Dear Shareholders,
Your directors take great pleasure in presenting the Thirtieth Annual Report on the business and operations of R Systems International Limited ("R Systems" or the "Company") together with the audited financial statements of accounts for the year ended December 31, 2023.
1. FINANCIAL RESULTS
Key aspects of the financial performance of your Company prepared as per the Indian Accounting Standards ("Ind AS") for the financial year ended December 31, 2023 are as under:
(H in Millions, except per equity share data)
Financial Year ended
Consolidated
2. Results of Operations
Standalone Accounts
Total revenue during the year 2023 was H 9,038.87 mn. as compared to H 8,138.90 mn. during the year 2022, an increase of 11.06%.
Profit after tax was H 1,734.57 mn. during the year 2023 as compared to H 1,127.11 mn. during 2022, an increase of 53.90%.
Basic earnings per share (of face value of H 1/- each) was H 14.66 for the year 2023 as compared to H 9.53 for the year 2022, an increase of 53.83%.
Consolidated Accounts
Total revenue during the year 2023 was H 16,845.18 mn. as compared to H 15,158.31 mn. during the year 2022, an increase of 11.13%.
Profit after tax was H 1,401.06 mn. during the year 2023 as compared to H 1,396.81 mn. during the year 2022, an increase of 0.30%.
Basic earnings per share (of face value of H 1/- each) was H 11.84 for the year 2023 as compared to H 11.81 for the year 2022, an increase of 0.25%.
The state of affairs of the Company is presented as part of Management Discussion and Analysis Report forming part of this report.
3. Appropriations and Reserves
Dividend
During the year 2023, the Board of Directors declared an interim dividend namely, Interim Dividend 2023 of H 6.80/- per equity share i.e. 680% of face value of H 1/- each at its meeting held on December 13, 2023. The said interim dividend was paid to shareholders on January 09, 2024. The Board of Directors has not recommended any final dividend for the financial year ended December 31, 2023.
Subsequent to the year ended December 31, 2023, the Board of Directors of the Company has declared Interim Dividend for the year 2024 of H 6.00/- per equity share i.e. 600% of face value of H 1/- each at its meeting held on March 19, 2024. The said dividend was paid to the shareholders on April 12, 2024.
Transfer to Reserves
In order to augment resources, your Directors do not propose to transfer any amount to reserves.
4. Business R Systems is a leading digital product engineering Company that creates next-gen products and digital experiences that empower enterprises to thrive and excel in a rapidly changing business environment. Our commitment to innovation enables us to consistently adopt the latest technologies such as cloud, automation, AI, ML, and data analytics to improve operational efficiency and aid the migration and modernization of existing digital ecosystems.
Our Core Offerings and Services are Digital Product Engineering, Cloud and DevOps, Data and AI, Quality Engineering, Embedded and Firmware, Automation and Digital Ops, Mobile Experience Design (UX/CX) and Enterprise Packaged Software and Services – Implementation and Integration.
Our digital product engineering prowess and specialized enterprise IT solutions have powered digital innovations across different domains. It has allowed us to empower clients, deliver customer-centric solutions, and expedite revenue realization.
R Systems maintains a global presence with eighteen development centres across North America, Europe, and APAC regions.
While acknowledging the signs of a global economic slowdown impacting demand dynamics, we recognize that businesses need to expedite their digital transformations by navigating the Generative AI Revolution. With a measured yet optimistic outlook, we persist in our commitment to investing in emerging technologies alongside strategic sales and marketing initiatives to drive innovation-led growth and ensure profitability in the face of prevailing challenges.
5. Quality Certifications
R Systems has continuously invested in processes, people, training, information systems, quality standards, frameworks, tools and methodologies to mitigate the risks associated with execution of projects. Adoption of quality models and practices such as the Capability Maturity Model Integration (CMMI) and People Capability Maturity Model (PCMM) practices for processes have ensured that risks are identified and mitigated at various levels in the planning and execution process. R Systems journey on various quality standards/models is as follows:
During the year 2023, Noida IT as well as Knowledge Services Division have undergone surveillance audits for ISO 9001 and ISO 27001. As of the date of this report, Noida IT division and Knowledge Services (KS) Division are PCMM Level 5, ISO 9001:2015, ISO 27001:2013 certified and HIPAA compliant. Apart from this, KS division is also PCI-DSS (ver.3.2.1) certified (for IT Infrastructure along with the projects/ process/ applications in scope). To maintain and strengthen competitive strengths, R Systems continues to make investments for enhancing its competencies around latest technologies for flawless execution and consistent delivery of state of art Product and solutions for our customers.
