DIRECTORS' REPORT

Your 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.

Management Discussion and Analysis

During the year 2015-16, the Company's profit after tax stood at Rs.1061 Lacs vis-a-vis H6739 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 H22396 Lacs in 2014-15 to H22927 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 H 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 H128466590 (25693318 Equity Shares of H.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  

(Chairman & Managing Director)

DIN: 00122942  

Place: Kolkata

Date: April 23, 2016