R Systems International Ltd
Directors Reports
Dear Shareholders,
Your directors take great pleasure in presenting the Twenty Ninth Annual Report on the
business and operations of R Systems International Limited ("R Systems" or the
"Company") together with the audited financial statements of accounts for the
year ended December 31, 2022.
1. Financial Results a) Standalone financial results of R Systems
(` in million)
Particulars |
Financial Year ended |
|
31.12.2022 |
31.12.2021 |
Revenue from Operations |
8,138.90 |
5,775.01 |
Profit before depreciation, exceptional items and tax |
1,536.32 |
1,505.42 |
Less: Depreciation and amortisation expense |
195.83 |
146.49 |
Profit before tax |
1,340.49 |
1,358.93 |
Less: Current tax |
296.55 |
245.27 |
Less: Deferred tax (credit)/expense |
(83.17) |
(43.81) |
Profit after tax |
1,127.11 |
1,157.47 |
Other comprehensive income/(Loss) |
4.37 |
0.71 |
Total comprehensive income for the year |
1,131.48 |
1,158.18 |
Statement of change in Retained Earnings |
|
|
Opening Balance |
3,416.65 |
3,104.05 |
Add: Profit for the current year |
1,127.11 |
1,157.47 |
Less: Buy-back of Shares (including tax) |
- |
168.10 |
Less: Dividend paid |
768.97 |
677.66 |
Add: Other comprehensive income/(Loss) |
4.37 |
0.89 |
Closing Balance |
3,779.16 |
3,416.65 |
EPS-Basic |
9.53 |
9.70 |
b) Consolidated financial results of R Systems and its Subsidiaries
(` in million)
Particulars |
Financial Year ended |
|
31.12.2022 |
31.12.2021 |
Revenue from Operations |
15,158.31 |
11,556.39 |
Profit before depreciation, exceptional items and tax |
2,051.35 |
1,977.65 |
Less: Depreciation and amortisation expense |
349.78 |
276.93 |
Profit before tax |
1,701.57 |
1,700.72 |
Less: Current tax |
387.19 |
327.63 |
Less: Deferred tax (credit)/expense |
(82.43) |
(41.27) |
Profit after tax |
1,396.81 |
1,414.36 |
Other comprehensive income/(Loss) |
223.89 |
(32.19) |
Total comprehensive income for the year |
1,620.70 |
1,382.17 |
Statement of change in Retained Earnings |
|
|
Opening Balance |
4,164.18 |
3,594.69 |
Add: Profit for the current year |
1,396.81 |
1,414.36 |
Less : Buy-back of Shares (including tax) |
- |
168.10 |
Less : Dividend paid |
768.97 |
677.66 |
Add: Other Comprehensive Income/(Loss) |
4.37 |
0.89 |
Closing Balance |
4,796.39 |
4,164.18 |
EPS-Basic |
11.81 |
11.85 |
2. Results of Operations Standalone Accounts
Revenue from Operations during the year 2022 was `8,138.90 mn. as compared to `
5,775.01 mn. during the year 2021, an increase of 40.93%.
Profit after tax was ` 1,127.11 mn. during the year 2022 as compared to `
1,157.47 mn. during 2021, a decrease of 2.62%.
Basic earnings per share (of face value of ` 1/- each) was ` 9.53 for the year
2022 as compared to ` 9.70 for the year 2021, a decrease of 1.75%.
Consolidated Accounts
Revenue from Operations during the year 2022 was
` 15,158.31 mn. as compared to ` 11,556.39 mn. during the year 2021, an increase of
31.17%.
Profit after tax was ` 1,396.81 mn. during the year 2022 as compared to `
1,414.36 mn. during the year 2021, a decrease of 1.24%.
Basic earnings per share (of face value of ` 1/- each) was ` 11.81 for the year
2022 as compared to ` 11.85 for the year 2021, a decrease of 0.34%.
The state of affairs of the Company is presented as part of Management Discussion and
Analysis Report forming part of this report.
3. Appropriations and Reserves Dividend
During the year 2022, the Board of Directors declared an interim dividend namely,
Interim Dividend 2022 of ` 6.50 per equity share i.e. 650% of face value of ` 1/- each at
its meeting held on June 01, 2022. The said interim dividend was paid to shareholders on
June 30, 2022. The Board of Directors has not recommended any final dividend for the
financial year ended December 31, 2022.
Transfer to Reserves
In order to augment resources, your Directors do not propose to transfer any amount to
reserves.
4.Business
R Systems is a leading provider of technology, artificial intelligence, analytics and
knowledge services. We partner with customers to enable or elevate their digital
transformation with our diversified digital offerings. Our technology offerings include
product engineering, cloud enablement, QA testing, Internet of Things (IoT), and digital
platforms and solutions.
AI/ Analytics services include advanced analytics, data monetization and modernization,
machine learning/ artificial intelligence, business analytics, intelligent automation and
modern data management. R Systems design services include UX engineering, visual
design, mobile user experience and experience re-engineering. Our knowledge service
offerings cover revenue cycle management, back office service, technical support, and
customer care using multi-lingual capabilities and global delivery platform.
