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R Systems International
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Directors Report Year End : Dec '14    « Dec 13
Dear Shareholders,
 
 The directors take great pleasure in presenting the Twenty First
 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, 2014.
 
 1.  Financial Results
 
 a.  Standalone financial results of R Systems
 
                                                     (Rs. in Millions)
 Particulars                                 Financial Year ended
                                            31.12.2014       31.12.2013
 
 Total income                                 3,045.65         2,739.72
 
 Profit before depreciation,                     685.01           589.30
 exceptional items and tax
 
 Less : Depreciation and                         67.24            47.81
 amortisation
 
 Add : Exceptional items*                       393.13                -
 
 Profit before tax                             1,010.90           541.49
 
 Less : Current tax (net of MAT                 247.53           188.29
 credit)
 
 Less : Deferred tax change/(credit)             13.08          (12.32)
 
 Profit after tax                                750.29           365.52
 
 Surplus in the statement of Profit and loss
 
 Balance as per last financial                   633.83           609.70
 statements
 
 Add: Profit for the current year                750.29           365.52
 
 Less: Appropriations
 
 Proposed dividend(refer note                   121.76           120.70
 below)
 
 Tax on proposed dividend                        24.33            21.24
 (refer note below)
 
 Interim Dividend                               624.33           139.24
 
 Tax on Interim Dividend                        119.29            23.66
 
 Transfer to General Reserve                         -            36.55
 
 Total Appropriation                            889.71           341.39
 
 Net Surplus in the                             494.41           633.83
 
 
 
 statement of Profit and loss
 
 * Exceptional Items                                   (Rs. in Millions)
 
 Particulars                                       Financial Year ended
                                            31.12.2014       31.12.2013
 
 Profit on buy back of                            77.79                - 
 subsidiary shares
 
 Profit on sale of subsidiaries                  240.69                -
 
 Provision for diminution in the                 74.65                - 
 value of investment written back
 
 Total                                          393.13                -
 
 The Company has issued 712,600 equity shares pursuant to exercise of
 employee stock options under the R Systems International Limited
 Employee Stock Option Scheme 2007 up to book closure date for
 distribution of dividend for the year ended December 31, 2013 and
 accordingly increased the appropriation in the current year by Rs. 0.68
 million and Rs. 0.12 million as dividend and tax on dividend
 respectively.
 
 b.  Consolidated financial results of R Systems and its subsidiaries
 
                                                     (Rs. in Millions)
 Particulars                                       Financial Year ended
                                            31.12.2014       31.12.2013
 
 Total income                                 6,575.68         6,007.69
 
 Profit before depreciation,                     986.55           819.96 
 exceptional items and tax
 
 Less : Depreciation and                        112.45           101.71 
 amortisation
 
 Add : Exceptional items*                       250.11                -
 
 Profit before tax                             1,124.21           718.25
 
 Less : Current tax (net of MAT                 325.29           192.50 
 credit)
 
 Less : Deferred tax change/(credit)             17.58           (1.23)
 
 Profit after tax                                781.34           526.99
 
 Surplus in the statement of Profit and loss
 
 Balance as per last financial                   767.74           582.14 
 statements
 
 Add: Profit for the current year                781.34           526.99
 
 Less: Appropriations
 
 Proposed dividend                              121.76           120.70
 
 Tax on proposed dividend                        24.33            21.24
 
 Interim Dividend                               624.33           139.24
 
 Tax on Interim Dividend                        119.29            23.66
 
 Transfer to General Reserve                         -            36.55
 
 Total Appropriations                           889.71           341.39
 
 Net Surplus in the                             659.36           767.74 
 statement of Profit and loss
 
 Previous Year figures have been regrouped /
 recasted, wherever necessary.
 