R Systems security policy provides a framework for protecting confidentiality, integrity and ensuring availability of organization's Information assets to the authorized persons to safeguard the interest of customer, business continuity and continual improvement of ISMS at R Systems. The security policy of R Systems has been designed to safeguard the risk associated with information security management.
6. Takeover and Reclassification of Promoters
Pursuant to the Share Purchase Agreement dated November 16, 2022, as amended on March 21, 2023 ("SPA") executed between BCP Asia II Topco II Pte. Ltd.(the "Acquirer") and (i) Dr. Satinder Singh Rekhi, (ii) Mrs. Harpreet Rekhi, (iii) The Satinder and Harpreet Rekhi Family Trust, (iv)Mr. Sartaj Singh Rekhi,(v) Mr. Ramneet Singh Rekhi, (vi) Mr. Jagmohan Singh Walia, (vii) Mrs. Amrita Rekhi, (viii) Mrs. Kuldeep Baldev Singh and (ix) Mrs. Anita Behl (hereinafter collectively referred as "Erstwhile Promoter & Promoter Group"), the Acquirer had acquired 61,129,969 equity shares, representing 51.67% of the paid up Share Capital of the Company from Erstwhile Promoter & Promoter Group on May 10, 2023.
The Acquirer had also acquired 303,036 equity shares of the Company from public shareholders under the composite offer made vide Letter of Offer dated April 10, 2023 in accordance with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and subsequent amendments thereto and SEBI (Delisting of Equity Shares) Regulations, 2021 and subsequent amendments thereto.
Pursuant to said acquisition of shares, the Acquirer became the Promoter of the Company and holds 61,433,005 equity shares of the Company.
The Erstwhile Promoter and Promoter Group was re-classified under Public Category as per approval letter dated November 01, 2023, received from National Stock Exchange of India Limited and BSE Limited under regulation 31A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").
7. Directors & Key Managerial Personnel (KMP)
During the year under review, the following changes took place in the office of Directors of the Company:
a. Pursuant to Share Purchase Agreement dated November 16, 2022, as amended by amendment agreement dated March 21, 2023 ("SPA"), entered into between BCP Asia II Topco II Pte. Ltd. and
Erstwhile Promoter and Promoter Group, Dr. Satinder Singh Rekhi resigned from the position of Managing Director & Chief Executive Officer of the Company w.e.f. May 10, 2023.
b. Lt. Gen. Baldev Singh (Retd.) and Mr. Avirag Jain resigned from the position of Director of the Company w.e.f. May 10, 2023. However, they continued in the employment of the Company, except that Lt. Gen. Baldev Singh (Retd.) took retirement w.e.f. January 01, 2024.
c. Pursuant to the shareholders' approval accorded in the 29th Annual General Meeting ("AGM") of the Company held on June 21, 2023, Mr. Amit Dalmia, Mr. Mukesh Mehta and Mr. Animesh Agrawal were appointed as Non-Executive Directors of the Company, w.e.f. May 10, 2023. d. Pursuant to shareholders' approval accorded in the 29th AGM, Mr. Nitesh Bansal was appointed as Managing Director and Chief Executive Officer of the Company, w.e.f. May 30, 2023. e. Board of Directors of the Company unanimously elected Mrs. Ruchica Gupta as the Chairperson of the Board w.e.f. May 30, 2023.
Except as stated above, there was no change in KMP(s) of the Company during the financial year ended on December 31, 2023. In terms of Section 152 of the Act, Mr. Mukesh Mehta, Non- Executive Director, being liable to retire by rotation, shall retire at the ensuing AGM and being eligible for re-appointment, offers himself for reappointment. The brief profile of Mr. Mukesh Mehta forms part of the notice of the ensuing AGM of the Company.
The Directors of R Systems have made necessary disclosures, as required under various provisions of the Companies Act, 2013 (Hereinafter referred as the "Act") and the Listing Regulations. No director of the Company is disqualified as per the provisions of Section 164(2) of the Companies Act, 2013.
