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Persistent Systems Ltd.

BSE: 533179 Sector: IT
NSE: PERSISTENT ISIN Code: INE262H01013
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VOLUME 160
52-Week high 706.95
52-Week low 501.10
P/E 17.48
Mkt Cap.(Rs cr) 5,059
Buy Price 631.35
Buy Qty 3.00
Sell Price 634.00
Sell Qty 1.00
OPEN 632.00
CLOSE 626.70
VOLUME 160
52-Week high 706.95
52-Week low 501.10
P/E 17.48
Mkt Cap.(Rs cr) 5,059
Buy Price 631.35
Buy Qty 3.00
Sell Price 634.00
Sell Qty 1.00

Persistent Systems Ltd. (PERSISTENT) - Director Report

Company director report

Report of the Directors

Your Directors are pleased to present the Twenty-Seventh Annual Report of your Companyalong with the Audited Financial Statements for the financial year ended March 31 2017.

The consolidated financial statements for the year ended March 31 2017 have beenprepared in accordance with Ind AS. Accordingly all the financial information related toFY 2016-17 and FY 2015-16 is stated as per Ind AS in this report.

Business Update

Your Company has the heritage of working with software product companies which setsyour Company well to be successful in the expanded market. The focus on data digital andIoT is well aligned with market requirements and is helping your Company establishleadership.

New technology has had another effect - it takes less effort and less time to get thesame things done. This has put pressure on the existing business model of your Companywhich has traditionally been based on billing on effort. Your Company had anticipated thisshift and organized the business with a clear focus on digital transformation. At thebeginning of last year to align the organization with this strategy your Companyreorganized the business around 4 (four) key growth areas:

• Digital - focused on the "how" of digital by bringing togethertechnology partner ecosystem solutions and a unique architecture to enable enterpriseswith digital transformation

• Alliance - focused on the long-standing and multi-dimensional relationshipbetween Persistent Systems and IBM

• Services - focused on services for software and product developmentincluding agile and experience design that are driven by the mainstream adoption of nextgeneration technologies

• Accelerite - focused on products that includes business-criticalinfrastructure software for enterprises telecom operators and the public sector

The results from this strategy are visible and the share of IP-led business and thebusiness resulting out of digital transformation is more than half of your Company's totalrevenue and is growing at a healthy rate. Your Company continues to be recognized as athought leader by customers partners and industry analysts. With strategy in place yourCompany's mantra for the year is focus collaborate and execute.

Data Digital and IoT

Digital and IoT enabled by enterprise data integration define the building blocks fora software driven business. Your Company sees this as an important nexus of technologiesfor the future. With big data and machine learning it is possible to build at scalesolutions that combine data from internal enterprise systems external data sources andIoT sensors. With connected devices these intelligent systems are completing the feedbackloop by responding in real time. The ability to build an eco-system that can leveragethese insights is helping create new business models that will monetize these investments.

In line with the market demand and the need to focus on IoT your Company broughttogether market-facing IoT groups from the Alliance and Accelerite as one unit. This willstrengthen the IoT offering by leveraging the IP solutions and device and sensorpartnerships across a wider set of platform partners.

IBM Watson IoT Alliance

Your Company successfully completed the integration of teams acquired from IBM as partof the agreement entered into with IBM during last financial year to support and extendthe IBM Continuous Lifecycle Management and Continuous Engineering product suite. Newsites were established in Guadalajara Mexico; Rehovot Israel; Ottawa Canada andEdinburgh Scotland during the year.

The product suite had good growth during the year and the roadmap is helping set thebenchmark for continuous engineering. Partnership with IBM is helping generate leads andyour Company is setting up a center in IBM's Watson IoT World Headquarters in MunichGermany enabling better access to IoT Customers.

Partnerships

Your Company continues to invest in partnerships building solutions and acceleratorsas well as in frameworks for enterprises to become software-driven. Your Company'sstrategy to build platform based solutions has seen very good growth in the Salesforce andAppian business. Your Company is now a platinum consulting partner for Salesforce.Continuing the focus on platform based approach your Company has partnered with GoogleCloud Platform Amazon Web Services Dell Boomi and this should result in good growth inbusiness in the coming year.

Your Company has signed a strategic collaboration with Partners Healthcare to develop anew industry-wide open- source platform to bring digital transformation to clinical care.This four-year collaboration will bring together the world class clinicians andresearchers at Partners HealthCare with your Company's innovative healthcare technologyand product engineering expertise. The co-developed digital platform will be based onSMART (open standards-based technology platform) along with FHIR (Fast HealthcareInteroperability Resources). The platform will enable provider systems across the countryto rapidly and cost effectively deploy industry-leading best practices in clinical careacross their ecosystems.

Your Company has partnered with USAA a financial services provider that serves membersof the US military and their families. USAA has been an innovator in securingauthentication and financial transactions through a process that extends beyond userpasswords and security questions. The development and intellectual property rights grantedto your Company stem from innovations that USAA uses to identify and verify members whilealso protecting their privacy. Through this agreement your Company will extend thesetechnologies and address a growing market opportunity for digital security products andsolutions in the financial services industry. Your Company will focus on authenticationand security solutions based on concepts such as micro-trust risk-aware contextual andpersonalized in conjunction with technologies related to biometrics risk modeling anddynamic proofing.

Acquisitions

Your Company completed the acquisition of PRM Cloud Solutions one of Australia'sleading Salesforce partner and cloud application development firms. Your Company alsocompleted the acquisition of GenWi a Bay area based startup focused on building digitalsolutions. Both these acquisitions augment the capabilities of the Digital Unit.

VLDB and Smart India Hackathon 2017

Your Company hosted the 42nd International Conference on Very LargeDatabases (VLDB) in Delhi in September 2016. The conference is a premier researchconference in the database area and was a stellar success. There were more than 900participants from 39 countries who will cherish their experience of attending theconference and visiting India for the rest of their lives.

Your Company was one of the organizers of Smart India Hackathon 2017 a 36 hoursnon-stop digital product development competition initiated by All India Council forTechnical Education (AICTE) under the aegis of the Ministry of Human Resource Development(MHRD). For the final 36-hour hackathon 1250 teams 10000 participants worked in 26locations across the country on more than 600 problems shared by 29 ministries. PrimeMinister Shri. Narendra Modi also addressed the students as part of this event.

