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Directors Report of RS Software (India) Ltd.

Mar 31, 2015

Dear Members,

The Directors take pleasure in presenting their Twenty Sixth Annual Report and the audited Statement of Accounts, highlighting the business operations and financial results for the financial year ended March 31, 2015.

1. Financial Summary or Highlights/Performance of the Company (Standalone and Consolidated)

The summarised standalone and consolidated results of your Company and its subsidiaries are given in the table below.

On the basis of Standalone financial statements, the performance of the Company appears as follows: (C in lac)

Particulars 2014-15 2013-14

Turnover 3571 1.24 35899.37

Profit before Finance Charges, Tax, Depreciation/Amortisation (PBITDA) 10216.44 8094.29

Less: Finance Charges 37.03 85.96

Profit before Depreciation/Amortisation (PBTDA) 10179.41 8008.33

Less: Depreciation 554.83 547.67

Net Profit before Taxation (PBT) 9624.57 7460.66

Provision for taxation 3131.04 2342.71

Profit/(Loss) after Taxation (PAT) 6493.53 51 17.95

Provision for proposed dividend 833.80 767.10

Dividend tax 170.81 124.44

On the basis of Consolidated financial statements, the performance of the Group appears as follows: (C in lac)

Particulars 2014-15 2013-14

Turnover 38807.28 38920.31

Profit before Finance Charges, Tax, Depreciation/Amortisation (PBITDA) 10499.57 8382.02

Less: Finance Charges 37.93 87.85

Profit before Depreciation/Amortisation (PBTDA) 10461.64 8294.17

Less: Depreciation 554.83 547.67

Net Profit before Taxation (PBT) 9906.81 7746.50

Provision for taxation 3168.14 2388.13

Minority interest 0.00 0.00

Profit/(Loss) after Taxation (PAT) 6738.67 5358.37

Provision for proposed dividend 833.80 767.10

Dividend tax 170.81 124.44

Summary of Operations

The fiscal year 2014-15 achieved the highest financial performance in the history of the Company. During the year, the Company''s profit after tax stood at C 6713 lac vis-a- vis C 5358 lac in the previous year, registering a growth of 25.28%. The net revenue at C 37642 lac is marginally down from the previous year''s revenue of C 38188 lac.

State of Company''s affairs

- Margins analysis

The Company''s EBITA margin strengthened to 25.60% in 2014-15 from 20.13% in 2013-14 owing to:

- Increased execution of business from lower cost geographies like India and Singapore

- Strategic cost management initiatives resulting in optimal infrastructure utilisation

- Efficient current asset management, including receivables and creditors, resulted in lower interest cost

- EBITDA has crossed C 10499.57 lac for the first time in the Company''s history

- The net profit margin was 17.36% in 2014-15 compared to 13.77% in 2013-14 despite higher expenditure on Taxes

- Reserve

The Company proposes to transfer a sum of C109 lac to its CSR Reserve. An amount of C 6629.67 lac is proposed to be retained in the Statement of Profit and Loss for the financial year 2014-15.

- Capital employed

The total capital employed increased from C17583 lac to C22781 lac in 2014-15 largely due to an increase in reserves and surplus, and a small increase in equity capital.

Economic Scenario and Outlook

The Global Payment Industry is poised for continuing growth, reaching $2.3 Trillion by 2018

1. Fuelled by increase in stability and volume - applicable for liquidity revenue as well as transaction revenue - the Payments industry is projected to reach $2.3T by 2018 (@ 8% CAGR) Payment-related revenue will account for 43% of global banking revenue by 2018, up from 34% in 2009.

2. Five disruptive forces:

a. Digital transformation of merchant payments

b. Shift in power from data accumulation to data insights and applications i.e. growing role of data analytics in developing actionable market insights

c. Advent of non-card real-time payments: conversion of paper could release $80 billion by 2018

d. Rapid growth and digital transformation in cross-border transaction banking: estimated to be growing at 9%

e. Payments will be the cornerstone in the next phase of digital banking

3. Highest growth would be from APAC (56%) region - top growth rate being that of Indonesia (17% CAGR), followed by China (15% CAGR). 25% of Indonesia''s growth would be fuelled by payment transaction fees.

4. European Commission''s new interchange regulation, which is likely to come into effect in 2016. In its current version,

it would cause $7.2 billion in European card revenue to evaporate.

Historic impact:

a. The implementation of the Directive on Payment Services in Europe led to the evaporation of $1.5 billion in float revenue, as of 2008

b. In the U.S., the Durbin Act will cut revenues by $7.1 billion, by 2018

c. Overdraft pricing limits in the UK and interchange fee limits in Australia, India and Korea have also taken their toll

Disruptions and Opportunities are emerging from Digitisation

1. Sustained growth expected in the next 5 years

2. 70% of world population own mobile out of which 25% have smartphones (2013)

3. Online banking grew by 2.6% and mobile banking grew by 4.4% (2013)

4. Consumer need driving convenience of mobile personalized banking service; Corporate demand driving online and digital banking service

5. Regulatory impact driving changes:

a. Margin compression may impact short term but would have low impact on long term revenue

b. KYC and AML adding cost to bank operation but creating a barrier to entry for new entrants

c. Increasing openness and standardization - leading to opportunity for non-banking digital technology players'' opportunity to access accounts and build services in a uniform way - this would have highest positive impact

6. Digital transformation of merchant payments:

a. E-commerce growing 6 times faster than store commerce

b. Innovations driving adoption - e-wallet (PayPal), credit transfer (IDEAL in Netherlands, MyBank in Europe)

c. Emergence of specialized online merchant service providers such as online payment service providers and gateways

d. Smartphone blurring digital and physical purchase experience - increasing "consider-evaluate-buy-bond" experience adoption

e. Mobile as POS and Mobile POS increasing e-payment adoption for SMB

f. Integration of checkout and purchase paving way for new service and revenue via loyalty programs, consumer analytics, mobile search and digital offers

g. Technology players entering the space - LevelUp, Braintree, Square, Amazon, Google, etc. and banks are competing as well - new solutions from Spain''s CaixaBank mPOS is Square like, Albert from Commonwealth Bank of Australia complete with "Pi" an open platform marketplace where Albert apps can be built (like Clover), CaixaBank''s PremiaT allows cardholders to access offers and promotions in their vicinity (using geo-location technology) and gives merchants a platform to circulate their offers among a large pool of potential customers

h. For banks that support issuing and acquiring, digital platform is enabling integrated services across channels (online, mobile and in-store) and new services along the consumer purchasing journey, merchant providers can widen the scope of their business. This would recover revenue erosion for the issuing segment forced by compression of fees

7. Shift in power from data accumulation to data insights

and applications

a. Parameters captured by payments: spending preferences of consumers, location, liquidity

behaviours, channel preferences and even counterparty exposures

b. The global payments industry transacts an estimated nearly 400 billion cashless payments a year, amounting to nearly 30 terabytes of data

c. Traditionally analytics was used for risk and fraud management, however, now aggregators are using these for more than one way - for example, compute credit rating using social data (Lenddo) scans inputs from Facebook, LinkedIn, Twitter, Gmail and Yahoo accounts, as well as past credit repayment performance ratings, to rate a consumer''s credit-worthiness

d. Banks are tying up with technology players to kick start. Bank of America, for example, combined its existing customer base and data with Cardlytics, forming BankAmeriDeals, a merchant-funded rewards program that taps into customer data to create targeted digital offers for Bank of America customers.

A similar example is Chase and Visa

8. Advent of non-card real-time payments

a. Australia has launched a platform "New Payments Platform" for low value payments that would be funded immediately and has created a platform for banks to innovate

b. Similar efforts are in UK (Faster Payments), Singapore (G3), Sweden (BiR)

c. These can migrate C2C / P2P payments away from paper. 2013 estimate for C2C is $6.2T. If 5% is moved to such platform it would generate $80B additional revenue. However, this may eat into card payments and if 5% of card transaction moves to this, it would erode $20B from the payment revenue

d. Banks need to adopt service lines for such low value transactions to support use cases such as one-off person-to-business payments (like last-minute bill payments); or low-value business-to-business payments

9. Rapid growth and digital transformation in cross-border

transaction banking

a. Cross-border transactions, which include both cross- border payments and trade finance documentary services, accounted for $230 billion in revenues in 2013

b. Expected to grow at 8% CAGR

c. Epicentre is shifting from Europe to Asia with rise of middle class in this region

d. New technology players are challenging banks here - Traxpay, Earthport, KlickEx, Open-SCi and Orbian are examples of non-bank players competing with the correspondent banking system

e. KYC and AML driving interoperable third party KYC services beyond banks SWIFT KYC and Thomson Reuters KYC - this can benefit technology players as well.

10. Payments will be a cornerstone in the next phase of digital banking

a. Payments is the dominant digital part of banking and is the testing ground for broader digital banking products and services

b. Web fuelled online channel is being expanded by mobile infrastructure now available

c. Integrating to provide via mobile spend management, social integration, real-time location-based loyalty and discount offers

d. Success stories in Kenya, India, South Africa, Uganda, Ghana are path setters

The world is quickly transitioning to Digital commerce and that demands Digital payments, anytime, anywhere. Internet of things (IOT) is at the heart of this evolution, and it is believed that the IOT build is a $30 trillion opportunity over the next 10 years. According to Ernst and Young, there are already 500 million middle class consumers in emerging markets and the number is likely to grow by 3 billion in the next two decades. This translates into what Financial Times terms as Demand shock by emerging economies, building the market for American brands and products. Digital commerce is creating a level playing field for consumers to buy goods anytime, anywhere.

Digital commerce is bringing about regulatory changes which in turn impact the payments industry. Domain knowledge therefore becomes a key ingredient for companies to build the evolutionary payments infrastructure. RS Software is uniquely qualified to engage in this space, and is transitioning its strategy to capitalize on these defined trends. This transition is impregnated with challenges and opportunities which bring potential volatility with it. Fortunately the company in its twenty years has demonstrated success in navigating volatility, achieving managed transition to strengthen its long term foundation. The company is committed to use this opportunity to diversify its business away from its dominant client and expand its reach to geographies beyond North America.

RS Software has taken the decision to minimise its risks of client concentration, put in place a risk managed business model that will transition its strategy to achieve its dual objective of progressing from "pure outsourcer" model to a hybrid, with new recurring product/services revenue.

Management Discussion and Analysis

RS Software services the growing needs of leading organisations in the global payments industry through in-depth expertise, all-inclusive services and relentless innovation.

Making it an attractive proxy of this rapidly emerging space across the world.

RS Software - the leader in this space, and committed to enhance it further.

One, we work extensively with payment network companies, who represent the core of electronic payment processes. These networks drive much of the innovation and cutting-edge development that transform the way we now transact in a virtual world. By the virtue of being present at the cutting- edge of change, we benefit in two ways: we are able to appraise the direction in which modern payment networks and technologies are headed and are hence able to adapt our technology response; we are able to provide services with speed around these inflection points through which we evolve into a preferred service provider.

Two, even as we derive the principal portion of our revenues from one of the largest payment network companies and have been doing so for years, we are optimistic of the vast operating headroom in exploring opportunities across other companies. RS Software is engaged in leveraging the rich experience of working with large select clients and widening its customer mix, broad-basing its risk and opening it to wider growth possibilities.