OnthebasisofthedeclarationssubmittedbytheIndependent Directors of the Company, the Board of Directors has opined that all the Independent Directors of the Company fulfil the required criteria as defined under Section 149(6) of the Act and the Listing Regulations. Further, the Board of Directors is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity.
8. Changes in the Capital Structure
During the year under review, there was no change in the capital structure of the Company. The share capital structure of the Company is as follows:
(Amount in H)
Particulars
9. Acquisitions
Pursuant to Share Purchase Agreement dated June 7, 2023 entered into between the Company, Velotio Technologies Private Limited ("Velotio") and shareholders of Velotio, the Company completed the acquisition of 100% equity shares of Velotio on July 3, 2023, at a consideration of H 2,693.74 million.
Further, on December 1, 2023, Velotio has acquired balance 60% equity shares in Scaleworx Technologies Private Limited ("Scaleworx"). Post the acquisition, Scaleworx has become wholly-owned subsidiary of Velotio.
10. Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars as prescribed under Section 134 (1) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 for the year ended December 31, 2023 are as follows:
A. Conservation of Energy
Though your Company does not have energy intensive operation, every endeavor has been made to ensure the optimal usage of energy, avoid wastage and conserve energy. R Systems constantly evaluates new technologies and makes appropriate investments to be energy efficient. During the year ended December 31, 2023, R Systems adopted various energy conservation options/ technologies and took measures to reduce energyconsumptionbyusingenergyefficientequipment and devices, replacing existing CFL fittings with LEDs fittings to reduce power consumption, timely preventive maintenance of all major and minor equipment.
The air is conditioned with energy efficient compressors for central air conditioning and with split air conditioning for localized areas. The Company has converted its Diesel generators to duel fuel based generators at one of its own premises. Please also refer the Business Responsibility and Sustainability Report for details on Energy consumption.
R Systems is always in search of innovative and efficient energy conservation technologies and applies them prudently. Being in the software industry, R Systems's operations are not energy intensive and energy costs constitute a very small portion of the total cost, therefore, the financial impact of these measures is not material.
B. Technology absorption
Technology today is no longer just an enabler, rather a catalyst for exponential growth and business differentiation. Leveraging disruptive technologies such as large language models (LLM) based generative AI (Gen AI) to create new possibilities in digital product engineering and enterprise IT solutions is core to our mission.
At R Systems, Gen AI forms a pivotal block of our digital product engineering services. Embedding Gen AI capability into clients software products or building specific enterprise IT use cases that accelerate their digital transformation – delivering accuracy, speed and highly personalized experiences.
We also partner with software vendors like AWS, Google, Salesforce, Microsoft, Boomi, UiPath, and others to craft domain-specific solutions to accelerate the time-to-value and deliver exceptional customer experience (CX).
During the year ended December 31, 2023, your Company has invested in research and development around all leading digital technologies. Further, R Systems has also strengthened its proprietary solutions and frameworks optimizing the integration with digital technologies.
R Systems has setup a Center of Excellence (CoE) at the prestigious Indian Institute of Technology Delhi (IIT-Delhi) on Applied AI for Sustainable Systems. This initiative underscores the strategic priority of R Systems to promote innovation, enhance new-age skills, and develop deep tech.
C. Foreign Exchange Earnings and Outgo (Accrual Basis)
A significant percentage of R Systems revenues are generated from exports. The development and service centre in Noida is registered with the Software Technology Park of India as 100% Export Oriented Undertaking.
All efforts of the Company are geared to increase the business of software exports in different products and markets. We have made investments in sales and marketing activities in various growing markets.
The total foreign exchange used and earned by R Systems during the year as compared with the previous year is as follows:
( H in Millions)
11. Subsidiaries
As on December 31, 2023, R Systems has twenty-seven subsidiaries. The name and country of incorporation of those subsidiaries are as follows:
1Subsidiaries of R Systems Computaris International Limited, UK. 2The shareholding held by the Company and R Systems (Singapore) Pte. Limited is 69.37% and 30.38%, respectively.
3Wholly owned subsidiary of R Systems Consulting Services Limited, Singapore.
4Wholly owned subsidiary of R Systems (Singapore) Pte. Limited, Singapore.