Financial Results

The highlights of the financial performance on a consolidated basis for the year endedMarch 31 2017 are as under:

Particulars

(Amount in USD Million except EPS and Book Value)

(Amount In Rs. Million except EPS and Book Value)

2016-17 2015-16 2016-17 2015-16 % Change (based on the amounts in ')
Revenue from Operations 429.01 351.65 28784.39 23123.31 24.48
Earnings before interest depreciation and amortization exceptional item and taxes 69.36 59.54 4653.47 3915.08 18.86
Finance Cost 0.01 0.01 0.91 0.92 (1.09)
Depreciation and amortization 22.21 15.06 1490.17 990.13 50.50
Exceptional item (Expense) 1.70 - 114.11 -
Other income 14.28 11.75 958.45 772.88 24.01
Provision for income tax 14.79 14.05 992.08 923.92 7.38
Net profit for the year 44.93 42.17 3014.65 2772.99 8.71
Transfer to general reserve 17.53 16.15 1176.12 1061.84 10.76
Net worth* 292.50 249.16 18968.38 16504.58 14.93
Earnings per share (EPS) (Basic) 0.56 0.53 37.68 34.74 8.46
Earnings per share (EPS) (Diluted) 0.56 0.53 37.68 34.66 8.71
Book value per equity share 3.66 3.11 237.10 206.31 14.92

[Conversion Rate USD 1 = ' 67.09 for Profit and Loss items; USD 1 = ' 64.85 for BalanceSheet items (financial year 2016-17) and USD 1 = ' 65.76 for Profit and Loss items; USD 1= ' 66.24 for Balance Sheet items (financial year 2015-16)].

*Net worth = Equity Share Capital + Reserves and Surplus (excluding capital reserve) +Other Comprehensive Income.

The highlights of the financial performance on an unconsolidated basis for the yearended March 31 2017 are as under:

Particulars

(Amount in USD Million except EPS and Book Value)

(Amount In Rs. Million except EPS and Book Value)

2016-17 2015-16 2016-17 2015-16 % Change (based on the amounts in ')
Revenue from Operations 258.30 220.06 17329.64 14471.36 19.75
Earnings before interest depreciation and amortization and taxes 55.18 49.51 3701.79 3255.77 13.70
Finance Cost 0.01 0.01 0.91 0.92 (1.09)
Depreciation and amortization 9.09 8.90 609.68 585.35 4.16
Other income 14.10 12.08 946.21 794.70 19.07
Provision for income tax 16.35 14.72 1097.09 968.21 13.31
Net profit for the year 43.83 37.96 2940.32 2495.99 17.80
Transfer to general reserve 17.53 16.15 1176.12 1061.84 10.76
Net worth* 279.79 236.21 18144.14 15646.46 15.96
Earnings per share (EPS) (Basic) 0.55 0.48 36.75 31.27 17.52
Earnings per share (EPS) (Diluted) 0.55 0.47 36.75 31.20 17.79
Book value per equity share 3.50 2.95 226.80 195.58 15.96

[Conversion Rate USD 1 = ' 67.09 for Profit and Loss items; USD 1 = ' 64.85 for BalanceSheet items (financial year 2016-17) and USD 1 = ' 65.76 for Profit and Loss items; USD 1= ' 66.24 for Balance Sheet items (financial year 2015-16)].

*Net worth = Equity Share Capital + Reserves and Surplus + Other Comprehensive Income

Material Events Occurring after Balance Sheet Date

There were no material changes and commitments affecting the financial position of yourCompany between the end of the financial year and the date of this report.

Liquidity

Your Company continues to maintain adequate amount of liquidity to meet its strategicand growth objectives. Your Company has ensured a balance between earning adequate returnson liquid assets and the need to cover financial and business risks. As at March 31 2017your Company on an unconsolidated basis had cash and cash equivalents (includinginvestments) amounting to ' 8159.98 Million as against ' 7610.69 Million as at March 312016. The details of cash and cash equivalents (including investments) are as below:

(In Rs. Million)

Particulars As at March 31 2017 As at March 31 2016
Investment in Mutual Funds at fair value 6193.93 5640.25
Fixed Deposits with scheduled banks 564.18 561.72
Deposit with Financial Institutions 435.00 300.00
Ta x free Bonds (quoted) 517.04 609.46
Cash and Bank balances 449.83 499.26
Total 8159.98 7610.69

Dividend

In January 2017 your Directors declared an Interim Dividend of ' 6 per share on thepaid-up equity share capital out of the net profits of your Company. Total outflow onaccount of this interim dividend including dividend distribution tax amounted to ' 577.72Million.

The Board has recommended a Final Dividend of ' 3 per share for the financial year2016-17. Total outflow on account of Anal dividend including dividend distribution taxwould amount to ' 288.86 Million. The payment of Anal dividend of ' 3 per share is subjectto the approval of the Members. Thus including the proposed Anal dividend the totaldividend for the financial year 2016-17 would be ' 9 per share as compared to ' 8 pershare in the financial year 2015-16.

Out of the interim dividend declared in January 2017 ' 0.12 Million remained unclaimedas on March 31 2017.

The Company has uploaded its Dividend Distribution Policy on its website at'https://www.persistent.com/wp-content/uploads/2016/09/Dividend-Distribution-Policy.pdf'

Transfer to reserves

Your Company proposes to transfer an amount of ' 1176.12 Million to the GeneralReserve and an amount of ' 1145.08 Million is proposed to be retained in the Statement ofProfit and Loss after payment of interim dividend and tax thereon. The balance in theProfit and Loss Account as on March 31 2017 is ' 7784.28 Million.

Fixed Deposits

In terms of the provision of Sections 73 and 74 of the Companies Act 2013 (the‘Act') read with the relevant rules your Company has not accepted any fixed depositsduring the year under report.

Team Persistent

Talent Additions during the Year

Your Company continues to attract high caliber quality talent in the industry. Duringthe financial year 2016-17 your Company recruited 2310 employees on a consolidated basisconsisting of regular employees trainees / interns consultants business consultantscontract consultants consisting of (technical and non-technical) professionals.

As on March 31 2017 your Company employed 9460 professionals (including trainees andassociates) on a consolidated basis spread across 18 countries. The technical strength was8808 employees which comprised among others 4969 graduates (Engineers and Technicians)2043 post graduates and 26 Ph.D.s. Your Company is going global and there was asignificant increase in the distribution of overseas employees which now constitutes15.97% of the total work force as against 12.28% in the last year.

Your Company recruits fresh talent from various engineering colleges in India. Duringthe year under report your Company added a batch of 223 new graduates through campus.Your Company strongly believes in nurturing ‘Industry - Academia' partnerships andhas many programs to engage with students such as BE project mentoring Persistent DayInternship and sessions through experts of Persistent Computing Institute (PCI).