Three, even as one reads extensively about the e-commerce revolution transpiring in India, the reality is that the country is barely scratching the surface. Most people confuse e-commerce for digital payments. In India, there is a difference; a number of e-commerce transactions are still concluded through physical cash at the customer''s premises. As the country matures in the use of virtual money, we see a growing incidence of digital payments. As a company that has been engaged in this space for years, we are well positioned to provide a widening portfolio of solutions to other payment network companies.

Four, there is a growing recognition that digital money will be the currency of the future. This evolution is being catalysed by the growing incidence of smartphones. As opportunities on smartphones increasingly present themselves, the consumer intends to transact immediately through the same instrument. There is then a growing priority for payment network companies to facilitate these transact -ions through smartphone applications, which inevitably warrants dependable knowledge service providers like RS Software.

The company is exploring a larger presence in the testing space. Our testing revenues have grown 2.5x, in the last 5 years alone. This is a validation of our deep commitment to this space, which represents approximately 30% to 35% of the entire software life cycle management. As the payment industry evolves and responds to digital commerce, new technologies are getting adopted, and legacy applications (dominant portion of the existing technology infrastructure) have to interface with new generation applications. Each of these has to be tested to ensure that the trust on the financial services provider is not impacted. As it is, the disruptors like Apple, Google, Alipay and Amazon are making life difficult for Incumbents - the major banks and payment networks.

RS Software is committed to meet the needs of both the Incumbents and the Disruptors.

The State of Testing

The testing industry has seen significant expansion across all sectors in the last five years. It is seen by many as one of the most important growth areas in the IT sector and has experienced major activity in M&A activity while other parts of the market have remained stagnant to a great degree.

Agile methodology

It is estimated that the testing process consumes between a third and a half of all software development budgets. As the industry as a whole moves increasingly towards agile development processes, the need for testing at all stages increases. The reality of Agile development methods is that companies see many more code drops in an environment where traditional approaches to testing deliver massively reduced value as the steady state such approaches rely on are non-existent. In addition, the ability to provide genuine load testing grows in relevance and importance, as changes are released frequently into a production environment to maximise the benefits of the agile development state.

Cloud based testing

The growth in cloud computing further extends the need for load testing and the broader requirement of virtualisation. Testing virtualisation offers the opportunity for entire systems to be tested, scaled and deployed rapidly, and without the need for major hardware environments supporting replicated live systems, which improves turn around for users and makes a significant, positive impact on costs. In itself, the provision of cloud based testing services enables substantial cost savings for the industry as well as stricter adherence to standards.

For instance, clients can take advantage of interface testing in the cloud, rather than each owning their own interface testing tools, which would in themselves require uplifts as the standards change and develop (an exercise that occurs twice a year in all major schemes).

Brand protection & innovation

For many financial institutions, the software and the services they provide are their only means of engaging or interacting with their client. Internet banking, ATMs, Mobile Payments and Banking, Tablet services, are the ways in which the modern consumer manages the full range of their relationship with their bank or payment provider. These facilities are now normalised in every sense, and any lack of availability of what is expected to be a 24x7 set of services is the modern equivalent of a bank not opening its doors fifty years ago. Preventing operational issues, down time, system failures, or even the most basic account level errors is fundamental to ensuring the service expectation is met fully. Organisations who do not invest in proper, professional testing will increasingly fall behind their competitors as devices, channels and services, and their speed of deployment, continue to be central to a bank''s customer engagement strategy. When one considers the severe impact of promoting poorly tested solutions into production it''s clear to see why this is such a critical IT component. Financial losses, system unavailability and the resultant damage to a financial institution''s brand have all been experienced by some of the world''s foremost organisations as a result of ineffective testing. These problems impact balance sheets, share values and are often very public; they cause embarrassment, and occasionally worse, to senior managers. The critical role of testing along the full extent of the payment chain is, as a result, recognised across all players in the financial sector.

Digital payment opportunities are perishable; if a network cannot facilitate payments, the consumer immediately uses another card and moves to another network. The result is that every network wants to create a 99.99 percent uptime environment that facilitates transactions anywhere, anytime and anyhow. This is easier said than done. What this requires is a comprehensive testing discipline that helps in building and maintaining networks. Over the last few years, the emphasis on testing has only grown. With client requirements growing - in volumes, urgency and sophistication - the time has come to take our testing competencies to the other level. We need to provide end-to-end testing solutions (across products

and services) that make us mission-critical to the success of our customers, translating into multi-year engagement and growing project sizes. To grow these competencies in-house would take long; what we need to do is go out and acquire companies that possess these capabilities, fast-tracking our growth from one level to another.

2. Dividend

The Board of directors has recommended a dividend of 25% i.e. C 1.25 per share to the Equity Shareholders of the company for the Financial year ended 2014-15 subject to approval of the Shareholders in this Annual General Meeting. The Board of directors has already declared and paid three (3) interim dividends@ 10%, 15% & 15% for the Financial Year 2014-15 to the equity shareholders of the Company.

Interim Dividends:

- For the First Quarter Period the Company has declared a Dividend of C1 per Share i.e. 10% as on 17th July, 2014.

- For the Second Quarter Period the Company has declared a Dividend of C 1.50 per Share i.e. 15% as on 17th October, 2014.

- For the Third Quarter Period the Company has declared a Dividend of C 0.75 per Share (after Stock Split) i.e. 15% as on 16th January, 2015. (As the Record Date is 22.01.2015 for the Dividend Declaration and Stock Split.)

3. Finance and Capital

Cash and cash equivalent as at March 31, 2015 was C 14682.95 Lacs. The Company continues to focus judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

The paid up Equity Share Capital as on March 31, 2015 was C 1,28,391,590 (25,678,318 Equity Shares of C 5/- per share). The Nominal value of each Equity Share has been sub-divided from C10/- per share to C 5/- per Share on 31.12.2014 by e-voting and postal ballot under the Provisions of Section 108 and under Section 61 read with 110 of the Companies Act, 2013, beside that there was no issue of rights / preferential / private placement basis. All Equity Shares rank pari-passu in all respects with the existing Equity Shares of the Company.

4. Issue of Employee Stock Options

Your company believes in employees'' participation in management and considers ESOP Scheme as an empowerment tool. During the financial year 2014-15 the employees had exercised 34325 ESOP options and according to the Company''s ESOP Scheme equity shares in the ratio of 1:1 were allotted to the eligible employees. The Company had allotted 34,325 equity shares to the eligible employees by way of ESOP and ESOP pursuant to Bonus. The details of ESOP allotments are given in "Annexure A" to Board''s Report.

An Employees Stock Option Scheme effective from 1st April 2013 for a period of 3 years was approved by the Shareholders at the AGM held on July 18, 2013.

During the year 2014-15, the Company allotted 7,500 equity shares at a price of C 84.75 per share which includes a premium of C 74.75 per share as on 24.08.2014 and 26,825 equity shares at a price of C 49.55 per share which includes a premium of C 39.55 per share as on 26.11.2014 under ESOP.

5. Provision of money by the Company for purchase of its own shares by employees or by trustees for the benefit of employees

The Company has a Trust named R S Software Employees Welfare Trust which is also holding 1148640 shares of the Company being purchased a couple of years back from the Secondary Market and no such provisions were required to be maintained as the shares are not sold out yet.

6. Details Relating to Material Variations

No such material variances as per clause 43(c) are there in the Company.

7. Material Changes and Commitments, if any, Affecting the Financial Position

No Material changes occurred subsequent to the close of the financial year of the Company to which the balance sheet relates and the date of the report so it is still standing the same and not affecting the Financial Position.

8. Details of significant and material orders passed by the regulators /courts / tribunals impacting the going concern status and the company''s operations in future

The pending litigations are stated below and the Company do not envisaged any liability out of the same as all the Suits filed by the Company:

i) Title Suit filed by the Company against Mr. G. Ravi of Madurai at the Alipore Court, Kolkata relating to equity shares of the Company.

ii) Writ Petition filed by the Company against Mr. G. Venugopal Naidu of Nellore at the High Court, Kolkata relating to equity shares of the Company.

iii) Suit filed by the Company against Software One India Ltd of New Delhi at the High Court, Kolkata relating to termination of contract for non-performance and subsequent damages.

9. Internal Control Systems and Audit

The CEO and CFO certification provided in the Annual Report discusses the adequacy of the Company''s Internal Control System and Audit.

10. Details of Subsidiaries

Pursuant to sub-section (3) of Section 129 of the Act, read with Rule 5 of the Companies (Accounts) Rule, 2014, the statement containing the salient feature of the financial statement of a company''s subsidiary or subsidiaries, is given in AOC-I as "Annexure B". Further, in line with Section 129(3) of the Act read with the aforesaid Rules, the Listing Agreement with the Stock Exchanges and in accordance with the Accounting Standard 21 (AS-21), Consolidated Financial Statements prepared by your Company include financial information of its subsidiary companies. During the year no new subsidiary was formed nor ceased.

11. Performance and financial position of each of the subsidiaries included in the consolidated financial statement

A report on the performance and financial position of each of the Subsidiaries included in the consolidated financial statements prepared by your company as per Rule 8(1) of the Companies (Accounts) Rules, 2014, forms part of the audited annual accounts of each of the subsidiary companies which have been placed on the website of your company www. rsssoftware.com. Members interested in obtaining a copy of audited annual accounts of each of the subsidiary companies may write to the Company Secretary at your Company''s Registered Office.

12. Deposits

The Company has not accepted any kind of deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

13. Auditors

Statutory Auditors

M/s. Chaturvedi & Co., Chartered Accountants and Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting, and have confirmed their eligibility and willingness to accept the office of Auditors, if re-appointed. The Company has also received a confirmation that their appointment, if made will be within the limit as prescribed under Section 139 of the Companies Act, 2013 and the rules therein.

Their reappointment for a further term is recommended by the Audit Committee and the Board of Directors at such remuneration as mutually decided. The Members are requested to confirm the re-appointment of M/s. Chaturvedi & Co., Chartered Accountants as the Statutory Auditors from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting of the Company, subject to the ratification by the members at each Annual General Meeting. The same would be also duly approved by the Audit Committee and the Board of directors in their duly convened meetings.

The Statutory Auditor Chaturvedi & Company has submitted an un-qualified Audit Report for the financial year 2014-15.

14. Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. MR & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Auditor has submitted an un-qualified Secretarial Audit Report for the financial year 2014-15. The Report of the Secretarial Audit is annexed herewith as "Annexure C".

15. Extract of the Annual Return

An extract of Annual Return as on the financial year ended on March 31, 2015 in Form MGT-9 as required under section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management & Administration) rules 2014, is set out as an "Annexure D" to the Director''s Report.

16. Particulars of Employees

The prescribed particulars of remuneration of employees pursuant to Section 134(3)(q) and Section 197(12) read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are set out as Annexure ''E'' to the Director''s Report.

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

The particulars as prescribed under sub-section (3)(m) of the Section 134 of the Companies Act, 2013 read with The Companies (Accounts) Rules, 2014, are given at "Annexure F" to the Directors'' Report.