5Wholly owned subsidiary of R Systems IBIZCS Pte. Ltd., Singapore. 6 Wholly owned subsidiary of IBIZ Consulting Services Limited - Hong Kong. 7Become subsidiary of the Company w.e.f. July 03, 2023.
8Wholly owned subsidiary of Velotio Technologies Private Limited w.e.f. December 01, 2023. 9IBIZ Consulting Services Pte. Ltd., Singapore was struck off from the Registrar of Companies w.e.f. January 08, 2024.
During the year under review, IBIZ Consultancy Services India Private Limited, wholly owned subsidiary of the Company was dissolved vide order dated April 24, 2023 of the Hon'ble National Company Law Tribunal, New Delhi ("NCLT"). During the year under review, the Company has complied with the provisions of Downstream Investment under Rule 23 of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 ("NDI Rules") and read with paragraph 9(7)(1) of RBI FED Master Direction No. 11/2017-18 dated January 04, 2018, as amended ("Master Direction"). The Company has obtained a Certificate from M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors of the Company, certifying compliance with the downstream investment as mentioned in NDI Rules and Master Direction. Subsequent to the year ended December 31, 2023, Accounting and Corporate Regulatory Authority, Singapore has approved the striking off the name of IBIZConsultingServicesPte.Ltd.,whollyownedsubsidiaryof R Systems IBIZCS Pte. Ltd. being 100% Subsidiary of R Systems (Singapore) Pte Limited, from the register of Companies w.e.f. January 08, 2024. It may be noted that IBIZ Consultancy Services India Private Limited and IBIZ Consulting Services Pte. Ltd. were not material subsidiaries of the Company and did not impact materially on the business of the Company.
As on date of this report, all the subsidiaries of the Company, except Velotio and Scaleworx, were incorporated and based outside India. In addition to provide services to various international clients these subsidiaries also help to generate revenues for R Systems.
During the year, no other corporate restructuring activity was done by the Company, except as stated in this report.
The Board of Directors of the Company regularly reviews the affairs of these subsidiaries. Policy for determining material subsidiaries of the Company is available on the website of the Company at https://www.rsystems.com/corporate-governance/policies/. During the year 2023, the Company had three material Subsidiaries, namely R Systems, Inc., R Systems (Singapore) Pte. Limited, and R Systems Computaris Europe S.R.L., all incorporated and based outside India.
A statement containing the salient features of the financial statements of our subsidiaries in the prescribed Form AOC-1 is attached at the end of consolidated financial statement of the Company. The statement also provides the details of performance, financial position of each of the subsidiaries.
Further, the audited annual accounts and related detailed information of our subsidiaries, wherever applicable, will be made available to shareholders seeking such information at any point of time. The annual accounts of the subsidiary companies will also be available for inspection by the shareholders at Registered Office of R Systems i.e. GF-1-A, 6, Devika Tower, Nehru Place, New Delhi-110019 and Corporate Office of R Systems i.e. C-40, Sector 59, Noida (U.P.)–201307 and Registered Offices of the subsidiary companies concerned during business hours. The same will also be hosted on R Systems' website i.e. www.rsystems.com.
12. Particulars of employees
The details required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed as Annexure A and forms part of this report.
Further, as required under the provisions of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the name and other particulars of employees are set out in Annexure B and forms part of this report.
13. Employee Stock Options/ Restricted Stock Units (RSUs)
The industry in which R Systems operates is people intensive and R Systems believes that human resources play a pivotal role in the sustainability and growth of the Company. R Systems has always believed in rewarding its employees with competitive compensation packages for their dedication, hard work, loyalty and contribution towards better performance of the Company. In order to incentivize, reward and motivate the employees to contribute effectively towards the future growth and profitability of the Company, the members of the Company, on the recommendation of the Board of Directors, approved the R Systems International Limited Management Incentive Plan 2023 ("MIP 2023"), vide resolution passed through postal ballot on November 15, 2023.
As per MIP 2023, a maximum of 8,000,000 Employee Stock Options ("Options")/ Restricted Stock Unit ("RSUs") may be offered and granted under the MIP 2023 to the employees of the Company and its subsidiaries, which upon exercise would entitle not more than 8,000,000 equity shares of face value of H 1/- each of the Company.
