Mar 31, 2018
The Directors have immense pleasure in presenting the Thirtieth Annual Report together with the Audited Statement of Accounts, highlighting the business operations and financial results for the Financial Year ended MarcRs. 31, 2018.
1. FINANCIAL SUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY(STANDALONE AND CONSOLIDATED)
The summarized 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:
(Rs. in Lacs)
Particulars |
2017-18 |
2016-17 |
Total Revenue |
6,595.52 |
8,317.77 |
Profit before Finance Charges, Tax, Depreciation/Amortization (PBITDA) |
(3486.5) |
(2197.40) |
Less : Finance Charges |
3.75 |
0.00 |
Profit before Depreciation/Amortization (PBTDA) |
(3490.25) |
(2197.40) |
Less : Depreciation |
208.84 |
396.49 |
Net Profit before Taxation (PBT) |
(3,699.09) |
(2,593.89) |
Provision for taxation |
(1,126.03) |
(963.97) |
Profit/(Loss) after Taxation (PAT) |
(2,573.06) |
(1,629.92) |
On the basis of Consolidated Financial Statements, the performance of the Company appears as follows:
(Rs. in Lacs)
Particulars |
2017-18 |
2016-17 |
Total Revenue |
7,197.96 |
8,860.41 |
Profit before Finance charges, Tax, Depreciation/Amortization (PBITDA) |
(3597.47) |
(2229.87) |
Less : Finance Charges |
3.75 |
10.38 |
Profit before Depreciation/Amortization (PBTDA) |
(3601.22) |
(2240.25) |
Less : Depreciation |
224.15 |
398.30 |
Net Profit before Taxation (PBT) |
(3,825.37) |
(2,638.55) |
Provision for taxation |
(1,181.70) |
(978.21) |
Profit/(Loss) after Taxation (PAT) |
(2,643.66) |
(1,660.34) |
Note: The above figures are extracted from the standalone and consolidated financial statements prepared under IND AS (Indian Accounting Standards) for the financial year ended on MarcRs. 31, 2018 and the figures for the Financial Year ended 31.03.2017 differs with the Annual Report for the Year 2016-17 because of applicability of IND AS. The detailed explanation in this regard has been provided in the Financial Statements, forming part of this Annual Report.
2. STATE OF COMPANYâS AFFAIRS
Your company is undergoing a transitional Strategy wherein the company is making a strategic shift in its business focus while reducing client concentration, your company is focusing on building platforms, products and frameworks. The Company has focused exclusively on providing software solution to electronic payment. The company is engaged in development, testing and maintenances of software for their clients.
- Margins analysis
On a standalone basis, the Companyâs profit/(loss) after tax stood at RS. (2,573) Lacs in the financial year 2017-18, vis-a-vis RS. (1,630) Lacs in the previous year. The net revenue at is RS. 6,596 Lacs is down from the previous yearâs revenue of RS. 8,318 Lacs.
On a consolidated basis, the Companyâs profit/ (loss) after tax stood at RS. (2,644) Lacs in the financial year 2017-18, vis-a-vis RS. (1,660) Lacs in the previous year. The net revenue at is RS. 7,198 Lacs is down from the previous yearâs revenue of RS. 8,860 Lacs.
The Companyâs PAT margin as per the consolidated financial results 2017-18 has been (36.73%) as compared to (18.74%) in 2016-17. The reason for decline in margin is attributable to the strategic shift made by the Company as it is making substantial investments in: a) developing tools and platforms, b) sales and marketing to enhance its customer base. The Company has focused on reducing its client concentration during the period under review.
- Capital employed
The total capital employed as per the consolidated financial results decreased from RS. 21,632.42 Lacs in 2016-17 to RS. 18,790.38 Lacs in 2017-18 largely due to an increase in reserves and surplus.
- Economic Scenario, outlook and strategy
As the economy is preparing for a cardless and cashless economy R S Software sees a huge opportunity in this transformation of Global Economy. R S Software has contributed to the development of UPI which is the core of cashless economy in India.
The current market outlook and positioning of your Company has been covered separately as a part of this Annual Report in various sections as an addendum along with other analysis and discussion on performance.
3. TRANSFER TO RESERVES
The Directors do not propose to transfer any amount to the General Reserves.
4. CHANGES IN SHARE CAPITAL
The Companyâs paid up equity share capital remained at RS. 12, 85, 41,590 (Rupees Twelve Crore Eighty Five Lacs Forty One Thousand Five Hundred Ninety only) comprising of 2, 57, 08,318 equity shares of RS. 5/- each.
There was no change in the Companyâs paid up share capital during the year under review.
5. CHANGE IN NATURE OF BUSINESS, IF ANY
During the year, there was no change in the nature of business of the Company and the Company continues to concentrate on its own business.
6. DIVIDEND
Due to absence of profit the Board of directors of the Company could not recommended any dividend for the Financial Year ended 2017-18.
7. DETAILS OF BOARD MEETING
During the Financial Year five Board Meetings were held, details of which are given below:
Date of the meeting |
No. of Directors attended the meeting |
19.04.2017 |
4 |
20.07.2017 |
3 |
17.10.2017 |
4 |
25.01.2018 |
5 |
19.03.2018 |
5 |
The maximum time gap between any two consecutive meetings did not exceed 120 (One Hundred Twenty) days.
8. COMMITTEES OF THE BOARD
The Audit Committee has been constituted in line with the provisions of Section 177 of the Companies Act, 2013 read with Regulation 18 of SEBI Listing Regulations, 2015. The details of composition of the Committees of the Board of Directors are as under:-
a. Audit Committee
Sl. |
Name |
din |
Category |
No. |
|||
1. |
Mr. Shital Kumar Jain |
00047474 |
Non-Executive & |
(Chairman) |
Independent Director |
||
2. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
3. |
Mr. Rajasekhar |
00090279 |
Non-Executive & |
Ramaraj |
Independent Director |
The Company Secretary of your Company acts as the Secretary to the Audit Committee. The terms of reference of the Audit Committee has been provided in the Corporate Governance Report forming part of this Report. During the Financial Year, the Committee had met four times as on April 19, 2017, July 20, 2017, October 17, 2017 and January 25, 2018.
