Persistent Systems Limited — Audit Report / Information 2020

May 5, 2020

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NSE & BSE / 2020-21 / 15 May 5, 2020

The Manager, Corporate Services, National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai 400 051

Ref: Symbol: PERSISTENT

The Manager, Corporate Services, Bombay Stock Exchange Limited 14[th] Floor, P J Towers, Dalal Street, Mumbai 400 001

Ref: Scrip Code: 533179

Dear Sir/Madam,

Sub: Audited Financial Statements for the quarter and year ended March 31, 2020

We wish to inform you that the Board of Directors at its meeting through Tele-conferencing held on April 23 to 25, 2020 and concluded on May 5, 2020, has approved the Audited Financial Statements for the quarter and year ended March 31, 2020.

Accordingly, please find enclosed the following documents:

1. Audited Consolidated Financial Statements for the quarter and year ended March 31, 2020;

2. Audited Unconsolidated Financial Statements for the quarter and year ended March 31, 2020.

Due to the lock-down restrictions, the Company is not in a position to obtain the ‘wet ink’ signatures of the signatories on the above referred financial statements. However, in terms of the guidelines issued by the Stock Exchanges and our discussion with their concerned personnel about the signing requirements on compliance documents, Mr. Amit Atre, Company Secretary has affixed his digital signature on the same. The Company will obtain ‘wet ink’ signatures of the signatories post lock-down restrictions and will keep the same for its records.

Please acknowledge the receipt.

Thanking you,

Yours Sincerely,

For Persistent Systems Limited

Digitally signed by AMIT AMIT MURARI ATRE MURARI ATRE Date: 2020.05.06 01:00:28 +05'30'

Amit Atre Company Secretary ICSI Membership No.: A20507

Encl: As above

Persistent Systems Limited, Bhageerath, 402 Senapati Bapat Road, Pune 411 016, Maharashtra, India CIN - L72300PN1990PLCO56696

Tel: +91 (20) 670 30000 | Fax - +91 (20) 6703 0008 | E-mail - info@persistent.com | Website - www.persistent.com

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Walker Chandiok & Co LLP 16th floor, Tower II, Indiabulls Finance Centre, SB Marg, Prabhadevi (W) Mumbai 400 013 India T +91 22 6626 2699 F +91 22 6626 2601

To the Members of Persistent Systems Limited

Report on the Audit of the Consolidated Financial Statements

Opinion

1. We have audited the accompanying consolidated financial statements of Persistent Systems Limited Holding and its subsidiaries (the Holding Company and its subsidiaries together and its associate, which comprise the Consolidated Balance Sheet as at 31

March 2020, the Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Cash Flow Statement and the Consolidated Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

1. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on separate financial statements and on the other financial information of the subsidiaries, the aforesaid consolidated financial statements give and fair view in conformity with the accounting principles generally accepted in India including Indian Section 133 of the Act, of the consolidated state of

affairs (consolidated financial position) of the Group and its associate as at 31 March 2020, and its consolidated profit (consolidated financial performance including other comprehensive income), its consolidated cash flows and the consolidated changes in equity for the year ended on that date.

Basis for Opinion

1. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in paragraph 15 of the Other Matters section below is sufficient and appropriate to provide a basis for our opinion.

Walker Chandiok & Co LLP is registered with limited liability with identification number AAC-2085 and its registered office at L-41 Connaught Circus, New Delhi, 110001, India

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Key Audit Matters

1. Key audit matters are those matters that, in our professional judgment and based on the consideration of the reports of the other auditors on separate financial statements and on the other financial information of the subsidiaries, and its associate were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