No grant was made during the year. However, subsequent to the year ended December 31, 2023 and as on date of this report, Nomination, Remuneration and Compensation Committee ("NRCC") has granted 5,434,679 RSUs to the employees of the Company and its subsidiaries to be exercised at an exercise price of H 1/- per share. The RSUs will vest subject to performance-based conditions or time-based conditions, as per the provisions of the MIP 2023 and the grant letter.
. Directors' responsibility statement
Pursuant to the requirement of Section 134 (3) (c) read with Section 134(5) of the Act, with respect to directors' responsibility statement, your Board of Directors, to the best of its knowledge and ability, hereby confirm that:
1) in the preparation of the annual accounts for the financial year ended December 31, 2023, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any; 2) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; 3) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; 4) the directors had prepared the annual accounts for the financial year ended December 31, 2023 on a going concern basis; 5) the directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
6) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
15. Statutory Auditors and Audit Report
M/s.DeloitteHaskins&SellsLLP,CharteredAccountants, [Firm's Registration No.117366W/W-100018], were re-appointed as the statutory auditors of your Company in the AGM held on June 20, 2022 for a term of five years until the conclusion of the 33rd AGM of the Company.
The Auditors have issued an unmodified opinion on the Financial Statements, both standalone and consolidated, for the financial year ended December 31, 2023. During the year 2023, the statutory auditors have not reported any matter under Section 143(12) of the Act. The said Auditors' Report(s) for the financial year ended December 31, 2023 on the financial statements of the Company forms part of the Annual Report.
16. Prevention and prohibition of sexual harassment of women at work place
Respect for Human Rights is a fundamental value of R Systems International Limited. At R Systems, it is our desire to promote a healthy and congenial working environment irrespective of gender, caste, creed or social class of the employees.
The Company has framed a policy on Prevention of sexual harassment of women at workplace and has constituted an Internal Complaints Committee ("ICC") under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, which entertains the sexual harassment complaints made by any aggrieved women employees. During the year ended December 31, 2023, there was no case reported to ICC of sexual harassment.
17. Corporate Governance
As required under the Listing Regulations, the detailed report on corporate governance is given as Annexure C to this report and the certificate obtained from
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors of the Company, regarding compliance of the conditions of corporate governance as stipulated in the Listing Regulations is annexed as Annexure D to this report.
18. Customer relations
R Systems recognizes that the customers have a choice of service providers and the directors would like to place on record their gratitude on behalf of the Company for the business provided by them. The Company's quality policy mandates that the voice of the customer is obtained on a regular basis. We constantly review the feedback and incorporate its impact into our delivery systems and communications.
19. Stakeholder's relations
R Systems is inspired by its customers and its employees transform that inspiration and customers' needs into value for all stakeholders. We thank all R Systems employees worldwide for their hard work, commitment, dedication and discipline that enables the Company to accomplish its customer commitments and commitments to all its stakeholders. R Systems is certified as a Great Place To Work? in all ten countries where it has a full-time workforce and it is also recognised as one of the 'Most Preferred Workplaces in IT & ITES for the year 2023-24'. These certification and recognitions are testament to R Systems' dedication to creating an inclusive and dynamic work environment across its global operations. It highlights the Company's commitment to building a culture that values trust, collaboration, and innovation. We thank our shareholders for their continuous support and confidence in R Systems. We are aware of our responsibilities to our shareholders to provide full visibility of operations, corporate governance and creating superior shareholder value and we promise to fulfill the same. R Systems is featured as one of the ‘Value Creators of India' in Dun & Bradstreet's prestigious 'India's Top 500 Value Creators 2023'. This honor is a testament to R Systems' consistent dedication to creating long-term value for all stakeholders, beyond financial growth.
20. Management discussion and analysis report
In terms of the Listing Regulations, Management Discussion and Analysis Report is given as Annexure Eto this report.
21. Business Responsibility and Sustainability Report
The Business Responsibility and Sustainability Report of the Company for the financial year ended December 31, 2023 as required under Regulation 34(2)(f) of the Listing Regulations forms part of this Report as Annexure F.
22. Secretarial Auditor and Secretarial Audit Report
M/s. DPV & Associates LLP, Company Secretaries, was appointed by the Board of Directors of the Company to carry out the Secretarial Audit under the provision of Section 204 of the Act for the financial year ended December 31, 2023. The Secretarial Audit report for financial year ended December 31, 2023 is enclosed as Annexure G.
