1 each and
 the issued, subscribed and paid up share capital was Rs. 126,654,580/-
 divided into 126,654,580 equity shares of Re. 1 each.
 
 Further subsequent to the year end, the Company has allotted 712,600
 equity shares of Re. 1 each on March 10, 2014 at a price of Rs. 12.07
 per equity share pursuant to exercise of options by employees of the
 Company in terms of R Systems International Limited Employee Stock
 Option Scheme 2007. With the said allotment, the paid-up capital of the
 Company stands increased to Rs. 127,367,180/- divided into 127,367,180
 fully paid up equity shares of Re. 1 each.
 
 11. Corporate Restructuring
 
 During the year ended December 31, 2013, the Board of directors further
 reassessed the synergies arising out of proposed amalgamation of its
 two subsidiaries based in Singapore for their revival and growth
 namely, ECnet Limited and R Systems (Singapore) Pte Limited, as was
 earlier approved by the Board in the year 2011, and also permitted
 modification of the scheme of corporate restructuring so as to convert
 the loan given by R Systems (Singapore) Pte Limited to ECnet Limited
 into equity instead of merging these two companies. Further, the
 company has also made additional equity investment amounting to Rs.
 30,807,962/- (SGD 661,800) for long term purpose in ECnet Limited,
 Singapore and Rs. 13,413,875 (USD 250,000) for long term purpose in R
 Systems Solutions Inc, U.S.A.
 
 Pursuant to the earlier approvals of the Board, the liquidation of R
 Systems NV, Belgium (wholly owned subsidiary) and closure of Branch
 Office of the Company in London, United Kingdom have been completed
 successfully during the year 2013. Further during the year 2013, the
 company also successfully closed its branch office in The Netherlands and
 liquidated one of the step down subsidiaries namely, Computaris
 Limited, U.K. (WOS of Computaris International Limited, U.K. which is
 100% subsidiary of R Systems International Limited).
 
 12. Material Changes Affecting the Financial Position of the Company
 
 Subsequent to the yearend 2013, the Company has allotted 712,600
 equity shares of Re. 1/- each on March 10, 2014 at a price of Rs. 12.07
 per equity share pursuant to exercise of options by employees of the
 Company in terms of R Systems International Limited Employee Stock
 Option Scheme 2007. With the said allotment, the paid-up capital of the
 Company stands increased to Rs.  127,367,180/- divided into 127,367,180
 fully paid up equity shares of Re. 1/- each.
 
 Except as detailed above, there were no other significant events
 subsequent to the balance sheet date till the date of this report which
 would materially affect the financial position of the Company.
 
 13. Particulars of Conservation of Energy, Technology Absorption and
 Foreign Exchange Earnings and Outgo
 
 The particulars as prescribed under Section 217(1)(e) of the Companies
 Act, 1956, read with the Companies (Disclosure of Particulars in the
 Report of Board of Directors) Rules, 1988 for the year ended December
 31, 2013 are as follows:
 
 A.  Conservation of Energy
 
 During the year ended December 31, 2013 R Systems continued its action
 plans to curtail the energy bills by adopting various energy
 conservation options / technologies as identified by Federation of
 Indian Chambers of Commerce & Industry (FICCI) through a detailed
 Energy Audit carried out by FICCI for R Systems Noida operations.
 Significant measures were taken to reduce energy consumption by using
 energy efficient equipment and devices. R Systems constantly evaluates
 new technologies and makes appropriate investments to be energy
 efficient. Currently, the Company uses CFL fittings and electronic
 ballasts to reduce power consumption of fluorescent tubes. 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.
 
 Form A of the said Rules is not applicable to the software industry.
 
 B.  Technology Absorption
 
 The particulars with respect to technology absorption are given below:
 
 (a) Research and Development (R&D)
 
 Research and Development (R&D) Activities Carried out by the Company
 
 The Company''s R&D programme covers technology for the secure, high
 performance and high availability products across web and mobility
 modes. The Company creates and owns the intellectual property in these
 products that cater to Retail, SME & Corporate Sector Lending,
 Insurance, Telecom, and Mobility businesses.  The Company builds on a
 continuous basis new products, upgrades existing products with new
 releases. The rapidly evolving technology and competitive environment
 necessitates that we re-vamp the technology stack, provide new
 functionality and modules.
 
 The Company develops a medium term and long term product road map and
 strategy which is reviewed constantly for relevance. We incorporate
 market and technology inputs on a continuous basis based on Market
 Research, RFI/RFP analysis, and feedback from customers and prospects.
 The Company follows an AGILE product development methodology under
 inspirational leadership of its management and its R & D Heads.
 
 All R&D initiatives are governed by a Research & Development Committee
 constituted by the board of directors of the Company which includes
 technology and domain experts and R&D heads who approve all R&D
 initiatives.
 
