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R S Software (India) Ltd.

BSE: 517447 Sector: IT
NSE: RSSOFTWARE ISIN Code: INE165B01029
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VOLUME 37319
52-Week high 122.80
52-Week low 59.10
P/E
Mkt Cap.(Rs cr) 208
Buy Price 81.10
Buy Qty 325.00
Sell Price 0.00
Sell Qty 0.00
OPEN 81.40
CLOSE 80.90
VOLUME 37319
52-Week high 122.80
52-Week low 59.10
P/E
Mkt Cap.(Rs cr) 208
Buy Price 81.10
Buy Qty 325.00
Sell Price 0.00
Sell Qty 0.00

R S Software (India) Ltd. (RSSOFTWARE) - Director Report

Company director report

Dear members

Your Directors take pleasure in presenting their Twenty Ninth Annual Report and theaudited Statement of Accounts highlighting the business operations and financial resultsfor the financial year ended March 31 2017.

1. FINANCIALSUMMARY OR HIGHLIGHTS/PERFORMANCE OF THE COMPANY(STANDALONE ANDCONSOLIDATED)

The summarized standalone and consolidated results of your Company and its subsidiariesare given in the table below:

On the basis of standalone financial statements the performance of the Company appearsas follows:

( H 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 Companyappears as follows:

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 Afiairs

Your company is undergoing a transitional Strategy wherein the company is making astrategic shift in its business focus while reducing client concentration your company isfocusing on building platforms products and frameworks.

• Margins analysis

During the year 2016-17 the Company’s profit after tax stood at H (1822) Lacsvis--vis H1062 Lacs in the previous year. The net revenue

of current year is H8964 Lacs is down from the previous year’s revenue of H20550Lacs. The Company has focused on reducing its client concentrating during the period underreview.

The Company’s PAT margin in 2016-17 has been (20.3%) as compared to 5.17% in2015-16. The reason for decline in margin is attributable to the strategic shift made bythe Company as it is making substantial investments in: a) developing tools and platformsb) sales and marketing to enhance its customer base.

• Capital employed

The total capital employed decreased from H24544 Lacs in 2015-16 to H20976 Lacs in2016-17 due to losses incurred by the company during the year largely on account ofinvestments made by the company in developing frameworks platforms and building its salesengine.

Economic Scenario outlook and strategy

As the economy is transitioning to cardless and cashless economy R S Software sees ahuge opportunity this transformation of Global Economy. RS has contributed to developmentof UPI which is the core of cashless economy in India.

The current market outlook and positioning of RS has been covered separately as a partof this Annual Report in various sections along with other analysis and discussion onperformance.

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 theirown business.

4. DIVIDEND

Due to absence of profit the Board of directors of the Company could not recommend anydividend 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 givenbelow:

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

Name DIN Category
Mr. Shital Kumar Jain (Chairman) 00047474 Non –Executive & Independent Director
Mr. Rajnit Rai Jain 00122942 Executive Director
Mr. Rajasekhar Ramaraj 00090279 Non- Executive & Independent Director

The Company Secretary of your Company acts as the Secretary to the Audit Committee. TheTerms of Reference of the Audit Committee has been provided in the Corporate GovernanceSection forming part of this Report. During the financial year the Committee had met 4times 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 Boardduring the financial year.

Vigil Mechanism

Your Company is serious about its adherence to the codes of Conduct and to achieve atpar with the highest standards of ethical moral and legal conduct of business operationsand henceforth encourage its employees to bring ethical and legal violations. They areaware of an internal authority without fear of punishment or unfair treatment so thataction can be taken immediately to resolve the problem. A Vigil (Whistle Blower) mechanismprovides a channel to the employees and Directors to report to the management concernsabout unethical behaviour actual or suspected fraud or violation of the Codes of conductor policy. The mechanism also provides for adequate safeguards against victimization ofdirectors or employees or any other person to avail of the mechanism and also provide fordirect access to the Chairman of the Audit Committee. Thus minimization oforganization’s exposure to the damage that can occur when employees circumventinternal mechanisms is the main objective which neither releases employees from their dutyof confidentiality in the course of their work nor can it be used as a route for raisingany malicious allegations against people in authority and / or colleagues in general. Yourcompany has given affirmation that no personnel have been denied access to the AuditCommittee. The Company’s Whistle Blower Policy is available on the company’swebsite www.rssoftware.com and on the weblink http://www.rssoftware.com/investors#corporatefigovernance.

