Your Directors are pleased to present the Thirtieth Annual Report of your Company alongwith the Audited Financial Statements for the Financial Year ended March 31 2020.
It has been an exciting thirty-years' journey for your Company that started in 1990 onMarch 27 1990 Gudhi Padawa the new year day in the local lunar calendar followed byMaharashtrians and others in India. Mr. S. P. (Dada) Deshpande the founding Director ofthe Company initiated the paperwork to establish your Company. The actual paperwork wascompleted in two months and your Company received the Certificate of Incorporation datedMay 30 1990. At this time in the thirtieth year of your Company we are in the midst ofan unprecedented crisis caused by the global COVID-19 pandemic. Since mid-March mostcountries where our people are located and where we do business are locked-down and allemployees of your Company are working from home. While all the employees of your Companyare safe this crisis has caused very high levels of uncertainty and economic hardshipsglobally. As a responsible corporate citizen in the first week of April 2020 yourCompany declared a contribution of Rs. 250 million (US$ 3.3 million) to supportcommunities globally with food rehabilitation treatment vaccines research and othersupport for medical professionals.
This year was momentous for your Company as two significant milestones were achieved --your Company crossed the 10000-employee mark in April 2019 and crossed the Half BillionDollar in revenues for the Financial Year.
Mr. Christopher O'Connor joined Persistent Group as the Chief Executive Officer onFebruary 25 2019 and Mr. Sandeep Kalra joined as the President of the Technology andServices Unit on May 1 2019. This was the first full year for the new CEO and the newmanagement team.
Revenues for the year was Rs. 35658.08 million which is 5.9% growth over the previousyear. This is US$ 501.61 million which was 4.3% growth over the previous year. The Profitafter Tax was Rs. 3402.89 million which is 3.2% lower than the previous year.
The highlights of the financial performance on a consolidated basis for the year endedMarch 31 2020 are as under:
| ||(Amount in USD million except EPS and Book Value) ||(Amount in Rs. million except EPS and Book Value) ||% Change (based on amounts in Rs.) |
|Particulars ||2019-20 ||2018-19 ||2019-20 ||2018-19 || |
|Revenue from Operations ||501.61 ||480.97 ||35658.08 ||33659.41 ||5.94% |
|Earnings before interest depreciation ||69.34 ||82.96 ||4929.54 ||5805.36 ||(15.09%) |
|amortization and taxes || || || || || |
|Finance Cost* ||0.89 ||0.04 ||63.32 ||3.05 ||1976.07% |
|Depreciation and amortization ||23.35 ||22.47 ||1659.62 ||1572.51 ||5.54% |
|Other income ||18.53 ||9.05 ||1316.82 ||633.59 ||107.83% |
|Tax expense ||15.76 ||19.25 ||1120.53 ||1346.60 ||(16.79%) |
|Net profit ||47.87 ||50.25 ||3402.89 ||3516.79 ||(3.24%) |
|Transfer to general reserve ||22.94 ||18.01 ||1630.89 ||1260.03 ||29.43% |
|Net worth** ||314.56 ||338.51 ||23799.84 ||23394.09 ||1.73% |
|Earnings per share (EPS) (Basic) ||0.62 ||0.63 ||44.38 ||43.99 ||0.89% |
|Earnings per share (EPS) (Diluted) ||0.62 ||0.63 ||44.38 ||43.99 ||0.89% |
|Book value per equity share ||4.12 ||4.28 ||311.41 ||295.68 ||5.32% |
[Conversion Rate USD 1 = Rs. 71.09 for Profit and Loss items; USD 1 = Rs. 75.66 forBalance Sheet items (Financial Year 2019-20) and USD 1 = Rs. 69.98 for Profit and Lossitems; USD 1 = Rs. 69.11 for Balance Sheet items (Financial Year 2018-19)]. *Includesnotional interest on lease liability Rs. 61.22 million recognized in accordance with INDAS 116 on Leases for the year ended March 31 2020 **Net worth = Equity ShareCapital + Reserves and Surplus (excluding Gain on bargain purchase) + Other ComprehensiveIncome
The highlights of the financial performance on an unconsolidated basis for the yearended March 31 2020 are as under:
| ||(Amount in USD million except EPS and Book Value) ||(Amount in Rs. million except EPS and Book Value) ||% Change (based on amounts in Rs.) |
|Particulars ||2019-20 ||2018-19 ||2019-20 ||2018-19 || |
|Revenue from Operations ||296.54 ||280.06 ||21081.22 ||19598.67 ||7.56% |
|Earnings before interest depreciation ||60.90 ||54.38 ||4329.65 ||3805.21 ||13.78% |
|amortization and taxes || || || || || |
|Finance Cost* ||0.63 ||0.01 ||44.51 ||0.51 ||8627.45% |
|Depreciation and amortization ||7.81 ||6.56 ||555.12 ||458.84 ||20.98% |
|Other income ||22.49 ||14.83 ||1599.04 ||1037.90 ||54.06% |
|Tax expense ||17.61 ||17.63 ||1251.83 ||1233.68 ||1.47% |
|Net profit ||57.35 ||45.01 ||4077.23 ||3150.08 ||29.43% |
|Transfer to general reserve ||22.94 ||18.01 ||1630.89 ||1260.03 ||29.43% |
|Net worth** ||303.80 ||321.40 ||22985.38 ||22211.90 ||3.48% |
|Earnings per share (EPS) (Basic) ||0.75 ||0.56 ||53.17 ||39.40 ||34.95% |
|Earnings per share (EPS) (Diluted) ||0.75 ||0.56 ||53.17 ||39.40 ||34.95% |
|Book value per equity share ||3.98 ||4.06 ||300.76 ||280.74 ||7.13% |
[Conversion Rate USD 1 = Rs. 71.09 for Profit and Loss items; USD 1 = Rs. 75.66 forBalance Sheet items (Financial Year 2019-20) and USD 1 = Rs. 69.98 for Profit and Lossitems; USD 1 = Rs. 69.11 for Balance Sheet items (Financial Year 2018-19)].
*Includes notional interest on lease liability Rs. 43.86 million recognised inaccordance with IND AS 116 on Leases for the year ended March 31 2020 **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.
Buyback of Equity Shares of your Company
The Board of Directors of your Company at its meeting held on January 27 and 28 2019approved the buyback of the Company's fully paid-up equity shares of the face value of Rs.10 each from its shareholders (excluding promoters promoter group and persons who are incontrol of the Company) via the "open market" route through the stockexchanges for a total amount not exceeding Rs. 2250 million and at a price notexceeding Rs. 750 per Equity Share. The buyback of equity shares through the stockexchanges commenced on February 8 2019 and was completed on June 27 2019. During thisbuyback period your Company had purchased and extinguished a total of 3575000 equityshares from the stock exchanges at an average buy back price of Rs. 628.93 per equityshare comprising 4.47% of the pre buyback paid-up equity share capital of your Company.The buyback resulted in a cash outflow of Rs. 2248.42 million (excluding transactioncosts). Your Company funded the buyback from utilization of its securities premium accountand free reserves. Consequently the paid-up capital of your Company has reduced from Rs.800000000 (Pre-Buyback) to Rs. 764250000 (Post-Buyback) comprising of 76425000Equity Shares of Rs. 10 each.
Your Company continues to maintain adequate amount of liquidity to meet the necessarystrategic and growth objectives. Your Company aims to balance between earning adequatereturns on liquid assets and the need to cover financial and business risks. As at March31 2020 your Company on an unconsolidated basis had cash and cash equivalents(including investments) amounting to Rs. 12687.08 million as against Rs. 13109.31million as at March 31 2019.