18. Directors

During the year Mr. Shital Kumar Jain (DIN: 00047474),

Mr. Rajasekhar Ramaraj (DIN: 00090279), and Mr. Richard Nicholas Launder (DIN: 03375772) were appointed as Independent Directors of your Company for a period of 5 years. Your Company issued a formal letter of appointment to the Independent Directors.

Mrs. Sarita Jain, Non-Executive Director of the company who is liable to retire by rotation and offers herself for re- appointment, based on the recommendation of Nomination and Remuneration Committee, subject to the approval of the members at the ensuing Annual General Meeting

All the Independent Directors'' of your Company furnish declaration at the time of their appointment as also annually that they qualify the tests of their being independent as laid down under sub-section (6) of Section 149 of the Companies Act, and revised Clause 49 of the Listing Agreement has been received by the Company.

19. Key Managerial Personnel

Mr. Rajnit Rai Jain (DIN:00122942) Executive Director and Chairman & Managing Director and Mr. Vijendra Kumar Surana CFO & Company Secretary of the company, were designated as Key Managerial Personnel during the financial year 2014-15 as per provisions of Section 203 under Companies Act, 2013. No appointment/ resignation of KMPs were made during the year.

20. Corporate Social Responsibility (CSR) Committee

The concept of Corporate Social Responsibility has gained prominence from all avenues. Organizations have realized that Government alone will not be able to get success in its endeavour to uplift the downtrodden of Society. With the rapidly changing corporate environment, more functional autonomy, operational freedom etc. our company has adopted CSR as a strategic tool for sustainable growth.

Further, the Report on CSR Activities/ Initiatives is enclosed as Annexure G.

The CSR Committee comprises of Mr. Rajnit Rai Jain, Chairman

of the Committee, Mr. Shital Kumar Jain and Mr. Rajasekhar Ramaraj Independent Directors of the Company.

21. Particulars of Contracts or Arrangements with Related Parties

The particulars of every contract or arrangements entered into by the Company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm''s length transactions under third proviso thereto are disclosed in Form No. AOC-2. ("Annexure H"). The Related Party Transaction Policy has been devised by your company for determining the materiality of transactions with related parties and dealings with them.

22. Familiarizations Programme for IDS

In terms of Clause 49(II)(BX7) of the Listing Agreement, the Company has conducted the Familiarization Programme for Independent Director to familiarize them with their roles, rights, responsibilities in the company, nature of the industry in which the company operates, business model of the company, etc., through various initiatives.

23. Prevention of Insider Trading

The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company, during the period (the Trading Window is closed). The Board is responsible for implementation of the Code.

All Board Directors and the designated employees have confirmed compliance with the Code.

24. Corporate Governance

The Corporate Governance which form an integral part of this Report, are set out as separate "Annexure I", together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Clause 49 of the Listing Agreement. The Annxure includes the details of the meetings held by Board of Directors as well as the Committees of the Directors in the financial year 2014-15 and the details of the remuneration paid to the Directors of the Company.

Formal Annual Evaluation

All information regarding this have been provided in Annexure ''I'' to the Directors'' Report

Vigil Mechanism

Information regarding this have been provided in Annexure ''I'' to the Directors'' Report

25. Disclosures Under Sexual Harassment Of Women at Workplace

Your Company is committed to provide and promote safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. Your company has put in place a "Policy on Prevention of Sexual Harassment" as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

26. Directors'' Responsibility Statement

In terms of provisions of Section 134(5) of the Companies Act, 2013, your Directors confirm that:

(i) In the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) they have 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;

(iii) they have 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;

(iv) they have prepared the annual accounts for the financial year ended 31st March, 2015 on a going concern basis;

(v) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

(v) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

27. Acknowledgements

Your Directors'' place on record their deep appreciation of the continued assistance and co-operation extended to the Company by its customers, investors, bankers, Government agencies and its dedicated band of employees. Above all, the Board expresses a deep sense of gratitude to the Members of the Company who have reposed faith in their Board and the Management.

Thanking you,

For and on behalf of the Board of Directors

Kolkata Rajnit Rai Jain April 17, 2015 Chairman


Mar 31, 2014

Dear members,

The Directors are pleased to present the twenty-fifth Annual Report and the audited Statement of Accounts, highlighting the business operations and financial results for the year ended 31st March 2014.

Financial Highlights

R. S. Software (India) Ltd. (Rs. In Lacs) Standalone Consolidated 2013-14 2012-13 2013-14 2012-13

Gross Revenue 35899.37 29766.70 38920.31 32262.97

Operating Profit (PBDIT) 8094.29 5130.60 8382.02 5404.44

Interest 85.96 91.91 87.85 94.22

Depreciation 547.67 346.57 547.67 346.57

Profit before Tax 7460.66 4692.12 7746.50 4963.64

Provision for Tax 2342.71 1147.66 2388.13 1170.90

Profit after Tax 5117.95 3544.46 5358.37 3792.74

Review & Analysis of the Financial Performance Revenue analysis

Revenue analysis

The net revenues grew 21% from Rs. 32263 Lacs in 2012-13 to Rs. 38920 Lacs in 2013-14. This growth can be attributed to Improvement in resource utilization and better financial management

Expenditure analysis

The company continues to work in its strategic cost management initiatives and has achieved a significant improvement of 4% in its operating margin.

Margins analysis

The Company''s EBITA margin strengthened to 20 % in 2013- 14 from 16% in 2012-13 owing to:

* Periodic analysis undertaken which eventually led to superior cost Management

* Better receivables management

* Improved processes leading to better resource

* Optimal Infrastructure Utilization The net profit margin was 13.77% in 2013-14 compared to 11.76% in 2012-13 despite higher expenditure on Taxes.

Capital employed

The total capital employed increased from Rs. 12319 Lacs to Rs. 17583 Lacs in 2013-14 largely due to an increase in reserves and surplus ,and increase in equity capital.

Liquidity

The Company continued to be debt-free during the year under review.

Investments

The audit committee of the board monitors closely the balance between risk management and returns available on investments made. Investment as on 31st March 2014 stood at Rs. 8218 Lacs out of which Rs. 3400 Lacs were non-current investments and Rs. 2017 Lacs as current investments and Rs. 2801 Lacs as Fixed Deposit. The Company generated a return of 8% from these investments during the year.

Trade receivables

Sundry debtors increased from Rs. 3798 Lacs in 31 March 2013 to Rs. 4659 Lacs in 31 March 2014. This is attributable to growth in Revenue.

Loans and advances

Loans and advances increased from Rs. 3440.39 Lacs as on 31 March 2013 to Rs. 3894.46 Lacs as on 31 March, 2014. This increase is due to increase in Advance Tax and Service Tax.

Trade payables

Sundry creditors increased to Rs.1182.64 Lacs in 31 March 2014 from Rs. 794.42 Lacs in 31 March 2013, this is consistent with our working capital policy and financial structure..

Free Cash Flows

Total free cash flow available with company as on 31st March 2014 is Rs. 9530 Lacs as against Rs. 5713 Lacs as on 31st March 2013, a growth of 67%. This has enabled the ability of the company to look at oppurtunities of investing in expansion and growth of the company both organically and inorganically. The company has also rewarded its shareholders with higher dividend payout of 60%.

Working Capital

The working capital of the company (excluding current Investments ) has increased from Rs. 5542 Lacs as on 31st March 2013 to Rs. 7382 Lacs in 2014 signifying improvement in liquidity of the company and its ability to meet business growth in near future.

Book Value

The book Value of the company has increased significantly from Rs. 101 in 2013 to Rs. 137 in 2014, a growth of 36% signifying consolidation of financial strength of the company over the years.

Increase in share capital

Share capital comprises of 12,804,834 equity shares with a face value of Rs. 10 each. The Company''s share capital increased from Rs. 1,210.95 Lacs in 2012-13 to Rs. 1,280.48 Lacs in 2013-14 consequent to allotment of 100297 equity shares under ESOP & ESOP pursuant to Bonus and 595,000 equity shares on conversion of convertible warrants allotted to the promoter on preferential basis at Rs. 51.86 each convertible into one equity share each, being the last tranche of allotment of shares out of the total 15,50,000 convertible warrants allotted to the promoter.

Fixed assets

Net tangible assets increased by 39% to Rs. 1631.18 Lacs as on March 31, 2014 from Rs. 1172.10 Lacs as on March 31, 2013.

Management discussion

R.S. Software (India) Limited is a global leader in providing technology solutions to Global electronic payments industry from India, and the company continues to set higher standards of performance. Its growth has been higher than the industry growth rate over past few years in succession now. Elaborate commentary has been provided elsewhere in the document that covers each area of the business.

The growth of electronic payments has reached the early majority stage of technology adoption in North America. Driving this growth are a number of trends including the expansion of merchant categories accepting electronic payments, the growth of e-commerce, the replacement of cash and innovations that offer the consumer more convenience while making a purchase.

The fusion of regulation, competition, industrialization and technology has created dynamic payment flows, evolved payment technologies and facilitated true Globalisation with the global electronic payments industry is experiencing unprecedented growth fuelled by continuing shift from paper to electronic forms of payment. This is an continual cycle, which will keep growing with the growth of the world economy. The opportunities are endless.

Payments companies can spend as much as 10% of their total revenue on technology and infrastructure leading to a sizeable opportunity and RS Software is attractively positioned to capitalise on this global phenomenon. Even though 85% of all transactions are still done in cash, there is a growing convergence of online and mobile channels of payments which is forcing payment companies to re-platform their systems to meet consumer expectations. This leaves agamut of opportunities for RS Software, given its decades of experience in the payments industry and a domain knowledge very few can match.

Mobile phones are emerging as a means of extending financial services in lieu of an underdeveloped banking system with transactions involving SMS-based payments, direct mobile billing using PIN and onetime password (OTP) authentication and mobile web payments. The global volume of money spent using mobile phones was around $106 billion in 2011, rising to $171 billion in 2012, and is expected to grow to about $617 billion by 2016.

RS Software integrates knowledge management, innovation and specialised methodologies with 20 years of an exclusive focus on payments processing. This approach which differentiates RS Software from mere outsourcing providers has made it the partner of choice for leading global payment brands.

RS Software possesses an expertise in global outsourcing and insight into electronic payment transactions. This has been supported by a business strategy to work with major stakeholders in the global payments industry.

A. Long term aspiration

We aspire to be the infrastructure builder of the core payment systems, like Cisco has become the infrastructure builder for the Internet space. Our vision is to be a global leader in providing technology solutions to the electronic payments industry.

Our extended vision is to be:

1) An investment of choice for our investors

2) An employer of choice for our employees

3) Partner of choice for our customers

B. Medium-term strategy

1) Continue to strengthen our vertically integrated strategy, and our process architecture.

2) Diversification of revenues and reduce client concentration

3) School of payments to lead domain knowledge build and help customers win.

4) Reinforce "Think of yourself as the customer".

5) Continue our transformation and implement our core values.

C. Short-term strategy

1) Sales and business support teams to cover the territory and strengthening of the sales engine.

2) Sourcing process to target talent acquisition to meet the growth planned.

3) Diversification of revenues and reduce client concentration The Growth drivers for RS Software continue to be

* Investments in sales engine

* Optimization of the vertically integrated model

* Continued investment in our process architecture

* Implementation of ERP

* Cultural Transformation

* Cost Optimisation

Awards and Recognitions

1. RS Software features second year in a row on Forbes ''Asia''s 200 Best under a Billion'' list 2013.

RS Software was a proud recipient for a second consecutive year at the Forbes Asia Best under a Billion 2013 Award Ceremony and Dinner held at the Shangri-la Hotel Singapore on October 29, 2013.