The attrition rate during the year was 15.69% which was less than the attrition rate of16.43% in the previous year. Continuous Learning and Skill Enablement

In line with a focus on continuously learning and self-development PersistentUniversity is driving ongoing skills development thus ensuring that employees are readyfor the future. It serves as a one-stop learning destination with offerings to enhancetechnical skills business communication management and behavioral skills. Multiplelearning methodologies are offered such as in-class trainings remote trainings blendedtrainings Massive Online Courses self-learning and assessments for internalcertification. Employees can choose from a variety of courses along with combination oflearning methodologies as per their individual learning plan (ILP). Every employee's ILPis in line with the Company project and individual aspirations.

Training details during the financial year 2016-17

Your Company covered 77% of the employees through at least one training this year and63% employees passed at least one internal certification. Your Company trained about 746campus hires in the Entry Level Training Program (ELTP) and about 477 employees under FullStack Training this year.

The total investment for In-Class training was around 1700 person months and totalingto 11887 enrollments. Self-learning investment on In-house knowledge center courseenrollments was around 1000 person months.

Total enrollments for internal certifications either after In-Class training orself-learning were 24310.

Your Company encourages learning and knowledge enhancements via various means. Thisyear your Company continued with the Technothon initiative where the campus hires workon new technologies (IoT Machine Learning Block Chain Dev Ops AWS MEAN Stack fullstack). They build and exhibit end-to-end mini-projects. Around 80 such mini projects wereexhibited after the ELTP.

Infrastructure

During the financial year 2016-17 the total built-up capacity owned by your Company inIndia and abroad was 115478 m2.

The details of owned facilities of your Company are as follows:

Location Year of Acquisition / Completion Total Built-up Area (m2) Total Seating Capacity
Pune
Kapilvastu 1994 202 35
Panini 1998 929 80
Bhageerath 2002 12170 586
Aryabhata - Pingala 2007 31680 2618
Hinjawadi 2012 41446 3173
Goa
Charak 1997* 3280 412
Bhaskar 2014 3762 313
Nagpur
IT Tower 2003 3708 352
Gargi and Maitreyi 2011 17279 1263
Grenoble France 2000** 1022 50
Total 115478 8882

* Company started to occupy this premises from October 2005 onwards.

** Company acquired this premises in August 2011 as part of the acquisition of theGrenoble team.

Along with the Company owned premises your Company also operates from leasedfacilities at Bengaluru Hyderabad Kuala Lumpur (Malaysia) Belfast (UK) Colombo (SriLanka) Guadalajara (Mexico) Rehovot (Israel) Dublin (Ireland) Ottawa (Canada)Edinburgh (Scotland) and Santa Clara (CA) Irvine (CA) Dublin (OH) Littleton (MA)Raleigh (NC) Bellevue (WA) Nashua (NH) in the US.

Awards and recognitions during the financial year 2016-17

During the financial year 2016-17 your Company continued its tradition of winningvarious awards and getting new recognitions. Your Company was a proud recipient of thefollowing awards during the year:

1. Recognized in ‘Leadership' zone across all categories in ‘Zinnov Zones forDigital Services'

2. Named Appian Regional Partner of the Year Americas and Awarded "Best Use ofMobile" in Appian App Market Awards

3. Won the India's ‘Coding Power House' in 2016 which is thrice in a row

4. Recognized for the strongest overall capabilities in Distributed Agile Delivery ofServices by Ovum Decision Matrix: 2016-2017

5. Recognized as Oracles' North America Partner of the Year in Security

6. Recognized in Leadership Zone for ‘Software Platform Engineering &Management' and ‘Engineering Analytics & Decision Sciences' in ‘Zinnov Zones2016 - IoT Technology Services' Report

7. Got featured in Forbes India Magazine - "With an eye on the cloud PersistentSystems continues to innovate"

8. Recognized at the Oracle Excellence Awards 2016 as a specialised partner forsecurity

9. Recognized by the Association for Talent Development in the 2016 BEST Awards fordemonstrating enterprise-wide success through talent development

10. Cited as a Leader among BPM Service Providers by The Forrester Wave™: BPMService Providers Q4 2016 Report

11. Ranked amongst the ‘Fastest Growing Firms‘ in Consulting Magazine

12. Recognized for its industry-leading Product Engineering competency in ‘ZinnovZones 2016 - Product Engineering Services' Report

13. Recognized as ‘Salesforce Platinum Consulting Partner' a reflection of yourCompany's growing strength and market success

14. Named by IBM as the ‘Worldwide Watson Internet of Things Innovative BusinessPartner of the Year' at the IBM World of Watson 2016 Business Partner Awards

15. Recognized by the New HfS Report for Growing Momentum in Salesforce Ecosystem

16. Beacon Award Finalist recognition at the 2017 IBM Partnerworld Leadershipconference in Las Vegas

17. Won the Prestigious Global award from Association for Talent Development

18. Won the Premier Global Award from Training Magazine

19. Won the TISS- LEAPVAULT CLO AWARD for Best Corporate University from Tata Instituteof Social Sciences which is five times in a row

20. Won ‘Platinum' rating in ‘The Asset Corporate Awards 2016' for Excellencein Governance CSR & Investor Relations

21. League of American Communications Professionals (LACP) Florida USA announced theAnnual Report 2016 as the winner of -

i) ‘Gold' award for excellence within its Competition Class

ii) Ranked 40th rank among Top 100 Communications Materials of 2016

22. Won a ‘Special Jury Award' for Environment and Sustainability by HYSEA for theyear 2015-16

23. The Infrastructure Facility Human Resources & Realty Association (iNFHRA) hasawarded the following awards:

i) Xcellence award for Ecological Sustainability to Mr. Sanjay Chaudhari SeniorManager - Admin

ii) Xcellence award for Corporate Travel Transport & Logistics to Mr. Amol UndreAssociate Sr. Manager - Admin

iii) Xcellence award for Safety & Security to Mr. Robin Hyam Associate GeneralManager - Admin

Auditors

Appointment of statutory auditors

The Members of your Company at the Twenty-Fourth Annual General Meeting held on July26 2014 appointed M/s. Deloitte Haskins & Sells LLP Chartered Accountants (FirmRegistration No. 117366W/W-100018) and M/s. Joshi Apte & Co. Chartered Accountants(Firm Registration No. 104370W) as the Joint Statutory Auditors of your Company to holdsuch office till the conclusion of the Annual General Meeting in the calendar year 2019and 2017 respectively.

Pursuant to such appointment M/s. Joshi Apte & Co. Chartered Accountants willretire at the conclusion of the Annual General Meeting scheduled to be held on July 202017. The Directors acknowledge their valuable contribution during the last 27 years andwishes them success in their future endeavors.