The details of cash and cash equivalents (including investments) are as below:
|Particulars ||As on March 31 2020 ||As on March 31 2019 |
|Investment in Mutual Funds at fair value ||7339.28 ||5270.44 |
|Fixed Deposits with scheduled banks ||2643.65 ||4687.90 |
|Deposit with Financial Institutions (net) ||- ||497.50 |
|Bonds (quoted) ||2171.52 ||2088.35 |
|Cash and Bank balances ||532.63 ||565.12 |
|Total ||12687.08 ||13109.31 |
Update on Fixed Deposits with IL&FS
One of the investments in your Company's treasury portfolio is in the form of fixeddeposits with Infrastructure Leasing and Financial Services Limited (IL&FS) andIL&FS Financial Services Limited (IL&FS Group) to the extent of Rs. 430 million.These were due for maturity from January 2019 to June 2019. In view of the uncertaintyprevailing with respect to recovery of outstanding balances from IL&FS GroupManagement of your Company has fully provided for these deposits along with interestaccrued thereon till the date as the deposits had become doubtful of recovery. TheManagement continues to be hopeful of recovery though with a time lag. Your Companycontinues to monitor developments in the matter and is committed to take steps includinglegal action that may be necessary to ensure full recovery of the said deposits.
Dividend for the Financial Year 2019-20
The details of the Dividend for the Financial Year 2019-20 and 2018-19 are as follows:
| ||Financial Year 2019-20 ||Financial Year 2018-19 |
|Type of Dividend ||Interim 1 ||Interim 2 ||Interim ||Final |
|Month of Declaration ||January 2020 ||March 2020 ||January 2019 ||July 2019 |
|Amount of Dividend Per Equity Share of Rs. 10 each (In Rs.) ||9 ||3 ||8 ||3 |
|% of Dividend ||90% ||30% ||80% ||30% |
|Total Dividend (Amt. in Rs. million) ||687.83 ||229.28 ||640.00 ||229.28* |
|Dividend Distribution Tax (Amt. in Rs. million) ||87.47 ||18.67 ||117.23 ||47.99* |
|Total Outflow (Including Dividend Distribution Tax) ||775.30 ||247.95 ||757.23 ||277.27* |
|(Amt. in Rs. million) || || || || |
|Total Dividend Outflow for the year (Amt. in Rs. million) ||1023.25 ||1034.50 |
*The minor variation in figure as compared to the reported figure in Previous Year isdue to change in outstanding number of Equity Share post Buyback.
The Board has not recommended any Final Dividend for the Financial Year 2019-20.
The Company has Dividend Distribution Policy and the same has been uploaded on thewebsite athttps://www.persistent.com/wp-content/uploads/2016/09/Dividend-Distribution-Policy.pdf'.As per the policy the dividend pay-out ratio shall be maintained up to 40% of theConsolidated Profit After Tax. The above dividend is in compliance with the DividendDistribution Policy of the Company. Pursuant to the Finance Act 2020 dividend income willbe taxable in the hands of shareholders w.e.f. April 1 2020 and the Company is requiredto deduct the tax at source from dividend paid to shareholders at the prescribed rates.
For the prescribed rates for various categories the shareholders are requested torefer to the Finance Act 2020 and amendments thereof.
In this regard the Company has availed the facility for online submission of TaxExemption forms online from M/s. Link Intime India Private Limited wherein theshareholders can submit their tax-exemption forms along with other required documents. Therequisite form for claiming tax exemption can be downloaded from Link Intime's website.The URL for the same is as under: https://www.linkintime.co.in/client-downloads.html - Onthis page select the General tab. All the forms are available under the head "Form15G/15H/10F" The aforementioned documents (duly completed and signed) are required tobe uploaded on the URL mentioned below:https://linkintime.co.in/formsreg/submission-of-form-15g-15h.html On this page the usershall be prompted to select / share the following information to register their request.
|Select the company (Dropdown) |
|Folio / DP-Client ID |
|Financial year (Dropdown) |
|Form selection |
|Document attachment 1 (PAN) |
|Document attachment 2 (Forms) |
|Document attachment 3 (Any other supporting document) |
Please note that the upload of documents (duly completed and signed) on the website ofLink Intime India Private Ltd should be done in order to enable the Company to determineand deduct appropriate TDS / Withholding Tax. Incomplete and/or unsigned forms anddeclarations will not be considered by the Company. The Members may note that in case thetax on said interim/final dividend is deducted at a higher rate in absence of receipt ofthe aforementioned details/documents option is available to the Members to file thereturn of income as per Income Tax Act 1961 and claim an appropriate refund if eligible.
Transfer to reserves
As per the policy of the Company on transfer of surplus profit to reserves an amountof Rs. 1630.89 million has been transferred to the General Reserve and an amount of Rs.1002.03 million will be retained in the Statement of Profit and Loss after payment ofdividend and tax thereon. Further an amount of Rs. 875.97 million is utilized towards buyback of shares out of the accumulated profits of your Company. The balance in Profit andLoss Account as on March 31 2020 is Rs. 9861.78 million.
In terms of the provision of Sections 73 and 74 of the Companies Act 2013 (theAct') read with the relevant Rules your Company has not accepted any fixed depositsduring the year under report.
During the Financial Year 2019-20 the total built-up capacity owned by your Company inIndia and abroad was 115478 m2 which is adequate for 8800+ employees.
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 || || || |
|1 Kapilvastu ||1994 ||202 ||35 |
|2 Panini ||1998 ||929 ||80 |
|3 Bhageerath ||2002 ||12170 ||586 |
|4 Aryabhata Pingala ||2007 ||31680 ||2618 |
|5 Hinjawadi ||2012 ||41446 ||3173 |
|Goa || || || |
|1 Charak ||1997* ||3280 ||309 |
|2 Bhaskar ||2014 ||3762 ||411 |
|Nagpur || || || |
|1 IT Tower ||2003 ||3708 ||352 |
|2 Gargi and Maitreyi ||2011 ||17279 ||1263 |
|Grenoble France ||2000** ||1022 ||50 |
|Total || ||115478 ||8877 |
* Company started to occupy this premises from October 2005 onwards.
** Company acquired this premises in August 2011 as part of acquisition of the Grenobleteam.
Along with the Company owned premises your Company also operates from leasedfacilities at Canada Germany India Israel Ireland Malaysia Mexico Scotland SriLanka Switzerland USA and UK.
Awards and recognitions during the Financial Year 2019-20
During the Financial Year 2019-20 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 "Ecological Sustainability" Award by iNFHRA
Your Company was declared winner' among 70+ IT companies in Pune for"Ecological Sustainability" by iNFHRA and facilitated in an award function onNovember 22 2019. This is the FOURTH consecutive annual award in this category. iNFHRA isan industry body & member-based organization representing Infrastructure FacilityManagement Human Resource & Realty industry. This an annual award and is awardedafter rigorous scrutiny by a Jury from the Industry. The award was in recognition of yourCompany's outstanding efforts on following fronts i. Energy Conservation including LEDsAC upgradation Ozone system for ACs VFDs etc. ii. Renewable energy generation (wind andsolar) with green energy generation of 5293952 kWh /Annum and reduction of 5934.37 Tonsof CO2 eq emissions in Financial Year 2018-19 rain water conservation andrainwater harvesting in Persistent campuses iii. Tree plantation and maintenance drivesiv. Watershed and rainwater harvesting projects in Rural Maharashtra under CSR v. Wastemanagement and plastic free campuses vi. First company to receive ISO 14064: 2018Certification for reduction of GHG emissions
2 The Institute of Company Secretaries of India (ICSI) awarded your Company as the BestCorporate (Emerging Category) under the 4th ICSI Awards for Excellence inCorporate Social Responsibility 2019
3 Training Top 125 (T125) 2018 Award (International) from Training magazine
4 Golden Peacock National Training Award 2019 from the Institute of Directors NewDelhi
5 TISS - LEAPVAULT CLO AWARD 2019 for Best Corporate University Award
6 TISS - LEAPVAULT CLO AWARD 2019 for Best Chief Learning Officer Dr. Shubhangi KelkarSHRM 2019 Award for Excellence in Learning and Development
7 ATD BEST 2019 Award (Global)
8 ATD Excellence in Practice Award: Ongoing Skills Improvement Program: 2019 (Global)
1 Constellation again includes your Company in ShortList for Innovation Servicesand Engineering
2 ISG elevates your Company as cross-category leader in Provider Lens 2020 forSalesforce Ecosystem Partners
3 Zinnov places your Company in leadership positions in Zinnov Zones 2019 ER&DServices Report
Appointment of Statutory Auditors
The members at its 29th Annual General Meeting (the AGM') of yourCompany held on July 24 2019 had approved the resolution re-appointing M/s. DeloitteHaskins & Sells LLP Chartered Accountants (Deloitte') as the Statutory Auditorsof the Company for a 2 (Two) year term i.e. from July 24 2019 till the AGM to be held inthe calendar year 2021 i.e. on or before September 30 2021.