Recommendation by audit committee:
There were no such instances where the recommendation of audit committee has not been accepted by the Board during the financial year under review.
Vigil Mechanism/Whistle blower Mechanism
Your Company is serious about its adherence to the Codes of Conduct and to achieve at par with the highest standards of ethical, moral and legal conduct of business operations and henceforth encourage its employees to bring ethical and legal violations they are aware of to an internal authority without fear of punishment or unfair treatment so that action can be taken immediately to resolve the problem. A Vigil (Whistle Blower) Mechanism provides a channel to the employees and Directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Codes of Conduct or policy. The mechanism also provides for adequate safeguards against victimization of Directors or employees or any other person to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee. Thus, minimization of organizationâs exposure to the damage that can occur when employees circumvent internal mechanisms is the main objective which neither releases employees from their duty of confidentiality in the course of their work, or can it be used as a route for raising any malicious allegations against people in authority and / or colleagues in general. Your company has given affirmation that no personnel have been denied access to the Audit Committee.
Your Company has formulated a codified Whistle Blower Policy incorporating the provisions relating to Vigil Mechanism in terms of Section 177 of the Companies Act, 2013 and Regulation 22 of SEBI Listing Regulations, 2015. The Companyâs Whistle Blower Policy is available on the companyâs website www.rssoftware.com and a link to the said policy has been provided elsewhere in this Annual Report.
b. Nomination & Remuneration Committee
Sl. No. |
Members |
DIN |
Category |
1. |
Mr. Rajasekhar Ramaraj (Chairman) |
00090279 |
Non -Executive & Independent Director |
2. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
3. |
Mr. Shital Kumar Jain |
00047474 |
Non-Executive & Independent Director |
4. |
Mr. Richard Nicholas Launder |
03375772 |
Non-Executive & Independent Director |
The Board of Directors of your Company has constituted a Nomination and Remuneration Committee in accordance with the provisions of Section 178 of the Companies Act, 2013 read with Regulation 19 of SEBI Listing Regulations, 2015. The terms of reference of the Committee has been provided in the Corporate Governance Report forming part of this Report. During the financial year, the Committee met four times as on April 19, 2017, July 21, 2017, October 17, 2017 and January 24, 2018. The Committee has formulated the Nomination and Remuneration Policy which broadly laid down the various principles of remuneration being support for strategic objectives, transparency, internal & external equity, flexibility, performance driven remuneration, affordability and sustainability and covers the procedure for selection, appointment and compensation structure of Board members, Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) of your Company. The said Policy is available on your Companyâs website www.rssoftware.com and a link to the said Policy has been provided elsewhere in this Annual Report.
c. Stakeholders Relationship Committee
Is |
Members |
DIN |
Category |
No. |
|||
1. |
Mr. Shital Kumar Jain |
00047474 |
Non -Executive & |
(Chairman) |
Independent Director |
||
2. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
The terms of reference of the Committee has been provided in the Corporate Governance Report forming part of this Report. During the financial year, the Committee met three times as on April 18, 2017, July 20, 2017 and January 24, 2018.
d. Corporate Social Responsibility Committee
Sl. No. |
Members |
din |
Category |
1. |
Mr. Rajnit Rai Jain (Chairman) |
00122942 |
Executive Director |
2. |
Mr. Shital Kumar Jain |
00047474 |
Non-Executive & Independent Director |
3. |
Mr. Rajasekhar Ramaraj |
00090279 |
Non-Executive & Independent Director |
During the financial year, the Committee met on 24th January, 2018.
e. Executive committee
Sl. |
Members |
DIN |
Category |
No. |
|||
1. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
(Chairman) |
|||
2. |
Mr. Shital Kumar Jain |
00047474 |
Non-Executive & Independent Director |
3. |
Mr. Rajasekhar Ramaraj |
00090279 |
Non-Executive & Independent Director |
4. |
Mr. Richard Nicholas Launder |
03375772 |
Non-Executive & Independent Director |
During the financial year, the Committee met four times as on April 18, 2017, July 20, 2017, October 16, 2017 and January 24, 2018.
9. DISCLOSURES PURSUANT TO REGULATION 14 OF THE SEBI (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS, 2014
Your company believes in employeesâ participation in management and considers ESOP Scheme as an empowerment tool. Companyâs Stock Option Plans are in compliance with Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (âEmployee Benefits Regulationsâ) and there have been no material changes to the Companyâs existing Stock Option Plan during the financial year 2017-18. The existing ESOP was approved by the Shareholders in the Annual General Meeting held on July 21, 2016 for the period of 3 years from 1st April 2016. None of the employees were awarded any options under the Companyâs existing Employees Stock Option Plan (ESOP) in the financial year 2017-18.
10. TRANSFER OF UNPAID AND UNCLAIMED DIVIDEND AMOUNTS TO IEPF
Pursuant to the provisions of Section 124 of the Act, the dividend amounts which have remained unpaid or unclaimed for a period of seven years from the date of declaration have been transferred by the Company to the Investor Education and Protection Fund (âIEPFâ) established by the Central Government pursuant to Section 125 of the Act. The details of unpaid / unclaimed dividend that will be transferred to IEPF in subsequent years are given in the Corporate Governance Report. Further, according to the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe IEPF Rulesâ), the shares in respect of which the dividend has not been claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly, the Company will transfer the corresponding shares for which the unpaid and unclaimed dividend has been transferred, as per the requirements of the IEPF Rules. The details of such shares are available on the website of the Company at www. rssoftware.com.