 These R&D initiates are carried out of our R&D centers at Pune and
 Noida. The R&D team consists of 100 plus associates including high
 quality technical experts, engineers and domain experts who create a
 knowledge culture.
 
 The technology stack has been reviewed and appreciated by peers and
 intellectuals who are represented in our
 
 customers and business alliances who have endorsed the products by
 their selection.
 
 The product and technologies built by the R&D centers are delivered to
 the customers through a separate delivery team.
 
 The products created out of the R&D initiatives of the Company compete
 with international products besides bringing in valuable foreign
 exchange into the country, also provides a degree of import
 substitution as it fulfils domestic needs for robust, scalable, high
 performance and high availability technology solutions.
 
 Specific areas of R&D
 
 The Company has been engaged in developing its own intellectual
 property in form of product for many years and owns high quality
 intellectual properties. The key areas of R & D in technology covers.
 
 - High performance on web
 
 - Highly Secure applications relevant to today''s requirement for
 anytime/anywhere access
 
 - Build products that are world class and international (multi-tenant,
 multi-lingual, multi-currency)
 
 - Optimize and Upgrade existing products
 
 - Ergonomic and aesthetic usability standards
 
 - High availability
 
 - Open Source and other low cost technology stack
 
 - Cloud Technology
 
 - Mobile computing
 
 - Digitisation and workflow
 
 - Business Functionality
 
 - Interfacing with other IT solutions used by client in adjacent areas
 
 - Incorporate and innovate best industry practices
 
 - Promote a culture of knowledge workers by sharing within the company
 and with technology and business groups
 
 Benefits derived as a result of the above R&D
 
 The Company has over the years become a key product vendor to banks,
 NBFCs, Telecom and Insurance Companies competing globally and winning
 customers in India and abroad. The solutions are receiving recognition
 for its contemporary technology, robustness, low total cost of
 ownership. This is amply proven by the award that R Systems has
 received during 2013 as WINNER of the Financial Express IT Solution of
 the Year award for the Product solution that we delivered for India''s
 one of the most respected Insurance companies.
 
 The Company has also won many global engagements and is recognised as
 global, internationalised solution suitable in a multi country,
 multi-currency, multi-tenant environment.
 
 Over the years the company has expanded its stability of products:
 
 For Banking and Non-banking Finance Companies
 
 - Indus Loan Originations System
 
 - Indus Loan Management Systems (or Receivables Management System)
 
 - Indus Collections
 
 - Indus Corporate Loan Originations
 
 - Indus Collateral Management System
 
 - Indus Commercial Vehicle and Leasing System
 
 - Indus Exposure Monitoring System
 
 - Indus Dealer Funding (Auto Loan Business)
 
 - Indus Stock Audit (Auto Loan Business)
 
 - BFSI Apps
 
 For Telecom Companies
 
 - Indus Customer Acquisition System
 
 - Indus Credit Management and Receivables System
 
 For Insurance Companies
 
 - Ipersyst – solution for persistency
 
 - Iprotect- web based solutions for Insurance Originations
 
 Generic Modules
 
 - Platform for managing workflows that can be integrated into business
 solutions
 
 Common Reporting System
 
 - Commissions & Incentives (a performance management solution)
 
 Mobile Apps
 
 The Company also builds mobile applications across most of the mobility
 platforms such as Android and its. These mobile applications are
 developed at our R&D centre in Noida. These are generic applications
 that are used by public at large for convenience.
 
 Future plan of action
 
 The key R&D areas for future shall include:
 
 - The Company is evaluating its platform for its 6th generation product
 suite. The key deliverables for the 6th generation product suite will
 be:
 
 Low TCO bringing a great deal of efficiency into the Financial Services
 Business
 
 High configurability allowing customers to improvise financial products,
 workflow and control systems
 
 Flexibility in use of bandwidth availability - web & mobility enabled
 
 Ergonomic and multi-language capabilities
 
 Architecture that allows customers to mix and match solutions and use
 invest in technology in an incremental manner improving the ROI for the
 investment
 
 Build strong interfaces with technology partners that allows for
 bundling the solution in manner that provides customers a seamless ERP
 like business environment
 
 Build strong set of analytics in the suite that provides customers
 business tools
 
 - The Company shall continue to focus on applications for mobile
 devices such as:
 
 Generic office automation for business on the move
 
 Extending web-based software by B2B and B2C enablement on mobile
 devices
 
 Personal tools for convenience of mobile users
 
 Applications for banking and finance industry
 
 Cloud and Crowd computing
 
 Expenditure on R&D
 
 The Company carries out its Research and Development activities at its
 Pune and Noida centers. The details of expenditure are as follows:
 
                                           (Rs. in Millions)
 