R Systems services and solutions span over five major business verticals i.e.
Technology, Telecom, Healthcare & Life Science, Finance & Insurance and Retail
& e-commerce. R Systems maintains seventeen development and service centres to serve
customers in North America, Europe, and APAC. There were no changes in the nature of the
Companys business and generally in the classes of business in which the Company has
an interest and in the business carried on by the subsidiaries during the year under
review. For details of Companys subsidiaries please refer note number 11 relating to
subsidiaries.
The sign of a global slowdown has resulted some softness in the demand environment
which may affect growth momentum in near term. However, businesses have to accelerate
their digital transformation to address the fast changing technology landscape. We are
cautiously optimistic and continue to invest in newer technologies and sales and marketing
initiatives to drive profitable growth through innovation.
5.Quality
R Systems has continuously invested in processes, people, training, information
systems, quality standards, frameworks, tools and methodologies to mitigate the risks
associated with execution of projects. Adoption of quality models and practices such as
the Capability Maturity Model Integration (CMMI) and People Capability Maturity Model
(PCMM) practices for processes have ensured that risks are identified and mitigated at
various levels in the planning and execution process. R Systems journey on various quality
standards/models is as follows:
During the year 2022, Noida IT as well as Knowledge Services Division were recertified
for ISO 9001:2015. As of the date of this report, Noida IT division is CMMI level 5
(Ver.1.3), PCMM Level 5, ISO 9001:2015, ISO 27001:2013 certified and HIPAA compliant.
Noida Knowledge Services (KS) Division is PCMM Level 5, ISO 27001:2013, ISO 9001:2015
certified and HIPAA compliant. Apart from this, KS division is also PCI-DSS (ver.3.2.1)
certified (for IT Infrastructure along with the projects/ process/ applications in scope).
To maintain and strengthen competitive strengths, R Systems continues to make
investments for enhancing its competencies around latest technologies for flawless
execution and consistent delivery of state of art product and solutions for our customers.
The product engineering offerings include services along the entire software lifecycle
that includes technology consulting, architecture, design and development, professional
services, testing, maintenance, customer care and technical support. R Systems expects
that its technology focus, investment in processes, talent and methodologies will enable
it to distinguish itself from competition as it seeks to provide services to technology/
product companies.
6.Directors & Key Managerial Personnels (KMP)
During the year under review, Lt. Gen. Baldev Singh (Retd.) was re-appointed as
director, liable to retire by rotation, at the Annual General Meeting held on June 20,
2022.
There was no change in KMP(s) of the Company during the financial year ended on
December 31, 2022. In terms of Section 152 of the Act, Mr. Avirag Jain, Director &
Chief Technology Officer, being liable to retire by rotation, shall retire at the ensuing
AGM and being eligible for re-appointment, offers himself for reappointment.
The brief profile of Mr. Avirag Jain forms part of the Corporate Governance Report. No
director of the Company is disqualified as per the provisions of Section 164(2) of the
Companies Act, 2013.
The directors of R Systems have made necessary disclosures, as required under various
provisions of the Companies Act, 2013 (Hereinafter referred as the "Act") and
the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (Hereinafter referred as "Listing Regulations").
On the basis of the declarations submitted by the Independent Directors of the Company,
the Board of Directors has opined that all the Independent Directors of the Company fulfil
the required criteria as defined under Section 149(6) of the Act and the Listing
Regulations. Further, the Board of Directors is of the opinion that the Independent
Directors of the Company possess requisite qualifications, experience and expertise and
they hold highest standards of integrity.
7.Liquidity and Borrowings - Consolidated Financial Statement
The consolidated cash and cash equivalents as at December 31, 2022 were ` 2,062.30 mn.
as against
` 2,043.68 mn. as on December 31, 2021. Net cash generated from operating activities
was ` 963.86 for the year ended December 31, 2022 compared to ` 873.15 mn. for the year
ended December 31, 2021. Cash used in investing activities was ` 213.71 mn. for the year
ended December 31, 2022 and mainly comprised of purchase of fixed assets of ` 358.96 mn,
as offset by proceeds from investment in term deposit with bank ` 115.60 mn. Cash used in
financing activities was ` 864.00 mn. for the year ended December 31, 2022. Interim
Dividend paid during the year was ` 768.97 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 (fund based as well as non-fund based) from the Axis
Bank Limited and ICICI Bank Limited. As at December 31, 2022, the total credit balance was
nil under fund based line of credit. Further, borrowings as on December 31, 2022 comprises
of loan for motor vehicles purchased amounting to ` 20.44 mn.