 * Exceptional Items                                   (Rs. in Millions)
 
 Particulars                                       Financial Year ended
                                            31.12.2014       31.12.2013
 
 Currency translation reserve                    26.09                -
 released on buy back of subsidiary shares
 
 Profit on sale of subsidiaries                  224.02                -
 
 Total                                          250.11                -
 
 2.  Results of Operations Standalone Accounts
 
 - Total income during the year 2014 increased to Rs. 3,045.65 million
 as against Rs. 2,739.72 million during the year 2013, a growth of
 11.17%.
 
 - Profit after tax was Rs. 750.29 million during the year 2014 as
 compared to Rs. 365.52 million during 2013, a growth of 105.27%.
 
 - Basic earnings per share (of face value of Re. 1/- each) was Rs. 5.90
 for the year 2014 as compared to Rs. 2.90 for the year 2013, a growth
 of 103.45%.
 
 Consolidated Accounts
 
 - Consolidated total income during the year 2014 increased to Rs.
 6,575.68 million as against Rs. 6,007.69 million during the year 2013,
 a growth of 9.45%.
 
 - Profit after taxes was Rs. 781.34 million during the year 2014 as
 compared to Rs. 526.99 million during 2013, a growth of 48.27%.
 
 - Basic earnings per share (of face value of Re. 1/- each) were Rs.
 6.14 for the year 2014 as compared to Rs. 4.18 for the year 2013, a
 growth of 46.89%.
 
 3.  Appropriations and Reserves
 
 Dividend
 
 During the year 2014, the Board declared four interim dividends namely,
 frst interim dividend of Re. 0.95 per equity share of Re. 1/- each at
 its meeting held on June 03, 2014, second interim dividend of Re. 0.50
 per equity share of Re 1/-each at its meeting held on July 26, 2014,
 third interim dividend of Re. 0.90 per equity share of Re. 1/- each at
 its meeting held on October 29, 2014 and fourth interim(Special)
 dividend of Rs. 2.55 per equity share of Re. 1/- each at its meeting
 held on December 20, 2014.
 
 Taking into consideration the operating Profits for the year 2014, the
 Board of Directors (the Board) is pleased to recommend a fnal
 dividend of Re. 0.95 per equity share of Re. 1/- each, being 95% on the
 par value of Re. 1/- per share, to be appropriated from the available
 Profits of the Company for the financial year 2014 subject to the
 approval of the shareholders at the ensuing Annual General Meeting.
 Total dividend including four interim dividends already paid for the
 year 2014 comes to Rs. 5.85 per equity share of Re. 1/- each i.e. 585%,
 as compared to total dividend including interim dividend paid for the
 year 2013 at Rs. 2.05 per equity shares of Re. 1/- each i.e. 205%.
 
 The aforesaid fnal dividend for the year 2014 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
 June 05, 2015 after giving efect 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 June 04, 2015 and to those whose names appear
 as benefcial 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 June 05, 2015 to June 09, 2015, both days inclusive.
 
 Transfer to Reserves
 
 It is proposed not to transfer any amount to General Reserve in respect
 to dividend declared after April 01, 2014 in pursuance of the Section
 123 of the Companies Act, 2013 and Rules made thereunder.
 
 4.  Business
 
 R Systems is a leading provider of outsourced product development
 services, business process outsource services and also ofers own
 product suite in BFSI, Manufacturing & Logistic verticals. R Systems
 diversifed ofering includes:
 
 fPLM 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.
 
 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 oferings 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 oferings.
 
 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 efcient solutions and
 services under chosen verticals.
 
 Customers and Delivery Centres
 
 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
 eleven development and service centres 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
 Capability Maturity Model Integrated CMMi and Six Sigma practices for
 processes have ensured that risks are identifed and mitigated at
 various levels in the planning and execution process. R Systems journey
 for various quality certifications / standards for the development and
 service centres in India is provided below:
 
 In the year 2014, Noida IT Center of the Company was re- appraised for
 SEI CMMI Level 5 ver 1.3. 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 centres 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
 diferentiates us to keep our competitive edge in service and product
 oferings.
 