However M/s. Deloitte vide their letter dated July 23 2019 communicated that iftheir re-appointment is approved by the shareholders in the 29th AGM held onJuly 24 2019 for a period of 2 (Two) years and not for 5 (Five) years they would notaccept the same. Hence in light of this communication the resolution passed by theshareholders could not be made effective.
Thereafter the Members at the Extra Ordinary General Meeting (EOGM') of yourCompany held on September 4 2019 appointed M/s. Walker Chandiok & Co LLP (FirmRegistration No. 001076N/N500013) as Statutory Auditors of the Company to hold office fromthe conclusion of the said EOGM up to the conclusion of the 30th Annual GeneralMeeting of the Company to be held in the calendar year 2020 i.e. on or before September30 2020.
The Audit Committee and the Board of Directors of your Company have recommended theappointment of M/s. Walker Chandiok & Co LLP as the Statutory Auditors of the Companyto hold office for a term of 5 (Five) years from the conclusion of the ensuing 30thAnnual General Meeting till the Annual General Meeting to be held in the calendar year2025 i.e. on or before September 30 2025.
Further in terms of the Regulation 33(1)(d) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (the Listing Regulations') the StatutoryAuditors of your Company are subjected to the Peer Review Process of the Institute ofChartered Accountants of India (ICAI). M/s. Walker Chandiok & Co LLP has confirmedthat they hold a valid certificate issued by Peer Review Board' of ICAI. They alsoconveyed their eligibility and willingness to act as the Statutory Auditors of theCompany.
Secretarial Audit Report
Pursuant to Section 204 of the Act the Board of Directors had appointed M/s. PVS andAssociates Practicing Company Secretaries as the Secretarial Auditors of your Company forthe Financial Year 2019-20. Accordingly the Secretarial Auditors have given their reportwhich is annexed hereto as Annexure A. The explanation of the Board on the qualificationof the Secretarial Auditors are as follows:
The Company had not proposed re-appointment of the Statutory Auditors for their secondterm in the Annual General Meeting held on July 24 2019 as per the provisions of section139 of the Companies Act 2013.
Explanation by the Board
In terms of the provisions of the Section 139(2) of Companies Act 2013 (theAct') the companies shall appoint an audit firm for not more than 2 (Two) terms of5 (Five) consecutive years. From the literal interpretation of the provision it may beinterpreted that the Section does not give liberty to the Audit Committee Board ofDirectors or Members to appoint the Statutory Auditors for a term less than 5 (Five)years.
Your Company is a law-abiding company and has always interpreted the statutoryprovisions in its spirit. The following circumstances forced the Company to take a prudentview in the interest of the Members of your Company.
In view of one of the proceedings pending with National Company Law Tribunal in whichthe affiliates of M/s. Deloitte Haskins and Sells LLC and other audit firms are theStatutory Auditors of a company and its subsidiaries the Serious Fraud InvestigationOffice (SFIO) and the National Financial Regulatory Authority (NFRA) were probing the roleof auditors in this matter. Also SFIO had filed a charge sheet against Deloitte inrelation to this matter. While at that stage the implications of the charge-sheet wereunclear any regulatory action on Deloitte could have necessitated a sudden auditorreplacement which could have been disruptive for your Company.
In the context of the above situation then prevailing the Audit Committee of the Boardtook a conservative view and recommended appointment of Deloitte in their second term fora period of 2 (two) years i.e. from the ensuing 29th AGM up to the conclusionof the AGM to be held on or before September 30 2021. The period of two years would haveallowed your Company to the necessary time to induct an alternative firm with an overlapof one full year before the term of Deloitte would have come to an end.
The Board of Directors of the Company approved the recommendation of the AuditCommittee and proposed the re-appointment of Deloitte for a period of 2 years.Accordingly the proposal was circulated to the members through the notice of AGM for itsapproval. It may be noted that the Company did not receive any questions from its Memberson the proposed appointment of Deloitte before or during the 29th AGM.Additionally the Members upheld this proposal of the Company with 95.68% votes in favourof the resolution. It is worth noting that the notice of 29th AGM where it wasproposed to appoint Deloitte for a shorter term of 2 years was also submitted with theMinistry of Corporate Affairs and the Stock Exchanges as a part of relevant compliance.The Company has not received any communication / objection from any of these authoritieson this proposal.
However M/s. Deloitte vide their letter dated July 23 2019 communicated that iftheir reappointment is approved by the shareholders in the 29th AGM held onJuly 24 2019 for a period of 2 (Two) years and not for 5 (Five) years they would not beable to accept the same. Hence in light of this communication the resolution passed bythe shareholders could not be made effective. In view of the above the Audit Committeeand the Board of Directors of your Company recommended appointment of M/s. Walker Chandiok& Co LLP as Statutory Auditors of the Company for approval of the Members at an ExtraOrdinary General Meeting (EOGM) held on September 4 2019. This appointment was approvedby the Members with 98.57% votes in favour of the resolution.
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 Year2019-20 are given in the Report on Corporate Governance section forming part of thisAnnual Report.
Directors and Key Managerial Personnel
During the year under report the Members of your Company in 29th AnnualGeneral Meeting confirmed the appointment/ re-appointment as follows:
a. Re-appointment of Ms. Roshini Bakshi (DIN: 01832163) for the second term of 5 (Five)years as an Independent Director of the Company for a term up to conclusion of the 34thAnnual General Meeting.
b. Re-appointment of Mr. Pradeep Bhargava (DIN: 00525234) for the second term of 3(Three) years as an Independent Director of the Company for a term up to conclusion of the32nd Annual General Meeting.
c. Re-appointment of Mr. Prakash Telang (DIN: 00012562) for the second term of 1 (One)year as an Independent Director of the Company for a term up to conclusion of the 30thAnnual General Meeting.
d. Re-appointment of Mr. Kiran Umrootkar (DIN: 00326672) for the second term of 1 (One)year as an Independent Director of the Company for a term up to conclusion of the 30thAnnual General Meeting.
e. Confirmation of appointment of Mr. Christopher O'Connor (DIN: 08420958) as anExecutive Director and Chief Executive Officer with effect from April 27 2019 for a termof 3 (Three) years i.e. up to April 26 2022.
f. Confirmation of appointment of Mr. Sandeep Kalra (DIN: 02506494) as an ExecutiveDirector and President Technology Services Unit with effect from June 11 2019 fora term of 3 (Three) years i.e. up to June 10 2022.