2. We have determined the matters described below to be the key audit matters to be communicated in our report.

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Key audit matter How our audit addressed the key audit matter
Accuracy of revenues and onerous obligations Our audit work included but was not restricted to the
in respect of fixed-price contracts following procedures:
Refer Note 4(a)(i) notes forming part of the Obtained an understanding of the systems, processes
Consolidated Financial Statements. and controls implemented by management for
recording and calculating revenue, and the associated
unbilled revenue, unearned and deferred revenue
balances, and onerous contract obligations.
The Group has entered into various fixed-price
Tested the design and operating effectiveness of
software development contracts, for which revenue
is recognized by the group using the percentage of to assess key information technology (IT) controls
completion computed as per the Input method over:
prescribed under Ind AS 115 Revenue from IT environment in which the business systems
Contracts with Customers. The said revenue operate, including access controls, segregation
of duties, program change controls, program
recognition accounting policy involves exercise of
development controls and IT operation controls;
significant judgement by the management and the Testing the IT controls over the completeness
following factors requiring significant auditor and accuracy of cost/efforts and revenue reports
attention: generated by the system; and
Testing the access and application controls
pertaining to allocation of resources and
budgeting systems which prevents the
High inherent risk around accuracy of
unauthorized changes to recording of efforts
revenue, given the customised and complex
incurred and controls relating to the estimation of
nature of these contracts and significant
contract efforts required to complete the project.
involvement of IT systems.
Selected a sample of contracts and performed a
High estimation uncertainty relating to
retrospective review of efforts incurred with estimated
determination of the progress of each contract,
efforts to identify significant variations and verify
costs incurred till date and additional costs
whether those variations have been considered in
required to complete the remaining contract.
estimating the remaining efforts to complete the
Identification and determination of onerous
contract.
contracts and related obligations.
Reviewed a sample of contracts with unbilled
Determination of unbilled revenue receivables
revenues to identify possible delays in achieving
and unearned revenue related to these
milestones, which require change in estimated efforts
contracts as at end of reporting period.
to complete the remaining performance obligations.
Performed analytical procedures for reasonableness
of incurred and estimated efforts.
Considering the materiality of the amounts
involved, and significant degree of judgement and
contracts based on estimates tested as above.
subjectivity involved in the estimates as mentioned
Evaluated the appropriateness of disclosures made in
above, we have identified revenue recognition for the financial statements with respect to revenue
fixed price contracts and determination of onerous recognized during the year as required by applicable
contracts and related provisions, as a key audit Indian Accounting Standards.
matter for the current year audit.
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Unbilled revenue in respect of revenue sharing Our audit work included but was not restricted to the
arrangements, i.e., Royalty income following procedures:
Refer Note 4(a)(i) notes forming part of the
Consolidated Financial Statements.
Obtained an understanding of the systems, processes
and controls implemented by management for
Royalty income from one of the main customers is estimating revenue and the associated unbilled
accrued as a percentage of total onward sales revenue.
made by the customer during the period.
Tested the design and operating effectiveness of the
Recognition of royalty income for the period of internal controls relating to estimation of share of
three months before year end, involves estimations revenue involved in recognition of royalty income.
made by the Group based on past trends and
information available with the management during
Evaluated basis of estimation of aforesaid unbilled
the particular period. Such Royalty income is
receivable from the terms of the contract and past
booked as unbilled receivable, since actual sales trends, and verified arithmetical accuracy of
for the aforesaid period by the customer is management computation.
determined subsequent to the period end,
Assessed historical accuracy of the forecasts made by
Considering the materiality of the amounts the management in earlier period/s.
involved, and significant degree of judgement and
subjectivity involved in the estimates of the unbilled
Performed analytical procedures for reasonableness
revenue, we have identified unbilled receivable in of revenue and associated unbilled revenue recorded
respect of revenue sharing arrangements as a key and disclosed as at year end.
audit matter for the current year audit.
Evaluated the appropriateness of disclosures made in
the financial statements with respect to unbilled
revenue recognized during the year as required by
applicable Indian Accounting Standards.
Contingent liabilities relating to export Our audit work included but was not restricted to the
incentive litigation following procedures:
Refer Note 43 notes forming part of the
Consolidated Financial Statements regarding process and the underlying controls for identification
and monitoring of the pending litigations and
dispute on export incentives availed by the Parent
completeness of such litigations for financial reporting
Company that have been refunded under protest.
Assessed the appropriateness of the Parent
and contingent liability disclosures, in accordance with
significant assumptions and assessments requiring
the applicable Indian Accounting Standards.
interpretation of various applicable rules,
regulations, practices and precedents, export
Discussed developments during the year in the export
incentive matter with the management and obtained
years, has been disclosed as a contingent liability
as at year end.
underlying assumptions in estimating the export
In view of the amounts involved and uncertainty incentive benefits and the possible outcome of the
matters. This involved assessing the probability of an
pertaining to the final outcome of the matter
unfavorable outcome of a given proceeding and the
requiring significant management judgement in
reliability of estimates of related amounts which
determination of recognition of provision or involved consideration of legal precedence and other
disclosure of contingent liability with respect to the rulings and expert opinion obtained by the
said litigation, this matter is considered as a key management.
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Assessed adequacy and appropriateness of the contingent liability disclosure made in Note 43 to determine whether management has presented the facts and circumstances adequately.