11. PROVISION OF MONEY BY THE COMPANY FOR PURCHASE OF ITS OWN SHARES 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.
12. DISCLOSURE RELATING TO MATERIAL VARIATIONS
As per Regulation 32(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, there are no such material variances in the Company.
13. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT
There are no material changes or commitments affecting the financial position of the Company, which have occurred between the end of the financial year and the date of this Report.
14. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS /COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANYâS OPERATIONS IN FUTURE
There are no significant and material orders passed by any Regulators / Courts /Tribunals, which impacts the going concern status of the Company or will have any bearing on Companyâs Operations in future.
15. RISK MANGEMENT POLICY
In terms of the requirement of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Company has taken adequate measures to mitigate various risk encountered. In the opinion of the Board there is no such risk which may threaten the present existence of the Company.
16. INTERNAL CONTROL SYSTEMS
Your Company has an adequate system of internal controls procedures commensurate with its size and the nature of its business. The company has documented its policies, controls and procedures, covering all financial and operating functions, designed to provide a reasonable assurance with regard to reliability of financial reporting, monitoring of operations, protecting assets from unauthorized use or losses, compliances with regulations, prevention and detection of fraudulent activities etc.
The internal control systems of the Company are monitored and evaluated by the Internal Auditors. Your Company manages and monitors the various risks and uncertainties that can have adverse impact on the Companyâs business. Your Company is giving major thrust in developing and strengthening its internal audit so that risk threat can be mitigated.
The Audit Committee of the Board of Directors, comprising of Independent Directors, regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with accounting standards as well as reasons for changes in accounting policies and practices, if any.
The CEO and CFO certification as provided in the Annual Report discusses the adequacy of the Companyâs Internal Control System and Audit.
17. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES
Pursuant to sub-section (3) of Section 129 of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rule, 2014, the statement containing the salient features of the financial statement of a companyâs subsidiaries, is given in AOC-I as âAnnexure Aâ which forms a part of this Annual Report.
The Consolidated Financial Statements are prepared in line with Section 129(3) of the Act read with the aforesaid Rules, SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and in accordance with the Indian Accounting Standards (âIND ASâ). Consolidated Financial Statements and other applicable provisions include financial information of its subsidiary companies.
During the year no new subsidiary was formed or ceased. Further, the Company has no Joint Venture and Associate during the financial year ended 31st March, 2018.
18. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES 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 and also forms part of Form AOC-1 pursuant to Rule 5 of the Companies (Accounts) Rules, 2014, which are set out as an annexure to the Directorsâ Report and forms a part of this Annual Report. Members interested to inspect may write to the Company Secretary at your Companyâs Registered Office.
19. 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.
20. AUDITORS
Statutory Auditors
M/s. Deoki Bijay & Co., Chartered Accountants (Registration No. 313105E), the 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 reappointment of M/s. Deoki Bijay & 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 has approved by the Audit Committee and the Board of Directors in their convened meetings as well.
The Statutory Auditor Deoki Bijay & Co. has submitted an unqualified Audit Reports for the financial year 2017-18.
21. SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M R & Associates, a firm of Company Secretaries in Practice to conduct the Secretarial Audit of the Company. The Secretarial Auditor has submitted an un-qualified Secretarial Audit Report for the financial year 2017-18. The Report of the Secretarial Audit is annexed herewith as âAnnexure Bâ and forms a part of this Annual Report.
22. EXTRACT OF THE ANNUAL RETURN
An extract of Annual Return as on the financial year ended on MarcRs. 31, 2018 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 âAnnexure Câ to the Directorâs Report and forms a part of this Annual Report.
23. MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report, in terms of Regulation 34 (3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, have been covered in the initial segment of this Annual Report.
24. PARTICULARS OF EMPLOYEES AND MANAGERIAL REMUNERATION
Disclosure pertaining to remuneration and other details as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in this Report as âAnnexure -Dâ
The Statement containing particulars of employees as required under section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is available for inspection in terms of Section 136 of the Act, any member interested may write to the Company Secretary and the same will be furnished on request.
25. 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 âAnnexure Eâ to the Directorsâ Report, which forms a part of this Annual Report .
26. DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the period under review, Mr. Rajnit Rai Jain, Chairman & Managing Director of the Company was re-appointed, for a period of 3 (three) years w.e.f. 1st October, 2017 after obtaining approval of the members at the Annual General Meeting held on 21.07.2017 in accordance with provisions of Sections 196, 197, 203 of Companies Act, 2013 read with relevant Rules,
In accordance with Section 152 and other applicable provisions of the Companies Act, 2013, read with relevant Rules, Mr. Rajnit Rai Jain, Chairman & Managing Director of the company retires by rotation at the ensuing Annual General Meeting and being interested, offers himself for re-appointment.
The brief resume / details relating to Director who is proposed to be re-appointed are furnished in the Notice of the ensuing AGM. The Board of Directors of your Company recommends his reappointment in the Board.
Your Company has received declaration from each of the Independent Directors under Section 149(7) of the Companies Act, 2013 that they meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI Listing Regulations, 2015. All the declarations were placed before the Board.
The following directors/executives of your Company are wholetime Key Managerial Personnel (KMPs) as on MarcRs. 31, 2018 in accordance with the provisions of Section 203 of the Companies Act, 2013 -
Mr. Rajnit Rai Jain - Chairman & Managing Director
Mr. Vijendra Surana - Chief Financial Officer and Company Secretary.
27. REMUNERATION POLICY
Remuneration policy of the RS Software (India) Ltd comprising members of the Board of Directors (âBoardâ), Key Managerial Personnel (âKMPâ) and the Senior Management Personnel (SMP or âLTâ) of the Company.