 To maintain and strengthen competitive strengths, R Systems continues
 to make investments in its unique and proprietary ( with best
 practices, tools and methodologies for fawless execution and consistent
 delivery of high quality software.  The pSuite framework ofers 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
 
 Subsequent to the closing of the year 2014, the Board of Directors at
 its meeting held on April 23, 2015 has approved the acquisition of a
 Singapore based ERP company having operations mainly in South East Asia
 through wholly owned subsidiary namely R Systems (Singapore) Pte.
 Limited, for a maximum consideration of SGD 7.50 million including the
 earn-outs over the next three years on fulfllment of certain
 conditions. The above said approval is subject to execution of
 defnitive agreements and receipt of necessary corporate and regulatory
 approval.
 
 7.  Directors
 
 During the year under review, the following changes took place in the
 ofce of directors of the Company.
 
 Mr. Suresh Paruthi and Lt. Gen. Baldev Singh (Retd.) were reappointed
 as directors liable to retire by rotation at the previous Annual
 General Meeting held on May 10, 2014.
 
 Mr. Anuj Kanish, who expressed his unwillingness to be re-appointed at
 the previous Annual General Meeting of the Company held on May 10,
 2014, ceased to be the director of the Company w.e.f. May 10, 2014 on
 completion of his term as additional director.
 
 Mr. Amardeep Singh Ranghar and Mrs. Ruchica Gupta were appointed by the
 Board of Directors at its meeting held on July 07, 2014 as an
 additional director to hold ofce till the ensuing Annual General
 Meeting of the company.
 
 Pursuant to the implementation of Section 149 of the Companies Act,
 2013, Mr. Raj Kumar Gogia, Mr. Gurbax Singh Bhasin, and Mr. Suresh
 Paruthi, existing Non-Executive Independent Directors of the Company
 whose ofces were liable to retire by rotation, under the erstwhile
 applicable provisions of the Companies Act, 1956, are proposed to be
 appointed as Independent Directors of the Company, not liable to retire
 by rotation, at the ensuing Annual General Meeting. These directors
 have given the declarations that they meet the criteria of independence
 as laid down under Section 149(6) of the Companies Act, 2013 and Clause
 49 of the Listing Agreement.
 
 Mr. Amardeep Singh Ranghar who was appointed as additional director at
 the Board Meeting held on July 07, 2014 and who shall hold the ofce up
 the date of ensuing Annual General Meeting, is also proposed to be
 appointed as Independent Director of the Company, not liable to retire
 by rotation, at the ensuing Annual General Meeting. He has given the
 declarations that he meets the criteria of independence as laid down
 under Section 149(6) of the Companies Act, 2013 and Clause 49 of the
 Listing Agreement.
 
 Mrs. Ruchica Gupta was appointed by the Board as an additional director
 of the Company at its meeting held on July 07, 2014 to hold ofce upto
 the date of ensuing Annual General Meeting and proposed to be appointed
 as a regular director pursuant to Section 152 of the Companies Act,
 2013.
 
 At the ensuing Annual General Meeting Mr. Raj Swaminathan, Director &
 Chief Operating Ofcer of the Company is liable to retire by rotation in
 accordance with the provisions of Section 152 of the Companies Act,
 2013 read with the Articles of Association of the Company and being
 eligible, ofer himself for reappointment as director of the Company.
 
 Further, on the recommendation of the Nomination & Remuneration
 Committee of the Company, Lt. Gen Baldev Singh (Retd.) is proposed to
 be reappointed as President and Senior Executive Director of the
 Company for a period of three years i.e. w.e.f. April 01, 2015 to April
 01, 2018 subject to the approval of the Central Government and the
 shareholders at the ensuing Annual General Meeting of the Company.
 
 None of the directors of the Company are disqualifed as per the
 provisions of Section 274(1)(g) of the Companies Act, 1956 and Section
 164(2) of the Companies Act, 2013. The directors of R Systems have made
 necessary disclosures, as required under various provisions of the
 Companies Act, 2013 and 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. The term of the said plan has been expired on August 31, 2014.
 