2. RS Software wins award at The Economic Times Bengal Corporate Awards 2014,

RS Software wins the award for Best Financial Performance at The Economic Times Bengal Corporate Awards 2014, a platform where companies with corporate offices in West Bengal who have been actively involved in corporate excellence and sustainability are recognized and rewarded.

3. Outlook featured RS as one of the fastest growing companies in India.

Outlook Business magazine (May 25, 2013 issue) ranks RS Software at #17 out of the 30 fastest growing companies in India. As per the coverage, with the share of electronic payments in India rising and thanks to a burgeoning e-commerce market, the payments processing business offers ample growth opportunities for RS Software. RS is the only company from the east to have moved into the spotlight of high performing organizations across all sectors in India.

Dividend

Your Board has believed in consistently rewarding its shareholders and at their Meeting held on April 16, 2014 have considered and recommended a final dividend to Equity Shareholders @ 25 % subject to the Shareholders'' approval at this Annual General Meeting in addition to the interim dividends declared and paid. The Board had approved and paid Interim Dividends 25% at the Meeting held on October 18, 2013 and 10% at the Meeting held on January 16, 2014 to the Equity Shareholders of the Company.Thus the total dividend for the year stands at 60 %.

Performance of Subsidiaries

The US subsidiary Responsive Solutions Inc. and Singapore Company have been focusing on their Businesses in North America and Asia Pacific regions respectively. The performance of these companies have complemented and strengthened the growth strategy of the Company. Responsive Solutions Inc. is now a profitable subsidiary.

Allotment of Equity Shares on conversion of Warrants on Preferential Basis

Your Directors are pleased to update you that 1550000 Convertible Warrants on preferential basis to the Promoter and the Chairman & Managing Director of the Company at Rs. 51.86 per warrant to be converted into equity shares at Rs. 10/- each at the ratio of 1:1, during the year 2013-14, 595000 convertible warrants were converted into equity shares upon receipt of the amount due for the last tranche conversion of 595000 convertible warrants. The 1550000 convertible warrants were allotted to the Promoter pursuant to SEBI (ICDR) Regulations and Shareholders'' approval accorded through Postal Ballot on 4th March 2012.

Fixed Deposits

The Company has not accepted any Deposits within the meaning of Section 58A of the Companies Act 1956.

Directors

1) Mr. Rajnit Rai Jain (DIN 00122942) retires by rotation and being eligible, seeks re-appointment. Your Directors recommend appointment of Mr. Jain, for a further tenure, as this would be entirely in the larger business interest of your Company.

A brief profile of Mr. Rajnit Rai Jain is given below:

As Chairman and Managing Director of RS Software, Raj Jain is responsible for providing the leadership required to realize our vision of being the global leader in providing technology solutions for the electronic payments industry. In 1987,

Mr. Jain left his job as a software systems analyst in Los Angeles, California and returned to India where he founded R. S. Software (India) Limited with the goal of providing quality software services to international markets. At the time,the prospects for the software market in India were less than idea but Mr. Jain''s entrepreneurial talents and leadership traits established him as a pioneer in a field that would soon blossom into a multi-billion dollar industry.

Mr. Jain has over 30 years of industry experience and holds a BS and MBA from California State University. He has served on the Executive Council of National Association of Software and Services Companies (NASSCOM), both as a member and officer. In 1999, he was elected Chairman of NASSCOM by its Executive Council and, in that same year, acknowledged by Ernst & Young as one of the top 20 Outstanding Entrepreneurs of the Year. Mr. Jain''s remains an active member of NASSCOM and serves as a member of their Chairmen Emeritus. He also has been a member of TIE (The IndUS Entrepreneurs) and YPO (Young Presidents Organization).

2. Mr. Shital Kumar Jain (holding DIN 00047474) is a Non-Executive (Independent) Director of the Company. He joined the Board of Directors on February 19, 2001. Mr. Shital Kumar Jain retires by rotation at the ensuing Annual General Meeting under the provisions of the erstwhile Companies Act, 1956. In terms of Section 149 and any other applicable provisions of the Companies Act, 2013, Mr. Shital Kumar Jain, being eligible and seeking re-appointment, is proposed to be appointed as an Independent Director for a term of five years.

A brief profile of Mr. Shital Kumar Jain is given below:

Mr. Shital Jain brings to our Board more than 31 years of experience with Citibank and has worked in Hong Kong, Taiwan, the Philippines, Thailand, and Canada. Mr. Jain remains active in the financial services industry participating in consulting assignments worldwide, including ongoing projects in Thailand and Indonesia. Mr. Jain is a Fulbright scholar, receiving his MBA from Indiana University, where he was elected to the Beta Gamma Society, whose membership includes the top 25 percent of MBAs in the US.

3. Mr. Rajasekhar Ramaraj (holding DIN 00090279) is a Non-Executive (Independent) Director of the Company. He joined the Board of Directors on May 1, 2009. Mr. Rajasekhar Ramaraj retires by rotation at the ensuing Annual General Meeting under the provisions of the erstwhile Companies Act, 1956. In terms of Section 149 and any other applicable provisions of the Companies Act, 2013, Mr. Rajasekhar Ramaraj, being eligible and seeking re-appointment, is proposed to be appointed as an Independent Director for a term of five years.

A brief profile of Mr. Rajasekhar Ramaraj is given below:

Mr. Ramaraj is an icon in his field. He was recognized as the ''Evangelist of the Year'' at the India Internet World Convention in September 2000 and voted IT Person of the Year in a CNET. com poll in India that same year. Mr. Ramaraj was invited by the UN Secretary-General Kofi Annan to be a member of UN''s Working Group on Internet Governance (WGIG) and was the Co-Founder and CEO of Sify Limited, the pioneer and leader company in Internet, networking and e-commerce services in India. Mr. Ramaraj is the Senior Advisor at Sequoia Capital, a member of the Global Board of Trustees of TiE (The Indus Entrepreneurs) and the first Indian to be invited to serve on the Board of Directors of ICANN (Internet Corporation for Assigned Names and Numbers). He holds a B.Tech in Chemical Engineering from the University of Madras as well as an MBA from the Indian Institute of Management, Calcutta.

4. Mr. Richard Nicholas Launder (holding DIN 03375772) is a Non-Executive (Independent) Director of the Company. He joined the Board of Directors on July 28, 2009. Mr. Richard Nicholas Launder retires by rotation at the ensuing Annual General Meeting under the provisions of the erstwhile Companies Act, 1956. In terms of Section 149 and any other applicable provisions of the Companies Act, 2013, Mr. Richard Nicholas Launder, being eligible and seeking re-appointment, is proposed to be appointed as an Independent Director for a term of five years.

A brief profile of Mr. Richard Nicholas Launder is given below:

Mr. Launder has more than 20 years of experience in the payments industry with strengths in sales, marketing and operations. As a managing director in Europe, the Middle East and Africa for one of the largest software companies in the payments industry, Mr. Launder generated more than $130 million in revenue by developing a distribution model for the region based on acquisitions, direct operations, joint ventures, distributors and sales agents. He is expert in strategic selling, building effective sales teams and marketing within diverse markets and cultures. Mr. Launder was recently added to the RS Software board to help the company continue to develop growth strategies for the business.

Auditor''s Report

Your Directors have taken note of the Auditor''s Report and comments thereupon on the accounts for the year ended March 31, 2014. The Auditor''s Report read together with the notes to accounts thereupon are self-explanatory.

Directors'' Responsibility Statement

Pursuant to the requirement under section 134(5) of the Companies Act, 2013 with respect to Directors'' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2014, the applicable accounting standards have been followed along with appropriate explanation relating to material departures;

(ii) that the Directors have 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 states of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2014 on a "going concern" basis.

Corporate Social Responsibility

At R.S. Software your company takes its responsibility towards the Society very seriously, never losing sight of the core values and firmly believing in treating all its stakeholders and the society at large with dignity, respect and compassion.

As one of the first companies in Kolkata to set up offshore operations in the Salt Lake Electronics Complex, R.S. Software has played a major role in generating employment for engineering students who joined the industry in the early years of IT. Thereafter RS has been providing opportunities for summer training to budding engineers in their final semesters.

The Company has constituted a CSR Committee. The Role of CSR Committee as per Section 135 (3) and Rule 5 & 6 of the Companies Act, 2013 as under:

* Formulate and recommend to the Board a ''CSR Policy'' which indicates the activities to be undertaken as specified in Schedule VII.

* Recommend the amount of expenditure to be incurred.

* Monitor the CSR policy.

* Institute a transparent monitoring mechanism.

Your Company has been a forerunner in instituting and allocating fund for CSR which currently has a balance of Rs. 85 Lacs including the appropriation of Rs. 70 Lacs during current fiscal. CSR is to support activities of NGOs engaged in improving the living conditions of the underprivileged segment of the society by appropriating its reserves. RS also works alongside other key NGOs, organizing the donation of old clothes, medicine, old PCs, money, and other essentials for the less fortunate. RSites have always donated generously to the Prime Minister''s national fund on account of earthquakes and other natural disasters. At RS, we never lose sight of who we are and the communities in which we operate and will continue to help organizations such as Veerayatan build a better world.

Statutory Auditors

M/s Chaturvedi & Co., Chartered Accountants and Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. Their reappointment for a further term is recommended by your Board at such remuneration as the Board may be allowed to fix by the General Body.

Conservation of Energy, Technology Absorption

The particulars as prescribed under sub-section (1)(e) of the Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are given at Annexure '' A'' to the Directors'' Report.

Employees Stock Option

Your company believes in employees'' participation in management and considers ESOP Scheme as an empowerment tool. During the financial year 2013-14 the employees had exercised 91925 ESOP options and according to the Company''s ESOP Scheme equity shares in the ratio of 1:1 were allotted to the eligible employees. The Company had also allotted 8372 equity shares to the eligible employees by way of ESOP pursuant to Bonus. The details of ESOP allotments are given in Annexure ''B'' to Directors'' Report.

A new Employees Stock Option Scheme effective from 1st April 2013 for a period of 3 years approved by the Shareholders at the AGM held on July 18, 2013, now is in place.

Corporate Governance and Disclosures

Our Company''s philosophy on corporate governance envisages attainment of highest level of transparency, accountability and fairness in respect of its operations and achievement of highest international standards in corporate governance.

The Company believes that all actions and operations must sub serve its best business interest and enhance overall shareholders'' value. Refer Annexure ''C'' to Directors'' Report.

Particulars of Employees

Information as per Section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975 forming part of this Report does not apply to our Company because the employees of the Company engaged in Information Technology sector like our Company not being Directors or their relatives and drawing salary exceeding the prescribed limits are exempted from being included in such statement of the Board''s Report as per the Government''s Notification no.: G.S.R 212 (E) dated 24.3.2004.

Acknowledgements

Your Directors'' place on record their deep appreciation of the continued assistance and co-operation extended to the Company by its customers, investors, bankers, Government agencies and its dedicated band of employees. Above all, the Board expresses a deep sense of gratitude to the Members of the Company who have reposed faith in their Board and the Management.