The objective of the remuneration policy is to enable the Company to attract, motivate, and retain qualified industry professionals for the Board of Management and other executive level in order to achieve the Company strategic goals. The remuneration policy acknowledges the internal and external context as well as the business needs and long term strategy. The policy is designed to encourage behaviour that is focused on long-term value creation, while adopting the highest standards of good corporate governance. The Companyâs Remuneration Policy is available on the companyâs website www.rssoftware.com and a link to the said policy has been provided elsewhere in this Annual Report.
28. CORPORATE SOCIAL RESPONSIBILITY
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. Pursuant to Section 135 of the Companies Act, 2013 read with Schedule VII and Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of the Company has in place a Corporate Social Responsibility (CSR) Policy. The CSR policy is uploaded on Companyâs website i.e. on www. rssoftware.com. Further, the Report on CSR Activities/ Initiatives along with other relevant disclosures is enclosed as âAnnexure Fâ
29. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments have been disclosed in the notes of the Financial Statements for the year ended 31st March, 2018 and form a part of this Annual Report.
30. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis and are in compliance with the applicable provisions of the Companies Act 2013 and SEBI Listing Regulations, 2015.
There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc., which may have potential conflict with the interest of the Company at large. Hence no disclosure in Form AOC-2 is required. All related party transactions are presented to the Audit Committee and the Board for approval.
The Related Party Transaction Policy has been devised by your company for determining the materiality of transactions with related parties and dealings with them and the same is hosted on the website of the Company at www.rssoftware.com and a link to the said policy has been provided elsewhere in this Annual Report.
31. FAMILIARIZATIONS PROGRAMME FOR IDsâ
In terms of 25(7) of Listing Regulations, 2015, 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.
32. ANNUAL EVALUATION OF BOARDâS PERFORMANCE
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, an Annual Performance evaluation is to be made by the Board of its own performance and that of the Committees and individual Directors. The exercise was carried out covering various aspects of the Boards functioning such as composition of the Board & committees, qualification, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of Non-Independent Directors.
The performance of Independent Directors has been evaluated based on the guidelines as provided under Schedule IV of the Act. The evaluation of the Independent Directors was carried out by the entire Board except by the Director being evaluated. The directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.
33. 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.
34. CORPORATE GOVERNANCE
The Corporate Governance which form an integral part of this Report, are set separately as âAnnexure Gâ together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Regulation 34(3) read with Schedule V of the SEBI Listing Regulations, 2015.
35. POLICY AGAINST SEXUAL AND WORKPLACE HARASSMENT
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 âPolicy on Prevention of Sexual Harassmentâ as per The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
36. DIRECTORSâ RESPONSIBILITY STATEMENT
In terms of provisions of Section 134(5) of the Companies Act, 2013, your Board of Directors confirms that:
(i) In the preparation of the annual accounts for the financial year ended 31st March, 2018, 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, 2018 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.
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
37. ACKNOWLEDGEMENTS
Your Directorsâ 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
Sd/-
Rajnit Rai Jain
Place: Kolkata Chairman And Managing Director
Date: April 19, 2018 (DIN: 00122942)
Mar 31, 2017
Tear members.
Your Directors take pleasure in presenting their Twenty Ninth Annual Report and the audited Statement of Accounts, highlighting the business operations and financial results for the financial year ended March 31,2017.
1. FINANCIALSUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY(STANDALONE AND CONSOLIDATED)
The summarized 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:
(Rs, in Lacs)
Particulars |
2016-17 |
2015-16 |
Total Revenue |
8421.38 |
18690.86 |
Profit before finance charges, Tax, Depreciation/Amortization (PBITDA) |
(2149.01) |
1588.19 |
Less: Finance Charges |
10.38 |
21.50 |
Profit before Depreciation/Amortization (PBTDA) |
(2159.39) |
1566.69 |
Less: Depreciation |
396.49 |
417.02 |
Net Profit before Taxation (PBT) |
(2555.88) |
1149.67 |
Provision for taxation |
(801.63) |
354.53 |
Profit/(Loss) after Taxation (PAT) |
(1754.25) |
795.14 |
On the basis of consolidated financial statements, the performance of the Company appears as follows:
(Rs, in Lacs)
Particulars |
2016-17 |
2015-16 |
Total Revenue |
8964.25 |
20549.60 |
Profit before finance charges, Tax, Depreciation/Amortization (PBITDA) |
(2179.07) |
1877.56 |
Less: Finance Charges |
10.38 |
21.86 |
Profit before Depreciation/Amortization (PBTDA) |
(2189.45) |
1855.70 |
Less: Depreciation |
398.30 |
417.02 |
Net Profit before Taxation (PBT) |
(2587.75) |
1438.68 |
Provision for taxation |
(765.84) |
377.38 |
Profit/(Loss) after Taxation (PAT) |
(1821.91) |
1061.30 |
State of Company''s Affairs
Your company is undergoing a transitional Strategy wherein the company is making a strategic shift in its business focus while reducing client concentration, your company is focusing on building platforms, products and frameworks.
- Margins analysis
During the year 2016-17, the Company''s profit after tax stood at Rs, (1822) Lacs vis-a-vis Rs,1062 Lacs in the previous year. The net revenue of current year is Rs,8964 Lacs is down from the previous year''s revenue ofRs,20550 Lacs. The Company has focused on reducing its client concentrating during the period under review.
The Company''s PAT margin in 2016-17 has been (20.3%) as compared to 5.17% in 2015-16. The reason for decline in margin is attributable to the strategic shift made by the Company as it is making substantial investments in: a) developing tools and platforms, b) sales and marketing to enhance its customer base.
- Capital employed
The total capital employed decreased from Rs,24544 Lacs in 2015-16 to Rs,20976 Lacs in 2016-17 due to losses incurred by the company during the year largely on account of investments made by the company in developing frameworks, platforms and building its sales engine.
Economic Scenario, outlook and strategy
As the economy is transitioning to cardless and cashless economy R S Software sees a huge opportunity this transformation of Global Economy. RS has contributed to development of UPI which is the core of cashless economy in India.