8.Changes in the Capital Structure
During the year under review, there was no change in the capital structure of the
Company. The share capital structure of the Company is as follows: Amount in `
Sr. No. |
Particulars |
As on December |
As on December |
|
|
31, 2022 |
31, 2021 |
1. |
Authorised Share Capital: |
|
|
|
Equity Shares of ` 1/- each |
206,000,000 |
206,000,000 |
|
Issued, Subscribed and |
|
|
2. |
Paid-Up Capital: |
|
|
|
Equity Shares of ` 1/- each |
118,303,445 |
118,303,445 |
9.Takeover Offer and Voluntary Delisting of Shares
On November 16, 2022, BCP Asia II Topco II Pte. Ltd. ("Acquirer") has entered
into a Share Purchase Agreement ("SPA") with the Promoter and Promoter Group of
the Company to acquire up to 61,129,969 Equity Shares, representing 51.67% of the Voting
Share Capital, from the Promoter and Promoter Group of the Company, subject to the terms
and conditions set out in the SPA, including fulfilment of customary closing conditions.
Consequently, A public announcement was made on November 16, 2022 by Kotak Mahindra
Capital Company Limited, the manager to the Offer, for and on behalf of the Acquirer along
with Blackstone Capital Partners Asia II L.P. ("PAC"), making a composite offer
for acquisition of up to 57,173,476 fully paid-up equity shares of face value of ` 1/-
representing 48.33% of the Voting Share Capital ("Offer") in accordance with the
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 and subsequent amendments thereto ("SEBI (SAST) Regulations")
and the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations
2021 and subsequent Amendments thereto ("SEBI Delisting Regulations") from the
Public Shareholders and consequently to delist the equity shares of the Company from
National Stock Exchange of India Limited and BSE Limited ("Stock Exchanges")
where shares of the Company are presently listed. The Detailed Public Statement was
published on November 23, 2022 in compliance with applicable provisions of SEBI (SAST)
Regulations and SEBI Delisting Regulations.
The Board of Directors of the Company at its meeting held on November 25, 2022 has
approved the voluntary delisting of equity shares of the Company from the Stock Exchanges.
The Shareholders of the Company have also approved the voluntary delisting of equity
shares of the Company from Stock Exchanges with the requisite majority on December 31,
2022.
The applications for approvals of relevant statutory authorities have been filed.
In-principle approval from Stock Exchanges and Observations from SEBI are awaited as on
the date of this report.
10. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars as prescribed under Section 134 (1) (m) of the Companies Act, 2013 read
with Rule 8 of the Companies (Accounts) Rules, 2014 for the year ended December 31, 2022
are as follows:
A. Conservation of Energy
Though your Company does not have energy intensive operation, every endeavor has been
made to ensure the optimal usage of energy, avoid wastage and conserve energy.
R Systems constantly evaluates new technologies and makes appropriate investments to be
energy efficient. During the year ended December 31, 2022, R Systems adopted various
energy conservation options/ technologies and took measures to reduce energy consumption
by using energy efficient equipment and devices, replacing existing CFL fittings with LEDs
fittings to reduce power consumption, timely preventive maintenance of all major and minor
equipment. The air is conditioned with energy efficient compressors for central air
conditioning and with split air conditioning for localized areas. The Company is
endeavoring to convert its Diesel generators to GAS based generators. Please also refer
the Business Responsibility and Sustainability Report for details of Energy consumption.
R Systems is always in search of innovative and efficient energy conservation
technologies and applies them prudently. Being in the software industry, R Systemss
operations are not energy intensive and energy costs constitute a very small portion of
the total cost, therefore, the financial impact of these measures is not material.
B. Technology absorption
1.Efforts made towards technology absorption
The Company has established centre of excellence in specific digital technologies like
Cloud, Mobility, IOT, Analytics, Intelligent Process Automation (IPA) etc. to strengthen
competencies and enhance offerings across focused verticals i.e. Technology, Telecom,
Healthcare & Life Science, Finance & Insurance and Retail & e-Commerce.
2.Benefits derived as a result of the above efforts
Our investment in digital technologies is helping us to enhance market reach and
support our revenue growth.
3.Technology imported during the last 3 years.
Not applicable, as no technology has been imported by the Company.
4.Expenditure incurred on Research and development
Driven by our core value of innovation, we believe that innovation is not just a
practice but an essential component embedded within R Systems organizational DNA. We are
now operating in a digital world. Digital transformation is one of our core areas where R
Systems partner with businesses to make them competitive and successful in todays
hyper-changing environment. Over the year ended December 31, 2022, your Company has
invested in research and development around all leading digital technologies. Further, R
Systems has also strengthened its proprietary solutions and frameworks optimizing the
integration with digital technologies.
C. Foreign Exchange Earnings and Outgo (Accrual Basis)
A significant percentage of R Systems revenues are generated from exports. The
development and service centre in Noida is registered with the Software Technology Park of
India as 100% Export Oriented Undertaking. All efforts of the Company are geared to
increase the business of software exports in different products and markets. We have made
investments in sales and marketing activities in various growing markets.