Implementation of new ERP IT system During the current year, with effect from 01 Octob 2019, the Group has implemented a new ERP I - locations including overseas locations, coverin certain key business processes including financi information reporting process. The Group is highly dependent on informatio technology (IT) systems for carrying on i operations including automated interfaces betwee the various sub-systems. processes are dependent on the automate controls enabled by IT systems which impacts ke financial accounting and reporting items. Th migration has resulted in a significant change in th Due to its importance and bearing on operatin procedures and financial accounting controls an significant management efforts with regards transition and migration of data and require integration with continued other legacy IT system which required increased audit efforts and robu discussions with the management and thos charged with governance, the implementation new ERP has been considered as a key aud matter for the current year audit.

er T g al n ts n d y e e g d to d s, st e of it Our audit work included, but was not limited to, the following procedures p experts, where necessary: Obtained an understanding of the systems, processes and underlying controls of the new ERP system from experts. Obtained an understanding of the processes and controls implemented by management during the data migration process and integration of the new ERP with continued other legacy IT systems. Discussed, assessed and evaluated the appropriateness of IT access and segregation of duties in the new IT system. Performed walkthroughs to test design and also tested operating effectiveness of automated controls including the IT general controls and key IT application controls in the financial reporting module of the new IT system. Verified the SOC 1-Type II report provided by Oracle for Oracle Fusion Cloud Services-Oracle Fusion ERP. Obtained and reviewed exception report from the management with respect to data migration and re- performed reconciliations between old sub-ledgers and general ledgers and data migrated to the new system.

Information other than the Consolidated

1. The Holding information comprises the information included in the Annual Report, but does not include the consolidated eport is expected to be made available to us after the date of this auditor's report.

Our opinion on the consolidated financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

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In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

1. Section 134(5) of the Act with respect to the preparation of these consolidated financial statements that give a true and fair view of the consolidated state of affairs (consolidated financial position), consolidated profit or loss (consolidated financial performance including other comprehensive income), consolidated changes in equity and consolidated cash flows of the Group including its associate in accordance with the accounting principles generally accepted in India, including the Ind AS specified under Section 133 of the Act. including financial information considered necessary for the preparation of consolidated Ind AS financial statements. Further, in terms of the provisions of the Act, the respective Board of Directors /management of the companies included in the Group and its associate, covered under the Act are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. These financial statements have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid.

2. In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group and its associate are responsible for assessing the ability of the Group and its associate to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group and its associate or to cease operations, or has no realistic alternative but to do so.

3. The Board of Directors are also responsible for overseeing the financial reporting process of the companies included in the Group and its associate.

Consolidated Financial Statements

1. Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

2. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

3. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the holding company has adequate internal financial controls system in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and its associate to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw consolidated financial statements

• or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the may cause the Group and its associate to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

• From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters

1. We did not audit the financial statements of fifteen subsidiaries, whose financial statements reflect total 4,751.45 million 1,473.65 million as at 31 March 2020, total revenues of

4,964.27 million and net cash inflows amo 115.88 million for the year ended on that date,

as considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, and our report in terms of sub-section (3) of Section 143 of the Act, in so far as it relates to the aforesaid subsidiaries, is based solely on the reports of the other auditors.

Our opinion above on the consolidated financial statements, and our report on other legal and regulatory requirements below, are not modified in respect of the above matters with respect to our reliance on the work done by and the reports of the other auditors.