M/s. Deloitte Haskins & Sells LLP has confirmed their eligibility and willingnessto accept office if the appointment is ratified by the Members of your Company. Furtherin terms of the Regulation 33(1)(d) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (the "Listing Regulations") the statutoryauditor of your Company has subjected to the Peer Review Process of the Institute ofChartered Accountants of India (ICAI). M/s. Deloitte Haskins & Sells LLP has confirmedthat they hold a valid certificate issued by ‘Peer Review Board' of ICAI; and haveprovided a copy of the said certificate to your Company for reference and records.

The ratification of appointment of Statutory Auditor is subject to the approval of theMembers of your Company.

Your Directors propose ratification of appointment of M/s. Deloitte Haskins & SellsLLP as the Statutory Auditors of your Company.

Secretarial Audit Report

Pursuant to Section 204 of the Act the Board of Directors had appointed M/s. SKO &Associates Practicing Company Secretaries as the Secretarial Auditors of your Company forthe financial year 2016-17.

Accordingly the Secretarial Auditors have given their report which is annexed heretoas Annexure A. The comments of the Board on the observations of the Secretarial Auditorsare as follows:

Sr. No. Observations by Secretarial Auditors Comments by the Board
1. Pursuant to Section 89 of the Act the Company has not Fled in six instances forms with the Registrar of Companies within the prescribed time intimating change in beneficial interest on transfer of shares to the employees pursuant to the exercise of vested stock options during the year under report. The Company has been prompt to notify the changes in the beneficial interest to the Ministry of Corporate Affairs (MCA). However due to technical issues with the MCA website (which was also acknowledged by MCA) the Company could not intimate the changes within prescribed time for those six instances.
2. Pursuant to section 125 of the Act the Company has not Fled Form IEPF - 2 within prescribed limit of 90 days during the year under report. Since the Form IEPF - 2 was not available on the website of MCA the Company could not file the same within prescribed time. However as soon as the Form was made available by MCA the Company promptly Fled it.

Board and Corporate Governance Board Meetings

The details pertaining to the composition terms of reference and other details of theBoard of Directors of your Company and the meetings thereof held during the financial yearare given in the Report on Corporate Governance section forming part of this AnnualReport.

Directors and Key Managerial Personnel

Dr. Anant Jhingran who was an Independent Director of the Company since November 102011 resigned from the Board with effect from November 3 2016 to focus on his otherprofessional commitments. The Directors take this opportunity to thank Dr. Jhingran forhis strategic guidance and his contributions to your Company. The Directors wish himsuccess in his future endeavors.

Mr. Thomas (Tom) Kendra was appointed as an Independent Director with effect fromJanuary 22 2016. On March 28 2017 your Company entered into an agreement with M/s.Azure Associates LLC USA which is owned by Mr. Kendra for providing businessconsultation coaching advisory and mentoring services to the Company. Pursuant to thesaid agreement Mr. Kendra's status has changed from 'Independent Director' to'Non-Executive Non-Independent Director' with effect from April 1 2017. The saidagreement was ratified by the Board of Directors at its meeting held on April 24 and 252017.

A separate proposal seeking approval of the Members for noting the change of status forMr. Kendra from 'Independent Director' to 'Non-Executive Non-Independent Director' of yourCompany forms part of the Notice of the ensuing Annual General Meeting.

The appointment of 5 (Five) Independent Directors was made at the 24thAnnual General Meeting (AGM) held on July 24 2014 for a period of 5 (Five) consecutiveyears for a term up to conclusion of the 29th AGM to be held in the calendaryear 2019. Pursuant to Section 149(13) of the Act they are not liable to retire byrotation.

In terms of Section 152(6) of the Act and Article 137 of the Articles of Association ofyour Company Dr. Anand Deshpande Chairman and Managing Director is liable to retire byrotation at the Twenty-Seventh Annual General Meeting as he is the Non-IndependentDirector who is holding office for the longest period among the Non-Independent directorsliable to retire by rotation.

Dr. Deshpande has confirmed his eligibility and willingness to accept the office of theDirector of your Company if confirmed by the Members at the ensuing Annual GeneralMeeting. In the opinion of your Directors Dr. Deshpande has requisite qualifications andexperience and therefore your Directors recommend that the proposed resolution relatingto the re-appointment of Dr. Deshpande be passed.

At present your Company has 5 (Five) Non-Executive Directors who are IndependentDirectors. Pursuant to the Regulation 17(1)(b) of the Listing Regulations every listedcompany shall have at least half of its total strength of the Board of Directors asIndependent Directors. Based on the present composition of the Board of Directors yourCompany complies with this requirement.

In terms of the Listing Regulations your Company conducts the Familiarization Programfor Independent Directors about their roles rights responsibilities in your Companynature of the industry in which your Company operates business model of your Companyetc. through various initiatives. The details of the same can be found at:'http://investors.persistent.com/familiarisation-program' .

Major changes in the shareholding of the Promoter and Promoter Group

During the Financial Year 2016-17 Mr. S. P. Deshpande Promoter and former Director ofthe Company gifted 3999999 shares of the Company (i.e. 4.99% of the paid-up sharecapital) to Rama-Purushottam Foundation (RPF) a Section 8 Company formed forphilanthropic activities against NIL consideration on December 21 2016 as hiscontribution towards the corpus.

In addition to the above transfer of shares to RPF Mr. Deshpande has gifted a fewshares aggregating to 966000 shares (i.e. 1.21% of the paid-up share capital) to hisclose relatives against NIL consideration on December 21 2016 as a part of his successionplanning.

As on March 31 2017 Mr. Deshpande holds 288651 shares of the Company (i.e. 0.36% ofthe paid-up share capital) jointly with his spouse. The detailed shareholding of thePromoter and Promoter Group forms part of Annexure D of the Directors' Report sectionforming part of this Annual Report.

Declaration of Independence by Independent Directors

The Board confirms that all Independent Directors of your Company have given adeclaration to the Board that they meet the criteria of independence as prescribed underSection 149 of the Act.

Committees of the Board

The composition of the committees of the Board is given elsewhere in this AnnualReport. Until April 2017 your Company did not have a separate Risk Management Committee.Instead the terms of reference of the Risk Management Committee as prescribed in theRegulation 19 of the Listing Regulations were included in the terms of refrence of theAudit Committee. This was in terms of the discussion of the Board of Directors at itsmeeting held in July 2014.

However the Board at its meeting held in April 2017 approved constitution of theRisk Management Committee. The first meeting of the newly formed Risk Management Committeewill be held in July 2017.

The details of the powers functions composition and meetings of all the Committees ofthe Board held during the year under report are given in the Report on CorporateGovernance section forming part of this Annual Report.