The total foreign exchange used and earned by R Systems during the year as
compared with the previous year is as follows:
(` in Millions)
|
Particulars |
Financial Year ended |
31.12.2022 |
31.12.2021 |
(a) |
Earnings (Accrual Basis) |
7,892.20 |
5,770.20 |
(b) |
Expenditure (Accrual Basis) |
862.42 |
695.83 |
(c) |
CIF value of imports |
48.74 |
64.27 |
11. Subsidiaries
As on December 31, 2022, R Systems has twenty-six subsidiaries. The name and country of
incorporation of those subsidiaries are as follows:
S. No. |
Name of the Subsidiaries |
Country of Incorporation |
1. |
R Systems, Inc., |
U.S.A. |
2. |
R Systems Technologies Ltd. |
U.S.A. |
3. |
RSYS Technologies Ltd. |
Canada |
4. |
R Systems Consulting Services Limited |
Singapore |
5. |
R Systems Consulting Services (M) Sdn. Bhd.# |
Malaysia |
6. |
R Systems Consulting Services (HongKong) Limited# |
Hong Kong |
7. |
R Systems Consulting Services (Thailand) Co. Ltd.# |
Thailand |
8. |
R Systems Consulting Services Kabushiki Kaisha# |
Japan |
S. No. |
Name of the Subsidiaries |
Country of Incorporation |
9. |
R Systems Consulting Services (Shanghai) Co., Ltd.# |
Peoples Republic of China |
10. |
R Systems Consulting Services Company Limited# |
Vietnam |
11. |
R Systems Computaris International Limited |
U.K. |
12. |
R Systems Computaris S.R.L.@ |
Moldova |
13. |
R Systems Computaris Malaysia Sdn. Bhd.@ |
Malaysia |
14. |
R Systems Computaris Poland Sp. Z o.o.@ |
Poland |
15. |
R Systems Computaris Europe S.R.L.@ |
Romania |
16. |
R Systems Computaris Philippines Pte. Ltd. Inc.@ |
Philippines |
17. |
R Systems Computaris Suisse S?rl@ |
Switzerland |
18. |
R Systems (Singapore) Pte. Ltd |
Singapore |
19. |
R Systems IBIZCS Pte. Ltd.* |
Singapore |
20. |
IBIZ Consulting Services Pte. Ltd.^ |
Singapore |
21. |
R Systems IBIZCS Sdn. Bhd. ^ |
Malaysia |
22. |
PT RSystems IBIZCS International^ |
Indonesia |
23. |
IBIZ Consulting Services Limited^ |
Hong Kong |
24. |
IBIZ Consulting Services (Shanghai) Co., Ltd.% |
Peoples Republic of China |
25. |
IBIZ Consulting (Thailand) Co. Ltd.^ |
Thailand |
26. |
IBIZ Consultancy Services India Private Limited$ |
India |
# wholly owned subsidiaries of R Systems Consulting Services Limited, Singapore being
99.75% subsidiary of R Systems (The shareholding held by R Systems International Limited
and R Systems (Singapore) Pte. Ltd. is 69.37% and 30.38%, respectively).
@ wholly owned subsidiaries of R Systems Computaris International Limited being
100% subsidiary of R Systems. * wholly owned subsidiary of R Systems (Singapore) Pte Ltd.
being 100% subsidiary of R Systems.
^ whollyownedsubsidiariesofRSystemsIBIZCSPte.Ltd.being 100% Subsidiary of R Systems
(Singapore) Pte. Limited.
% wholly owned subsidiary of IBIZ Consulting Services Limited - Hong Kong being 100%
Subsidiary of R Systems IBIZCS Pte. Ltd.
$Under Voluntary Liquidation.
On October 17, 2022, R Systems Consulting Services Limited, Singapore, incorporated a
wholly-owned subsidiary in Vietnam named R Systems Consulting Services Company Limited.
During the year under review, IBIZ Consultancy Services India Private Limited, wholly
owned subsidiary of the Company, has gone into Voluntary Liquidation under Section 59 of
Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board of India
(Voluntary Liquidation) Regulations, 2017. Ms. Gunjan Mittal has been appointed as a
liquidator of IBIZ India to implement the said liquidation. Subsequent to the year ended
December 31, 2022, the petition for approving the voluntary liquidation has been filed
with the Honble National Company Law Tribunal, New Delhi.
As on date of this report, all the subsidiaries of the Company except IBIZ Consultancy
Services India Private Limited are incorporated and based outside India. In addition to
provide services to various international clients these subsidiaries also help to generate
revenues for R Systems.
During the year, no other corporate restructuring activity was done by the Company,
except as stated in this report.
The Board of Directors of the Company regularly reviews the affairs of these
subsidiaries. Policy for determining material subsidiaries of the Company is available on
the website of the Company at https://www.rsystems.com/
investors-info/corporate-governance/.
During the year 2022, the Company had three material Subsidiaries, namely R Systems,
Inc., R Systems (Singapore) Pte. Ltd., Singapore and R Systems Computaris Europe S.R.L.,
all incorporated and based outside India.
A statement containing the salient features of the financial statements of our
subsidiaries in the prescribed Form AOC-1 is attached at the end of consolidated financial
statements of the Company. The statement also provides the details of performance,
financial position of each of the subsidiaries.