b. Nomination & Remuneration Committee

Members DIN Category
Mr. Shital Kumar Jain (Chairman) 00047474 Non –Executive & Independent Director
Mr. Rajnit Rai Jain 00122942 Executive Director
Mr. Rajasekhar Ramaraj 00090279 Non- Executive & Independent Director
Mr. Richard Nicholas Launder 03375772 Non-Executive & Independent Director

The Terms of Reference of the Committee has been provided in the Corporate GovernanceSection forming part of this Report. During the financial year the Committee had met 4times as on April 22 2016 July 20 2016 October 14 2016 and January 17 2017. TheCommittee has formulated the Nomination and Remuneration policy which broadly laid downthe various principles of remuneration being support for strategic objectivestransparency internal

& external equity flexibility performance driven remuneration affordability andsustainability and covers the procedure for selection appointment and compensationstructure of Board members Key Managerial Personnel (KMPs) and Senior ManagementPersonnel (SMPs) of your Company. The said Policy is available on your Company’swebsite www.rssoftware.com and on the weblink http://www.rssoftware.com/investors#corporatefigovernance.

c. Stakeholders Relationship Committee

Members DIN Category
Mr. Shital Kumar Jain (Chairman) 00047474 Non–Executive & Independent Director
Mr. Rajnit Rai Jain 00122942 Executive Director

The Terms of Reference of the Committee has been provided in the Corporate GovernanceSection forming part of this Report. During the financial year the Committee had met 4times as on April 22 2016 July 20 2016 October 14 2016 and January 17 2017.

d. Corporate Social Responsibility Committee

Members DIN Category
Mr. Rajnit Rai Jain (Chairman of the Committee) 00122942 Executive Director
Mr. Shital Kumar Jain 00047474 Non–Executive & Independent Director
Mr. Rajasekhar Ramaraj 00090279 Non–Executive & Independent Director

During the financial year the Committee had met 1 times as on 18th January 2017

e. Executive committee

Members DIN Category
Mr. Rajnit Rai Jain (Chairman of the Committee) 00122942 Executive Director
Mr. Shital Kumar Jain 00047474 Non-Executive & Independent Director
Mr. Rajasekhar Ramaraj 00090279 Non-Executive & Independent Director
Mr. Richard Nicholas Launder 03375772 Non-Executive & Independent Director

During the financial year the Committee had met 4 times as on April 22 2016 July 202016 October 14 2016 and January 17 2017.

7. ISSUE OF EMPLOYEE STOCK OPTIONS

Your company believes in employees’ participation in management and considers ESOPScheme as an empowerment tool. During the financial year 2016-17 the employees hadexercised 15000 ESOP options and according to the Company’s ESOP Scheme 15000 equityshares were allotted to the eligible employees.

8. PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BYTRUSTEES FOR THE BENEFIT OF EMPLOYEES

The Company has a Trust named R S Software Employees Welfare Trust which is alsoholding 1148640 shares of the Company being purchased from the Secondary Market and nosuch 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 yearof the Company to which the financial statements relate and the date of the reportaffecting 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 infuture.

12. RISK MANGEMENT

In terms of the requirement of the Companies Act 2013 and Regulation 17 (9) of ListingRegulations 2015 the Company has developed and implemented the Risk Management Policy.The Company has taken adequate measures to mitigate various risk encountered. In theopinion of the Board there is no such risk which may threaten the present existence of theCompany.

13. INTERNAL CONTROL SYSTEMS

Your Company has adequate system of internal control procedures commensurate with itssize and the nature of its business. The internal control systems of the Company aremonitored and evaluated by the Internal Auditors. Your Company manages and monitors thevarious risks and uncertainties that can have adverse impact on the Company’sBusiness. Your Company is giving major thrust in developing and strengthening its internalaudit so that risk threat can be mitigated.