The current market outlook and positioning of RS has been covered separately as a part of this Annual Report in various sections along with other analysis and discussion on performance.
2. TRANSFER TO RESERVES
The Directors do not propose to transfer any amount to the General Reserves.
3. CHANGE IN NATURE OF BUSINESS, IF ANY
There has been no change in business and the Company continues to concentrate on their own business.
4. DIVIDEND
Due to absence of profit the Board of directors of the Company could not recommend any dividend for the financial year ended 2016-17.
5. DETAILS OF BOARD MEETING
During the Financial Year, 4 Board meetings were held, details of which are given below:
Date of the meeting |
No. of Directors attended the meeting |
23.04.2016 |
3 |
20.07.2016 |
4 |
15.10.2016 |
5 |
18.01.2017 |
4 |
6. COMMITTEES OF THE BOARD
The details of composition of the Committees of the Board of Directors are as under:-
a. Audit Committee
SI. No. |
Name |
DIN |
Category |
1. |
Mr. Shital Kumar Jain (Chairman) |
00047474 |
Non -Executive & Independent Director |
2. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
3. |
Mr. Rajasekhar Rama raj |
00090279 |
Non- Executive & Independent Director |
The Company Secretary of your Company acts as the Secretary to the Audit Committee. The Terms of Reference of the Audit Committee has been provided in the Corporate Governance Section forming part of this Report. During the financial year, the Committee had met 4 times as on April 23,2016, July 20,2016, October 15, 2016 and January 17, 2017.
Recommendation by audit committee:
There is no recommendation of audit committee which has not been accepted by the Board during the financial year.
Vigil Mechanism
Your Company is serious about its adherence to the codes of Conduct and to achieve at par with the highest standards of ethical, moral and legal conduct of business operations and henceforth encourage its employees to bring ethical and legal violations. They are aware of an internal authority without fear of punishment or unfair treatment so that action can be taken immediately to resolve the problem. A Vigil (Whistle Blower) mechanism provides a channel to the employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Codes of conduct or policy. The mechanism also provides for adequate safeguards against victimization of directors or employees or any other person to avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee. Thus minimization of organization''s exposure to the damage that can occur when employees circumvent internal mechanisms is the main objective which neither releases employees from their duty of confidentiality in the course of their work, nor can it be used as a route for raising any malicious allegations against people in authority and / or colleagues in general. Your company has given affirmation that no personnel have been denied access to the Audit Committee. The Company''s Whistle Blower Policy is available on the company''s website www.rssoftware.com and on the we blink http:// www.rssoftware.com/investors#corporate_governance.
b. Nomination & Remuneration Committee |
|||
SI. No. |
Members |
DIN |
Category |
1. |
Mr. Shital Kumar Jain (Chairman) |
00047474 |
Non -Executive & Independent Director |
2. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
3. |
Mr. Rajasekhar Rama raj |
00090279 |
Non- Executive & Independent Director |
4. |
Mr. Richard Nicholas Launder |
03375772 |
Non-Executive & Independent Director |
The Terms of Reference of the Committee has been provided in the Corporate Governance Section forming part of this Report. During the financial year, the Committee had met 4 times as on April 22, 2016, July 20, 2016, October 14, 2016 and January 17, 2017. The Committee has formulated the Nomination and Remuneration policy which broadly laid down the various principles of remuneration being support for strategic objectives, transparency, internal & external equity, flexibility, performance driven remuneration, affordability and sustainability and covers the procedure for selection, appointment and compensation structure of Board members, Key Managerial Personnel (KMPs) and Senior Management Personnel (SMPs) of your Company. The said Policy is available on your Company''s website www.rssoftware.com and on the we blink http://www. rssoftware.com/investors# corporate governance.
c. Stakeholders Relationship Committee
SI. No. |
Members |
DIN |
Category |
1. |
Mr. Shital Kumar Jain (Chairman) |
00047474 |
Non-Executive & Independent Director |
2. |
Mr. Rajnit Rai Jain |
00122942 |
Executive Director |
The Terms of Reference of the Committee has been provided in the Corporate Governance Section forming part of this Report. During the financial year, the Committee had met 4 times as on April 22, 2016, July 20, 2016, October 14, 2016 and January 17, 2017.
d. Corporate Social Responsibility Committee
SI. No. |
Members |
DIN |
Category |
1. |
Mr. Rajnit Rai Jain (Chairman of the Committee) |
00122942 |
Executive Director |
2. |
Mr. Shital Kumar Jain |
00047474 |
Non-Executive & Independent Director |
3. |
Mr. Rajasekhar Rama raj |
00090279 |
Non-Executive & Independent Director |
During the financial year, the Committee had met 1 times as on 18th January, 2017
e. Executive committee
SI. No. |
Members |
DIN |
Category |
1. |
Mr. Rajnit Rai Jain (Chairman of the Committee) |
00122942 |
Executive Director |
2. |
Mr. Shital Kumar Jain |
00047474 |
Non-Executive & Independent Director |
3. |
Mr. Rajasekhar Rama raj |
00090279 |
Non-Executive & Independent Director |
4. |
Mr. Richard Nicholas Launder |
03375772 |
Non-Executive & Independent Director |
During the financial year, the Committee had met4 times as on April 22, 2016, July 20, 2016, October 14,2016 and January 17, 2017.
7. ISSUE OF EMPLOYEE STOCK OPTIONS
Your company believes in employees âparticipation in management and considers ESOP Scheme as an empowerment tool. During the financial year 2016-17 the employees had exercised 15000 ESOP options and according to the Company''s ESOP Scheme 15000 equity shares were allotted to the eligible employees.
8. PROVISION OF MONEY BY 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 from the Secondary Market and no such provisions were required to be maintained as the shares are not sold out yet.