Thanking you,

For and on behalf of the Board of Directors Kolkata Rajnit Rai Jain April 16, 2014 Chairman


Mar 31, 2013

The Directors are pleased to present the twenty-fi fth Annual Report and the audited Statement of Accounts, highlighting the business operations and fi nancial results for the year ended 31st March 2013.

Financial Highlights

R. S. Software (India) Ltd.

(Rs. in Lacs)

Standalone Consolidated 2012-13 2011-12 2012-13 2011-12

Gross Revenue 29755.51 24809.72 32251.78 26498.97

Operating Profit (PBDIT) 5130.60 3794.47 5404.43 3972.75

Interest 91.91 44.31 94.22 45.48

Depreciation 346.57 417.91 346.57 417.91

Profit before Tax 4692.12 3332.25 4963.64 3509.36

Provision for Tax 1147.66 589.19 1170.90 623.40

Profi t after Tax 3544.46 2743.06 3792.74 2885.96

Review & Analysis of the Financial Performance

Revenue analysis

The net revenues grew 22 % from Rs.26,499 lacs in 2011- 12 to Rs.32251.78 lacs in 2012-13. This growth can be attributed to primarily strategic cost management initiatives and early payoff from investments in enhancing our sales and marketing infrastructure. I am pleased to inform that The company also received the following recognition during the fi scal year:

RS Software has appeared for the fi rst time in Forbes "Asia''s 200 Best under a Billion" in 2012. Steady Growth in Revenues, Profi t and Earnings per Share has placed the company in this Elite Group.

RS Software has been listed as one of the "30 fastest

growing companies in India", by Outlook Business. Ranked at #17, RS Software has moved into the spotlight of high performing organizations across all sectors in India.

Management discussion

An extensive commentary has been provided about the company in the fulfi llment of the strategy section, which shows the management leadership being provided in each area of the business. According to Dee Hock, the founder of the electronics payment industry, "an organization, no matter how well designed, is only as good as the people who live and work in it. Ultimately what determines the organization''s performance is the approach to management its leaders take." At RS Software we consciously pursue leadership development at various levels, and constantly are on the look for talent globally that can help us to implement our strategy eff ectively.

Last year, the top fi ve Indian information technology (IT) services providers - Tata Consultancy Services (TCS), Infosys, Wipro, HCL and Cognizant- together grew 13.3 %, accounting for revenues of $34.3 billion. During the same period, the overall IT services industry grew just 2%, according to research and advisory fi rm Gartner. RS Software grew 8% during 2012-13, ahead of at least two of the fi ve large service providers, which grew at a pace of ~4% over the previous fi scal year.

The performance of the company has reinforced its commitment to capitalize on the next wave of growth for the Indian IT companies, and is expected to grow 3 times in the next 10 years. As mentioned elsewhere in the report the long term secular growth trend for the Payments industry is well established. We are constantly preparing ourselves to leverage this opportunity.

In order to be in the drivers'' seat to ride on this opportunity, the company continues to reinforce its core strength, which will be an enabler for the company to achieve exponential growth. The company continues to focus on:

1) Pursuing Its longer term Operational and Strategic plan.

2) Putting a robust global sales engine to leverage upon the growth potential that exists in the global market place.

3) Having an effi cient organization structure which is decentralized and provides adequate platform for eff ective growth.

4) Developing systems coupled with installation of an ERP system.

5) Institutionalization of the Gazelles methodology of management & planning that focuses on best practices for mid-size businesses.

6) Innovation to play a key role in enhancing RS Software''s ability to marry the emerging technologies with the changing demands of consumers and business in the way they experience payments.

7) Targeting increased emphasis on operational and risk governance with formalized PMO and QA practices.

8) Its proximity to Silicon Valley, a highly developed ecosystem for the payments industry, providing access to premium payments consultants and associations to collaborate with.

To fulfi ll its vision of becoming a global leader in providing technology solutions to the Electronic Payments industry, the company will work with major Payment networks, Acquiring and Issuing processors, Emerging Payment players, and Technology solution providers, who continually invest in the development and enhancement of their systems to compete in an increasing competitive market. The Marketing and sales strategy, complemented by the company''s Innovation and fulfi llment strategy, are all aligned to target the next phase of growth.

The company continues to demonstrate process scalability and management agility, focusing on its core values of bringing Responsive Solutions to its customers, and reinforcing the culture of working with passion to help its customers compete.

The fi ve years consistent track record is indicative of company''s commitment to leverage this growth potential both over short term and long term period.

Financial Highlights of RS Software for last 5

years

Highlights of 5 years analysis

Crossed revenue level of Rs.320 crore in FY 13

Revenues in re terms have trebled : from Rs.101 crore in 2007-08 to Rs.322 crore in 2012-13

CAGR (compounded annual growth rate) of revenues for the 5 year period has been 26%

Consistent net profi ts for the last 23 quarters

Earnings before Interest, Depreciation and Taxes (Operating Profi ts) have increased 5 times over the 5 year period

Net margin has improved 51 times over 5 years (from less than Rs.1 crore in 2007-08 to Rs.38 crore in 2012-13)

Zero Debt Company

Signifi cant cash on balance sheet to make investments to leverage the growth opportunity

Book value in FY 13 increased 5 times over FY 08

Net Worth has crossed Rs.100 crore as on 31st March 2013

(Rs.127 crore) : a 7 times jump from Rs.17 crore in 2007-08

Again became a dividend paying Company from 2010-11, after a decade..

In 2010-11, 20% dividend was declared, followed by 30% dividend in 2011-12 and 35% dividend in 2012-13.

Expenditure analysis – Fiscal 2012-13 Total operating cost as a proportion of net revenue declined to 83 % in 2012-13 from 85% in the previous year, after absorbing increased investments in enhancing our sales and marketing process, expansion of our management bandwidth, strengthening of our vertically integrated execution model by making investments in RS School of Payments, and investment in our Payments lab, that is focused on Innovation. This is testimony to our commitment to consistently improve our cost management infrastructure.

Margins analysis

The Company''s EBIDTA margin strengthened to 16.76 % in 2012-13 from 14.99% in 2011-12, while profi t after taxes improved from 11.76% in 2012-13 compared to 10.89% in 2011-12, after absorbing signifi cantly higher Income taxes.

Investments

The Company made signifi cant investments during the year and Investment as on 31 March 2013 stood at Rs.2,976.47 lacs out of which 808.03 lacs were non-current investments and Rs.2,168.17 lacs as current investments. The Company generated a return of between 8% -10 % from these investments during the year.

Free cash flows

The company''s free cash fl ows increased by 25% in this fi scal year as compared to the previous fi scal year, and by 130% as compared to two years ago.

Capital employed

The total capital employed increased from 8,903.63 lacs to Rs.12,678.23 lacs in 2012-13 largely due to an increase in reserves and surplus. The return on net worth stands at 30%.

Trade receivables

Sundry debtors increased from Rs.2,723.06 lacs as on 31st

March 2012 to Rs.3,797.56 lacs as on 31 st March 2013.The Sundry debtors refl ected are net of Invoice funding which has reduced by Rs.1082.57 lacs. Hence there has been no increase in debtors despite increase in revenues.

Trade payables

Trade payables: Sundry creditors declined to Rs.794.42 lacs as on 31 st March 2013 from Rs.1234.65 lacs as on 31 st March 2012.

Liquidity

The Company was debt-free during the year under review. The company''s current liquidity ratio stands at 3.90 demonstrating the confi dence of the company to meet all its fi nancial obligations.

Working capital

The Company''s working capital outlay increased from Rs.5, 877.98 lacs in the year ended 31 st March 2012 to Rs.7,991.68 lacs in the year ended 31 st March 2013 due to an increase in operations, as a result of growth.

Loans and advances

Loans and advances increased 102% from Rs.1,703.88 lacs as on 31 st March 2012 to Rs.3440.38 lacs as on 31 st March 2013. This increase is due to long term investments made in the form of loans and an increase in Advance tax.

Increase in share capital

Share capital comprised 12,109,537 equity shares with a face value of Rs.10 each. The Company''s share capital increased from Rs.1,146.71 lacs in 2011-12 to Rs.1,210.95 lacs in 2012-13 consequent to allotment of 77476 equity shares under ESOP & ESOP pursuant to Bonus and 565,000 equity shares on conversion of convertible warrants allotted to the Promoter on preferential basis at Rs.51.86 each convertible into one equity share each out of the total 15,50,000 warrants (the remaining 5,95,000 share warrants will be due in September 2013).

Fixed assets

The Company''s gross block increased 4.4% from Rs.8381 Lac as on 31 st March 2012 to Rs.8750 as on 31 st March 2013. The tangible gross block increased 3%. The major investments for RS Software are not in capital outlay, but in areas like RS School of payments, expansion of sales and marketing infrastructure, Payments lab, enhancement of management bandwidth, and these are all expensed in the profi t and loss statement each year. For RS Software the largest expenditure is in building technology and talent. In the fi scal 2013-14 we see signifi cant investments on:

Technology

Hardware

Software

Expansion of our sales engine

ERP implementation

HR systems

Ongoing investment in RS School of payments

Dividend

The Board of Directors at their Meeting held on April 12, 2013 have considered and recommended a fi nal dividend to Equity Shareholders @ 20% subject to the Shareholders'' approval at this Annual General Meeting in addition to the interim dividend declared and paid. The Board had recommended and approved an Interim dividend @15% at the meeting held on January 08, 2013.

Performance of Subsidiaries

The US subsidiary Responsive Solutions Inc. and Singapore Company have been focusing on their businesses in their respective regions. Both the subsidiaries are performing well, to meet the strategic growth objectives of the company.

Allotment of Equity Shares on conversion of Warrants on Preferential Basis

Your Directors are pleased to update you that 15,50,000 Convertible Warrants were allotted on preferential basis to the Promoter and the Chairman & Managing Director of the Company at Rs.51.86 per warrant to be converted into equity shares at Rs.10/- each at the ratio of 1:1. During the year 2012-13, 565,000 convertible warrants were converted into equity shares upon receipt of the amount due and further 595,000 convertible warrants would be converted during the current fi scal. The 15,50,000 convertible warrants were allotted to the Promoter pursuant to SEBI (ICDR) Regulations and Shareholders'' approval accorded through Postal Ballot on 4th March 2012.

Fixed Deposits

The Company has not accepted any Deposits within the meaning of Section 58A of the Companies Act 1956.

Directors

1) Mr. R. Ramaraj retires by rotation and being eligible off ers himself for re-appointment. Your Directors recommend appointment of Mr. Ramaraj, for a further tenure, as this would be entirely in the larger business interest of your Company.

A brief profi le of Mr. R. Ramaraj is given below:

Mr. Rajasekhar Ramaraj holds a B.Tech in chemical engineering from the University of Madras and an M.B.A. from the Indian Institute of Management, Calcutta. He was the Co- Founder and CEO of Sify Limited, the pioneer and leader in Internet, Networking and e-commerce services in India. Sify was the fi rst Indian Internet company to be listed on the Nasdaq National Market in the USA. Mr. Ramaraj was recognized as the ''Evangelist of the Year'' at the India Internet World Convention in September 2000. And in 2001, in a CNET.com poll in India, he was voted the IT Person of the Year 2000. He was invited by the UN Secretary-General, Kofi Annan to be a member of UN''s Working Group on Internet Governance (WGIG). Currently Mr. Ramaraj is the Senior Advisor at Sequoia Capital and is a member of the Global Board of Trustees of TiE (The Indus Entrepreneurs). Mr. R. Ramaraj is the fi rst Indian invited to the Board of Directors of ICANN (Internet Corporation for Assigned Names and Numbers). Mr. R. Ramaraj has brought value additions to the Company by virtue of his experience and knowledge in IT Space.