Audit Committee

The details pertaining to the composition terms of reference and other details of theAudit Committee of the Board of Directors of your Company and the meetings thereof heldduring the financial year are given in the Report on Corporate Governance section formingpart of this Annual Report. The recommendations of the Audit Committee in terms of itsCharter were accepted by the Board of Directors of your Company from time to time duringthe year under report.

Compensation and Remuneration Committee

The Compensation and Remuneration Committee of the Board was constituted on April 232004. In terms of the erstwhile SEBI (Employee Stock Option Scheme and Employee StockPurchase Scheme) Guidelines 1999 ("SEBI ESOP Guidelines") your Companyre-constituted the Compensation and Remuneration Committee for the administration andsuperintendence of the employee stock options schemes on October 4 2007.

The Board of Directors at its meeting held in April 2014 named this Committee as theNomination and Remuneration Committee for the purpose of provisions under the Act. Asregards the terms of the Compensation and Remuneration Committee of your Company the sameare in line with the statutory terms of the Nomination and Remuneration Committee.

The details including the composition terms of reference and the meetings thereofheld during the financial year the Compensation and Remuneration Committee and theRemuneration Policy of the Company are given in the Report on Corporate Governance sectionforming part of this Annual Report.

Nomination and Governance Committee

The Board of Directors at its meeting held in April 2014 named this Committee as theNomination and Remuneration Committee for the purpose of provisions under the Act. Asregards the terms of the Nomination and Governance Committee of your Company the same arein line with the statutory terms of the Nomination and Remuneration Committee.

The details including the composition and terms of reference of the Nomination andGovernance Committee of the Board of Directors of your Company and the meetings thereofheld during the financial year are given in the Report on Corporate Governance sectionforming part of this Annual Report.

The policy for appointment of a new director on the Board is as follows:

The Board of Directors decides the criteria for the appointment of a new director onthe Board from time to time. This criteria may include candidate's expertise area ageindustry experience professional background association with

other companies and such other things.

Once the criteria are determined the Board directs the Nomination and GovernanceCommittee to compile profiles of suitable candidates through networking industryassociations and business connects. The Nomination and Governance Committee considers eachand every profile on the decided parameters and shortlists the candidates. Shortlistedcandidates are then interviewed personally or through tele-conference by the Members ofthe Committee.

Once the Committee is convinced about a candidate's competency his/her businessacumen commitment towards his/ her association with your Company and his/her availabilityfor your Company on various matters as and when they arise it recommends the candidate tothe Board of Directors for its further consideration.

Employees' remuneration

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 a statementshowing the names and other particulars of the employees posted in India and drawingremuneration in excess of the limits set out in the said Rules are provided in theAnnexure B of the Directors' Report.

The details of employees posted outside India and drawing remneration in excess of thelimits set out in the said Rules can be made available on request.

Employee stock option plans

Your Company has various stock option plans for its employees. Details of the stockoptions granted under various employee stock option schemes are annexed to this Report asAnnexure C.

During the year under report no employee has been granted stock options equal to orexceeding 1% of the issued capital (excluding outstanding warrants and conversions) ofyour Company at the time of grant.

In line with the Ind AS 102 on 'Share Based Payments' your Company has computed thecost of equity-settled transactions by using the fair value of the options at the date ofthe grant and recognized as employee compensation cost over the vesting period.

Weighted average exercise prices and weighted average fair values of options:

The Binomial tree valuation model has been used for computing the weighted average fairvalue of the stock options granted during the financial year 2016-17 and 2015-16considering the following inputs:

Particulars March 31 2017 March 31 2016
Scheme XII Scheme XI
Weighted average share price (Rs.) 700.50 583.66
Exercise Price (Rs.) 10 10
Expected Volatility 51.00% 35.08%
Life of the options granted (Vesting and exercise period) 2.5 Months 3.5 Years
Dividend Yield 1% 1%
Average risk-free interest rate 7.1% 7.8%
Expected dividend rate 60% 60%

No new options were granted to the Independent Directors of your Company during theyear under report. Shares held by Independent Directors of your Company as on March 312017 are as under:

Name of the Director Shares held (through exercise of vested Stock Options) Shares held (through allotment under a pre IPO scheme) Shares held (through market purchase / IPO) Total Shares held
Ms. Roshini Bakshi Nil Nil Nil Nil
Mr. Pradeep Bhargava* 13600 Nil Nil 13600
Mr. Sanjay Bhattacharyya** 14000 Nil Nil 14000
Mr. Thomas (Tom) Kendra# Nil Nil Nil Nil
Mr. Prakash Telang* 14000 Nil 4000 18000
Mr. Kiran Umrootkar* 6000 Nil Nil 6000

* Shares held jointly with the spouse

** Out of 14000 equity shares 10500 shares are jointly held with Mrs. RitaBhattacharyya

# The designation of Mr. Thomas Kendra has changed from 'Independent Director' to'Non-Executive Non-Independent Director' with effect from April 1 2017

During the financial year 2016-17 pursuant to the resolutions passed by theCompensation and Remuneration Committee of the Board of Directors through circulationIndependent Directors and employees including ex-employees ('Grantees') exercised theirstock options for shares which were already vested in their name. During this exercise684908 (Six Hundred Eighty Four Thousand Nine Hundred and Eight only) i.e. 0.86% Equityshares of the total Paid-up Capital were transferred from PSPL ESOP Management Trust tothe eligible Grantees at an aggregate value of ' 92.15 Million under various ESOP Schemesof your Company.

Your Company has 12 (Twelve) ESOP Schemes as on March 31 2017 under which options weregranted to various Independent Directors employees of the Company and its subsidiariesdetails of which are given elsewhere in this Annual Report.

Shares Suspense Account

Your Company had opened an ‘Unclaimed Securities Suspense Account' on behalf ofthe allottees who were entitled to the equity shares under the initial public offering.Some of the equity shares could not be transferred to the respective allottees due totechnical reasons. Such shares were held in ‘Unclaimed Securities Suspense Account'to be transferred to allottees as and when they approach your Company.

Your Company strives to ensure that the Equity Shares are credited to the demat accountof the respective allottees. During the year under report your Company voluntarilyapproached all the 14 (Fourteen) allottees to help them claim their unclaimed shares. Inresponse your Company received applications from 4 (Four) allottees for crediting theshares from the said Suspense Account to their respective accounts. The Equity Sharesalong with the Bonus Shares (allotted in March 2015) were credited to their respectivedemat accounts before March 31 2017. The balance in the above mentioned Suspense Accountas on March 31 2017 is 400 Equity Shares owned by 10 allottees. Your Company willcontinue to try contacting these 10 allottees and will arrange credit of due shares tothem before the statutory deadline to transfer those shares to the IEPF Suspense Accountof the Government of India.