9. DETAILS RELATING TO MATERIAL VARIATIONS
No such material variances as per Regulation 32(1) are there in the Company.
10. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION
No material changes and commitments have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report affecting the financial position of the Company.
11. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS /COURTS / TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY''S OPERATIONS IN FUTURE
There are no significant and material orders passed by the Regulators / Courts /Tribunals which would impact on the Going Concern and the Company''s Operations in future.
12. RISK MANGEMENT
In terms of the requirement of the Companies Act, 2013 and Regulation 17 (9) of Listing Regulations 2015, the Company has developed and implemented the Risk Management Policy. The Company has taken adequate measures to mitigate various risk encountered. In the opinion of the Board there is no such risk which may threaten the present existence of the Company.
13. INTERNAL CONTROL SYSTEMS
Your Company has adequate system of internal control procedures commensurate with its size and the nature of its business. The internal control systems of the Company are monitored and evaluated by the Internal Auditors. Your Company manages and monitors the various risks and uncertainties that can have adverse impact on the Company''s Business. Your Company is giving major thrust in developing and strengthening its internal audit so that risk threat can be mitigated.
The CEO and CFO certification provided in the Annual Report discusses the adequacy of the Company''s Internal Control System and Audit.
Furthermore, the Audit committee of your company evaluates and reviews the adequacy and effectiveness of the internal control systems and suggest improvements. Significant deviations are brought to the notice of the audit committee and corrective measures are recommended for implementations. Based on the internal audit report, process owners undertake corrective actions in their respective areas. All these measures help in maintaining a healthy internal control environment.
14. DETAILS OF SUBSIDIARY/JOINT VENTURES/ ASSOCIATE COMPANIES
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 Regulation 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 Peppermint Private Limited becomes the subsidiary of the company. Further, the Company has no Joint Venture and Associate during the financial year ended 31st March, 2017.
15. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES 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.
16. 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.
17. AUDITORS Statutory Auditors
Messers Chaturvedi & Company, Chartered Accountants, having registration number FRN 302137E allotted by The Institute of Chartered Accountants of India (ICAI) retires as Auditor of your Company and therefore they are not eligible for re-appointment as their tenure is expired as per the provisions of Companies Act, 2013.
M/s. Deoki Bijay & Co., Chartered Accountants (Registration No. 313105E) are being appointed as the Auditors of the Company in place of the retiring Auditors to hold office from the conclusion of this 29th Annual General Meeting till the conclusion of the 30th Annual General Meeting subject to approval by the shareholders at ensuing Annual General Meeting
The retiring Statutory Auditor Chaturvedi &Company has submitted an un-qualified Audit Report for the financial year 2016-17.
18. 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 2016-17. The Report of the Secretarial Audit is annexed herewith as" Annexure C".
19. EXTRACT OF THE ANNUAL RETURN
An extract of Annual Return as on the financial year ended on March 31, 2017 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.
20. Management Discussion and Analysis
Please refer to the initial segment of the Annual Report wherein Management Discussion and Analysis has been covered in details.
21. 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) Amendment Rules, 2016, are set out as "Annexure E"to the Director''s Report.
22. 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 as "Annexure F"to the Directors'' Report.
23. DIRECTORS AND KEY MANAGERIAL PERSONNEL
As per provisions of Section 152 of the Companies Act, 2013, Mr. Rajnit Rai Jain, Chairman & Managing Director of the Company is being re-appointed for a period of 3 years, based on the recommendation of Nomination and Remuneration Committee, subject to the approval of the members at the ensuing Annual General Meeting at remuneration as decided by the Board.
Mrs. Sarita Jain, a Non-Executive & Non-Independent Director of the company who is liable to retire by rotation and offers herself for reappointment, 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 âof 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 2013, and Regulation 16 of Listing Regulations has been received by the Company.
There has been no change in the Director(s) and Key Managerial Personnel(s) during the financial year 2016-17.
24. Remuneration Policy
Remuneration policy of the RS Software (India) Ltd comprising members of the Board of Directors ("Board"), Key Managerial Personnel ("KMP"), Senior Management Personnel (SMP or "LT") and the other employees of the Company.
The objective of the remuneration policy is to enable the Company to attract, motivate, and retain qualified industry professionals for the Board of Management and other executive level in order to achieve the Company strategic goals. The remuneration policy acknowledges the internal and external context as well as the business needs and long term strategy. The policy is designed to encourage behavior that is focused on long-term value creation, while adopting the highest standards of good corporate governance. The Company''s Remuneration Policy is available on the company''s website www.rssoftware.com and on the we blink http:// www.rssoftware.com/investors#corporate_governa nee.
25. CORPORATE SOCIAL RESPONSIBILITY
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. The Committee had approved the CSR policy and the Budget. In the year under review, your company could not spend the entire allocated budget of Rs,28.41 lacs since the company incurred loss during the financial year and could not focus on CSR spent. The CSR policy is uploaded on Company''s website i.e. on www.rssoftware.com. Further, the Report on CSR Activities/ Initiatives is enclosed as âAnnexure G".
26. Particulars of Loans, Guarantees and Investments
The particulars of loans, guarantees or investments made under section 186 of the Companies Act 2013 are covered in the notes of the Financial Statement for the year ended 31st March, 2017.
27. PARTICULARS OF CONTRACTSOR ARRANGEMENTS WITH RELATED PARTIES
All contracts/arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis.
There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc, which may have potential conflict with the interest of the Company at large. Hence no disclosure in Form AOC-2 is required. All related party transactions are presented to the Audit Committee and the Board for its approval.
The Related Party Transaction Policy has been devised by your company for determining the materiality of transactions with related parties and dealings with them.
28. FAMILIARIZATIONS PROGRAMME FOR IDs''
In terms of 25(7) of Listing Regulations, 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.