Further, the audited annual accounts and related detailed information of our
subsidiaries, wherever applicable, will be made available to shareholders seeking such
information at any point of time. The annual accounts of the subsidiary companies will
also be available for inspection by the shareholders at Registered Office of R Systems
i.e. GF-1-A, 6, Devika Tower, Nehru Place, New Delhi-110019 and Corporate Office of R
Systems i.e. C-40, Sector 59, Noida (U.P.)201307 and Registered Offices of the
subsidiary companies concerned during business hours. The same will also be hosted on R
Systems website i.e. www.rsystems.com.
12. Particulars of employees
The details required under Section 197(12) of the Act read with Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed
as Annexure A and forms part of this report.
Further, as required under the provisions of Rule 5(2) of the Companies (Appointment
and Remuneration of Managerial Personnel) Rules, 2014, the name and other particulars of
employees are set out in Annexure B and forms part of this report.
13. Directors responsibility statement
Pursuant to the requirement of Section 134 (3) (c) read with Section 134(5) of the
Companies Act, 2013 with respect to directors responsibility statement, your Board
of Directors, to the best of its knowledge and ability, hereby confirm that:
1) in the preparation of the annual accounts for the financial year ended December 31,
2022, the applicable accounting standards have been followed along with proper explanation
relating to material departures, if any;
2) the directors had selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the company at the end of the financial year and of
the profit and loss of the Company for that period;
3) the directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of this Act for safeguarding the
assets of the Company and for preventing and detecting fraud and other irregularities;
4) the directors have prepared the annual accounts for the financial year ended
December 31, 2022 on a going concern basis;
5) the directors, have laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and operating effectively;
6) the directors have devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems are adequate and operating effectively.
14. Auditors and Audit Report
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [Firms Registration
No. 117366W/W-100018], were re-appointed as the Statutory Auditors of your Company in the
Annual General Meeting held on June 20, 2022 for a term of five years until the conclusion
of the 33rd Annual General Meeting of the Company.
The Auditors have issued an unmodified opinion on the Financial Statements, both
standalone and consolidated, for the financial year ended December 31, 2022. During the
year 2022, the statutory auditors have not reported any matter under Section 143(12) of
the Act. The said Auditors Report(s) for the financial year ended December 31, 2022
on the financial statements of the Company forms part of this Annual Report.
15. Audit committee
R Systems has a qualified and independent Audit Committee. During the year under
review, there was no change in the composition of the Audit Committee. The constitution of
the Committee is in compliance with the provisions of the Act and the Listing Regulations.
Detailed description of the Audit Committee has been given in Corporate Governance
Report. The terms of reference and role of the Committee are as per the rules set out in
the Listing Regulations and Section 177 of the Act and rules made thereunder and includes
such other functions as may be assigned to it by the Board from time to time.
The Committee has adequate powers to play an effective role as required under the
provisions of the Act and Listing Regulations. During the year under review, the Board of
Directors of the Company had accepted all the recommendations of the Audit Committee.
16. Prevention and prohibition of sexual harassment of women at work place
Respect for Human Rights is a fundamental value of R Systems International Limited. At
R Systems, it is our desire to promote a healthy and congenial working environment
irrespective of gender, caste, creed or social class of the employees.
We value every individual and are committed to protect the dignity and respect of every
individual. The Company has always endeavored for providing a better and safe environment
free of sexual harassment at all its work places. Consequent to the enactment of Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and
Rules made thereunder, the Management of R Systems International Limited has constituted
an Internal Complaints Committee ("ICC") to deal with any complaints or issues
that may arise, in the nature of sexual harassment of women employees. The Company has
also prepared and implemented Policy for Prevention, Prohibition and Redressal of Sexual
Harassment of Women at Workplace. During the year ended December 31, 2022, no case of
sexual harassment of women was reported to ICC.
17. Corporate Governance
As required under the Listing Regulations, the detailed report on corporate governance
is given as Annexure C to this report and the certificate obtained from
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, [Firms Registration
No. 117366W/ W-100018], Statutory Auditors of the Company, regarding compliance of the
conditions of corporate governance as stipulated in the Listing Regulations is annexed as Annexure
D to this report.
18. Customer relations
R Systems recognizes that the customers have a choice of service providers and the
directors would like to place on record their gratitude on behalf of the Company for the
business provided by them. The Companys quality policy mandates that the voice of
the customer is obtained on a regular basis. We constantly review the feedback and
incorporate its impact into our delivery systems and communications.
19. Stakeholders relations
R Systems is inspired by its customers and its employees and transforms 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. R Systems is
constantly validating key employee data with industry and peer group business. These
practices have helped the Company to achieve many of its business goals and have been
recognised in many industry surveys over the last few years. The open door policy of our
senior management team ensures that the feedback loop is completed promptly. We thank our
shareholders for their continuous support and confidence in R Systems. We are aware of our
responsibilities to our shareholders to provide full visibility of operations, corporate
governance and creating superior shareholder value and we promise to fulfill the same.
20. Management discussion and analysis report
In terms of the Listing Regulations, Management Discussion and Analysis Report is given
as Annexure E to this report.