 (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.
 
 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 after 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 Rupees per equity shares of Re. 1/- each i.e. after giving into
 efect 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, 2014, R Systems International Ltd.
 - Year 2004 Employee Stock Option Plan – Ecnet has been expired on
 August 31, 2014 due to expiry of the term of the plan.
 
 During the year ended December 31, 2014, 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, 2014.
 
 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 frm of Chartered Accountants, to
 determine accounting impact, if any, of options granted over the
 periods. In the considered opinion of the valuer, 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.
 
 * 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 frm of Chartered Accountants, to determine
 accounting impact, if any, of options granted. In the considered
 opinion of the valuer, the fair value of these options determined using
 ''Black Scholes Valuation Model'' is Nil and thus no accounting thereof
 is required.
 
 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 frm of Chartered Accountants. In the considered opinion of the
 valuer, the fair value of these options determined using ''Black Scholes
 Valuation Model'' is Rs. 50.73 per option.
 
 The stock based compensation cost calculated as per the intrinsic value
 method for the financial year 2013 and 2014 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 2014 would be nil (Previous year nil). The efect 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,    December 31, 
                                                    2014            2013
 
 Net Income as reported                      750,289,488     365,521,996
 
 Add : Intrinsic Value Compensation Cost               -               -
 
 Less : Fair Value Compensation Cost*                  -               -
 
 Adjusted Pro-forma Net Income               750,289,488     365,521,996 
 
 Earnings`Per Share (Face Value of Re. 1/-)
 Basic (Face Value of Re. 1/-)
 
 - As reported                                      5.90            2.90
 
 - Pro-forma                                        5.90            2.90 
 
 Diluted (Face Value of Re. 1/-)
 
 - As reported                                      5.90            2.90
 
 - Pro-forma                                        5.90            2.90 
 
 *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 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 as at December 31, 2014 was Rs. 1,098.24 mn
 against Rs. 1,115.20 mn as of December 31, 2013. This excludes the
 money kept in separate bank accounts for fourth interim (special)
 dividend and margin money for buy back ofer. Decrease was mainly on
 account of purchase of fxed assets and dividends as ofset by cash
 generation from operations net of taxes and proceeds from the sale of
 Europe BPO business.
 
 The consolidated cash and cash equivalent as at December 31, 2014 were
 Rs. 1,059.10 mn as against Rs. 795.19 mn as on December 31, 2013.  Cash
 and cash equivalent as at December 31, 2014 includes Rs. 325.02 mn for
 fourth interim dividend which has been paid subsequent to year end and
 Rs. 15.00 mn for buy back ofer by the Company.
 
 Net cash generated from operating activities is Rs. 724.57 mn for the
 year ended December 31, 2014 compared to Rs. 481.02 mn for the year
 ended December 31, 2013.
 
 Cash flow generated from investing activities during the year 2014
 mainly includes Rs. 229.28 mn received from sale of Europe BPO business
 and Rs. 41.24 mn as interest income on fxed deposits as ofset by
 purchase of fxed assets of Rs. 98.24 mn.
 
 Cash used in fnancing activities during the year 2014 mainly includes
 payment of dividend of Rs. 419.79 mn and Rs. 139.85 mn for dividend
 distribution tax as ofset by proceeds from other non-current assets
 (margin money) Rs. 20.10 mn and proceeds of Rs. 9.70 mn on issuance of
 shares pursuant to exercise of ESOP.
 
 R Systems'' policy is to maintain sufcient 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. 180 mn for
 currency forwards). As at December 31, 2014, 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. 9.29 mn
 as at December 31, 2014.  R Systems primary bankers in India are Axis
 Bank Limited, ICICI Bank Limited, Kotak Mahindra Bank Limited, State
 Bank of India, HDFC Bank Limited and Oriental Bank of Commerce. In
 U.S.A., U.K., and Singapore, the primary bankers are California Bank &
 Trust, Natwest Bank and Citibank N.A., respectively.
 