29. ANNUAL EVALUATION OF Board''s PERFORMANCE
During the financial year, the Board evaluated its own performance as well as that of its Committees and individual Directors. The exercise was carried out covering various aspects of the Boards functioning such as composition of the Board & committees, qualification, experience & competencies, performance of specific duties & obligations, governance issues etc. Separate exercise was carried out to evaluate the performance of Non-Independent Directors. The performance of Independent Directors has been evaluated based on the guidelines as provided under Schedule IV of the Act. The evaluation of the Independent Directors was carried out by the entire Board except by the Director being evaluated. The directors were satisfied with the evaluation results, which reflected the overall engagement of the Board and its Committees with the Company.
30. PREVENTION OF INSIDERTRADING
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.
31. CORPORATE GOVERNANCE
The Corporate Governance which form an integral part of this Report, are set out as separate "Annexure FI", together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Regulation 34(3) read with Schedule Vof the SEBI Listing Regulation.
32. 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 Flarassment" as per The Sexual Flarassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your directors further state that during the year under review, there were no cases filed pursuant to the sexual harrassment of women at workplace (Prevention, Prohibition, and Redressal) Act, 2013.
33. 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, 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(ii) we 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) we 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) we have prepared the annual accounts for the financial year ended 31st March, 2017on a going concern basis;
(v) we have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(vi) we have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
34. 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
Sd/-
Place: Kolkata Rajnit Rai Jain
Date: April 19, 201 7 CHAIRMAN AND MANAGING DIRECTOR
(DIN: 00122942)
Mar 31, 2016
The Directors take pleasure in presenting their Twenty Eighth Annual Report and the audited Statement of Accounts, highlighting the business operations and financial results for the financial year ended March 31, 2016.
1. Financial Summary or Highlights/Performance of the Company (Standalone and Consolidated)
The summarized 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 Group appears as follows:
(Rupees in Lacs)
Particulars |
2015-16 |
2014-15 |
Turnover |
18690.86 |
35711.24 |
Profit before finance charges, Tax, Depreciation/Amortization (PBITDA) |
1588.19 |
10216.43 |
Less : Finance Charges |
21.50 |
37.03 |
Profit before Depreciation/Amortization (PBTDA) |
1566.69 |
10179.40 |
Less : Depreciation |
417.02 |
554.83 |
Net Profit before Taxation (PBT) |
1149.67 |
9624.57 |
Provision for taxation |
354.53 |
3131.04 |
Profit/(Loss) after Taxation (PAT) |
795.14 |
6493.53 |
On the basis of consolidated financial statements, the performance of the Company appears as follows:
(Rupees in Lacs)
Particulars |
2015-16 |
2014-15 |
Turnover |
20549.60 |
38807.27 |
Profit before finance charges, Tax, Depreciation/Amortization (PBITDA) |
1877.56 |
10499.57 |
Less : Finance Charges |
21.86 |
37.93 |
Profit before Depreciation/Amortization (PBTDA) |
1855.70 |
10461.64 |
Less : Depreciation |
417.02 |
554.83 |
Net Profit before Taxation (PBT) |
1438.68 |
9906.81 |
Provision for taxation |
377.38 |
3168.14 |
Profit/(Loss) after Taxation (PAT) |
1061.30 |
6738.67 |
Management Discussion and Analysis
During the year 2015-16, the Company''s profit after tax stood at RS,1061 Lacs vis-a-vis RS,6739 Lacs in the previous year. The net revenue at is RS,20549 Lacs is down from the previous year''s revenue of RS,37642 Lacs.
State of Company''s affairs
- Margins analysis
The Company''s PAT margin in 2015-16 has been 5.16% as compared to 17.36% in 2014-15. The reason for decline in margin is attributable to the strategic shift made by the
Company as it is making substantial investments in: a) developing tools and platforms, b) sales and marketing to enhance its customer base. The Company has focused on reducing its client concentration during the period under review.
- Capital employed
The total capital employed increased from RS,22396 Lacs in
2014-15 to RS,22927 Lacs in 2015-16 largely due to an increase in reserves and surplus, and a small increase in equity capital.
Economic Scenario, outlook and strategy
As the economy is preparing for a cardless and cashless economy R.S. Software sees a huge opportunity this transformation of Global Economy. The current market outlook and positioning of RS has been covered separately as a part of this Annual Report in various sections as an addendum along with other analysis and discussion on performance.
2. Dividend
The Board of directors has recommended a final dividend of 20% i.e RS, 1 per share to the equity shareholders for the financial year 2015-16.
3. Finance and Capital
The paid up Equity Share Capital as on March 31, 2016 was RS,128466590 (25693318 Equity Shares of RS,.5 per share). There was an allotment of 15,000 Equity Shares under ESOP during financial year 2015-16. 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 2015-16 the employees had exercised 15000 ESOP options and according to the Company''s ESOP Scheme 15000 equity shares were allotted to the eligible employees. The details of ESOP allotment are given "Annexure A" to the Directors'' Report.
5. Provision of money by 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 Regulation 32(1) 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 Subsidiary/Joint Ventures/ Associate Companies
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 Regulation 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, associates and joint venture companies 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 2015-16.
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 2015-16. 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, 2016 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
Mr. Rajnit Rai Jain, an Executive Director and the Chairman and Managing Director of the company who is liable to retire by rotation and offers himself 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 Regulation 16 of Listing Regulation has been received by the Company.
19. Key Managerial Personnel
Mr. Rajnit Rai Jain (DIN:00122942) Executive Director and Chairman and Mr. Vijendra Kumar Surana CFO & Company Secretary of the company, were designated as Key Managerial Personnel during the financial year 2015-16 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. The Committee had approved the CSR policy and the Budget. The CSR policy is uploaded on Company''s website i.e. on www.rssoftware.com. 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 arms'' 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 25(7) of Listing Regulation , 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. Meetings of the Board
4(Four) Board Meetings were held during the year 2015-16 in April 17, 2015; July 9, 2015; October 16,2015 and January 23, 2016. The maximum time gap between any two consecutive meeting did not exceed 120 days.