 Particulars                   Financial Year ended
                               31.12.2013    31.12.2012
 
 Recurring expenditure              93.04         67.45
 
 charged to statement of 
 proft & loss
 Capital expenditure
 
 (i) Intangible assets              15.89          9.83
 (including under development)
 
 (ii) Tangible assets                1.99          1.76
 
 Total                             110.92         79.04
 
 Total R&D expenses as %             4.11%         3.45%
 of total revenue
 
 (b) Technology absorption, adaptation and innovation
 
 1.  Efforts made towards technology absorption, adaptation and
 innovation
 
 The Company has established practice streams in specific technologies to
 analyze their implications and the benefits they can provide to the
 Company''s customers. These steps enable the Company to find and execute
 the most appropriate solutions for its clients.
 
 2.  Benefits derived as a result of the above efforts
 
 The benefits derived from the above mentioned efforts are fulflling
 customer needs, efficiency in operations, improvement in quality and
 growth in revenues.
 
 3.  Technology imported during the last 5 years
 
 Not applicable, as no technology has been imported by the Company.
 
 C.  Foreign Exchange Earnings and Outgo (Accrual Basis)
 
 A significant percentage of R Systems revenues are generated from
 exports. The development and service centers in Noida, Pune and Chennai
 are registered with the Software Technology Park of India in their
 respective areas as 100% Export Oriented Undertakings. 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
                                  31.12.2013   31.12.2012
 
 (a) Earnings (Accrual Basis)       2,454.88     2,082.21
 
 (b) Expenditure (Accrual             398.40       377.68 
 Basis)
 
 (c) CIF value of imports              49.49         9.12
 
 14. Subsidiaries
 
 As on December 31, 2013, R Systems has twenty subsidiaries. The names
 and country of incorporation of those subsidiaries are as follows:
 
 S.   Name of the Subsidiaries                    Country of
 No.                                              Incorporation
 
 1.   R Systems (Singapore) Pte Limited           Singapore
 
 2.   R Systems, Inc.                             U.S.A.
 
 3.   Indus Software, Inc.                        U.S.A.
 
 4.   ECnet Limited                               Singapore
 
 5.   R Systems Solutions, Inc.                   U.S.A.
 
 6.   R Systems Europe B.V.                       The Netherlands
 
 7.   R Systems S.A.S.                            France
 
 8.   Computaris International Limited            U.K.
 
 9.   Systémes R. International Ltée              Canada
 
 10.  ECnet (M) Sdn. Bhd. #                       Malaysia
 
 11.  ECnet, Inc. #                               U.S.A.
 
 12.  ECnet (Hong Kong) Limited #                 Hong Kong
 
 13.  ECnet Systems (Thailand)                    Thailand 
      Company Limited #
 
 14.  ECnet Kabushiki Kaisha #                     Japan
 
 15.  ECnet (Shanghai) Co. Ltd. #                  People''s Republic of
                                                   China
 
 16.  ICS Computaris International Srl @           Moldova
 
 17.  Computaris Malaysia Sdn.Bhd. @               Malaysia
 
 18.  Computaris Polska sp z o.o. @                Poland
 
 19.  Computaris Romania SRL @                     Romania
 
 20.  Computaris USA, Inc. @                       U.S.A.
 
 # wholly owned subsidiaries of ECnet Limited, Singapore.  R Systems
 International Limited holds 69.37% directly in ECnet Limited, Singapore
 and 30.38% shares through its wholly owned subsidiary i.e. R Systems
 (Singapore) Pte Limited, Singapore and thus together it holds 99.75%
 (previous year 99.56%) of total capital of ECnet Limited, Singapore.
 
 @ wholly owned subsidiaries of Computaris International Limited being
 100% subsidiary of R Systems.
 
 During the year 2013, R Systems NV, Belgium, a wholly owned direct
 subsidiary and Compautaris Limited, U.K. a step-down wholly owned
 subsidiary of R Systems International Limited, was liquidated and
 closed.
 
 All the aforementioned twenty subsidiaries are incorporated and based
 outside India. In addition to providing services to various
 international clients these subsidiaries also help to generate revenues
 for R Systems. The Board of Directors of the Company regularly reviews
 the affairs of these subsidiaries.
 
 As per Section 212 of the Companies Act, 1956, we are required to
 attach the Directors'' Report, Balance Sheet and Profit and Loss Account
 (referred to as Financial Statements) of our subsidiaries.  The
 Ministry of Corporate Affairs, Government of India vide its General
 Circular No. 2/2011 dated 8th February, 2011 has provided an exemption
 to companies from complying with Section 212, provided such companies
 publish the audited consolidated financial statement in the Annual
 Report. Accordingly, the Annual Report 2013 does not contain the
 Financial Statements of our subsidiaries. As directed under the said
 Circular, information in aggregate in respect of each subsidiaries
 including subsidiaries of subsidiaries i.e. (a) capital (b) reserves
 (c) total assets (d) total liabilities (e) details of investments
 (except in case of investment in subsidiaries) (f) turnover (g) profit
 before taxation (h) provisions for taxation (i) profit after taxation
 and (j) proposed dividend for each subsidiary has been disclosed in
 brief abstract forming part of the consolidated balance sheet.
 