 10.  Changes in the Capital Structure
 
 The following changes took place in the capital structure during the
 year under review:
 
 i.  Sub division of Equity Shares
 
 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.  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.
 
 ii.  Allotment of Shares under R Systems International Limited Employee
 Stock Option Scheme 2007
 
 R Systems allotted 804,000 equity shares of Re. 1/- per shares to the
 eligible employees of the Company pursuant to the exercise of stock
 options granted under R Systems International Limited Employee Stock
 Option Scheme 2007
 
 Hence after the said allotment, the issued, subscribed and paid up
 share capital of the Company as on December 31, 2014 was Rs.
 127,458,580/- divided into 127,458,580 equity shares of Re. 1 each.
 
 iii Buy Back of Equity Shares.
 
 The Board of Directors of the Company at its meeting held on December
 20, 2014 had approved the buy-back of the Company''s fully paid-up
 equity shares of face value of Re. 1/- each from its existing
 shareholders, other than those who are promoters, members of the
 promoter group and persons acting in concert, from the open market
 through stock exchange(s) for a total consideration not exceeding Rs.
 600 lakhs and at a price not exceeding Rs. 100/- per share, payable in
 cash. This ofer for buy back remained opened from January 06, 2015 to
 April 23, 2015. During this period of Buy Back the company has bought
 back 678,155 equity shares for Rs. 595.74 lacs. All the shares bought
 back from January 06, 2015 to April 23, 2015 have been extinguished.
 After the said extinguishment the issued and paid up share capital of
 the Company stands revised to Rs. 126,780,425 divided into 126,780,425
 equity shares of Re. 1/- each.
 
 11.  Corporate Restructuring
 
 During the year ended December 31, 2014 the Company has obtained the
 approval of its Shareholders through postal ballot on September 23,
 2014 to transfer its Indus IT Product and Service business operated out
 of Pune and Chennai centres to R Systems Products & Technologies
 Limited (RSPTL), a wholly owned subsidiary of the Company. The
 Company is in the process of implementing the transfer as per the
 aforesaid approval.
 
 During the year ended December 31, 2014 the Company has transferred
 Europe BPO Business by way of sale of its 100% holding in R Systems
 Europe B.V., Netherlands and R Systems S.A.S., France, being wholly
 owned subsidiaries, to Customer Contact Management Group B.V. (CCMG)
 a Europe based company.
 
 12.  Material Changes Afecting the Financial Position of the Company
 
 Subsequent to the year ended on December 31, 2014 the Comapny has
 bought back 678,155 equity shares of face value of Re. 1/- each from
 its existing shares holders, other than those who are promoters,
 members of the promoter group and persons acting in concert, from the
 open market through stock exchange(s) from January 06, 2015 to April
 23, 2015 for Rs. 595.74 lacs pursuant to the approval of the Board of
 Directors at its meeting held on December 20, 2014.
 
 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 afect 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, 2014 are as follows:
 
 A.  Conservation of Energy
 
 During the year ended December 31, 2014 R Systems continued its'' action
 plans to curtail the energy bills by adopting various energy
 conservation options / technologies as identifed 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 efcient equipment and devices. R Systems constantly evaluates
 new technologies and makes appropriate investments to be energy
 efcient.  Currently, the Company uses CFL fttings and electronic
 ballasts to reduce power consumption of fuorescent tubes.  The air is
 conditioned with energy efcient compressors for central air
 conditioning and with split air conditioning for localized areas. R
 Systems is always in search of innovative and efcient 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 centres 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 centres 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 fulfls 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)
 
 - Optimise 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
 
 Benefts 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
 
 - Mobile Apps for Customer acquisition and Collections
 
 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) – This
 is Generic Module applicable across industry verticals. Report &
 template printing is CRS module.
 
 Future plan of action
 
 The key R&D areas for future shall include:
 
 - Evaluating the 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 efciency into the Financial Services
 Business.
 