21. Business Responsibility and Sustainability Report
The Business Responsibility Report of the Company for the financial year ended December
31, 2022 as required under Regulation 34(2)(f) of the Listing Regulations forms part of
this Report as Annexure F.
22. Secretarial Auditor and Secretarial Audit Report
M/s. Sanjay Grover & Associates, Company Secretaries, was appointed by the Board of
Directors of the Company to carry out the Secretarial Audit under the provision of Section
204 of the Act for the financial year ended December 31, 2022. The Secretarial Audit
report for financial year ended December 31, 2022 is enclosed as Annexure G.
Further, the Secretarial auditors report being self-explanatory, does not call
for any further comments by the Board of Directors as there are no qualifications,
reservation or adverse remark or disclaimer made in the
auditreportforthefinancialyearendedDecember31,2022.
23. Vigil Mechanism/ Whistle Blower Policy
In order to provide a mechanism to employees of the company to disclose any unethical
and improper practices or any other alleged wrongful conduct in the Company and to
prohibit managerial personnel from taking any adverse action against those employees, the
Company has laid down a Vigil Mechanism also known as Whistle Blower Policy to deal with
instances of fraud and mismanagement, if any. The details of the Vigil Mechanism or
Whistle Blower Policy is explained in the Corporate Governance Report and also posted on
the website of the Company.
24. Criteria for selection of candidates for Membership on the Board of Directors and
the Remuneration Policy
As per the provisions of Section 178 of the Act and other relevant provisions and on
the recommendation of the Nomination and Remuneration Committee, the Board has framed a
criteria for selection of Directors, a policy for remuneration of Directors, Key
Managerial Personnel, Senior Management Personnel and other employees. The Criteria for
selection of candidates for Membership on the Board of Directors and the remuneration
policy are stated in the Corporate Governance Report.
25. Meetings of the Board
The Board of the Company and its Committees meet at regular intervals to discuss,
decide and supervise the various business policies, business strategy, Companys
performance and other statutory matters. During the year under review, the Board has met
eight times. The details of the meeting of the Board and its Committees are given in the
Corporate Governance Report. The intervening gap between two Board Meetings did not exceed
120 days.
26. Committees of the Board
The Board of Company has constituted the following Committees to focus on specific
areas and take informed decisions in the best interests of the Company within authority
delegated to each of the Committees:
(a) Audit Committee
(b) Nomination and Remuneration Committee (c) Stakeholders Relationship Committee (d)
Corporate Social Responsibility Committee (e) Risk Management Committee (f) Compensation
Committee
The details of composition of the said Committee(s), their terms of reference, meetings
held and attendance of the Committee members during the financial year 2022 are provided
in the Corporate Governance Report.
27. Board Evaluation
Pursuant to the provisions of the Act and the Listing Regulations, the Board has
carried out an annual performance evaluation of its own performance, its committees and
the individual directors. The manner in which the evaluation has been carried out has been
explained in the Corporate Governance Report.
28. Particulars of Loans, Guarantees or investments
During the year under review, the Company has not given any loan, Guarantee or made any
investment which falls under Section 186 of the Companies Act, 2013. Further details of
loan, guarantees and investments are provided in the notes to accounts of the financial
statements.
29. Related Party Disclosure
All the related party transactions entered during the year were in the ordinary course
of business and on arms length basis and in compliance with the applicable
provisions of the Act and Listing Regulations. There are no materially significant related
party transactions made by the Company with its Promoters, Directors, Key Managerial
Personnel or other designated persons which may have a potential conflict of interest with
the Company at large. All the related party transactions are presented to the Audit
Committee and the Board, as required. Omnibus approval is obtained for the transactions
which are repetitive in nature.
A statement of all related party transactions is presented before the Audit Committee
on quarterly basis, specifying the terms & conditions of the transactions. The policy
on Related Party Transactions, as approved by the Board is uploaded on the Companys
website at the web link as mentioned in the Corporate Governance Report. Details of
particulars of contracts or arrangements with related parties referred to in sub-section
(1) of Section 188 of the Act in form AOC-2 has been enclosed herewith as Annexure H.
30. Risk Management
In view of growing level of operations of the Company and in terms of the Listing
Regulations, the Board of Directors of the Company constituted the Risk Management
Committee to identify elements of risk in different areas of operations, comprising of the
members of the Board of Directors of the Company.
The Company has developed and implemented a comprehensive Risk Management Policy
including Cyber security for identification, assessment and monitoring of key risks that
could negatively impact the Companys goals and objectives. This policy is
periodically reviewed and enhanced under the oversight of the Risk Management Committee of
the Board.
31. Annual Return
The Annual Return of the Company as on December 31, 2022 in Form MGT - 7 in accordance
with Section 92(3) of the Act read with the Companies (Management and Administration)
Rules, 2014, is available on the website of the Company at
https://www.rsystems.com/investors-info/ annual-reports/.