In terms of Clause (e) of the Schedule V to the Act a person who wishes to beappointed as the Whole Time Director of a listed company needs to be a Resident of Indiai.e. a person who has been staying in India for a continuous period of not less thantwelve months immediately preceding the date of his appointment as a managerial person andwho has come to stay in India for taking up an employment in India; or for carrying on abusiness or vacation in India. Further a person being a non-resident in India and gettingappointed as the Whole Time Director may travel to India only after obtaining anEmployment Visa from the concerned Indian Mission abroad. Since Mr. O'Connor and Mr. Kalraare non-residents your Company had made an application seeking an approval from theCentral Government for claiming an exemption from the above requirement as per theSchedule V to the Act. Your Company has received approval from the Central Government forthe said appointments. The re-appointment of 2 (Two) Independent Directors (Mr. PrakashTelang and Mr. Kiran Umrootkar) was made at the 29th AGM held on July 24 2019for a period of 1 (One) year for a term up to conclusion of the ensuing 30thAGM. Accordingly they will retire at the conclusion of the ensuing 30th AGM.During the year under report Mr. Sanjay Bhattacharyya Independent Director had resignedeffective from July 1 2019 due to his personal reasons. He had confirmed that there wereno material reasons for his resignation other than the reason mentioned above.
During the year under report and till the date of this report the Board has appointedMr. Praveen Kadle as an Additional Director (Independent Member) with effect from April23 2020 to hold office up to the conclusion of 30th Annual General Meeting ofthe Company.
The Board of Directors of your Company at the meeting held on June 9 2020 recommendedMr. Kadle's appointment as an Independent Director for the first term of consecutive 5(Five) years for a term up i.e. up to April 22 2025. The Board considered his expertisewide industry experience and business connects for recommending his appointment. Pursuantto the provisions of the Act he is not liable to retire by rotation. Mr. Kadle hasconfirmed his eligibility and willingness to accept the office of the Director of yourCompany if confirmed by the Members at the ensuing AGM. In the opinion of your DirectorsMr. Kadle has requisite qualifications and experience and therefore your Directorsrecommend that the proposed resolution relating to the appointment of Mr. Kadle be passedwith the requisite majority. Mr. Kadle's profile forms part of this Annual Report and hasbeen also provided in the Notice of the 30th Annual General Meeting.
The Board in the above meeting also recommended the re-appointment of Dr. AnandDeshpande Chairman and Managing Director of the Company as the Managing Director of theCompany liable to retire by rotation to hold office for a period of 5 (Five) years i.e.up to the conclusion of the 35th Annual General Meeting of the Company to beheld on or before September 30 2025. Dr. Deshpande has confirmed his eligibility andwillingness to accept the office of the Director of your Company if confirmed by theMembers at the ensuing AGM. In the opinion of your Directors Dr. Deshpande has requisitequalifications and experience and therefore your Directors recommend that the proposedresolution relating to the reappointment of Dr. Deshpande be passed with the requisitemajority.
In terms of Section 152(6) of the Act and Article 137 of the Articles of Association ofyour Company Mr. Thomas Kendra Non-Executive Non-Independent Director and Mr. SunilSapre Executive Director and Chief Financial Officer are liable to retire by rotation atthe 30th AGM as they are Non-Independent Directors who are holding office forthe longest period among the Non-Independent Directors on the Board. Mr. Kendra and Mr.Sapre have confirmed their eligibility and willingness to accept the office of theDirector of your Company if confirmed by the Members at the ensuing AGM. In the opinionof your Directors Mr. Kendra and Mr. Sapre possess requisite qualifications andexperience and therefore your Directors recommend that the proposed resolutions relatingto the re-appointment of Mr. Kendra and Mr. Sapre be passed with the requisite majority.
At present your Company has 8 (Eight) 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 where Chairman is an Executive Director. Your Company complies withthis requirement. There is no inter-se relationship between the Directors.
In terms of the Listing Regulations your Company conducts the Familiarization Programfor Independent Directors about their roles rights and 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:https://www.persistent.com/investors/familiarisation-programme/
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(6) of the Act along with Rules framed thereunder and Regulation 16 of theListing Regulations. They have been already registered with MCA Databank of IndependentDirectors.
Separate meeting exclusively of the Independent Directors was held on January 30 2020during the Financial Year 2019-20 in which the Independent Directors have transacted thefollowing businesses along with few other important strategic and policy related matters:
1 Reviewed performance of the Management of the Company
2 Discussed the quality quantity and timeliness of the flow of information between theDirectors and the Management of the Company
3 Discussed the strategic matters of the Company and current state of the global ITindustry
4 Reviewed performance of the Executive Directors
Committees of the Board
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 forming part of this Annual Report.
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 forming part of this Annual Report. The recommendations of the AuditCommittee in terms of its Charter were accepted by the Board of Directors of your Companyfrom time to time during the year under Report.
Nomination and Remuneration Committee
Your Company had 2 (Two) separate committees namely Compensation andRemuneration Committee' and Nomination and Governance Committee' as per the terms ofreference and composition as per Regulation 19 of the Listing Regulations and theprovisions of the Act.
The Board had noted at its meeting held in April 2014 that both these Committees willfunction as the Nomination and Remuneration Committee for the purpose of compliance underthe Listing Regulations and the Act.
In the meeting of the Board of Directors of the Company held in July 2019 the abovetwo Committees were merged into one Nomination and Remuneration Committee' and thecomposition of the Committee was reconstituted. The reconstituted committee is operatingas per the terms of reference prescribed in the Regulation 19 of the Listing Regulationsand the Act. The details including the composition and terms of reference of theNomination and Remuneration Committee and the meetings thereof held during the FinancialYear and the Remuneration Policy of the Company and other matters provided in Section178(3) of the Act are given in the Report on Corporate Governance section forming part ofthis Annual Report. The policy on remuneration and other matters provided in Section178(3) of the Act has been disclosed in the Coporate Governance report which is part ofthis report The policy for appointment of a new director on the Board is as follows: TheBoard of Directors decides the criteria for the appointment of a new director on the Boardfrom time to time depending on dates or retirement of existing Directors and the strategicneeds of the Company. The criteria include expertise area industry experienceprofessional background association with other companies and such other things.
Once the criteria is determined the Board directs the Nomination and RemunerationCommittee to compile profiles of suitable candidates through networking industryassociations and business connects. The Nomination and Remuneration Committee considerseach and every profile on the decided parameters and shortlists the candidates.Shortlisted candidates are then interviewed personally or through tele-conference by theMembers of the Committee.
Once the Committee is convinced about a candidate's competency his/her businessacumen commitment towards his/her association with your Company disclosure of his/herinterest in other entities and his/her availability for your Company on various matters asand when they arise it recommends the candidate to the Board of Directors for its furtherconsideration. Generally the Board accepts the recommendation by consensus.
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 drawing remuneration in excess ofthe limits set out in the said rules are provided as Annexure B to the Report.
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 provided as Annexure C tothe Report.
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 "Share Based Payments" your Company hascomputed the cost of equity-settled transactions by using the fair value of the options atthe date of the grant and recognized as employee compensation cost over the vestingperiod. During the year under report 157 employees were granted 1055000 options underthe Employee Stock Option Plan 2017. No new options or shares were granted to theIndependent Directors of your Company during the year under report.
Shares held by Independent Directors and Non-Executive Non-Independent Directors as onMarch 31 2020 are as under:
| ||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 |
|Name of the Director || || || || |
|Ms. Roshini Bakshi ||NIL ||NIL ||NIL ||NIL |
|Mr. Pradeep Bhargava ||13600 ||NIL ||NIL ||13600 |
|Mr. Guy Eiferman ||NIL ||NIL ||NIL ||NIL |
|Dr. Anant Jhingran ||NIL ||NIL ||NIL ||NIL |
|Mr. Thomas Kendra ||NIL ||NIL ||NIL ||NIL |
|Prof. Deepak Phatak ||NIL ||NIL ||NIL ||NIL |
|Mr. Prakash Telang ||14000 ||NIL ||7000 ||21000 |
|Mr. Kiran Umrootkar ||6000 ||NIL ||NIL ||6000 |
The Compensation and Remuneration Committee at its meeting held in April 2019 andNomination and Remuneration Committee through circular resolution in February 2020 havegranted RSUs to the following Executive Directors and Sr. Executives:
|Name of the Director and Sr. Executives ||No. of RSUs |
|Mr. Christopher O'Connor ||400000 |
|Mr. Sandeep Kalra ||400000 |
|Mr. Sunil Sapre ||100000 |
|Mr. Bipin Sahni ||25000 |
During the Financial Year 2019-20 pursuant to the resolutions passed by theCompensation and Remuneration Committee and Nomination and Remuneration Committee of theBoard of Directors by way of circulation employees including ex-employees exercised theirstock options for shares which were already vested in their name. During this exercise171500 (One Hundred Seventy One Thousand and Five Hundred) i.e. 0.21% Equity Shares ofthe total Paid-up Capital were transferred from PSPL ESOP Management Trust to the eligibleemployees including ex-employees at an aggregate value of Rs. 12.82 million under variousESOP Schemes of your Company.