1) Mrs. Sarita Jain retires by rotation and being eligible off ers herself for re-appointment. Your Directors recommend appointment of Mrs. Jain for a further tenure, as this would be entirely in the larger business interest of your Company.

A brief profi le of Mrs. Sarita Jain is given below:

Mrs. Sarita Jain is an MA in English Literature and holds a Diploma in Mass Communication and Home Science. She is one of the Promoter Directors of your Company and her contribution on all professional matters of the Company has been noteworthy.

Auditor''s Report

Your Directors have taken note of the Auditor''s Report and comments thereupon on the accounts for the year ended 31 st March 2013. The Auditor''s Report read together with the Notes to accounts thereupon are self-explanatory.

Directors'' Responsibility Statement

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors'' Responsibility Statement, it is hereby confi rmed:

(i) that in the preparation of the annual accounts for the fi nancial year ended March 31 st 2013, the applicable accounting standards have been followed along with appropriate explanation relating to material departures;

(ii) that the Directors have 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 states of aff airs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for the year under review;

(iii) that the Directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the fi nancial year ended March 31 st2013 on a "going concern" basis.

Corporate Social Responsibility

At RS Software your company takes its responsibility towards the Society very seriously, never losing sight of the core values and fi rmly believing in treating all its stakeholders and the society at large with dignity, respect and compassion.

As part of the Corporate Social Responsibility of giving back to society, your company is closely associated with the philanthropic activities of Veerayatan, a non- profi t, non-governmental organisation that strives to uplift and empower humanity through the three jewels of humanitarianism, education and inner development irrespective of caste, creed, race, religion or socio economic status. Through its Eye and Orthopedic hospitals in Bihar, Veerayatan has performed thousands of surgeries for patients who come from poor economic backgrounds. For Education, it has established at Jakhania (Gujarat) primary and secondary schools, a vocational training center, a Pharmacy College along with a Health Centre for health check-ups and awareness for villagers.

The Company is maintaining a separate fund to support activities of NGOs engaged in improving the living conditions of the underprivileged segment of the society by appropriating from its reserves a sum of Rs.190 lacs towards CSR, out of which the Company contributed Rs.75 lacs in 2011-12 and Rs.50 lacs in 2012-13 for social activities.

RS also works alongside other key NGOs, organizing the donation of old clothes, medicine, old PCs, money, and other essentials for the less fortunate. At RS Software, we never lose sight of who we are and the communities in which we operate and will continue to help organizations such as Veerayatan build a better world.

Statutory Auditors

M/s Chaturvedi & Co., Chartered Accountants and Statutory Auditors of the Company, hold offi ce until the conclusion of the ensuing Annual General Meeting, and being eligible, off er themselves for reappointment. Their reappointment for a further term is recommended by your Board at such remuneration as the Board may be allowed to fi x by the General Body.

Conservation of Energy, Technology Absorption

The particulars as prescribed under sub-section (1)(e) of the Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are given at Annexure '' A'' to the Directors'' Report.

Employees Stock Option

During the fi nancial year 2012-13 the employees had exercised 61,250 ESOP options and according to the Company''s ESOP Scheme equity shares in the ratio of 1:1 were allotted to eligible employees. The Company had also allotted 16,226 equity shares to the eligible employees by way of ESOP pursuant to Bonus. The details of ESOP allotments are given in Annexure ''B1'' to Directors'' Report.

The Company''s last ESOP Scheme was approved by the Shareholders on 24th July 2010. The Scheme was valid for 3 years eff ective 1st April 2010 and expired on 31st March 2013. The said Scheme had a total ceiling of 2000000 Options. Your Directors have recommended a new Employees Stock Option Scheme eff ective from 1st April 2013 for a further period of 3 years subject to approval of the shareholders. The Disclosure under Clause 12.1 of SEBI (ESOS & ESPS) Guidelines for the new ESOS of the Company is in the Annexure ''B2'' of the Directors'' Report.

Corporate Governance and Disclosures

Our Company''s philosophy on Corporate Governance envisages attainment of the highest level of transparency, accountability and fairness in respect of its operations and achievement of highest international standards in corporate governance. The Company believes that all actions and operations must subserve its best business interest and enhance overall shareholders'' value. Refer Annexure ''C'' to Directors'' Report.

Particulars of Employees

Information as per Section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975 forming part of this Report does not apply to our Company because the employees of the Company engaged in Information Technology sector like our Company not being Directors or their relatives and drawing salaries exceeding the prescribed limits are exempted from being included in such statement of the Board''s Report as per the Government''s Notifi cation no.: G.S.R 212 (E) dated 24.3.2004.

Acknowledgements

Your Directors'' place on record their deep appreciation of the continued assistance and co-operation extended to the Company by its customers, investors, bankers, Government agencies and its dedicated band of employees. Above all, the Board expresses a deep sense of gratitude to the Members of the Company who have reposed faith in their Board and the Management.

Thanking you,

For and on behalf of the Board of Directors

Mumbai Rajnit Rai Jain

April 12, 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the twenty-fourth Annual Report and the audited Statement of Accounts, highlighting the business operations and financial results for the year ended 31 st March 2012.

Financial Highlights

(Rs in Millions)

Standalone Consolidated

2011-12 2010-11 2011-12 2010-11

Gross Revenue 2480.97 1883.00 2649.89 1993.10

Operating Profit (PBDIT) 379.45 308.00 397.27 327.10

Interest 4.43 8.50 4.54 8.50

Depreciation 41.79 46.00 41.79 46.00

Profit before Tax 333.22 253.50 350.94 272.60

Provision for Tax 58.92 46.40 62.34 49.30

Profit after Tax 274.30 207.10 288.60 223.30

Review & Analysis of the Financial Performance

Revenue analysis

Net revenues grew 33% from Rs19,931 Lac in 2010-11 to Rs26,499 Lac in 2011 -12 owing to the following reasons:

- Improved resource utilization without necessarily incurring higher people cost

- Improved managed services business from 25% in 2010-11 to 40% of turnover

- Added 2 clients around long-term contracts with y-o-y price escalation clause

- Majority of revenues were derived from the company's core business where it enjoys domain expertise and attractive profitability

Expenditure analysis

The Company's overall expenditure increased 34% from Rs17,205 Lac in 2010-11 to Rs22,990 Lac in 2011 -12, owing largely to an increase in employee benefit expenses. Total operating cost as a proportion of net revenue was 85% in 2011 -12 against 84% in 2010-11, reflecting cost optimization despite increasing cost of resources and operations. The Company took several initiatives to identify and optimize operating costs.

Margins analysis

The Company's Net Margin increased by 229% from 2232.80 Lac in 2010-11 to 2885.96 Lac in 2011 -12 owing to the following:

- Higher revenues helped amortize the physical infrastructure more effectively

- A periodic analysis helped reduce costs

- Stronger management of receivables accelerated cash inflow

- Improved processes

Capital employed

Total capital employed in the business increased 82% from Rs4,893 Lac as on March 31, 2011 to Rs8,904 Lac as on March 31, 2012, largely due to an increase in reserves and surplus owing to the increased generation of profits.

The return on capital employed is 24%, and with this the company's financial foundation is strengthened to achieve the growth planned in the fiscal 2012-13 The net worth of the company improved by 82% largely due to internal accruals .

Liquidity

The Company was debt-free during the year under review. Investments

The Company made significant investments during the year under review with the objective to park its business surplus for reasons of security and returns. The Company invested Rs3,321.90 Lac during the year under review - Rs900 Lac as non-current investments in mutual funds and Rs2,421.90 Lac as current investments in mutual funds maturing within 12 months. The Company generated a return of 9% from these investments during 2011 -12.

Working capital

The Company's working capital outlay increased 87% to Rs5,351 Lac as on 31 March, 2012 due to an increase in business operations. Working capital as a proportion of the total capital employed was 60% as on 31 March 2012 against 59% as on 31 March 2011.

2011-12 2010-11

Current ratio 2.76:1 2.34:1

Trade receivables:

Sundry debtors declined 6% from Rs2,905.19 Lac as on 31 March 2011 to Rs2,723.06 Lac as on 31 March, 2012 due to efficient receivables management. The company reduced its receivables cycle from 53 days of turnover equivalent in 2010- 11 to 38 days in 2011 -12 on account of stronger terms of trade derived from a growing leverage of its knowledge in the chosen areas of presence.

Loans and advances:

Loans and advances increased 106% from n,393.24 Lac as on 31 March 2011 to Rs2,865.1 5 Lac as on 31 March 2012, largely due to the payment of advance taxes (in addition to short-term and long-term loans and advances).

Trade payables:

Sundry creditors increased 51 % to n,262.94 Lac as on 31 March 2012 from Rs834.02 Lac as on 31 March 2011.

Increase in share capital:

Share capital comprised 11,467,061 equity shares with a face value of no each. The Company's share capital increased from n, 102.80 Lac in 2010-11 ton,146.71 in 2011-12 consequent to allotment of 390000 equity shares on conversion out of 15,50,000 preferential warrants allotted to the promoter at Rs51.86 each convertible into one equity share each (the remaining 11,60,000 share warrants will be due within 18 months from their date of allotment of warrants in 2011 -12).

The company continues to deploy deep penetration strategy for its growth with its primary clientele, while building its sales engine for implementing its vision to be a global leader in providing technology solutions to the electronic payments industry. The unique positioning of domain focus is helping to articulate our value proposition which is being received well by the leaders in the payments industry.

Fixed assets

The Company's gross block increased 2.5% from Rs8170 Lac as on March 31, 2011 to Rs8,381 as on March 31, 2012. The tangible gross block increased 1.5%. Net tangible assets declined 12.74% to n,112.72 Lac as on March 31, 2012 from n ,275.14 Lac as on March 31, 2011 owing to higher

rate of depreciation applicable on Plant & Machinery while intangible gross block (comprising of Software and Licenses) increased by 18%. Net intangible assets however declined 40% to Rs69.05 Lac as on March 31, 2012 from Rs114.36 as on March 31, 2011 owing to amortization on the basis of tenure of the software/licenses. Accumulated depreciation as a proportion of gross block stood at 86% in 2011-12 as against 83% in 2010-11.

R.S. Software (India) Limited is a global leader in providing technology solutions to the electronic payments industry from India, and this explains why the company has outperformed the Indian software export industry growth by a factor of 1,5x in fiscal 2011 -12 and reinforced its growth journey.

The credible performance has only reinforced the company's commitment to ensure that this time around, the company is fully prepared to capitalize on the next wave of growth for the Indian companies, with Indian IT industry expected to grow 3 times in the next 10 years. This coincides with the inflexion point for growth in the Payments industry. In anticipation of this opportunity, the company continues to build upon its core strength, which enables exponential rather than linear growth. Amongst other parameters, the company is focusing on:

1) The organization structure is decentralized and provides for efficient growth.