32. Corporate Social Responsibility
In compliance with the provisions of Section 135 of the Act read with the Companies
(Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a
Corporate Social Responsibility Committee (CSR Committee). During the year
under review, there was no change in the composition of the CSR Committee.
The detailed terms of reference of the CSR Committee has been provided in the Corporate
Governance Report. In pursuit of the responsibilities entrusted to the CSR Committee, a
policy on Corporate Social Responsibility has been prepared and adopted by the Board which
is available at the website of the Company at following link:
https://www.rsystems.com/investors-info/ corporate-governance/.
Annual Report on CSR activities of the Company in format prescribed in the Companies
(Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure I and
forms part of this report.
33. Dividend Distribution Policy
The Board of Directors of the Company had approved the dividend distribution policy in
line with Regulation 43A of the Listing Regulations. The Policy broadly specify the
external and internal factors including financial parameters that shall be considered
while declaring dividend and the circumstances under which the shareholders of the Company
may or may not expect dividend and how the retained earnings shall be utilized, etc. The
Dividend Distribution policy is available on the Companys website at
https://www.rsystems.com/wp-content/uploads/2021/05/ Dividend-Distribution-Policy.pdf.
34. Internal Control System and Internal Financial Controls
The Company has an Internal Control System, commensurate with the size, scale and
complexity of its operations. The Internal Auditors and the management monitors and
evaluates the efficacy and adequacy of the internal control system in the Company, its
compliance with operating systems, accounting procedures and policies at all locations of
the Company. Audit observations of Internal Auditors and corrective actions thereon are
presented to the Audit Committee. To maintain its objectivity and independence, the
Internal Auditor reports to the Audit
Committee. The Board of your Company has laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and
operating effectively.
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, the statutory auditors of
the Company, has audited the financial statements for the financial year ended December
31, 2022 and has issued unmodified opinion on
theadequacyandoperatingeffectivenessoftheCompanys internal financial controls over
financial reporting.
35. Other Disclosures
During the financial year under review:
the Company has complied with the applicable Secretarial Standards, i.e. SS-1
and SS-2, relating to Meetings of the Board of Directors and General
Meetings, respectively.
the Company does not have any stock option plan in force.
the Company has neither invited nor accepted any deposits from the public within
the purview of the Act and the Rules made thereunder, and accordingly no amount on account
of principal or interest on public deposits was outstanding as on December 31, 2022.
the Company has not issued shares with differential voting rights and sweat
equity shares.
no disclosure is required under Section 67 (3) (c) of the Act in respect of
voting rights not exercised directly by employees of the Company, as the provisions of the
said section are not applicable. the Company is not required to maintain Cost
records under Section 148(1) of the Act.
no significant or material orders were passed by the regulators or courts or
tribunals which could impact the going concern status of the Company and its future
operations.
no material changes and commitments have occurred after the close of the year
till the date of this report which may affect the financial position of the Company except
as mentioned in this report elsewhere.
details of unclaimed dividends and equity shares transferred to the Investor
Education and Protection Fund Authority during the year 2022 have been provided as part of
the Corporate Governance report.
36. 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, 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.
Disclosures pursuant to Section 197(12) of the Companies Act, 2013 and Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014
A. The ratio of the remuneration of each director to the median remuneration of the
employees of the Company for the financial year:
Sr. No. |
Name of the Director |
Category |
Ratio of the remuneration to the median remuneration of
the employees |
1. |
Dr. Satinder Singh Rekhi |
Promoter & Executive Director |
40.27 |
2. |
Lt. Gen. Baldev Singh (Retd.) |
Executive Director |
9.63 |
3. |
Mr. Avirag Jain |
Executive Director |
10.00 |
4. |
Mrs. Ruchica Gupta |
Non-Executive Independent Director |
NA |
5. |
Mr. Kapil Dhameja |
Non-Executive Independent Director |
NA |
6. |
Mr. Aditya Wadhwa |
Non-Executive Independent Director |
NA |
B. The percentage increase in remuneration of each Director, Chief Financial Officer,
Chief Executive Officer, Company Secretary or Manager, if any, in the financial year:
Sr. No. |
Name of the Director/CFO/ CEO CS/Manager |
Category |
% increase in remuneration in the financial year |
1. |
Dr. Satinder Singh Rekhi |
Promoter & Executive Director |
37.82% |
2. |
Lt. Gen. Baldev Singh (Retd.) |
Executive Director |
38.15% |
3. |
Mr. Avirag Jain |
Executive Director |
41.56% |
4. |
Mrs. Ruchica Gupta |
Non-Executive Independent Director |
NA |
5. |
Mr. Kapil Dhameja |
Non-Executive Independent Director |
NA |
6. |
Mr. Aditya Wadhwa |
Non-Executive Independent Director |
NA |
7. |
Mr. Nand Sardana |
Chief Financial Officer |
50.57% |
8. |
Mr. Bhasker Dubey |
Company Secretary & Compliance Officer |
28.29% |
C. Percentage increase in the median remuneration of employees in the financial year:
The percentage increase in the median remuneration of the employees in the financial
year was 14.64%.