 High confgurability 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 ofce 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 details of expenditure are as follows:
 
                                                     (Rs. in Millions)
 Particulars                                     Financial Year ended
                                              31.12.2014     31.12.2013
 
 Recurring expenditure charged to                  80.25          93.04
 statement of Profit & loss
 
 Capital expenditure
 
 (i) Intangible assets (including                   8.37          15.89
 under development) 
 
 (ii) Tangible assets                               2.03           1.99
 
 Total                                             90.65         110.92
 
 Total R&D expenses as % of total                   3.11           4.11
 revenue
 
 (b) Technology absorption, adaptation and innovation
 
 1.  Eforts made towards technology absorption, adaptation and
 innovation
 
 The Company has established practice streams in specific technologies to
 analyze their implications and the benefts they can provide to the
 Company''s customers. These steps enable the Company to fnd and execute
 the most appropriate solutions for its clients.
 
 2.  Benefts derived as a result of the above eforts
 
 The benefts derived from the above mentioned eforts are fulflling
 customer needs, efciency 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 centres in Noida, Pune and Chennai
 are registered with the Software Technology Park of India in their
 respective areas as 100% Export Oriented Undertakings. All eforts of
 the Company are geared to increase the business of software exports in
 diferent 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
                                               31.12.2014    31.12.2013
 
 (a) Earnings (Accrual Basis)                    3,087.10      2,454.88
 
 (b) Expenditure (Accrual Basis)                   412.68        398.40
 
 (c) CIF value of imports                           19.74         49.49
 
 14.  Subsidiaries
 
 During the year under review the Comapny has incorporated subsidiary
 named R Systems Products & Technologies Limited in Pune on July 11,
 2014. This is the frst Indian subsidiary of the Company.
 
 Further, during the year the Company has completed the transfer of its
 two wholly owned subsidiaries named R Systems Europe B.V., Netherlands
 and R Systems S.A.S., France, on November 27, 2014 to Customer Contact
 Management Group B.V. (CCMG) a Europe based company by executing the
 Share Sale Agreement along with other necessary documents.
 
 As on December 31, 2014, R Systems has nineteen 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                    Singapore 
     Limited
 
 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.  Systémes R. International Ltée               Canada
 
 7.  R Systems Products &                         India 
     Technologies Limited
 
 8.  ECnet (M) Sdn. Bhd. #                        Malaysia
 
 9.  ECnet, Inc. #                                U.S.A.
 
 10. ECnet (Hong Kong) Limited #                  Hong Kong
 
 11. ECnet Systems (Thailand)                     Thailand 
     Company Limited #
 
 12. ECnet Kabushiki Kaisha #                     Japan
 
 13. ECnet (Shanghai) Co. Ltd. #                  People''s Republic of
                                                  China
 
 14. Computaris International Limited             U.K.
 
 15. ICS Computaris International                 Moldova 
     Srl @
 
 16. Computaris Malaysia Sdn. Bhd. @              Malaysia
 
 17. Computaris Polska sp z o.o. @                Poland
 
 18. Computaris Romania SRL @                     Romania
 
 19. Computaris USA, Inc.                         U.S.A.
 
 # wholly owned subsidiaries of ECnet Limited, Singapore being
 
 99.75% subsidiary of R Systems (The shareholding 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.
 
 All the aforementioned nineteen subsidiaries except R Systems Products
 & Technologies 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. The Board of
 Directors of the Company regularly reviews the afairs of these
 subsidiaries.
 
 During the year under review, the Board of Directors at its meeting
 held on July 07, 2014 has approved the ofer of buy- back from
 Computaris International Limited (a wholly owned subsidiary) of 13,500
 shares held by the Company in the said subsidiary at the rate of GBP
 111.38 per share for a consideration of Rs. 148,979,660. The aforesaid
 buy-back proceeds have been received by the Company on September 17,
 2014. Even after this buy-back, Computaris International Limited
 continues to remain wholly owned subsidiary of the Company.
 