Your Company has 14 (Fourteen) ESOP Schemes as on March 31 2020 under which optionswere granted to various Independent Directors employees of the Company and itssubsidiaries details 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 hasbeen regularly uploading details of such unpaid/unclaimed shares on its website and on thewebsite of the Ministry of Corporate Affairs as well.
The current balance in the above-mentioned Suspense Account as on March 31 2020 is 140Equity Shares owned by 7 allottees. The details of equity shares held in anUnclaimed Securities Suspense Account' are as follows:
|Particulars ||Details |
|1 Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the beginning of the Financial Year 2019-20 ||7 allottees |
|2 Aggregate number of the outstanding equity shares in the Unclaimed Securities Suspense Account lying at the beginning of the Financial Year 2019-20 ||140 Equity shares |
|3 Number of allottees who approached issuer for transfer of shares from Unclaimed Securities Suspense Account during the Financial Year 2019-20 ||Nil |
|4 Number of shares transferred from Unclaimed Securities Suspense Account during the Financial Year 2019-20 ||Nil |
|5 Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the end of the Financial Year 2019-20 ||7 allottees |
|6 Aggregate number of outstanding equity shares in the Unclaimed Securities Suspense Account lying at the end of the Financial Year 2019-20 ||140 Equity shares |
Note: Voting rights on the above-mentioned equity shares are kept frozen till therightful owner of such equity shares claim these shares. Once the rightful owner claimsthese shares the shares along with accumulated dividend will be transferred to therightful owner.
Transfer of Unclaimed Dividend and corresponding shares to the IEPF Authority
During the year under report the Company has transferred the unclaimed and unpaiddividend of Rs. 35775 to the IEPF Authority. Further 44 corresponding shares on whichthe dividend was unclaimed for seven consecutive years have been transferred as per therequirement of the IEPF Rules. The details are provided in the shareholder informationsection of this Annual Report and also available on our website:https://www.persistent.com/investors/unclaimed-dividend/
As on March 31 2020 the total institutional holding in your Company stood at 44.76%of the total 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 2020. Your Directors believe that the consolidated financialstatements present a more comprehensive picture as compared to standalone financialstatements. These documents are available for inspection during the business hours at theRegistered Office of your Company and the respective subsidiary companies. A statementshowing financial highlights of the subsidiary companies is enclosed to the consolidatedfinancial statements.
The Annual Report of your Company does not contain full financial statements of thesubsidiary companies however your Company will make available the audited annualaccounts and related information of the subsidiary companies in soft copy in terms of theMCA Circular dated May 5 2020 upon request by any Member of your Company.
Consolidated financial statements
Consolidated financial statements of your Company and its subsidiaries as at March 312020 are prepared in accordance with the Indian Accounting Standard (Ind AS) 110 onConsolidated Financial Statements' notified by the Ministry of Corporate Affair(MCA) and forms 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 2020 areas under:
| || || ||Total Income ||Net Profit/(Loss) |
| || || ||For the period/year ended March 31 2020 ||For the period/year ended March 31 2019 ||For the period/year ended March 31 2020 ||For the period/year ended March 31 2019 |
|Name of the Entity and Country of incorporation ||Status || |
Period of Establishment/ Acquisition
|(Amount in Rs. million) ||(Amount in Rs. million) ||(Amount in Rs. million) ||(Amount in Rs. million) |
|Persistent Systems Inc. USA (PSI) ||Wholly Owned Subsidiary ||October 2001 ||21359.80 ||19754.38 ||(320.62) ||(174.76) |
|Persistent Systems Pte. Ltd. Singapore (Co. Reg. No. 200706736G) ||Wholly Owned Subsidiary ||April 2007 ||24.66 ||145.87 ||8.55 ||11.80 |
|Persistent Systems France S.A.S. France ||Wholly Owned Subsidiary ||April 2011 ||950.48 ||979.73 ||(11.02) ||43.37 |
|Persistent Systems Malaysia Sdn. Bhd. ||Wholly Owned Subsidiary ||September 2013 ||419.34 ||473.35 ||56.29 ||123.41 |
|Malaysia || || || || || || |
|Persistent Systems Germany GmbH ||Wholly Owned Subsidiary || |
|85.63 ||54.51 ||(55.87) ||(15.19) |
|Germany || || || || || || |
|Persistent Telecom ||Step-down subsidiary || |
|1001.84 ||1284.13 ||167.32 ||24.60 |
|Solutions Inc. USA ||(Wholly Owned || || || || || |
| ||Subsidiary of PSI) || || || || || |
| || || ||Total Income ||Net Profit/(Loss) |
| || || ||For the period/year ended March 31 2020 ||For the period/year ended March 31 2019 ||For the period/year ended March 31 2020 ||For the period/year ended March 31 2019 |
|Name of the Entity and Country of incorporation ||Status ||Period of Establishment/ Acquisition ||(Amount in Rs. million) ||(Amount in Rs. million) ||(Amount in Rs. million) ||(Amount in Rs. million) |
|Persistent Systems Mexico S.A. de C.V. ||Step-down subsidiary (Wholly Owned Subsidiary of PSI) ||March 2016 ||251.29 ||215.62 ||23.05 ||(22.29) |
|Mexico || || || || || || |
|Aepona Holdings Limited Ireland (Dissolved w.e.f. October 24 2019) ||Step-down subsidiary (Wholly Owned Subsidiary of PSI) ||October 2015* ||- ||- ||- ||- |
|Herald Technologies ||Step-down subsidiary ||August 2018* ||- ||0.07 ||- ||(10.29) |
|Inc. USA (Dissolved ||(Wholly Owned || || || || || |
|w.e.f. June 24 2019) ||Subsidiary of PSI) || || || || || |
|Aepona Group Limited Ireland ||Step-down subsidiary (Wholly Owned Subsidiary of Aepona Holdings Limited) ||October 2015* ||8.30 ||5.84 ||(122.16) ||(1360.89)# |
|Valista Limited Ireland (Under liquidation) ||Step-down subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) ||October 2015* ||0.89 ||16.50 ||0.23 ||14.96 |
|Aepona Limited United Kingdom ||Step-down subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) ||October 2015* ||332.74 ||397.34 ||71.99 ||(96.85) |
|Persistent Systems Lanka (Private) Limited Sri Lanka ||Step-down subsidiary (Wholly Owned Subsidiary of Valista Limited) ||October 2015* ||215.66 ||212.16 ||33.04 ||34.61 |
|PARX Werk AG ||Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Germany GmbH) ||August 2017* ||527.33 ||518.74 ||(2.72) ||15.00 |
|Switzerland || || || || || || |
|PARX Consulting GmbH Germany ||Step-down subsidiary (Wholly Owned Subsidiary of PARX Werk AG) ||August 2017* ||551.02 ||473.52 ||(48.85) ||(59.88) |
|Youperience GmbH ||Step-down subsidiary (wholly owned subsidiary of Persistent Systems Germany GmbH) ||July 2019* ||223.01 ||NA ||(83.36) ||NA |
|Germany** || || || || || || |
|Youperience Limited United Kingdom** ||Step-down subsidiary (wholly owned Youperience GmbH) ||July 2019* ||101.11 ||NA ||2.33 ||NA |
|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.