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1. Nil for the year ended 31 March 2020, as considered in the consolidated

financial statements, in respect of one associate, whose financial statements have not been audited by us. These financial statements are unaudited and have been furnished to us by the management and our opinion on the consolidated financial statements, in so far as it relates to the aforesaid associate is based solely on such unaudited financial statements. In our opinion and according to the information and explanations given to us by the management, these financial statements are not material to the Group and its associate.

Our opinion above on the consolidated financial statements, and our report on other legal and regulatory requirements below, are not modified in respect of the above matter with respect to our reliance on the financial statements certified by the management.

1. The consolidated financial statements of the Company for the year ended 31 March 2019 and for the quarter ended 30 June 2019 were audited by the predecessor auditor, Deloitte Haskins & Sells LLP, who have expressed an unmodified opinion on these consolidated financial statements and consolidated condensed financial statements vide their audit reports dated 27 April 2019 and 25 July 2019 respectively. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 197(16) of the Act, based on our audit we report that the Holding Company, covered under the Act paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act. Further, we report that the provisions of Section 197 read with Schedule V to the Act are not applicable to sixteen subsidiary companies and one associate company, since none of such companies are covered under the Act.

2. As required by Section 143 (3) of the Act, based on our audit and on the consideration of the reports of the other auditors on separate financial statements and other financial information of the subsidiaries, we report, to the extent applicable, that:

3. a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit of the aforesaid consolidated financial statements;

4. b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and the reports of the other auditors;

5. c) the consolidated financial statements dealt with by this report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements;

6. d) in our opinion, the aforesaid consolidated financial statements comply with Ind AS specified under Section 133 of the Act;

7. e) On the basis of the written representations received from the directors of the Holding Company and taken on record by the Board of Directors of the Holding Company, none of the directors of the Group companies and its associate, covered under the Act, are disqualified as on 31 March 2020 from being appointed as a director in terms of Section 164(2) of the Act.

8. f) With respect to the adequacy of the internal financial controls over financial reporting of the Holding Company, and its subsidiary companies, associate company covered under the Act, and the A ;

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• g) W of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditors on separate financial statements as also the other financial information of the subsidiaries:

• i. The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group and its associate, as detailed in Note 43 to the consolidated financial statements.

• ii. the Group and its associate did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2020;

• iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Holding Company, and its subsidiary companies and associate during the year ended 31 March 2020;

• iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these consolidated financial statements. Hence, reporting under this clause is not applicable.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABE7281

Place : Mumbai Date: 05 May 2020

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Annexure A Persistent Systems Limited on the consolidated financial statements for the year ended 31 March 2020

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ( the Act

1. In conjunction with our audit of the consolidated financial statements of Persistent Systems Limited the Holding Company and its subsidiaries (the Holding Company and its subsidiaries together

referred to as the Group and its associate, as at and for the year ended 31 March 2020, we have audited the internal financial controls over financial reporting ( IFCoFR ) of the Holding Company covered under the Act, as at that date.

Responsibilities of Management and Those Charged with Governance for Internal Financial Controls

1. The Board of Directors of the Holding Company, covered under the Act, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note o . These responsibilities include the

design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the business, including adherence to the policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor s Responsibility for the Audit of the Internal Financial Controls

1. Our responsibility is to express an opinion on the IFCoFR of the Holding Company, as aforesaid, based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India ( ICAI ) prescribed under Section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting ( the Guidance Note issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate IFCoFR were established and maintained and if such controls operated effectively in all material respects.

2. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the nt of the financial

statements, whether due to fraud or error.

1. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the IFCoFR of the Holding Company, as aforesaid.

Meaning of Internal Financial Controls over Financial Reporting

1. A company's IFCoFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's IFCoFR include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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Inherent Limitations of Internal Financial Controls over Financial Reporting

1. Because of the inherent limitations of IFCoFR, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the IFCoFR to future periods are subject to the risk that the IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

1. In our opinion, the Holding Company, has in all material respects, adequate internal financial controls over financial reporting and such controls were operating effectively as at 31 March 2020, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over .