 During the year ended December 31, 2014, the Company has received Rs.
 55,484,250 as dividend from R Systems Europe B.V., its wholly owned
 subsidiary in Netherlands. Further, Computaris International Limited,
 U.K., wholly owned subsidiary of R Systems International Limited has
 received a dividend amounting to Rs. 55.95 million from its wholly
 owned subsidiary Computaris Polska Sp. zo.o., Poland.
 
 As per Section 212 of the Companies Act, 1956 , we are required to
 attach the Directors'' Report, Balance Sheet and Statement of Profit and
 Loss (referred to as Financial Statements) of our subsidiaries. The
 Ministry of Corporate Afairs, 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 2014 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 Ofce of R Systems i.e.
 B-104 A, Greater Kailash-I, New Delhi – 110 048 and Corporate Ofce of R
 Systems i.e.  C-40, Sector 59, Noida – 201 307 and Registered Ofces 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 notifcation 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 of Listing Agreement read with Section 134
 (3) (c) of the Companies Act, 2013 (erstwhile Section 217 (2AA) of the
 Companies Act, 1956) with respect to directors'' responsibility
 statement, your directors hereby confrm that:
 
 i) In the preparation of the annual accounts for the financial year
 ended December 31, 2014, the applicable accounting standards had been
 followed along with proper explanation relating to material departures;
 
 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 afairs
 of the company at the end of the financial year and of the Profit and
 loss of the company for that period;
 
 iii) the directors had taken proper and sufcient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding the assets of the company and
 for preventing and detecting fraud and other irregularities;
 
 iv) the directors had prepared the annual accounts for the financial
 year ended December 31, 2014 on a going concern basis;
 
 v) 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 efectively; and
 
 vi) the directors had devised proper systems to ensure compliance with
 the provisions of all applicable laws and that such systems were
 adequate and operating efectively.
 
 17.  Auditors
 
 M/s S. R. Batliboi & Associates LLP (ICAI Firm Registration No.
 101049W), the statutory auditors of the Company will retire at the
 upcoming Annual General Meeting and are eligible for reappointment.
 
 The Board, based on the recommendation of the audit committee,
 recommends the re-appointment of M/s S. R. Batliboi & Associates LLP
 (ICAI Firm Registration No. 101049W) as the statutory auditors of the
 Company. M/s S. R. Batliboi & Associates LLP have confrmed their
 eligibility and willingness to act as the statutory auditors of the
 Company and have further confrmed that their appointment, if made,
 shall be within the limits prescribed under Section 141 of the
 Companies Act, 2013 and that they are not disqualifed for such
 appointment within the meaning of the said section.
 
 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 qualifed and independent Audit Committee.  During the
 year under review there was no change in composition of the Audit
 Committee except that Mr. Anuj Kanish ceased to be a member of Audit
 Committee consequent upon the completion of his term as Additional
 Director w.e.f. May 10, 2014 and Mrs. Ruchica Gupta was nominated as
 member of Audit Committee by the Board at its meeting held on July 26,
 2014.
 
 The constitution of the Committee is in compliance with the provisions
 of the Companies Act, 2013 and the Listing Agreement entered into with
 the stock exchanges. 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 Agreement with the stock exchanges
 read with Section 177 of the Companies Act, 2013 and rules made
 thereunder and includes such other functions as may be assigned to it
 by the Board from time to time. The Committee has adequate powers to
 play an efective 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 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 2014, 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 certifcate 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 (now Section II
 Clause B of Part II of Schedule V of the Companies Act, 2013) 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
 Section 2(31) of Companies Act, 2013 and rules made thereunder 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.  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 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 confdence 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 fulfll 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.  Secretarial Audit Report
 
 As per good governance practices, M/s SKP & Co., Company Secretaries in
 Whole Time Practice, has been appointed by the Board voluntarily to
 carry out the Secretarial Audit under the provision of Section 204 of
 the Companies Act, 2013 for the financial year ended December 31, 2014.
 The Secretarial Audit report for financial year ended 2014 is enclosed
 as Annexure E.  The report does not contain any qualifcation.
 