2) Building a robust global sales engine, that complements the high priority accorded to the company's dominant customer, and leveraging at the same time unusual growth potential.

3) Systems are developing, getting more refined and extensive, including the installation of an ERP system, and institutionalization of the Gazelles methodology that focuses on best practices for mid size businesses. This has helped large number of companies to grow from mid size to world class companies.

4) Longer term Operational and Strategic planning are being put in place.

5) Innovation to play a key role in enhancing R.S. Software's ability to marry the emerging technologies with the changing demands of consumers and business in the way they experience payments.

6) Unique early advantage which we are now leveraging given the timing of events in the electronic payments industry represents a huge growth potential for R.S. Software.

7) The company is targeting increased emphasis on operational and risk governance with formalized PMO and QA practices.

8) The proximity to Silicon Valley, a highly developed eco system for the payments industry, provides access to premium payments consultants and associations to collaborate with.

The Electronic Payments industry globally is going through its major growth evolution at the same time, given the interesting intersection of technology advancements and cultural changes that facilitate the move from paper money to digital currency. The volume and the value of electronic payment transactions are projected to grow multiple times in the next several years.

Payments appears to be a tremendously area ripe for disruption - new technologies are changing the relationship between consumers and merchants. The opportunity is extremely large, as this is a huge market with >$41 trillion in electronic payment volume and ~$300b in revenue in the US payment industry alone. The business of payments hinges on processing and storing large volumes of transaction data. To perform these activities well or at all, payments companies can spend as much as 10% of their total revenue on technology infrastructure. Reducing these costs even by a fraction of a percent can release millions of dollars that can be reinvested in growth and innovation or applied to the bottom line. Consequently, many global payments organizations face a demand for technology infrastructure that outpaces the growth of their business. These organizations have gone to great lengths to reduce their technology operating costs by re-engineering processes, shifting to global sourcing models and leveraging virtualized technologies. To find still more savings, they must evaluate how their business consumes technology and find a better way to match supply and demand.

Global customers have incrementally matured and are looking for the unique combination of high value-adds and high quality performance. Pursuing its core values and committed to "Think of Yourself as the Customer", the company has redefined its business strategy. R.S. Software is now a technology company focused on the Electronic Payments industry.

R.S. Software has carved out its niche to bring to the market place, the combination of its expertise in global outsourcing, and the domain knowledge of Electronic Payment transactions. Capitalizing on this core strength, R.S. Software has defined its business strategy to work with the major stakeholders in the payments industry globally. To fulfill its vision of becoming a global leader in providing technology solutions to the Electronic Payments industry, the company will work with major Payment networks, Acquiring and Issuing processors, Emerging Payment players, and Technology solution providers, who continually invest in the development and enhancements of their systems to compete in an increasing competitive market. The Marketing and sales strategy, complemented by the company's Innovation and fulfillment strategy, are all aligned to target the next phase of growth.

The Financial strategy of the company is to commit investments to meet the dynamic growth challenges. The company is committed to building:

- Diversified talent pool with globalised recruiting and HR practices

- Multiple management tracks, globalised expertise

- Emphasis on learning, knowledge management, research spending

- Deployable and specialized talent pools

The company continues to demonstrate process scalability and management agility, focusing on its core values of bringing Responsive Solutions to its customers, and reinforcing the culture of working with passion to help its customers compete.

The global software services industry is marked by a number of large multi-vertical companies. In this space, the large companies usually prefer to engage with large software service providers.

Over the years, R.S. Software has competed successfully against considerably larger multi-vertical companies, carved contracts away and grown twice as fast as India's broad off shoring sector.

The Company has reinforced its presence in a niche on account of varied dimensions of its distinctive business model.

Performance of Subsidiaries

The US subsidiary Responsive Solutions Inc. and Singapore Company have been focusing on their Businesses in respective regions. Both the subsidiaries are performing well, to meet the strategic growth objectives of the company.

Dividend

The Board of Directors at their Meeting held on April 18, 2011 have considered and recommended a Dividend to Equity Shareholders @ 20% subject to the Shareholders' approval at this Annual General Meeting in addition to the interim dividend declared. The Board had recommended and approved an Interim Dividend @10% at their Meeting held on January 31, 2012.

Allotment of Equity Shares on conversion of Warrants on Preferential Basis

Your Directors are pleased to update you that 1 5,50,000 Convertible Warrants on preferential basis to the Promoter and the Chairman & Managing Director of the Company at Rs51.86 per warrant to be converted into equity shares at Rs10/- each at the ratio of 1:1, during the year 3,90,000 convertible warrants were converted into equity shares upon receipt of the amount due. The convertible warrants were allotted to the Promoter pursuant to SEBI (ICDR) Regulations and Shareholders' approval accorded through Postal Ballot on 4th March 2012.

Fixed Deposits

The Company has not accepted any Deposits within the

meaning of Section 58A of the Companies Act 1956.

Directors Re-election

1) Mr. Shital Kumar Jain retires by rotation and being eligible offers himself for re-appointment. Your Directors recommend appointment of Mr. Jain, for a further tenure, as this would be entirely in the larger business interest of your Company.

2) Mr. Richard Launder retires by rotation and being eligible offers himself for re-appointment. Your Directors recommend appointment of Mr. Richard Launder for a further tenure, as this would be entirely in the larger business interest of your Company.

A brief profile of Mr. Shital Kumar Jain is given below:

Mr. Shital Jain is an MBA from Indiana University, USA and had earlier done MA, BA (Hons.) (Economics) from Punjab University, Chandigarh. He has worked in Citibank for almost 32 years and spent several years overseas in Senior Management positions in Hongkong, Taiwan, Philippines, Thailand and Canada.

A brief profile of Mr. Richard Launder given below:

Richard Launder has more than 20 years of experience in the payments industry with strengths in sales, marketing and operations. As a managing director of Europe, Middle East and Africa for one of the largest software companies in the payments industry, Mr. Lander generated more than $130 million in revenue by developing a distribution model for the region via acquisitions, direct operations, joint ventures, distributors and sales agents. He is expert in strategic selling, building effective sales teams and marketing within diverse markets and cultures. Mr. Launder was recently added to the R.S. Software board to help the company continue to develop growth strategies for the business.

Auditor's Report

Your Directors have taken note of the Auditor's Report and comments thereupon on the accounts for the year ended March 31, 2011. The Auditor's Report read together with the notes to accounts thereupon are self-explanatory.

Directors' Responsibility Statement

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with appropriate explanation relating to material departures;

(ii) that the Directors have 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 states of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2011 on a "going concern" basis.

Corporate Social Responsibility

At R.S. Software your company takes its responsibility towards the Society very seriously, never losing sight of the core values and firmly believing in treating all its stakeholders and the society at large with dignity, respect and compassion.

As one of the first companies in Kolkata to set up offshore operations in the Salt Lake Electronics Complex, R.S. Software has played a major role in generating employment for engineering students who joined the industry in the early years of IT. Thereafter RS has been providing opportunities for summer training to budding engineers in their final semesters.

As part of the Corporate Social Responsibility of giving back to society, your company is closely associated with the philanthropic activities of Veerayatan, a non-profit, non- governmental organization that strives to improve the quality of life for local communities by enriching their daily activities through humanitarianism (SEVA), education (SHIKSHA) and inner development (SADHANA). Veerayatan provides the majority of its services free of charge, granting access to fundamental services such as healthcare through its world renowned eye hospital & orthopedic center in neighboring state of Bihar and primary education & vocational training centers in the states of Gujarat & Maharashtra. It has opened Sankar Kendras in poorly developed and backward areas besides establishing centers for stress management, meditation and yoga. It is also engaged in providing training and education in the areas of computer education, healthcare and modern management to provide level playing field to the underprivileged segment of the society. It imparts education on the principles of non-violence, peace and love through its courses on inner development.

Veerayatan is dedicated to the service of mankind irrespective of caste, race, religion or socio-economic status. Recognising the untiring devotion of Veerayatan towards the cause of humanitarianism, the Govt, of India and global societies have felicitated this institution and its mentor with various awards.

In 2011 -12, your company has contributed Rs75 Lac towards establishing the Health care infrastructure in the neighboring state of Bihar. In 2012-13, the company has appropriated a sum of n 1 5 Lac towards CSR Fund. The company has also created a separate fund to support activities of NGOs engaged in improving the living conditions of the underprivileged segment of the society.

RS also works alongside other key NGOs, organizing the donation of old clothes, medicine, old PCs, money, and other essentials for the less fortunate. RS ites have always donated generously to the Prime Minister's national fund on account of earthquakes and other natural disasters. At RS, we never lose sight of who we are and the communities in which we operate and will continue to help organizations such as Veerayatan build a better world.

Statutory Auditors

M/s Chaturvedi & Co., Chartered Accountants and Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. Their reappointment for a further term is recommended by your Board at such remuneration as the Board may be allowed to fix by the General Body.

Conservation of Energy, Technology Absorption

The particulars as prescribed under sub-section (1)(e) of the Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are given at Annexure ' A' to the Directors' Report.

Employees Stock Option

The Company's ESOP Scheme having 2000000 Options already approved by the Shareholders at the Annual General Meeting held on 24th July 2010.

During the year the employees have exercised 49065 ESOP options and according to the Company's ESOP Scheme equity shares in the ratio 1:1 are allotted to them on December 26, 2011. The details of ESOP allotments are given in Annexure 'B' to Directors' Report.

Corporate Governance and Disclosures

Our Company's philosophy on corporate governance envisages attainment of highest level of transparency, accountability and fairness in respect of its operations and achievement of highest international standards in corporate governance. The Company believes that all actions and operations must sub serve its best business interest and enhance overall shareholders' value. Refer Annexure 'C' to Directors' Report.

Particulars of Employees

Information as per Section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975 forming part of this Report does not apply to our Company because the employees of the Company engaged in Information Technology sector like our Company not being Directors or their relatives and drawing salary exceeding the prescribed limits are exempted from being included in such statement of the Board's Report as per the Government's Notification no.: G.S.R 212 (E) dated 24.3.2004.

Acknowledgements

Your Directors' place on record their deep appreciation of the continued assistance and co-operation extended to the Company by its customers, investors, bankers, Government agencies and its dedicated band of employees. Above all, the Board expresses a deep sense of gratitude to the Members of the Company who have reposed faith in their Board and the Management.

Thanking you,

For and on behalf of the Board of Directors

Kolkata Raj Jain

April 18, 2012 Chairman


Mar 31, 2011

The Directors are pleased to present the twenty-third Annual Report and the audited Statement of Accounts, highlighting the business operations and financial results for the year ended 31st March 2011.