The details of equity shares held in an ‘Unclaimed Securities Suspense Account'are as follows:

Sr. No. Particulars Details
1. Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the beginning of the financial year 2016-17 14 allottees
2. Aggregate number of the outstanding equity shares in the Unclaimed Securities Suspense Account lying at the beginning of the financial year 2016-17 560 Equity shares
3. Number of allottees who approached issuer for transfer of shares from Unclaimed Securities Suspense Account during the financial year 2016-17 4 allottees
4. Number of shares transferred from Unclaimed Securities Suspense Account during the financial year 2016-17 160 Equity shares
5. Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the end of the financial year 2016-17 10 allottees
6. Aggregate number of outstanding equity shares in the Unclaimed Securities Suspense Account lying at the end of the financial year 2016-17 400 Equity shares

Note - Voting rights on the above mentioned equity shares are kept frozen till therightful owner of such equity shares claim these shares.

Institutional Holding

As on March 31 2017 the total institutional holding in your Company stood at 35.50%of the total paid-up share capital.

Particulars required as per Section 134 of the Companies Act 2013

As per Section 134 of the Act your Company has provided the Consolidated FinancialStatements as on March 31 2017. Your Directors believe that the consolidated financialstatements present a more comprehensive picture as compared to standalone financialstatements. These documents will also be available for inspection during the businesshours at the Registered Office of your Company. A statement showing financial highlightsof the subsidiary companies is enclosed to the consolidated financial statements.

The Annual Report of your Company though does not contain full financial statements ofthe subsidiary companies your Company can make available the audited annual accounts andrelated information of the subsidiary companies upon request.

Consolidated financial statements

Consolidated financial statements of your Company and its subsidiaries as at March 312017 are prepared in accordance with the Indian Accounting Standard (Ind AS) 110 on‘Consolidated Financial Statements' notified by the Ministry of Corporate Affairs(MCA) and form part of this Annual Report.

Subsidiary Companies Associate Companies and Joint Ventures

The details of the subsidiaries and associates of your Company as on March 31 2017 areas under:

(In Rs. Million)

Name of the Entity and Status

Total Income

Net Profit/(Loss)

Country of incorporation Period of Establishment/ Acquisition As on March 31 2017 As on March 31 2016 As on March 31 2017 As on March 31 2016
Persistent Systems Inc. USA Wholly Owned Subsidiary October 2001 15387.30 10390.71 238.67 169.15
Persistent Systems Pte. Ltd. Singapore (Co. Reg. No. 200706736G) Wholly Owned Subsidiary April 2007 427.49 377.67 72.99 79.48
Persistent Systems France S.A.S. France Wholly Owned Subsidiary April 2011 389.14 366.05 11.55 30.79
Persistent Systems Malaysia Sdn. Bhd. Malaysia Wholly Owned Subsidiary September 2013 548.42 542.97 62.54 (1.26)
Persistent Systems Germany GmbH Germany Wholly Owned Subsidiary December 2016 (0.67)
Persistent Telecom Solutions Inc. USA Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Inc.) January 2012 1437.51 1208.28 (156.13) (104.35)
Akshat Corporation (dba Rgen Solutions) USA Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Inc.) July 2015* 253.91 405.51 28.03 28.33
Persistent Systems Israel Ltd. Israel Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Inc.) February 2016 448.65 32.38
Persistent Systems Mexico S.A. de C.V. Mexico Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Inc.) March 2016 139.11 6.08

 

Name of the Entity and Status

Total Income

Net Profit/(Loss)

Country of incorporation Period of Establishment/ Acquisition As on March 31 2017 As on March 31 2016 As on March 31 2017 As on March 31 2016
Aepona Holdings Limited Ireland Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Inc.) October 2015*
Aepona Group Limited Ireland Step-down subsidiary (Wholly Owned Subsidiary of Aepona Holdings Limited) October 2015*
Valista Limited Ireland Step-down subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) October 2015* 21.43 13.38 (421.08)# 2.58
Aepona Limited UK Step-down subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) October 2015* 605.76 472.99 (178.21) 76.75
Aepona Software (Private) Limited Sri LankaA Step-down subsidiary (Wholly Owned Subsidiary of Valista Limited) October 2015* 260.43 124.11 22.77 7.21
Valista Inc. USA (Dissolved on June 28 2016) Step-down subsidiary (Wholly Owned Subsidiary of Valista Limited) October 2015* 0.93 0.79 0.79 0.18
CloudSquads Inc. USA (Dissolved on December 29 2015) Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Inc.) February 2014* 46.07 (5.46)
Klisma e-Services Private Limited India Associate Company March 2012

* Period of Establishment/ Acquisition mentioned above is the period in which theentities are acquired by your Company directly or through its subsidiaries.

# Includes loss on dissolution of subsidiary ' 409.06 Million

A The Name has been changed to 'Persistent Systems Lanka (Private) Limited' as onMay 19 2017.

The Policy for determining material subsidiaries of your Company is available on yourCompany's website at https://www.persistent.com/investors/policy-on-material-subsidiary/

Particulars of Loans and Guarantees given and Investments made

Loans guarantees and investments covered under Section 186 of the Act form part of thenotes to the financial statements provided in this Annual Report. (Refer notes 6 7 1516 and 43 of the standalone financial statements)

Related Party Transactions

The Policy to determine materiality of related party transactions and dealing withrelated party transactions as approved by the Board of Directors is available on yourCompany's website at'https://www.persistent.com/investors/related-party-transactions-policy/' .

During the year under report your Company had not entered into any materialtransaction with any party who is related to it as per the Act. There were certaintransactions entered into by your Company with its foreign subsidiaries and other partieswho are related within the meaning of the Indian Accounting Standard (Ind AS) 24.Attention of Members is drawn to the disclosure of transactions with such related partiesset out in Note No. 34 of the Standalone Financial Statements forming part of this AnnualReport. The Board of Directors confirms that none of the transactions with any of relatedparties were in conflict with your Company's interest.

The related party transactions are entered into based on considerations of variousbusiness exigencies such as synergy in operations sectoral specialisation and yourCompany's long-term strategy for sectoral investments optimization of market shareprofitability legal requirements liquidity and capital resources of subsidiaries.

All related party transactions are entered into on an arm's length basis are in theordinary course of business and are intended to further your Company's interests.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report asstipulated under the Listing Regulations and any other applicable law for the time beingin force forms an integral part of this Report.

Compliance Certificate from the Practicing Company Secretary regarding compliance ofconditions of Corporate Governance as stipulated in the Listing Regulations forms part ofthis Annual Report.

Management discussion and analysis

Report on Management Discussion and Analysis as stipulated under the ListingRegulations and any other applicable law for the time being in force based on auditedconsolidated financial statements for the financial year 2016-17 forms part of this AnnualReport.