** Acquired during FY 2019-20. # Includes provision for investment and inter corporatedeposits given to its wholly owned subsidiary in the UK prior to its acquisition byPersistent group. Since the net worth of the subsidiary had eroded the same is providedfor. Being the inter company transaction it is eliminated in the consolidated financialstatements. ^ Under Corporate Insolvency Resolution Process for winding up.
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 15 1634 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 athttps://www.persistent.com/investors/related-party-transactions-policy/ During the yearunder report your Company did not enter into any material transaction with any party whois related to it as per the Act. There were certain transactions entered into by yourCompany with its foreign subsidiaries and other parties who are related within the meaningof Indian Accounting Standard (Ind AS) 24. Attention of Members is drawn to the disclosureof transactions with such related parties set out in Note No. 34 of the StandaloneFinancial Statements forming part of this Annual Report. The Board of Directors confirmsthat none of the transactions with any of related parties were in conflict with yourCompany's interest. The list of Related Party Transactions entered by your Company for FY2019-20 (on consolidated basis) are available onhttps://www.persistent.com/investors/related-party-transactions-policy/ The related partytransactions are entered into based on considerations of various business requirementssuch as synergy in operations sectoral specialization and your Company's long-termstrategy for sectoral investments optimization of market share profitability legalrequirements 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.
The information on transactions with related parties pursuant to Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 are given in AnnexureD in Form No. AOC-2 and the same forms an integral part of this report.
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 anintegral part of this Annual Report.
Management Discussion and Analysis
Report on Management Discussion and Analysis as stipulated under the ListingRegulations and any other applicable laws for the time being in force based on auditedconsolidated financial statements for the Financial Year 2019-20 forms an integral part ofthis Annual Report.
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 an integral partof this Annual Report.
Conservation of energy technology absorption research and development foreignexchange earnings and outgo
Your Company believes that conservation of energy is essential and as a responsiblecorporate citizen your Company must encourage all employees vendors and otherstakeholders to act on ensuring reduced usage of energy on a perpetual basis. Your Companyhas procured various energy saving devices and systems which help in conserving energyand has resulted into a significant savings in the energy cost.
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.
Carbon management and sustainable development provide business with some of thegreatest opportunities towards sustainability. Your Company reduced carbon footprints bytaking energy conservation measures. Thanks to the reduced travel both because of localcommuting and air travel the carbon footprint this year is lower. Your Company continuesto take various measures on energy saving and sustainability as follows:
Energy Efficiency Activities
1 Upgradation of air conditioner systems a. Existing AC's based on R-22 gas replacedwith energy efficient Inverter based ACs based on environment friendly R-32 gas b.Replaced old chiller system by high efficiency (lesser energy and water consumption)chiller system in Bhageerath facility. c. Replaced old chiller system by high efficiencyVRV system in Goa facility
2 Replaced CFLs by LED lamps - indoor outdoor & all common areas such as parkinglobbies toilets etc. in our facilities. (quantity 8699 Nos.)
3 Proactively controlled smart lighting with clock timers delay timers sequentialtimers and photocell & occupancy/motion sensors. (quantity 859 Nos.)
4 Regulated and optimized schedules for workings of Lifts (30 Nos.) Vending machines(75 Nos.) Ventilation systems (89 Nos.) Water coolers (89 Nos.) etc. (Shut off innights/ off working hours except bare minimum required.)
5 AC Discipline - no cool air leakages from each air-conditioned area.
6 AC optimized in server rooms and data centres by removing unwanted heat loads spaceoptimization reorganizing inlet and out flow and wall insulation
7 Upgradation to high efficiency module online UPS systems to reduce losses. 18% energysaving achieved.
8 Optimized running hours of air-conditioned systems based on time of day occupancyand seasonal aspects including proper required temperature set points. (e.g. In Winternight hrs. weekends etc.)
9 Conference rooms and common area ACs set to 24 C minimum
10 Incorporated Ozone system with Air conditioning for energy saving and indoor qualityimprovement. 21 % energy saved.
11 Cold aisle containment work in Data centre results 18% saving in Power consumptionof Data centre AC.
12 89 VFDs installed for all fresh air AHU systems.
13 Usage of 848 thin client machines in place of CPUs for training rooms and someprojects in Hinjewadi facility.
14 Pilot project with active harmonic filter panel for automatic power factor andharmonics control in electrical system in progress to improve power quality and reducelosses
15 Energy saving measures are taken right from design stage like double wallconstruction low-e glass for facades and windows with DGUs maximum use of natural lightand ventilation underdeck insulation etc.
Renewable Energy Initiatives Roof Top Solar Plants
| || ||Annual Generation || || |
|Roof Top Solar Plant Location ||Capacity ||kWh (units) FY 2019-20 ||Cost saved in Rs. ||Remarks |
|1 AR-PG Facility Pune ||245 kWp ||89477 ||921613 ||Persistent Facility |
|2 Hinjawadi Facility Pune ||276 kWp ||408525 ||4207808 ||Persistent Facility |
|3 Nagpur Facility ||207 kWp ||163413 ||1683154 ||Persistent Facility |
|4 Pune Railway Station Pune ||160 kWp ||213931 ||1711448 ||PSL Through CSR activity |
|5 Nampally Railway Station Hyderabad ||228 kWp ||304601 ||2741409 ||PSL Through CSR activity |
|6 Tarachand hospital Pune ||63 kWp ||69486 ||715706 ||PSL Through CSR activity |
|Total || ||1249433 ||11981138 || |
|Roof Top Solar Plants || || || || |
|Windmill Location ||Capacity ||FY19-20 Generation ||Cost saved in Rs. ||Remarks |
|1 Windmill at Nandurbar ||2.1 MW ||4995206 ||24576414 ||Owned by Persistent |
|Maharashtra India || || || || |
|2 Windmill at Jath ||2.1 MW ||2925959 ||14395718 || |
Owned by Persistent
|Maharashtra India || || || || |
|Total || ||7921165 ||38972132 || |
1 Prevention of overflow from overhead tanks using auto level control system
2 Special nozzles/aerators installed to reduce water flow at water
3 "No leaky tap" policy leaky tap/pipe is repaired within 2 hours(immediately in most cases)
4 Monitoring water meter readings twice every day to detect overuse/ excessiveleakage.
5 STP output water is recycled for gardening at our Pune Nagpur and Goa facilities.
6 Infrastructure and system installed for collection of natural underground springwater leakages/seepages and recycling it for non-drinking and gardening use to reduceconsumption of treated water
7 Ground water recharging with rainwater harvesting system in Hinjawadi-Pune and Nagpurfacility
8 Frequent awareness campaigns run for encouraging employees to save water in officeand at home
9 Society work and awareness related to sustainability through our CSR activity
1 E-waste and hazardous waste is handed over only to authorized agencies approved byState Pollution Control Board. Employees are also encouraged to deposit their personalE-waste at all our company facilities for disposal the same way
2 Zero Plate Wastage' week is observed twice in a year and done regular awarenesstrough mails and poster
3 Minimized the amount of food wasted during meals. Your Company achieved 6.4%reduction compare to Financial Year 2019-20 in Plate wastage
4 Minimized plastic bags to almost zero and encouraged cloth or paper bags instead;Persistent organizes "No Plastic Days" to promote awareness of using plastic
5 Paperless office with all work done on email/ soft copies except where statutorilymandated or required by govt rules/ procedures
6 Both side printing set as default mode and a culture and printers installed trackingfacility help to reduce paper consumption
7 All waste papers are shredded and recycled through a vendor partner
8 All garden waste is treated in compose pit to get organic fertilizer
9 Dry garbage is collected on daily basis by "Swachh" an NGO appointed byLocal Municipal Corporations
10 No Tobacco/ No smoking policy in our entire organization
11 Single use plastic water bottles banned; Plastic spoons/ plates/ crockery alsobanned
Customer experience operational excellence on Green activities
1 Employees feel proud of belonging to a green company and volunteer more for greeninitiatives like tree plantation tree maintenance and society awareness related tosustainability
2 LED lighting has improved the ambience and freshness of workplace
3 Customers appreciate our initiatives and sense of Social Responsibility during theirvisits including our ISO 14001 and ISO 14064 certification
4 Ozonates improved indoor air quality and higher oxygen levels clearly felt byinmates as well as visitors. We are the very few IT companies to have this featureinstalled in our AC systems
5 We are the very few IT companies to have solar panels on almost all our rooftops andto own two (2) MW windmills.
During the Financial Year 2019-20 Dhule windmill generated 4995206 units whileSangli windmill generated 2925959 units.