As per the Secretarial Audit Report, there are no qualifications, reservations or adverse remark or disclaimer in the Secretarial Report, except that there has been a non-compliance in constitution of NRCC during the period from May 30, 2023 to August 07, 2023 under Regulation 19(2) of Listing Regulations which requires that the chairperson of the listed entity, whether executive or non-executive, may be appointed as a member of the NRCC and shall not chair such Committee. The National Stock Exchange of India Limited and BSE Limited ("Stock Exchanges") levied penalty of H 140,000/- each for the non-compliance during the period from May 30, 2023 till August 07, 2023.
The Company has rectified the said non-compliance w.e.f. August 08, 2023 and paid the penalty as levied by Stock Exchanges. The said non-compliance was inadvertent and without any malafide intention on the part of the Company.
23. Vigil Mechanism/ Whistle Blower Policy
In order to provide a mechanism to employees of the Company to disclose any unethical and improper practices or any other alleged wrongful conduct in the Company and to prohibit managerial personnel from taking any adverse action against those employees, the Company has laid down a Vigil Mechanism also known as Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the Vigil Mechanism or Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.
24. Criteria for selection of candidates for Membership on the Board of Directors and the Remuneration Policy
As per the provisions of Section 178 of the Act and other relevant provisions and on the recommendation of the NRCC, the Board has framed a criterion for selection of Directors, a policy for remuneration of Directors, Key Managerial Personnel, Senior Management Personnel and other employees. The Criteria for selection of candidates for Membership on the Board of Directors and the remuneration policy is available at the website of the Company https://www.rsystems.com/corporate-governance/policies/.
25. Meetings of the Board
The Board of Directors of the Company and its Committees meet at regular intervals to discuss, decide and supervise the various business policies, business strategy, Company's performance and other statutory matters. During the year under review, the Board met eleven times. The details of the meetings of the Board and its Committees are given in the Corporate Governance Report. The intervening gap between two Board Meetings did not exceed 120 days.
26. Committees of the Board
The Board of Directors of the Company has constituted the following Committees to focus on specific areas and take informed decisions in the best interests of the Company within authority delegated to each of the Committees:
(a) Audit Committee
(b) Nomination,RemunerationandCompensationCommittee* (c) Stakeholders' Relationship Committee (d) Corporate Social Responsibility Committee (e) Risk Management Committee (f) Management Committee
The details of composition of the aforesaid Committee(s), changes related thereof during the period under review, their terms of reference, meetings held and attendance of the Committee members during the financial year 2023 are provided in the Corporate Governance Report.
*The nomenclature of Nomination & Remuneration Committee has been changed to Nomination, Remuneration and Compensation Committee w.e.f. May 10, 2023.
27. Audit committee
R Systems has a qualified and independent Audit Committee. The constitution of the Committee is in compliance with the provisions of the Act and the Listing Regulations. During the year , Lt. Gen. Baldev Singh (Retd.) and Mr. Aditya Wadhwa ceased to be the member of the Audit Committee w.e.f.
May 10, 2023 and Mr. Amit Dalmia was appointed as member w.e.f. May 10, 2023.
Detailed description of the Audit Committee has been given in Corporate Governance Report. The terms of reference and role of the Committee are as per the rules set out in the Listing Regulations and Section 177 of the Act and rules made thereunder and includes such other functions as may be assigned to it by the Board from time to time.
The Committee has adequate powers to play an effective role as required under the provisions of the Act and Listing Regulations. During the year under review, the Board of Directors of the Company had accepted all the recommendations of the Audit Committee.
28. Board Evaluation
Pursuant to the provisions of the Act and the Listing Regulations,theBoardhascarriedoutanannualperformance evaluation of its own performance, its committees and the individual directors. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.
29. Particulars of Loans, Guarantees or investments
The details of loan, guarantees and investments covered under Section 186 of the Act are provided in the notes to accounts of the financial statements.
30. Related Party Disclosure
All the related party transactions entered during the year were in the ordinary course of business and on arm's length basis and in compliance with the applicable provisions of the Act and Listing Regulations. There are no materially significant related party transactions made by the Company with its Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict of interest with the Company at large. All the related party transactions are presented to the Audit Committee and the Board, as required. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature.