Business Responsibility Report

Report on Business Responsibility as stipulated under the Listing Regulations and anyother applicable law for the time being in force describing the initiatives taken by theManagement from an environmental social and governance perspective forms part of thisAnnual Report.

Conservation of energy technology absorption research and development foreignexchange earnings and outgo

Your Company has made the necessary disclosures in this Report in terms of Section134(3) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014. Your Companystrives to conserve energy on a perpetual basis. Your Company has procured various energysaving devices and systems which help in conserving energy. Bulk of the electric fixturesis equipped with electronic ballast which has resulted into a significant savings in theenergy cost.

Carbon management and sustainable development provide business with some of thegreatest opportunities towards sustainability. Your Company reduced carbon footprints bytaking energy conservation measures. Your Company continues to take various measures onenergy saving.

Your Company has reduced excessive illumination levels to standard levels in all commonareas by using switching or delamping and aggressively controlled lighting with new sensortechnologies. Like in the previous year your Company has continued to maximise the use ofenergy efficient flat monitors VRV air-conditioning systems solar energy for hot waterLED logo on buildings LED lighting in common areas installation of power managementsoftware for desktops WattMiser system in AHUs En-power Computer Management system andVFD Installation for Fresh Air AHU systems for conservation of energy. Your Company hasused all LED light fittings at its Hinjawadi (Yajurveda 2nd floor) Goa(Bhaskar) and Nagpur IT Tower facilities and have proposed to use the same in otherfacilities. Your Company has regulated working of lifts vending machines ventilationsystems and water coolers in its premises.

Your Company has made efforts to ensure that there is no cool air leakage from itspremises and has adopted measures to ensure optimum usage of air conditioners throughoutits premises. A building automation system has been implemented to control working of airconditioners and to make them more power efficient. The power consumption of airconditioning has been reduced by 18% since the cold aisle containment work has beencompleted in Data center Hinjawadi. VFD system has been installed for fresh air AHU's inair-conditioning systems. As a part of your Company's Green Movement two 2.1 MW windmillsare operational at Dhule and Sangli Districts of Maharashtra. During the financial year2016-17 Dhule windmill generated 4124745 units and Sangali windmill generated 2939333units.

Your Company has installed Ozone based air conditioning systems at a few locations.Modifications have been made in Data Centre arrangement to reduce power consumption.Ground water is used for landscaping to reduce consumption of treated water. A SewageTreatment Plant was installed at the Gargi-Maitreyi in Nagpur Aryabhata-Pingala in Punefacilities of your Company and recycled water through these plants is used for gardening.

Your Company celebrated ‘No Plastic Days' to promote awareness of using plasticand encourage employees to carry cloth or paper bags whenever possible. ‘Zero PlateWastage Week' was another event celebrated in all Company facilities. All the waste papersare shredded and disposed to scrap at all facilities.

All the facilities of your Company are certified by DNVGL for ISO 14001:2004 and OHSAS18001:2007 certifications after recertification audit and are now initiated for upgradingEnvironmental Management System Standard by ISO 14001:20015. Further your Company hasbeen certified by the American Global Standards for ISO 14064-1:2006 (Green House GasesInventory) for all facilities in India for the financial year 2015-16. Best practices topreserve the environment are undertaken by your Company even during constructing itsvarious premises by using crush sand By ash bricks and double glass unit use of gypsumand recycled wood to protect the environment.

Your Company undertakes various initiatives to save energy. A 250 KW rooftop solarpower plant was commissioned on the terrace of Aryabhata - Pingala facility on April 302015 and it generated 180349 units in the financial year 2016-17. Efforts are being madeto increase the plant efficiency. The chiller replacement work has been completed atBhageerath facility to ensure higher efficiency and it saves around 37% of theair-conditioning consumption. The Old UPS system was replaced by modular higher efficiencyUPS system at all the facilities and it resulted in 18% power saving in UPS power. Coldaisle containment work was completed in Hinjawadi Data Centre to reduce the powerconsumption by 19%.

It is your Company's constant endeavor to conserve and save the Environment and henceyour Company has launched the Green Persistent Movement to support the same.

As power cost constitutes an insignificant part of the total expenses the financialimpact of these measures is not material.

As your Company has not entered into technical collaboration with any entity there areno particulars relating to technology absorption.

The particulars of expenditure on Research and Development on accrual basis are asfollows:

(In Rs. Million)

Particulars

Year ended on March 31

2017 2016
Capital expenditure - 0.11
Revenue expenditure 543.76 62.47
Total research and development expenditure 543.76 62.58
As a percentage of total income 2.98% 0.41%

The particulars of foreign exchange earnings and outgo based on actual inflows andoutflows are as follows:

(In Rs. Million)

Particulars

Year ended on March 31

2017 2016
Earnings 16115.01 12361.34
Outgo 5402.11 2573.12

Adequacy of Internal Financial Controls

The Board is responsible for establishing and maintaining adequate internal financialcontrol as per Section 134 of the Act.

The Board has laid down policies and processes in respect of internal financialcontrols and such internal financial controls were adequate and were operatingeffectively. The internal financial controls covered the policies and procedures adoptedby your Company for ensuring orderly and efficient conduct of business including adherenceto your Company's policies safeguarding of the assets of your Company prevention anddetection of fraud and errors accuracy and completeness of accounting records and thetimely preparation of reliable financial information.

Directors' responsibility statement

The Directors state that:

1. In the preparation of the annual accounts the applicable Accounting Standards havebeen followed and there is no material departure;

2. Your Directors have selected such accounting policies and applied them consistentlyand made judgments and

estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of your Company

as at March 31 2017 and of the profit of your Company for that year;

3. Your Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in

accordance with the provisions of the Companies Act 2013 for safeguarding the assetsof your Company and for preventing and detecting fraud and other irregularities if any;

4. The annual accounts have been prepared on a going concern basis;

5. Your Directors had laid down internal financial controls to be followed by yourCompany and that such internal financial controls are adequate and were operatingeffectively;

6. Your Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

Extract of Annual Return

Pursuant to the provisions of the Section 92(3) of the Act read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of Annual Return ofyour Company for the financial year ended on March 31 2017 is provided in the Annexure Dto the Directors' Report.

Vigil Mechanism (Whistle Blower Policy)

The details of the vigil mechanism (whistle blower policy) are given in the Report onCorporate Governance forming part of this Annual Report. Your Company has uploaded thepolicy on its website at 'https://www.persistent.com/investors/whistle-blower-policy/' .

Risk Management Policy

Report on Risk Management based on the risk management policy developed and implementedat your Company for the financial year 2016-17 forms part of this Annual Report.