25. Committees
Relevant details regarding various Committees are given in "Annexure I" to the Directors'' Report.
26. Board''s Comment on Auditor''s Report
There are no qualifications, reservations or adverse remarks or disclaimers made by M/s Chaturvedi & Co., Statutory Auditors, in their report on the Company''s financial statements for the year ended on March 31, 2016.
27. Corporate Governance
The Corporate Governance which form an integral part of this Report, are set out as separate "Annexure ", together with the Certificate from the auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Regulation 27(2) of the Listing Regulation. The Annexure includes the details of the meetings held by Board of Directors as well as the Committees of the Directors in the financial year 2015-16.
28. 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.
29. 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, 2016, 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, 2016 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.
(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
30. 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
Rajnit Rai Jain
Place: Kolkata (Chairman & Managing Director)
Date: April 23, 2016 DIN: 00122942
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
Mar 31, 2010
The Directors are pleased to present the Twenty Second Annual Report
and the audited statement of Accounts, highlighting the business
operations and financial results for the year ended 31st March 2010.
Financial Highlights (Rs. in Millions)
R S Software (I) Ltd.
Particulars R S Software (I) Ltd.
(Consolidated)
2009-10 2008-09 2009-10 2008-09
Gross Revenue 1618.74 1494.55 1665.10 1494.55
Operating
Profit (PBDIT) 211.84 191.71 236.37 180.85
Interest 22.72 40.16 23.15 40.17
Depreciation 71.18 57.40 71.33 57.48
Profit
before Tax 117.94 94.15 141.88 83.19
Provision
for Tax 22.37 30.92 22.50 30.92
Profit
after Tax 95.57 63.23 119.38 52.27
Review & Analysis of the Financial Performance
During this fiscal year when Nasscom industry growth has been the
lowest in years, averaging around 7%, your company has achieved a
growth rate of 12%. The continued focus on a single domain, and
aligning the sales and marketing investments with this domain are
helping to increase the quality of revenues, and at the same time
helping the company to get traction with some of the key players in the
Electronic Payments Industry. The most significant part of the
performance improvement has been the 120% growth in Net Profits, made
possible through effective implementation of strategic cost management
initiatives. The Finance process is maintaining a crucial balance
between debt reduction levels, and making investments from internal
accruals to build the foundation for achieving high growth rates. There
is an organization-wide effort to enhance the productivity in each
process area, and companys management methodology is constantly
benchmarked to best practices globally. Your company is committed to
take leadership from India in building a domain focused, high value add
partner for its customers, and a uniquely rewarding investments for its
stakeholders. The growth of five times in the market capitalization
value of your company is a testimony to pursuance of this philosophy by
your management.
The Electronic Payments Industry
The Payment Industry is an archaic restricted industry which is finally
opening upto competition and innovation. Decentralization of the market
is occurring accelerated by the economic contraction and changes in the
regulations. R S Software is committed to a business model that
leverages opportunistic global outsourcing against mastery or market -
changing and value à creating innovations that obviate historic
product, market and processing silos to ensure secure and efficient
end-to-end transacting for the 21st Century
Our marketing strategy to reposition the Company as a domain focused
player has already started to pay off already and as we continue to
develop more competencies, we are in discussion with and confident of
winning strategic clients in the payments domain during2010-11.
Issue of Bonus Shares
Your Directors are pleased to recommend issue of28 bonus equity shares
against every 100 equity shares held by the Members as on the record
date subject to approval of shareholders and pursuant to the Guidelines
issued by the Securities and Exchange Board of India (SEBI) in this
behalf, out of the Capital Redemption Reserve account of Rs. 245 lacs.
Performance of Subsidiaries
Your company has started operations of its Singapore Subsidiary Company
which was incorporated on April 09, 2010. The US subsidiary Responsive
Solutions Inc. has also bagged a new contract and is now focusing on
Non Payments Business of the company. Your company draws strength from
its 100% subsidiaries in US and Singapore.
Allotment of Equity Warrants on Preferential Basis
Your Directors are pleased to update you that out of1000000 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 further 380000 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 theme aning of Section
58A of the Companies Act 1956.
Directors
1) Mr. Shital Kumar Jain retires by rotation and being eligible offer
himself for re-appointment. Your Directors recommend appointment of Mr.
Shital Kumar Jain, for a further tenure, as this would be entirely in
the larger business interest of your Company.
2) Mr. R Launder was appointed as an Additional Director on 28th July,
2009 and his tenure will expire at this Annual General Meeting of the
Company. The Company has received a Notice u/s 257 of the Companies
Act, 1956 from a Member proposing the candidature of Mr. Richard
Launder for the office of the Director. Mr. Launder is also recommended
for appointment as Director.
Auditors Report
Your Directors have taken note of the Auditors Report and comments
thereupon on the accounts for the year ended March 31, 2010. 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, itis
hereby confirmed:
(i) that in the preparation of the annual accounts for the financial
year ended 31st March, 2010 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, 2010 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
institution for imparting basic education. 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.
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 last ESOS Scheme was approved by the Shareholders on 10th August
2007. The Scheme was valid for3years effective 1st April 2007 and
lapsed on 31st March 2010. The said Scheme had a total ceiling of
2100000 Options of which 760400 Options were granted during those 3
years. Your Directors have recommended a new Employees Stock Option
Scheme effective from 1st April 2010 for a further period of 3 years
subject to approval of the shareholders. The status of the earlier
ESOS is given in the Annexure B1 to Directors Report. The Disclosure
under Clause 12.1 of SEBI (ESOS & ESPS) Guidelines for the new ESOS of
the Company is in the Annexure B2of the Directors Report.
Corporate Governance and Disclosures
Our 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 of 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 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 26, 2010 Chairman
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