6 In addition your Company also installed Solar panels on Pune and Hyderabad RailwayStations and at Tarachand Hospital Pune under CSR activity
7 Employees contributing regularly for Tree Plantation
8 Appreciation from NASSCOM for Green IT Initiatives in Pune city
9 Transport and travel operational efficiency and cost reduced due to optimization ofbusiness travel and local bus routes of employee transport also contributed to reductionof CO2 emissions by 272.21 tons in Financial Year 2018-19 10 Insistence oneco-friendly and high efficiency products. Your Company also promotes such products to itsvendors.
Impact caused by the implementation of Green initiatives on "employee/end userSatisfaction"
1 Better healthy and working environment with freshness greenery and brighterworkspaces
2 Greater participation by employees in green initiatives. e.g. at Nagpur recentWalkathon cum Plantathon conducted to reduce Carbon Footprint: 1000 Meters 1000Steps 1000 Plants
3 On reaching total employee headcount of 10000 your Company launched drive for10000 trees plantation Pan India with employee participation 10000 Trees alreadyplanted!
4 Greater bonding with local community and environmental groups
5 Zero Accidents till date in our entire Organization
6 Reduction in Greenhouse Gases emission in FY 2019-20 is 15.44% compare to FY 2018-19.
7 Total reduction of 2473 tons of CO2 emissions in FY 2019-20.
8 Lower insurance premiums as risks and liabilities are reduced
9 Building corporate image of organization globally
10 Reducing Operation and maintenance costs
11 Star Rating Scheme by BEE for two commercial buildings of your Company
All the facilities of your Company in India are certified by DNVGL for ISO 14001:2015and Occupational Health and Safety Management System Standard by ISO 45001:2018certifications after surveillance audit (January 2020) and are now initiated. Bestpractices to preserve the environment/health and safety are undertaken by your Companyeven during constructing its various premises by using crush sand fly ash bricks anddouble glass unit use of gypsum and recycled wood to protect the environment. Also allthe facilities of your Company in India are certified by AGS for ISO 14064-1:2006 isupgraded to ISO 14064-1:2018 Greenhouse gas inventory. Your company is the firstorganization in India and first IT company in the world for 2018 version. It is yourCompany's constant endeavour to conserve and save the Environment and hence your Companyhas launched the Green Persistent Movement to support the same. As power cost constitutesan insignificant part of the total expenses the financial impact of these measures is notmaterial.
Other ISO Certifications
The details about the other ISO certifications for technical processes and systems areprovided in Annexure F to this Report and which forms an integral part of this report.
The particulars of expenditure on Research and Development on accrual basis are asfollows:
| || |
Year ended on March 31
|Particulars ||2020 ||2019 |
|Capital expenditure ||1.04 ||0.46 |
|Revenue expenditure ||243.05 ||182.35 |
|Total research and development expenditure ||244.09 ||182.81 |
|As a percentage of total income ||1.08% ||0.89% |
The particulars of foreign exchange earnings and outgo based on actual inflows andoutflows are as follows:
| ||(In Rs. million) |
| ||Year ended on March 31 |
|Particulars ||2020 ||2019 |
|Earnings ||19207.33 ||20488.65 |
|Outgo ||5241.20 ||6281.03 |
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 inrespect of internal financial controls and such internal financial controls were adequateand were operating effectively. The internal financial controls covered the policies andprocedures adopted by your Company for ensuring orderly and efficient conduct of businessincluding adherence to your Company's policies safeguarding of the assets of yourCompany prevention and detection of fraud and errors accuracy and completeness ofaccounting records and timely preparation of reliable financial information.
Your Company has an in-house internal audit team since 2005 and comprises of personnelwith professional qualifications and certifications in audit and is rich on diversity. Theaudit team hones its skills through a robust knowledge management program to continuouslyassimilate the latest trends and skills in the domain and to retain the knowledge gainedfor future reference and dissemination.
The Head of Internal Audit team reports to the Chairman of the Audit Committee and is apermanent invitee to the quarterly meetings of the Audit Committee Risk ManagementCommittee and Executive Committee. Findings of the internal audits are presented to theAudit Committee at its quarterly meetings.
The function provides an independent objective assurance and consulting services tovalue-add and improve Operations of Business Units. The audits carried out through-out theyear are based on an internal audit plan which is reviewed and approved by the AuditCommittee every quarter. In line with the industry practice and regulatory requirementsthe internal audit function covers the areas such as review of Internal FinancialControls Business and Financial operations including regulatory compliances.
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 andfair view of the state of affairs of your Company as at March 31 2020 and of the profitof 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 forsafeguarding the assets of your Company and for preventing and detecting fraud and otherirregularities 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 provisions ofall 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 2020 is provided as an Annexure Eto 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 athttps://www.persistent.com/ethical-practices-at-persistent-systems/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 2019-20 forms an integral part of this AnnualReport.
Performance Evaluation of the Board its Committees and Directors
Your Company conducted the annual performance evaluation of the Board the Chairmanits various Committees and the Directors individually including Independent Directors. Theperformance evaluation was done by an external management consultant who specialized inBoard evaluations. The performance of the Board was evaluated by seeking inputs from allthe directors and senior management. The evaluation criteria includes aspects such as theboard composition and structure effectiveness of board processes information andfunctioning etc. The evaluation was conducted in March and April 2020 and the findings ofthe evaluation were presented at the meeting of the Nomination and Remuneration Committeeand the Board of Directors held in April 2020.
Qualitative comments received during the Board evaluation were as follows:
1 The excellent Executive Summary the Chairman circulates gives a comprehensive"reminder" about the key goals of the Organization while addressing specificissues. There is complete transparency. Your Board has power to question and debate.
2 Our Board is highly skilled in financial aspects of the business and adds significantvalue on the financial matters. The contribution on the business strategy either from aplanning or an ongoing quarterly review perspective is weak and could be significantlyenhanced.
3 Risk Management Committee and Audit Committee in greater details and Board in itsdiscussions cover the key risks that the organization faces Previous year's observations(For FY 2018-19) and actions taken are as follows:
|Observations ||Actions taken |
|1 The Board may consider setting aside time in every meeting to discuss certain themes in depth thinking big developing the next generation of leaders M&A etc. This could be decided in advance or based on what the issues at the time of the meeting ||During the Financial Year 2019-20 the specific time slots were given in all meetings for discussion related to organization development mergers and amalgamation plans business strategies etc. The presentations on the same were also circulated in advance in order to get qualitative inputs from the Board. |
|2 A program of Directors mentoring specific leaders may be introduced again ||A meeting of the business heads with the Directors possessing relevant business skills was organized along with the Board Meeting in which the business ideas were shared. |
Proposed actions based on current year's comments
For the current year comments received from the external management consultant aregeneric in nature so there is no specific action is required.