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

Further more the Audit committee of your company evaluates and reviews the adequacyand effectiveness of the internal control systems and suggest improvements. Significantdeviations are brought to the notice of the audit committee and corrective measures arerecommended for implementations. Based on the internal audit report process ownersundertake corrective actions in their respective areas. All these measures help inmaintaining 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 theCompanies (Accounts) Rule 2014 the statement containing the salient feature of thefinancial 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 theaforesaid Rules the Listing Regulation with the Stock Exchanges and in accordance withthe Accounting Standard 21 (AS-21) Consolidated Financial Statements prepared by yourCompany include financial information of its subsidiary companies. During the yearPaypermint Private Limited becomes the subsidiary of the company. Further the Company hasno Joint Venture and Associate during the financial year ended 31st March 2017.

15. PERFORMANCE AND FINANCIAL POSITION OF EACH OF THE SUBSIDIARIES ASSOCIATES ANDJOINT VENTURE COMPANIES INCLUDED IN THE CONSOLIDATED FINANCIAL STATEMENT

A report on the performance and financial position of each of the Subsidiaries includedin the consolidated financial statements prepared by your company as per Rule 8(1) of theCompanies (Accounts) Rules 2014 forms part of the audited annual accounts of each of thesubsidiary companies which have been placed on the website of your companywww.rsssoftware.com. Members interested in obtaining a copy of audited annual accounts ofeach of the subsidiary companies may write to the Company Secretary at your Company’sRegistered Office.

16. DEPOSITS

The Company has not accepted any kind of deposit from the public falling within theambit 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 FRN302137E allotted by The Institute of Chartered Accountants of India (ICAI) retires asAuditor of your Company and therefore they are not eligible for re-appointment as theirtenure is expired as per the provisions of Companies Act 2013.

M/s. Deoki Bijay & Co. Chartered Accountants (Registration No. 313105E) are beingappointed as the Auditors of the Company in place of the retiring Auditors to hold officefrom the conclusion of this 29th Annual General Meeting till the conclusion of the 30thAnnual General Meeting subject to approval by the shareholders at ensuing Annual GeneralMeeting

The retiring Statutory Auditor Chaturvedi & Company has submitted an un-qualifiedAudit 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 hasappointed M/s. MR & Associates a firm of Company Secretaries in Practice to undertakethe Secretarial Audit of the Company. The Secretarial Auditor has submitted anun-qualified Secretarial Audit Report for the financial year 2016-17. The Report of theSecretarial 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 FormMGT-9 as required under section 92(3) of the Companies Act 2013 read with Rule 12(1) ofthe 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 ManagementDiscussion 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 ofManagerial Personnel) Amendment Rules 2016 are set out as "Annexure E" to theDirector’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 theCompanies 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 JainChairman & Managing Director of the Company is being re-appointed for a period of 3years based on the recommendation of Nomination and Remuneration Committee subject tothe approval of the members at the ensuing Annual General Meeting at remuneration asdecided by the Board.

Mrs. Sarita Jain a Non-Executive & Non-Independent Director of the company who isliable to retire by rotation and offers herself for reappointment based on therecommendation of Nomination and Remuneration Committee subject to the approval of themembers at the ensuing Annual General Meeting

All the Independent Directors’ of your Company furnish declaration at the time oftheir appointment as also annually that they qualify the tests of their being independentas laid down under sub-section (6) of Section 149 of the Companies Act 2013 andRegulation 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 thefinancial year 2016-17.

24. Remuneration Policy

Remuneration policy of the RS Software (India) Ltd comprising members of the Board ofDirectors ("Board") Key Managerial Personnel ("KMP") SeniorManagement Personnel (SMP or "LT") and the other employees of theCompany.