FINANCIAL HIGHLIGHTS

R S Software (India) Ltd. (Rs. in Millions)

Particulars R S Software (India) Ltd. R S Software (India) Ltd. (Consolidated)

2010-11 2009-10 2010-11 2009-10

Gross Revenue 1883.00 1618.80 1993.10 1665.10

Operating Profit (PBDIT) 308.00 211.90 327.10 236.37

Interest 8.50 22.70 8.50 23.15

Depreciation 46.00 71.20 46.00 71.33

Profit before Tax 253.50 118.00 272.60 141.89

Provision for Tax 46.40 22.30 49.30 22.30

Profit after Tax 207.10 95.70 223.30 119.59

REVIEW & ANALYSIS OF THE FINANCIAL PERFORMANCE

The company has achieved an excellent performance during the year, with growth in profits exceeding 86% over the previous fiscal year, while attaining a US dollar revenue growth of 24%. The return on net worth is exceeding 60%, and with this the companys financial foundation is much strengthened to achieve the growth planned. The company continues to deploy deep penetration strategy for its growth with its primary clientele, while building its sales engine for implementing its vision to be a global leader in providing solutions to the electronic payments industry. The unique positioning of domain focus is helping to articulate our value proposition which is being received well by the leaders in the payments industry.

IT OUTSOURCING INDUSTRY AND MEETING COMPETITION

This industry continues to be robust and growth in this decade is expected to be significantly higher than the previous decade, and herein lies the opportunity, particularly for companies that recognize the following:

- As outsourcing matures and organizations move up the value chain, managing complexities & achieving business transformation require collaboration between the service provider and the client.

- Adoption of a deep niche strategy enables small firms to remain competitive

- Building of internal resources & capabilities by SMEs are key to competitive advantage

- Entrepreneurial strategic orientation enhances firm performance

Your company is practicing all of the above, and your management team is confident that continued focus on these actions will help to build our competitive advantage against competition and large players from India.

The last four years have seen a huge transformation initiative, to ensure that this time around the company is fully prepared to capitalize on the next wave of growth for Indian companies, with industry expected to grow 3 times in the next 10 years. This coincides with the inflexion point for growth in the Payments industry. In anticipation of this opportunity, the company continues to build upon its core strength, which enables exponential rather than linear growth. The growth in both revenues and profitability in the last three years bears testimony to the success of our transformation initiatives. Amongst other parameters, the company is focusing on:

1) The organization structure that facilitates effective implementation of our vision and strategy.

2) Building a robust global sales engine, that complements the high priority accorded to the companys existing customers, and leveraging at the same time unusual growth potential.

3) Systems are developing, getting more refined and extensive, and institutionalization of the Gazelles methodology that focuses on best practices for mid size businesses. This has helped large number of companies to grow from mid size to world class companies.

4) Innovation to play a key role in enhancing RS Softwares ability to integrate the emerging technologies with the legacy platforms, such that our customers are able to introduce solutions to the market, which bring about the difference in the way consumers and business experience payments.

5) Leveraging the unique early advantage of working in the electronic payments industry, represents a huge growth potential for RS Software.

6) The proximity to Silicon Valley which has a highly developed eco system for the payments industry provides access to premium payments consultants and associations to collaborate with.

THE ELECTRONIC PAYMENTS INDUSTRY

The Electronic Payments industry globally is going through its major growth evolution, given the interesting intersection of technology advancements and cultural changes that facilitate the move from paper money to digital currency. The volume and the value of electronic payment transactions are projected to grow multiple times in the next several years.

Global customers have incrementally matured and are looking for the unique combination of high value-ads and high quality performance. Pursuing its core values and committed to "Think of Yourself as the Customer", the company has redefined its business strategy. RS Software is now a technology company focused on the Electronic Payments industry. The company leverages its payments embedded global delivery model, evolved over two decades of working with industry leaders, to drive payment knowledge centric IT solutions to address customer business challenges. The next stage of the vision for the company is to become a global leader in providing technology solutions to the Electronic Payments industry.

GROWTH STRATEGY

R S Software has carved out its niche to bring to the market place, the combination of its expertise in global outsourcing, and the domain knowledge of Electronic payment transactions. Capitalizing on this core strength, RS Software has defined its business strategy to work with the major stakeholders in the payments industry globally, and bring the best value to its customers. To fulfill its vision of becoming a global leader in providing technology solutions to the Electronic Payments Industry, the company will work with major Payment networks, Acquiring and Issuing processors, Emerging Payment players, and technology solution providers, who continually invest in the development and enhancements of their systems to compete in an increasing competitive market. The Marketing and Sales strategy, complemented by the companys innovation and fulfillment strategy are all aligned to target the next phase of growth.

The Financial strategy of the company is to commit investments to meet the dynamic growth challenges aimed at the revenue goals of the company. The company is committed to building:

- Appropriate management bandwidth to achieve fulfillment of its vision.

- Diversified talent pool with globalised recruiting and HR practices.

- Emphasis on learning, knowledge management, and Innovation through consistent spending on research and development.

- Reusable tools and frameworks.

- Continued benchmarking to best practices and quality accreditations.

The company continues to demonstrate process scalability and management agility, focusing on its core values of bringing Responsive Solutions to its customers, and reinforcing the culture of working with passion to help its customers compete.

ISSUE OF BONUS SHARES

To reward its shareholders, during the year the company has issued 2,381,390 equity shares out of the Capital Redemption Reserve account of Rs. 245 lacs, in the ratio of 28 bonus equity shares against every 100 equity shares held by the Members.

DIVIDEND

The Board of Directors at their Meeting held on April 19, 2011 have considered and recommended a Dividend to Equity Shareholders @ 20% subject to the Shareholders approval at this Annual General Meeting.

PERFORMANCE OF SUBSIDIARIES

The US subsidiary Responsive Solutions Inc. and Singapore Company have been focusing on their Businesses in respective regions. Both the subsidiaries are performing well, to meet the strategic growth objectives of the company.

ALOTMENT OF EQUITY SHARES ON CONVERSION OF WARRANTS ON PREFERENTIAL BASIS

Your Directors are pleased to update you that out of 1000000 equity warrants issued on preferential basis to the Promoter and the Chairman & Managing Director of the Company at Rs.19.50 per warrant to be converted into equity shares at Rs.10/- each at the ratio 1:1, during the year balance 400000 equity warrants were converted into equity shares upon receipt of the amount due. This equity warrants were allotted pursuant to the relevant Guidelines on such Issues by SEBI and Shareholders approval accorded at the EGM held on 13th January 2009.

FIXED DEPOSITS

The Company has not accepted any Deposits within the meaning of Section 58A of the Companies Act 1956. DIRECTORS

1) Mrs. Sarita Jain retires by rotation and being eligible offers herself for re-appointment. Your Directors recommend appointment of Mrs. Jain, for a further tenure, as this would be entirely in the larger business interest of your Company.

2) Mr. Rajasekhar Ramaraj retires by rotation and being eligible offers himself for re-appointment. Your Directors recommend appointment of Mr. Ramaraj for a further tenure, as this would be entirely in the larger business interest of your Company.

Mrs. Sarita Jain: M.A. in English Literature and Diploma in Mass Communication and Home Science. She is one of the Promoter Directors of your Company and her contribution on all professional matters of the Company has been noteworthy.

Mr. Rajasekhar Ramaraj: Holds a B.Tech. in chemical engineering from the University of Madras and an M.B.A. from the Indian Institute of Management, Calcutta. He was the Co- Founder and CEO of Sify Limited, the pioneer and leader in Internet, Networking and e - Commerce Services in India. Sify was the first Indian Internet company to be listed on the Nasdaq National Market in the USA. Mr. Ramaraj was recognized as the Evangelist of the Year at the India Internet World Convention in September 2000. And in 2001, in a CNET.com poll in India, he was voted the IT Person of the Year 2000. He was invited by the UN Secretary-General, Kofi Annan to be a member of UNs Working Group on Internet Governance (WGIG). Currently Mr. Ramaraj is the Senior Advisor at Sequoia Capital and is a member of the Global Board of Trustees of TiE (The Indus Entrepreneurs). Mr. R. Ramaraj is the first Indian invited to the Board of directors of ICANN (Internet Corporation for Assigned Names and Numbers). Mr. R. Ramaraj has brought in the Company value additions by virtue of his experience and knowledge in IT Space.

AUDITORS REPORT

Your Directors have taken note of the Auditors Report and comments thereupon on the accounts for the year ended March 31, 2011. The Auditors Report read together with the notes to accounts thereupon are self-explanatory.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement under section 217(2AA) of the Companies Act, 1956 with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) that in the preparation of the annual accounts for the financial year ended 31st March, 2011, the applicable accounting standards have been followed along with appropriate explanation relating to material departures;

(ii) that the Directors have 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 states of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the accounts for the financial year ended 31st March, 2011 on a "going concern" basis.

SOCIAL RESPONSIBILITY

Your company continues to be committed to fulfill its responsibilities towards various constituents of society including various stakeholders of the company. The company keeps making contributions to charitable institutions for imparting basic educa- tion. The company undertakes various activities including development of skill and capabilities of its employees. It organizes sports and cultural events at organizational level to promote harmony and sense of belongingness amongst its employees. The company, this year, has also created Corporate Social responsibility to contribute towards creation and development of social infrastructure in the country.

STATUTORY AUDITORS

M/s Chaturvedi & Co., Chartered Accountants and Statutory Auditors of the Company, hold office until the conclusion of the ensuing Annual General Meeting, and being eligible, offer themselves for reappointment. Their reappointment for a further term is recommended by your Board at such remuneration as the Board may be allowed to fix by the General Body.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

The particulars as prescribed under sub-section (1)(e) of the Section 217 of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are given at Annexure A to the Directors Report.

EMPLOYEES STOCK OPTION

The Companys ESOS Scheme having 2,000,000 Options already approved by the Shareholders at the Annual General Meeting held on 24th July 2010. In accordance with the SEBI (ESOS & ESPS) Guidelines, 1999 it is required to pass a separate resolution at the General Meeting for granting options to the Employees and Directors of the Subsidiary Companies whether in India or outside India out of the same ceiling of 2,000,000 Options as approved by the Shareholders in the last Annual General Meeting for a period of 3 years from April 1, 2010.

During the year the employees have exercised 138,208 ESOS options and according to the Companys ESOS equity shares in the ratio 1:1 are allotted to them on January 29, 2011.

The status of earlier ESOS is given in Annexure B1 to Directors Report. The Disclosure under Clause 12.1 of SEBI (ESOS & ESPS) Guidelines 1999 for ESOS of the Company as well as of the Subsidiary Companies is shown in Annexure B2 of the Directors Report.

CORPORATE GOVERNANCE AND DISCLOSURES

Your Companys philosophy on corporate governance envisages attainment of highest level of transparency, accountability and fairness in respect of its operations and achievement of highest international standards in corporate governance. The Company believes that all actions and operations must sub serve its best business interest and enhance overall shareholders value. Refer Annexure C to Directors Report.

PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Rules, 1975 forming part of this Report does not apply to our Company because the employees of the Company engaged in Information Technology sector like our Company not being Directors or their relatives and drawing salary exceeding the prescribed limits are exempted from being included in such statement of the Boards Report as per the Governments Notification no.: G.S.R 212 (E) dated 24.3.2004.

ACKNOWLEDGEMENTS

Your Directors place on record their deep appreciation of the continued assistance and co-operation extended to the Company by its customers, investors, bankers, Government agencies and its dedicated band of employees. Above all, the Board expresses a deep sense of gratitude to the Members of the Company who have reposed faith in their Board and the Management.

Thanking you,

For and on behalf of the Board of Directors

Raj Jain Chairman & Managing Director

Kolkata April 19, 2011

 
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