Payments & Technology The growth story of RS Software RS Software (India) Limited l Annual Report 2017-18 Contents 08 Corporate identity 54 Board of directors 12 Chairman’s overview 56 Senior executive profiles 16 Management’s discussion & analysis 60 Notice 32 The Company’s review 66 Director’s report 42 RS Software’s product basket 118 Standalone financial statement 48 RS Software’s business strength 153 Subsidiary financial statement 50 Operational highlights 188 Consolidated financial statement 52 Addressing business risks Forward-looking statement In this Annual Report we have disclosed forward-looking information to enable investors to comprehend our prospects and take informed investment decisions. This report and other statements - written and oral - that we periodically make, contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’ and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realized, although we believe we have been prudent in assumptions. The achievement of results is subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should bear this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Payments and Technology The growth story of RS Software This annual report is structured around three principal arguments. Large growth ahead building a secular trend The convergence of regulations, consumer-facing technologies and the millennial generation are driving digital payments transformation, led by platforms that are building the foundation for an unprecedented global growth in digital payments. Considering that 80% + of the 3 trillion payment transactions a year still happen in cash at the consumer level, there is a digital payments opportunity for years to come Great timing for the Company RS Software is the right company at the right time to leverage these opportunities, having showcased its success in building UPI and BBPS platforms - world-class payment platform infrastructure in India, working with global leadership payment companies during the past 24 months, and investing significantly in innovation to strengthen its revenue growth model. Faster payments – the global mantra RS Software’s payment platforms specialisation addresses a multi-country opportunity. An estimated 100 countries today are investing in initiatives in building digital payments infrastructure, with different countries at varying levels of maturity. This is the growth Digital Demonstrated Scalable story of RS Payments Success possibilities Software: 02 | RS Software (India) Limited Corporate Overview Statutory Reports Financial Statements RS Software continues to make good world, our opportunities to serve and grow strides executing its strategy of serving are strong. leaders in digital payments. It has been The payments industry is transitioning quite a journey and we are confident from a traditional card-based approach to that we are on the right path to pursue a new world that enables commerce to be the growth opportunities available in the accessed with a digital credential. We are payments space. moving from a world dominated by face- We have had significant achievements over to-face transactions to online e-commerce the last two years including our building transactions, mobile m-commerce UPI and BBPS, the core digital payments transactions, and digital government to infrastructure in India. Our leadership consumer transactions (like the Indian in building these important real-time government’s direct benefit transfer payments systems for India is well timed program). to match developments in the payments In addition to this evolution in consumer industry globally. The roll-out of new payments, there is an emerging revolution real-time payments infrastructure in 2017 in B2B payments globally. Combined, these in other countries, most notably in the US, represent a multi-trillion dollar opportunity Australia, and the SEPA zone, has driven and provide the foundation for a new growth a marked change in attitudes in these for RS Software. markets. As these markets constitute the dominant part of the digital commerce “There is a tide in the affairs of men, Which taken at the flood, leads on to fortune…” – William Shakespeare Annual Report 2017-18 | 03 Payments and technology – the industry is at a point of no return The global payments market is transforming even as you read this. Regulators across the globe are accelerating the push for UPI like real-time payments platforms. Emerging payment trends (Open Banking, payment apps, invisible payments and conversational commerce) are transforming realities faster than ever. Features that deliver value are game changers. RS Software with deep knowledge in payments and mature global model, ideal to deliver value. 04 | RS Software (India) Limited Corporate Overview Statutory Reports Financial Statements This transformation is affecting the operating environment across industries. A number of them are making structural shifts in their long- term digital plans. Investments in payment technologies and services are becoming integral to success. There is a growing expectation that payment services will become invisibly embedded in the digital customer experience of tomorrow. Empowering a company like RS Software to leverage its established and unique digital payments and infrastructure-creation capabilities. Annual Report 2017-18 | 05 RS Software. Creating India’s digital payments backbone of tomorrow. India has demonstrated global leadership by investing in first-of- its- kind initiatives in building a digital payments infrastructure Unified Payment Interface (UPI), followed by Bharat Bill Payment System, India’s central bill payment network. Both these platforms have taken India from the early stage to advanced infrastructure status. The UPI and BBPS platforms are being recognised as global benchmarks for the creation of national level digital payments infrastructure. 30+ countries interested in creating similar infrastructure. 06 | RS Software (India) Limited Corporate Overview Statutory Reports Financial Statements RS Software is being respected as one of the leading players in this complex niche. The Company has been singularly focused for more than two decades in a space now acquiring global scope and scale. The result is that RS Software is attractively placed to lead with innovation and grow its revenue base. Making it a potential front-runner in transforming the payments world tomorrow. Annual Report 2017-18 | 07 8 things to know about RS Software 08 | RS Software (India) Limited Corporate Overview Statutory Reports Financial Statements 1 Who we are We are a company that has had clear vision from its inception, a strategy to implement its vision, responding to the needs of its clients by investing upfront, having started working with electronic payments in 1992, and has consistently demonstrated the ability to make bold decisions with the objective of delivering the best returns to all stakeholders. Our core values are the solid rock to deal with major economic recessionary times, making us wiser by learning from adversity. We have personified the saying “When the going gets tough, the tough get going”, and post each down impact, we have emerged significantly stronger and delivered better returns for all stakeholders. Between 2004 and 2015 the Company achieved 5X growth, and now the opportunities for growth are multiple times larger than ever before. This juncture of the life cycle of the Company, when it is reinventing itself started with the building of national digital payment infrastructure in India, paving the foundation to go after similar initiatives in 100+ countries. We are making success, albeit slowly in the last 24 months, credibly with zero debt, and are confident that ‘blood and sweat’ will soon translate to respect for the Company. This company is here for the long term. 2 Core values Make our customers more competitive Be responsive Be persuasive Be entrepreneurial This is how we secure digital exchanges for billions of people and things every day and bring trust to the digital payments world. 3 Vision Global Leader in Providing Technology Solutions to the Digital Payments Industry 4 Mission Our mission is to help enhance the economic circumstances of individuals, communities and countries through the transformative power of digital payments. Annual Report 2017-18 | 09 changing requirements of our clients. integrity, mutual respect and collective 5 Our strategy approach to meet the dynamically changing leadership. These form the guiding Our strategy for growth is to leverage the requirements of our clients. principles for our company and are the basis revolutionary changes that are happening for long-lasting partnerships with some of in the payments industry globally including the world’s leading payment brands. This India. The industry needs continual 7 Our journey journey will require patience and faith enhancement, new build and