The objective of the remuneration policy is to enable the Company to attract motivateand retain qualified industry professionals for the Board of Management and otherexecutive level in order to achieve the Company strategic goals. The remuneration policyacknowledges the internal and external context as well as the business needs and long termstrategy. The policy is designed to encourage behaviour that is focused on long-term valuecreation while adopting the highest standards of good corporate governance. TheCompany’s Remuneration Policy is available on the company’s websitewww.rssoftware.com and on the weblink http://www.rssoftware.com/investors#corporatefigovernance.

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 itsendeavour to uplift the downtrodden of Society. With the rapidly changing corporateenvironment more functional autonomy operational freedom etc. our company has adoptedCSR as a strategic tool for sustainable growth. The Committee had approved the CSR policyand the Budget. In the year under review your company could not spend the entire alocatedbudget of H28.41 lacs since the company incurred loss during the financial year and couldnot focus on CSR spent. The CSR policy is uploaded on Company’s website i.e. onwww.rssoftware.com. Further the Report on CSR Activities/ Initiatives is enclosed as"Annexure G".

26. Particulars of Loans Guarantees and Investments

The particulars of loans guarantees or investments made under section 186 of theCompanies Act 2013 are covered in the notes of the Financial Statement for the year ended31st March 2017.

27.PARTICULARSOFCONTRACTSORARRANGEMENTS WITH RELATED PARTIES

All contracts / arrangements / transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm’slength basis.

There are no materially significant related party transactions made by the Company withPromoters Directors or Key Managerial Personnel etc which may have potential conflictwith 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 itsapproval.

The Related Party Transaction Policy has been devised by your company for determiningthe 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 FamiliarizationProgramme for Independent Director to familiarize them with their roles rightsresponsibilities in the company nature of the industry in which the company operatesbusiness 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 ofits Committees and individual Directors. The exercise was carried out covering variousaspects of the Boards functioning such as composition of the Board & committeesqualification experience & competencies performance of specific duties &obligations governance issues etc. Separate exercise was carried out to evaluate theperformance of Non-Independent Directors. The performance of Independent Directors hasbeen evaluated based on the guidelines as provided under Schedule IV of the Act. Theevaluation of the Independent Directors was carried out by the entire Board except by theDirector being evaluated. The directors were satisfied with the evaluation results whichreflected the overall engagement of the Board and its Committees with the Company.

30. PREVENTION OF INSIDER TRADING

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

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

31. CORPORATE GOVERNANCE

The Corporate Governance which form an integral part of this Report are set out asseparate "Annexure H" together with the Certificate from the auditors of theCompany regarding compliance with the requirements of Corporate Governance as stipulatedin Regulation 34(3) read with Schedule V of 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 atmosphereirrespective of gender caste creed or social class of the employees. Your company hasput in place a "Policy on Prevention of Sexual Harassment" as per The SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

Your directors further state that during the year under review there were no casesfiled pursuant to the sexual harrassment of women at workplace (Prevention Prohibitionand Redressal) Act 2013.

33. DIRECTORS’ RESPONSIBILITY STATEMENT

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

(i) In the preparation of the annual accounts for the financial year ended 31st March2017 the applicable accounting standards had been followed along with proper explanationrelating to material departures; (ii) we have selected such accounting policies andapplied them consistently and made judgments and estimates that are reasonable and prudentso as to give a true and fair view of the state of affairs of the company at the end ofthe financial year and of the profit and loss of the company for that period; (iii) wehave taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the companyand for preventing and detecting fraud and other irregularities; (iv) we have prepared theannual 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 andthat such internal financial controls are adequate and were operating effectively.

(vi) we have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

34. ACKNOWLEDGEMENTS

Your Directors’ place on record their deep appreciation of the continuedassistance and co-operation extended to the Company by its customers investors bankersGovernment agencies and its dedicated band of employees. Above all the Board expresses adeep sense of gratitude to the Members of the Company who have reposed faith in theirBoard and the Management.

Thanking you

For and on behalf of the Board of Directors
Sd/-
Place: Kolkata Rajnit Rai Jain
Date: April 19 2017 CHAIRMAN AND MANAGING DIRECTOR
(DIN: 00122942)