D. Number of permanent employees on the rolls of company:
Number of permanent employees on the rolls of R Systems International Limited as at
December 31, 2022 was 3,260 (on Standalone basis).
E. Average percentile increase already made in the salaries of employees other than the
managerial personnel in the last financial year and its comparison with the percentile
increase in the managerial remuneration and justification thereof and point out if there
are any exceptional circumstances for increase in the managerial remuneration:
Average increase in remuneration for employees is 10% to 12% (approx.). The average
increase in overall managerial remuneration is 39.59%. These increases are a function of
the Companys market competitiveness within its comparator group and reflects the
Companys reward philosophy as well as the result of the benchmarking exercise.
F. Affirmation that the remuneration is as per the remuneration policy of the company:
The Company affirms that the remuneration is as per the remuneration policy of the
Company.
32ANNEXURE B TO THE DIRECTORS REPORT
Information as per 5(2) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 for the year ended December 31, 2022
Name of the Top 10 employees and employees drawing a remuneration of ` 1.02
crore or above per annum or drawing average remuneration of ` 8.5 lakhs or above
per month.*
a. Employed throughout the year
S. No |
Name |
Designation / nature of duties |
Qualification |
Age (Years) |
Date of Joining |
Experience (Years) |
Gross Remuneration (`) |
Previous employment & designation |
1 |
Mandeep Singh Sodhi$ |
Chief Operating Officer - R Systems USA Operations |
Bachelors degree in Electronics Engineering from Marathwada University
and MBA from University of California, Davis |
55 |
May 14, 1993 |
30 |
85,283,103% |
Sark Synertek Senior Marketing Engineer |
2 |
Dr. Satinder Singh Rekhi |
Managing Director & Chief Executive Officer |
Bachelor of Technology from IIT, Kharagpur; MBA California State
University, Sacramento; Senior Management programs from University of Berkeley and Harvard
Business School |
72 |
May 14, 1993 |
40 |
58,061,967% |
Digital Information Systems Corporation Senior Management Personnel |
3 |
Ramneet Singh Rekhi^ |
President - R Systems |
MBA in Finance & Strategy from Carnegie Mellon University, Tepper
School of business, and Masters of Arts in Economics from New York University. |
39 |
July 1, 2020 |
11 |
16,919,632% |
R Systems, Inc., USA Vice President |
4. |
Avirag Jain |
Director & Chief Technology Officer |
Graduate in Science and an MBA in Finance and International business and
Postgraduate diploma in Cyber Law |
57 |
September 15, 1997 |
33 |
14,409,928 |
Modi Olivetti/PM Project Manager |
5 |
Lt. Gen. Baldev Singh (Retd.) & |
President & Sr. Executive Director |
Masters in Military Sciences- Madras University |
82 |
September 1, 1997 |
56 |
13,883,166 |
Indian Army |
6 |
Nand Sardana |
Chief Financial Officer |
FCA, FCS, ACMA, CPA-USA and LLB |
57 |
September 13, 2011 |
33 |
12,221,979 |
Gujrat Hydrocarbons & Power SEZ Ltd. - Head Corporate & Company
Secretary |
b. Employed part of the year
S. No |
Name |
Designation / nature of duties |
Qualification |
Age (Years) |
Date of Joining |
Experience (Years) |
Gross Remuneration (`) |
Previous employment & designation |
|
|
|
Nil |
|
|
|
|
|
$Mr. Mandeep Singh Sodhi is related to Lt. Gen. Baldev Singh (Retd.), President &
Sr. Executive Director of the Company.
^Mr. Ramneet Singh Rekhi is related to Dr. Satinder Singh Rekhi, Managing Director
& Chief Executive Officer.
&Lt. Gen. Baldev Singh (Retd.) is related to Dr. Satinder Singh Rekhi, Managing
Director & Chief Executive Officer of the Company.
* Particulars of employees posted and working outside India, not being directors or
their relatives, drawing more than Rupees One Crore and Two Lakh per annum or Rupees Eight
Lakh and Fifty Thousand per month, as the case may be, have not been included in the above
statement. Any shareholder interested in obtaining full statement may write to the Company
Secretary.
%Employed at USA Branch of the Company, therefore, the remuneration in USD has been
converted into INR using USD / INR exchange rates.
Notes:
1.None of the employee owns more than 2% of the outstanding shares of the Company as on
December 31, 2022 except Dr. Satinder Singh Rekhi, Managing Director & Chief Executive
Officer of the Company, who holds 7,403,456 equity shares in the Company being 6.26% of
the total paid- up equity share capital of the Company in his own name and 11,702,623
equity shares being 9.89% of the total paid- up equity share capital of the Company
jointly with Mrs. Harpreet Rekhi (as a Trustee of The Satinder and Harpreet Rekhi Family
Trust) and Mr. Ramneet Singh Rekhi, President- Digital of the Company, who holds
16,236,331 equity shares in the Company being 13.72% of the total paid- up equity share
capital of the Company.
2.Nature of employment is contractual in all the above cases.