For Walker Chandiok & Co LLP

Chartered Accountants Firm Registration No.: 001076N/N500013

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Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABE7281

Place: Mumbai Date: 05 May 2020

Persistent Systems Limited

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2020

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Notes As at As at
March 31, 2020 March 31, 2019
ASSETS
Non-current assets
Property, plant and equipment 6.1 2,224.60 2,331.24
Capital work-in-progress 166.18 12.10
Right of use assets 6.2 566.81 -
Goodwill 6.3 88.94 81.24
Other Intangible assets 6.4 1,434.93 1,595.41
Intangible assets under development 137.20 303.54
4,618.66 4,323.53
Financial assets
- Investments 7 4,620.97 4,345.71
- Loans 8 176.13 164.00
-Other non-current financial assets 9 358.93 344.33
Deferred tax assets (net) 10 960.08 405.05
Other non-current assets 11 331.31 68.31
11,066.08 9,650.93
Current assets
Financial assets
- Investments 12 5,164.77 3,295.53
- Trade receivables (net) 13 5,921.96 4,923.01
- Cash and cash equivalents 14 1,899.99 1,739.45
- Other bank balances 15 2,672.19 4,989.35
- Loans 16 13.71 7.87
- Other current financial assets 17 2,068.54 2,377.00
Current tax assets (net) 163.93 185.06
Other current assets 18 1,950.52 1,387.79
19,855.61 18,905.06
TOTAL 30,921.69 28,555.99
EQUITY AND LIABILITIES
EQUITY
Equity share capital 5 764.25 791.19
Other equity 23,093.30 22,655.61
23,857.55 23,446.80
LIABILITIES
Non- current liabilities
Financial liabilities
- Borrowings 19 46.22 11.97
- Other long-term financial liabilities 20 361.32 1.83
Provisions 21 182.79 174.94
590.33 188.74
Current liabilities
Financial liabilities
- Trade payables [(dues of micro and small enterprises 22 2,247.09 1,517.07
- Other financial liabilities 23 1,163.44 441.93
Other current liabilities 24 1,320.13 1,122.44
Provisions 25 1,610.99 1,764.21
Current tax liabilities (net) 132.16 74.80
6,473.81 4,920.45
TOTAL 30,921.69 28,555.99
- 0.00 -
Summary of significant accounting policies 4
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The accompanying notes are an integral part of the consolidated financial statements. As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

Bharat Shetty Partner Membership No.: 106815

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Dr. Anand Deshpande Kiran Umrootkar Chairman and Managing Director Director

Place: Mumbai Date : May 5, 2020

Sunil Sapre Amit Atre Executive Director and Company Secretary Chief Financial Officer Place: Pune Date : May 5, 2020

Persistent Systems Limited

CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2020

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Notes For the year ended
March 31, 2020 March 31, 2019
Income
Revenue from operations (net) 26 35,658.08 33,659.41
Other income 27 1,323.77 876.55
Total income (A) 36,981.85 34,535.96
Expenses
Employee benefits expense 28.1 21,556.40 19,249.53
Cost of professionals 28.2 3,918.94 3,490.45
Finance costs (refer note 35) 63.32 3.05
Depreciation and amortization expense 6.5 1,659.62 1,572.51
Other expenses 29 5,260.15 5,357.03
Total expenses (B) 32,458.43 29,672.57
Profit before tax (A - B) 4,523.42 4,863.39
Tax expense
Current tax 1,354.70 1,343.20
Tax charge in respect of earlier years 52.55 88.81
Deferred tax credit (286.72) (85.41)
Total tax expense 1,120.53 1,346.60
Net profit for the year (C) 3,402.89 3,516.79
Other comprehensive income
Items that will not be reclassified to profit and loss (D)
- Remeasurements of the defined benefit liabilities / asset (net of tax) (34.80) (47.15)
- Tax effect on remeasurements of the defined benefit liabilities / (asset) - -
(34.80) (47.15)
Items that may be reclassified to profit and loss (E)
- Effective portion of cash flow hedge (net of tax) (429.15) 168.43
- Exchange differences in translating the financial statements of foreign operations 323.15 113.82
(106.00) 282.25
Total other comprehensive income for the year (D) + (E) (140.80) 235.10
Total comprehensive income for the year (C) + (D) + (E) 3,262.09 3,751.89
Earnings per equity share 30
44.38 43.99
44.38 43.99
Summary of significant accounting policies 4
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The accompanying notes are an integral part of the consolidated financial statements.