 26.  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 Policy is explained in the Corporate Governance
 Report and also posted on the website of the Company.
 
 27.  Remuneration Policy
 
 On the recommendation of Nomination & Remuneration Committee, the Board
 has framed a policy for selection and appointment of Directors, Senior
 Management and their remuneration. The Remuneration Policy is stated in
 the Corporate Governance Report.
 
 28.  Meeting of the Board
 
 The Board of R Systems International meets 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 12 times. The details of which are
 given in Corporate Governance Report.  The intervening gap between two
 Board Meetings did not exceed 120 days.
 
 29.  Board Evaluation
 
 Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
 the Listing Agreement, the Board has carried out an annual performance
 evaluation of its own performance as well as of directors individually.
 The manner in which the evaluation has been carried out has been
 explained in the Corporate Governance Report.
 
 30.  Particulars of Loans, Guarantees or investments under Section 186
 of the Companies Act, 2013
 
 During the year the Company has incorporated a wholly owned Subsidiary
 named as R Systems Products & Technologies Limited by investing Rs.
 500,000 (Rupees Five Lacs Only) by way of subscribing its Memorandum
 and Articles of Association.
 
 31.  Corporate Social Responsibility
 
 In compliance with the provisions of Section 135 of the Companies Act,
 2013 read with the Companies (Corporate Social Responsibility Policy)
 Rules, 2014, the Board of Directors of the Company at its Meeting held
 on March 30, 2014 has constituted a Corporate Social Responsibility
 Committee (''CSR Committee'').  The CSR Committee comprises of the
 following members:
 
 1.  Mr.  Raj Kumar Gogia (Chairman & Non Executive Independent
 Director)
 
 2.  Lt. Gen. Baldev Singh (Retd.) (President and Senior Executive
 Director)
 
 3.  Mrs. Ruchica Gupta (Non-Executive Director)
 
 4.  Mr. Suresh Paruthi (Non- Executive Independent Director)
 
 5.  Mr. Raj Swaminathan (Director & Chief Operating Ofcer)
 
 The detailed terms of reference of the Corporate Social Responsibility
 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
 
 Policy has been prepared and adopted by the Board which is available at
 the website of the Company at following link:
 
 http://www.rsystems.com/investors/composition_board_of_ directors.aspx
 
 32.  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 confdence and look
 forward for their continued support in the future.
 
 33.  DISCLAIMER
 
 The Ministry of Corporate Afairs vide its Circular No. 08/2014 dated
 April 04, 2014 clarifed that the financial statements and the documents
 required to be attached thereto, the Auditor''s and Boards'' Report in
 respect of the financial year under reference shall continue to be
 governed by the relevant provisions of the Companies Act, 1956,
 schedules and rules made thereunder.
 
 Accordingly, whilst the financial statements and the Auditor''s Report as
 aforesaid are prepared as per the requirements of the Companies Act,
 1956, the Company, as per its commitment to transparency and good
 governance, has provided some of the information in the Board''s Report
 and the Corporate Governance Report as per the Companies Act, 2013.
 
 On behalf of the Board
 
 For R Systems International Limited
 
 Sd/-                  Sd/-                          Sd/- 
 Satinder Singh Rekhi  Lt. Gen. Baldev Singh (Retd.) Raj Swaminathan
 (DIN: 00006955)       (DIN: 00006966)               (DIN: 00788158)
 (Managing Director)   (President & Senior           (Director & Chief
                       Executive Director)           Operating Ofcer)
 
 Place : CA, U.S.A     Place : New Delhi             Place : New Delhi
 Date : April 23, 2015 Date : April 23, 2015         Date : April 23,2015
 
 
 
Source : Dion Global Solutions Limited
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