Disclosure of Cost Audit
Your Company had filed Form 23C for appointment of Cost Auditor relating to itsactivities of generation of electricity from windmill turbine under the Companies (CostAudit Report) Rules 2011. However based on another Circular dated November 30 2011issued by the Ministry of Corporate Affairs (MCA) your Company claimed exemptions fromthe requirement of the Cost Auditor for the said purposes and accordingly had written aletter dated December 19 2012 to MCA Cost Audit Branch for withdrawal of theappointment of the said Cost Auditor as well as cancellation of the Form 23C so filed.Reply to the said letter is awaited from the MCA.
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 FinancialYear 2019-20 have been paid to both BSE and NSE.
The Ministry of Corporate Affairs notified the Secretarial Standard on Meetings of theBoard of Directors (SS 1) Secretarial Standard on General Meetings (SS2)Secretarial Standard on Dividend (SS3) and Secretarial Standard on Report of theBoard of Directors (SS-4). The Company complies with Secretarial Standards and guidelinesissued by the Institute of Company Secretaries of India (ICSI).
Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013
Your Company has an Anti-Harassment Policy in place which is in line with requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 (the Act' for this section). All employees (permanent contractualtemporary and trainees) are covered under this policy. Your Company has constituted anInternal Complaints Committee(s) (ICC) across all Company locations in India and abroad toconsider and resolve all sexual harassment complaints reported to this Committee. Theconstitution of the ICC is as per the Act and the Committee includes an external memberfrom NGOs with relevant experience at India locations. The Ethics Committee at the globallocations acts in the capacity of Internal Complaints Committee where the local law overthere does not enforce constitution of such committee. Investigation is conducted and thedecisions are made by the ICC at the respective location and the senior women employee isthe presiding officer over every case. Half of the total members of the ICC are women.During the year under report your Company has received one complaint of sexual harassmentwhich was disposed during the year under the report. As on March 31 2020 there were nopending cases of sexual harassment in your Company.
Corporate Social Responsibility
Your Company formed a Public Charitable Trust - Persistent Foundation' in theFinancial Year 2008-09 to institutionalize your Company's CSR initiatives and to develop asystematic approach to administer the process of grant of donations.
Last year Persistent Foundation celebrated its tenth year of establishment. Duringthese 11 years the Foundation has contributed to many projects spread across differentgeographies in association with well-known NGOs to reach out to large number ofbeneficiaries. Suggestions received from the impact assessment study were incorporated inthis year's plans. Your Company acknowledges the contribution made by the Foundation incoordinating and ensuring that the CSR donations made to your Company are beingeffectively deployed as proposed and have an impact to the society. During the year underreport Persistent Foundation (the Foundation') was able to continue to createexcitement among employees to participate in socially relevant causes. With cooperation ofthe employees of your Company the Foundation has set up several well-defined programs andactivities for the promotion of education health and community development. Theseactivities are carried out through projects undertaken by the Foundation with the supportof the employees and through the Government authorities reputed social organizations andinstitutions.
In addition to contributing Rs. 79.21 million to the Foundation your Company madedonations to various charitable institutions directly. Thus during the year under reportyour Company donated Rs. 86.11 million i.e. more than 2% of the Average Net Profits ofyour Company made during three immediately preceding Financial Years.
Report on CSR activities of your Company under the provisions of the Act during theFinancial Year 2019-20 is annexed hereto as Annexure G.
A detailed Report on the activities of the Foundation forms an integral part of thisAnnual Report.
CSR Committee and CSR Policy
The Board of Directors of your Company has constituted the CSR Committee to help yourCompany frame monitor and execute the Company's CSR activities under its CSR scope. TheCommittee 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 athttps://www.persistent.com/investors/csr-at-persistent/ The Company's CSR Policyhighlights that the need for contributing to the society is very large and your Companycan make a more significant contribution by staying focused on few areas through itssocial initiatives. The CSR policy recommends that your Company should encouragePersistent Foundation to contribute in the following focus areas:
3 Community Development
4 Assistance in Natural Calamities
The constitution of the CSR Committee is provided elsewhere in the Annual Report.
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 Dr. Anand Deshpande Chairman and Managing Director and Mr. Sunil Sapre ExecutiveDirector and Chief Financial Officer of your Company have not received any remuneration orcommission from any of its subsidiaries. However Mr. Christopher O'Connor ExecutiveDirector and Chief Executive Director and Mr. Sandeep Kalra Executive Director andPresident Technology Services Unit have received remuneration from PersistentSystems Inc. USA in addition to remuneration received from your Company.
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.
As we entered 2020 the world was progressing steadily in how it operates to a morecloud-centric digitally focused set of services and work patterns. Remote bankingshopping medical care logistics business to business marketplaces and other scenarioswere all projects that Persistent has repeatably undertaken for clients across the world.We therefore began the year with a focus on banking finance healthcare life sciencesand the industrial sector. The outbreak of COVID-19 was clearly a Black Swan event thelikes of which we have not experienced before as a global business community or society.While each business must navigate the pressure on both their bottom and top line uniquelyCOVID-19 has created the impetus and mandate for cloud-centric digital acceleration. Someindustries such as travel and leisure have experienced the worst impact but others willexpand and flourish. Persistent is well positioned to help banking healthcare andindustrial organizations move beyond the status quo of incremental digital projects andinstead transform into truly digital enterprises. The ISV community always animportant client set for Persistent -- is also re-evaluating how work is done which playsinto our longstanding strength at building better software with greater efficiency and atlower cost. This year saw Persistent cross the USD half a Billion revenue milestone an important landmark and one that gives us significantly more influence in the marketwith both clients and partners. We also brought in a new leadership team across salesstrategy and marketing which is now executing on a USD 1 Billion growth strategy and plan.
Today we are a forward-looking global solutions company supporting our clients' mostpressing issues at the core of their digital futures. In the context of helping ourclients navigate this future we introduced our digital mosaic approach definingand integrating the rich choices of cloud-based offerings - which is helping us expandclient conversations and open up new opportunities. Our strategy is to accelerate growthin market segments both vertical and horizontal - with the strongest demand forthis type of digital growth. Though we may see some reduced spending from customers weare cautiously optimistic about our future and our ability to post strong growth in yearsto come.
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 India (SEBI)throughout 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 CochinSpecial Economic Zone Central Excise and Customs Department Department of RevenueIncome Tax Department Department of Electronics Director General of Foreign TradeDirector of Industries Department of Shops and Establishments Department ofTelecommunication Department of Commerce (SEZ Section) Regional Director of WesternRegion Registrar of Companies Maharashtra Pune Goods and Service Tax DepartmentInfotech Corporation of Goa Limited Goa Industrial Development Corporation NationalStock Exchange of India Limited BSE Limited Central Depository Services (India) LimitedNational Securities Depository Limited local Municipal Corporations where Companyoperates Maharashtra State Electricity Distribution Company Limited Telangana (erstwhileAndhra Pradesh) State Electricity Board Telangana State Industrial InfrastructureCorporation Maharashtra Industrial Development Corporation Bengaluru MunicipalCorporation Karnataka Industrial Development Corporation BSNL and Mobile/InternetService providers.
Your Board also extends its sincere thanks to M/s. Walker Chandiok & Co LLPChartered Accountants Statutory Auditors M/s. Deloitte Haskins & Sells LLPChartered Accountants M/s. Joshi Apte & Co. Chartered Accountants Tax AuditorsM/s. PVS and Associates Company Secretaries Secretarial Auditors and wing of Ernst &Young LLP providers of Compliance Manager Tool and related advisory for their services toyour Company.
Your Board also extends its thanks to ABSA Capital Bank Axis Bank Bank of BarodaBank of India Barclays Bank Banco Nacional de Mexico S.A. Bank of Tokyo Mitsubishi BNPParibas Chase Bank Citibank NA Commer Bank Deutsche Bank HDFC Bank Hongkong andShanghai Banking Corporation PYG VR Bank Silicon Valley Bank State Bank of IndiaStandard Chartered Bank Syndicate Bank Union Bank of India Wells Fargo Bank ZrcherKantonal 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 June 9 2020 ||DIN:00005721 |