As per our report of even date

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For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of
Chartered Accountants Persistent Systems Limited
Firm Registration No.: 001076N/N500013
Bharat Shetty Dr. Anand Deshpande Kiran Umrootkar
Partner Chairman and Managing Director
Membership No.: 106815 Director
Sunil Sapre Amit Atre
Executive Director and Company Secretary
Chief Financial Officer
Place: Mumbai Place: Pune
Date : May 5, 2020 Date : May 5, 2020
----- End of picture text -----

Persistent Systems Limited

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended
Cash flow from operating activities Profit before tax Adjustments for:	4,523.42 4,863.39
Interest income Finance costs Dividend income Depreciation and amortization expense Amortization of lease premium Unrealised exchange loss/ (gain) (net) Change in foreign currency translation reserve Donations in kind Bad debts Employee stock compensation expenses Provision for doubtful deposits and advances Provision for diminution in value of investments Remeasurements of the defined benefit liabilities / asset (before tax effects) Excess provision in respect of earlier years written (back) (Gain)/ loss on fair valuation of assets designated at FVTPL Profit on sale of investments (net) Loss / (Profit) on sale of property, plant and equipment (net) Exchange loss on derivative contracts Exchange (gain) / loss on translation of foreign Provision for doubtful receivables (net) / (provision written back) currency cash and cash equivalents	(545.28) (287.72) 63.32 3.05 (13.98) (180.77) 1,659.62 1,572.51 - 0.58 (131.29) 106.52 119.30 (86.85) 58.51 20.51 71.36 - 1.40 - 71.18 83.86 (4.89) 236.79 - 248.48 182.50 - 13.98 (46.14) (70.36) (6.95) (33.89) (119.02) 68.92 (164.81) (366.09) 5.96 (4.02) (46.77)
Operating profit before working capital changes	5,925.02 5,941.31
Movements in working capital : (Increase) in non-current and current loans (Increase) in other non current assets (Increase) in other current financial assets (Increase) / decrease in other current assets (Increase) in trade receivables Increase / (decrease) in trade payables, current liabilities and non current liabilities (Decrease) / increase in provisions Operating profit after working capital changes Direct taxes paid (net of refunds) (A) Cash flows from investing activities Payment towards capital expenditure (including intangible assets) Proceeds from sale of property, plant and equipment Purchase of bonds Proceeds from sale/ maturity of bonds Purchase of non-current investments Proceeds from sale of non-current investments Investments in mutual funds Proceeds from sale / maturity of mutual funds Maturity / (Investments) of bank deposits having original maturity over three months Investments in deposits with financial institutions Maturity of deposits with financial institutions Non current loans placed Interest received Dividends received Net cash generated (used in) investing activities (B) Net cash generated from operating activities	(14.44) (5.55) (235.30) (1.68) (232.15) (135.26) (559.10) 175.62 (894.77) (246.03) 712.56 (180.13) (145.37) 179.91
	4,556.45 5,728.19 (1,328.27) (1,405.07)
	3,228.18 4,323.12
	(758.39) (379.06) 12.68 5.04 (435.48) (148.15) (901.61) (1,175.31) 819.87 199.43 - (144.96) 25.22 - (19,456.95) (22,418.13) 17,670.49 25,010.64 2,108.15 (4,049.96) - (300.00)
	250.00 650.35
	- (16.96) 503.60 327.33 13.98 180.77
	(148.44) (2,258.97)