 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.
 B-104 A, Greater Kailash-I, New Delhi – 110 048 and Corporate Office of R
 Systems i.e. C-40, Sector 59, Noida – 201307 and Registered Offices of
 the subsidiary companies concerned during business hours. The same will
 also be hosted on R Systems'' website, www.rsystems.com.
 
 15. Particulars of Employees
 
 As required under the provisions of Section 217(2A) of the Companies
 Act, 1956, read with the Companies (Particulars of Employees) Rules,
 1975, as amended by notification dated March 31, 2011, the names and
 other particulars of employees are set out in Annexure A to this
 report.
 
 16. Directors'' Responsibility Statement
 
 Pursuant to the requirement under Section 217(2AA) of the Companies
 Act, 1956 with respect to directors'' responsibility statement, your
 directors hereby confirm that:
 
 (i) In the preparation of the annual accounts for the financial year
 ended December 31, 2013, the applicable accounting standards had been
 followed along with proper explanation relating to material departures,
 wherever applicable;
 
 (ii) 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 or loss
 of the Company for the year under review;
 
 (iii) The directors had taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 (iv) The directors had prepared the annual accounts for the financial
 year ended December 31, 2013 on a going concern basis.
 
 17. Auditors
 
 M/s S. R. Batliboi & Co. LLP, the statutory auditors of the Company
 will retire at the upcoming annual general meeting and are eligible for
 reappointment. However M/s S. R. Batliboi & Co. LLP have expressed
 their unwillingness to get reappointed as the statutory auditors of the
 Company.
 
 The Board, based on the recommendation of the audit committee,
 recommends the appointment of M/s S. R. Batliboi & Associates LLP (Firm
 Registration No. 101049W) as the statutory auditors of the Company. M/s
 S. R. Batliboi & Associates LLP have confirmed their eligibility and
 willingness to act as the statutory auditors of the Company and have
 further confirmed that their appointment, if made, shall be within the
 limits prescribed under Section 224(1B) of the Companies Act, 1956.
 
 Further, the auditors'' report being self-explanatory, does not call for
 any further comments by the Board of Directors.
 
 18. Audit Committee
 
 R Systems has a qualified and independent Audit Committee.  During the
 year under review there was no change in composition of the Audit
 Committee except that Mr. Anuj Kanish was appointed as a regular member
 of the Audit Committee upon his appointment as Additional Director on
 May 11, 2013.
 
 The constitution of the Committee is in compliance with the provisions
 of the Companies Act, 1956 and the Listing Agreement entered into with
 the stock exchanges.
 
 The terms of reference and role of the Committee are as per the
 guidelines set out in the Listing Agreement with the stock exchanges
 read with Section 292A of the Companies Act, 1956 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 statute and Listing Agreement.
 
 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 there under, 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. Since the
 formation of the Committee, no cases of sexual harassment against women
 employees at any of its work place were reported to the ICC.
 
 20. Corporate Governance
 
 As required under Clause 49 of the Listing Agreement entered into with
 the stock exchanges, the detailed report on corporate governance is
 given as Annexure B to this report and the certificate obtained from a
 practicing company secretary regarding compliance of the conditions of
 corporate governance as stipulated in the said clause is annexed as
 Annexure C to this report.
 
 Further, the disclosure as required pursuant to Section II Clause C of
 Part II of Schedule XIII to the Companies Act, 1956 and in terms of
 Clause 49 of the Listing Agreement entered into with the stock
 exchanges for all the directors is given in the detailed report on
 corporate governance which forms part of this report and annexed as
 Annexure B to this report.
 
 21. Deposits
 
 The Company has neither invited nor accepted any deposits from the
 public within the meaning of Section 58A of the Companies Act, 1956 and
 as such, 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 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.
 
 23. 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 employees feedback. R Systems is
 constantly validating key employee data with industry and peer group
 business. These practices have helped the Company 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 Clause 49 of the Listing Agreement entered into with the
 stock exchanges, management discussion and analysis report is given as
 Annexure D to this report.
 
 25. 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, Maharashtra, 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/- 
 
 Place : CA, U.S.A.                     Satinder Singh Rekhi 
 
 Date : March 30, 2014       (Chairman and Managing Director)
Source : Dion Global Solutions Limited
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