Performance Evaluation of the Board its Committees and Directors

Your Company conducted the annual performance evaluation of the Board its variousCommittees and the Directors individually. This was conducted in March and April 2017 byan External Management Consultant and the findings of the evaluation were presented at themeeting of the Nomination and Governance Committee and the Board of Directors held inApril 2017. Recommendations and suggested areas of improvement for the Board its variouscommittees and the individual Directors were considered by the Board.

Listing with the stock exchanges

The Equity Shares of your Company are listed on BSE Limited (BSE) and the NationalStock Exchange of India Limited (NSE) since April 6 2010.

Listing fees for the financial year 2016-17 have been paid to both BSE and NSE.

Secretarial Standards

The Ministry of Corporate Affairs notified the Secretarial Standards on Meetings of theBoard of Directors (SS - 1) and Secretarial Standard on General Meetings (SS - 2)effective from July 1 2015. Your Company complies with the same.

Your Company will comply with the other Secretarial Standards issued by the Instituteof Company Secretaries of India (ICSI) as and when they are made effective.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

Your Company has an Anti-Sexual Harassment Policy in place which is in line withrequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. All employees (permanent contractual temporary trainees) arecovered under this policy. Internal Complaints Committee(s) (ICC) has been set up acrossall Company locations in India to redress complaints received regarding harassment. Thecases reported to such Committee(s) are investigated by the respective Committee(s)members and the detailed report thereon is presented to the Board of Directors on aregular basis. During the year under report your Company did not receive any case ofsexual harassment and hence as on March 31 2017 there were no pending cases of sexualharassment in your Company.

Corporate Social Responsibility

Your Company formed a Public Charitable Trust ‘Persistent Foundation' in thefinancial year 2008-09 to institutionalize the Company's CSR initiatives and to develop asystematic approach to administer the process of grant of donations.

During the year under report Persistent Foundation (the ‘Foundation') was able tocreate excitement among employees to participate in socially relevant causes. Withcooperation of the employees of your Company the Foundation has set up severalwell-defined programs and activities for the promotion of education health communitywelfare. These activities are carried out through projects undertaken by the Foundationwith the support of the employees and through the Government authorities reputed socialorganizations and institutions.

In addition to contributing ' 67.74 Million to the Foundation your Company madedonations to various other charitable institutions directly and incurred cost of thetechnical contribution towards MGI-Shakti Project an initiative of the Government ofMaharashtra and coordinated by McKinsey India. During the year under report your Companydonated a total of ' 70.03 Million which qualifies as CSR expenditure under Section135(5) of the Companies Act 2013. This expenditure is more than 2% of the Average NetProfits of your Company made during three immediately preceding financial years.

Your Company won the ‘Special Jury Award' for Environment and Sustainability byHyderabad Software Exporters1 Association (HYSEA) for its CSR wing for thefinancial year 2015-16

Report on CSR activities of your Company under the provisions of the Companies Act2013 during the financial year 2016-17 is annexed hereto as Annexure E. A detailed Reporton the activities of the Foundation forms part of this Annual Report.

CSR Committee and CSR Policy

The Board of Directors of your Company has constituted the CSR Committee to help yourCompany to frame monitor and execute the Company's CSR activities under its CSR scope.The Committee defines the parameters and observes them for effective discharge of theCompany's social responsibility.

The Board of Directors of your Company has further approved the CSR Policy of yourCompany to provide a guideline for the Company's CSR activities. The CSR Policy is alsouploaded on your Company's website at'https://www.persistent.com/investors/csr-at-persistent/' .

The Company's CSR Policy highlights that the need for contributing to the society isvery large and your Company can make a more significant contribution by staying focused onfew areas through its social initiatives. The CSR policy recommends that your Companyshould consider contributing in the following areas:

1. Health

2. Education

3. Community Development

4. Assistance in natural calamities

The constitution of the CSR Committee is provided elsewhere in the Annual Report.

Other matters

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on these items during the year under report:

1. Neither the Managing Director nor the Executive Director of your Company receive anyremuneration or commission from any of its subsidiaries.

2. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and your Company's operations in future.

Future Outlook

Your Company is well placed in the current market scenario. The expertise in buildingnext generation technology partnerships with the world's technology leaders and thechanges that your Company has made has set us up very well for the future.

Acknowledgments and appreciation

Your Board places on record the support and wise counsel received from the Governmentof India particularly the Department of Electronics and Information Technology theMinistry of Corporate Affairs the Ministry of Finance the Ministry of Commerce andIndustry the Reserve Bank of India and the Securities and Exchange Board of Indiathroughout the financial year.

Your Board extends its sincere thanks to the officers and staff of the SoftwareTechnology Parks of India - Pune Nagpur Goa Hyderabad Bengaluru Visakhapatnam SpecialEconomic Zone - Andhra Pradesh SEEPZ Special Economic Zone - Mumbai Cochin SpecialEconomic Zone Central Excise and Customs Department Department of Revenue Income TaxDepartment Department of Electronics Director General of Foreign Trade Director ofIndustries Department of Shops and Establishments Department of TelecommunicationDepartment of Commerce (SEZ Section) Regional Director of Western Region Registrar ofCompanies Maharashtra Pune Sales Tax Department High Court of Judicature at MumbaiICGL Goa Goa Industrial Development Corporation National Stock Exchange of IndiaLimited BSE Limited Central Depository Services (India) Limited National SecuritiesDepository Limited Pune Municipal Corporation Maharashtra Pollution Control BoardMaharashtra State Electricity Distribution Company Limited Telangana (erstwhile AndhraPradesh) State Electricity Board Telangana State Industrial Infrastructure CorporationMaharashtra Industrial Development Corporation Bengaluru Municipal Corporation KarnatakaIndustrial Development Corporation the Department of Scientific and Industrial Research(DSIR) BSNL Mobile / Internet Service providers.

Your Board also extends its thanks to Axis Bank Bank of India Barclays Bank BancoNacional de Mexico S.A. Bank of Tokyo Mitsubishi BNP Paribas Chase Bank Citibank NAHDFC Bank Silicon Valley Bank State Bank of India Syndicate Bank HSBC Bank WellsForgo Bank and their officials for extending excellent support in all banking relatedactivities.

Your Board places on record its deep sense of appreciation for the committed servicesof the associates of your Company at all levels.

Your Board thanks the investors and shareholders for placing immense faith in them.

Your Board takes this opportunity to express its sincere appreciation for thecontribution made by the employees at all levels in your Company. The consistent growthwas made possible by their hard work solidarity cooperation and support.

For and on behalf of the Board of Directors
Dr. Anand Deshpande
Chairman and Managing Director
Pune May 30 2017 DIN: 00 0 0 5721