A statement of all related party transactions is presented before the Audit Committee on quarterly basis, specifying the terms & conditions of the transactions. The policy on Related Party Transactions, as approved by the Board is uploaded on the Company's website at the web link https:// www.rsystems.com/corporate-governance/policies/, details of particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Act in form AOC-2 has been enclosed herewith as Annexure H.
31. Risk Management
In terms of the Listing Regulations, the Board of Directors of the Company has constituted the Risk Management Committee to identify elements of risk in different areas of operations, comprising of the members of the Board of Directors of the Company.
The Company has developed and implemented a comprehensive Risk Management Policy including Cyber security for identification, assessment and monitoring of key risks that could negatively impact the Company's goals and objectives. This policy is periodically reviewed by the Risk Management Committee of the Board.
32. Annual Return
The Annual Return of the Company as on December 31, 2023 in Form MGT - 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https://www.rsystems.com/investors-info/annual-reports/.
33. Corporate Social Responsibility
In compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy)Rules,2014,theCompanyhasconstitutedaCorporate Social Responsibility Committee ("CSR Committee").
The constitution of the CSR Committee is in compliance with the provisions of the Act. During the year under, Mr. Amit Dalmia and Mr. Animesh Agrawal were appointed as member of CSR Committee w.e.f. May 10, 2023 and Lt. Gen. Baldev Singh (Retd.) and Mrs. Ruchica Gupta ceased to be member of CSR Committee w.e.f. May 10, 2023.
In pursuit of the responsibilities entrusted to the CSR Committee, a policy on Corporate Social Responsibility has been prepared and adopted by the Board. The objective of CSR Policy at R Systems is to support our constant endeavour to bring about positive difference to communities where we exist. Through the CSR initiatives, the Company strives to provide equitable opportunities for sustainable growth, thereby aligning with our goal to build R Systems into an organization which maximizes Stakeholder Value. The detailed policy is available at the website of the Company at following link: https://www.rsystems.com/corporate-governance/policies/.
Annual Report on CSR activities of the Company in format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 is enclosed as Annexure I and forms part of this report.
34. Dividend Distribution Policy
The Board of Directors of the Company has formulated the dividend distribution policy in line with Regulation 43A of the Listing Regulations. The Policy broadly specify the external and internal factors including financial parameters that shall be considered while declaring dividend and how the retained earnings shall be utilized, etc. The Dividend Distribution policy is available on the Company's website at https://www. rsystems.com/corporate-governance/policies/ .
35. Internal Control System and Internal Financial Controls
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Internal Auditors and the management monitors and evaluates the efficacy and adequacy of the internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Audit observations of Internal
Auditors and corrective actions thereon are presented to the Audit Committee. To maintain its objectivity and independence, the Internal Auditor reports to the Audit Committee. The Board of your Company has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively.
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, the statutory auditors of the Company, has audited the nancial statements for the financial year ended December 31, 2023 and has issued unmodi ed opinion on the adequacy and operating effectiveness of the Company's internal nancial controls over nancial reporting.
36. Other Disclosures
During the financial year under review:
the Company has complied with the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors' and ‘General Meetings', respectively.
the Company has neither invited nor accepted any deposits from the public within the purview of the Act and the Rules made thereunder, and accordingly no amount on account of principal or interest on public deposits was outstanding as on December 31, 2023.
the Company has not issued shares with differential voting rights and sweat equity shares.
no disclosure is required under Section 67 (3) (c) of the Act in respect of voting rights not exercised directly by employees of the Company, as the provisions of the said section are not applicable.
the Company is not required to maintain Cost records under Section 148(1) of the Act.
no significant or material orders were passed by the regulators or courts or tribunals which could impact the going concern status of the Company and its future operations.
no material changes and commitments have occurred after the close of the year till the date of this report which may affect the financial position of the Company except as mentioned in this report elsewhere.
37. Acknowledgments
Your directors once again take this opportunity to thank the employees, investors, clients, vendors, banks, business associates, regulatory authorities including Stock Exchanges, Noida Special Economic Zone Authority, Software Technology Park of India, the Central Government, State Government of Delhi, Uttar Pradesh, Maharashtra, Tamil Nadu for the business support, valuable assistance and co-operation continuously extended to R Systems. Your directors gratefully acknowledge the trust and confidence and look forward for their continued support in the future.
On behalf of the Board
For R SYSTEMS INTERNATIONAL LIMITED