Persistent Systems Limited

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

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For the year ended
March 31, 2020 March 31, 2019
Cash flows from financing activities
(Repayment) of long term borrowings (4.62) (4.58)
Shares bought back (1,677.01) (571.41)
Loan received as a part of COVID-19 relief measures 39.14 -
Specific project related grant received 3.00 -
Interest paid (63.31) (3.66)
Dividends paid (1,146.38) (881.41)
Tax on dividend paid (154.14) (137.41)
Net cash (used in) financing activities (C ) (3,003.32) (1,598.47)
For the year ended
March 31, 2020 March 31, 2019
Net increase / (decrease) in cash and cash equivalents (A + B + C) 76.42 465.68
Cash and cash equivalents at the beginning of the year 1,739.45 1,345.13
Cash and cash equivalents acquired on acquisition 37.35 -
Effect of exchange difference on translation of foreign 46.77 (71.36)
currency cash and cash equivalents
Cash and cash equivalents at the end of the year 1,899.99 1,739.45
Components of cash and cash equivalents
Cash on hand (refer note 14) 0.24 0.22
Cheques on hand (refer note 14) - -
Balances with banks
On current accounts (refer note 14) 1,566.06 1,300.93
On saving accounts (refer note 14) 0.36 0.91
On Exchange Earner's Foreign Currency accounts (refer note 14) 261.86 114.91
On deposit accounts with original maturity less than three months (refer note 14) 71.47 229.54
On Escrow accounts (refer note 14) - 92.94
Cash and cash equivalents 1,899.99 1,739.45
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research and development activities specified in the agreement.

** The Parent Company concluded the buyback scheme on June 27, 2019 and minimum balance maintained in Escrow account was released on completion of statutory formalities.

Summary of significant accounting policies - refer note 4

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The accompanying notes are an integral part of the consolidated financial statements.
As per our report of even date
For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of
Chartered Accountants Persistent Systems Limited
Firm Registration No.: 001076N/N500013
Bharat Shetty Dr. Anand Deshpande Kiran Umrootkar
Partner Chairman and Managing Director
Membership No.: 106815 Director
Sunil Sapre Amit Atre
Executive Director and Company Secretary
Chief Financial Officer
Place: Mumbai Place: Pune
Date : May 5, 2020 Date : May 5, 2020
----- End of picture text -----

Persistent Systems Limited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED

A. Share capital

(refer note 5)

Balance as at April 1, 2019	Changes in equity share capital during theyear	Balance as at March 31, 2020
791.19	(26.94)	764.25
Balance as at April 1, 2018	Changes in equity share capital during theyear	Balance as at March 31, 2019
800.00	(8.81)	791.19

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Persistent Systems Limited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

B. Other equity

Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity	Persistent Systems Limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020 B. Other equity
Particulars				Reserves and surplus				Items of other comprehensive income		Total
	Securities premium	General reserve	Share options outstanding reserve	Gain on bargain purchase	Capital redemption reserve	Special Economic Zone re-investment reserve	Retained earnings	Effective portion of cash flow hedges	Exchange differences on translating the financial statements of foreign operations
Balance as at April 1, 2019 Net profit for the period Other comprehensive income for the period	774.10 - - - -	10,565.95 - - - -	76.29 - - - -	52.71 - - - -	8.81 - -	70.00 - - - -	10,657.52 3,402.89 (34.80) (26.94) (123.60)	185.06 - (429.15) - -	265.17 -	22,655.61 3,402.89 (140.80) -
									323.15
Transfer to capital redemption reserve					26.94				- -
Transitional impact on adoption of Ind AS 116 (net of taxes)					-					(123.60)
Dividend Tax on dividend	- -	- -	- -	- -	- -	- -	(1,146.38) (154.14)	- -	- -	(1,146.38) (154.14)
Transfer from Special Economic Zone re-investment reserve Transfer to general reserve Employee stock compensation expenses	- -	- 1,630.89	-	- -	- -	(20.05) -	20.05 (1,630.89)	- -	- -	- -
	-	-	236.79	-	-	-	-	-	-	236.79
Adjustments towards employees stock options Utilised towards buy back of shares (refer note 5) Other changes duringtheyear	- (774.10) -	25.61 - 4.96	(25.61) - 3.04	- - 5.00	- - -	- - -	- (875.97) -	- - -	- - -	- (1,650.07) 13.00
Balance at March 31, 2020	-	12,227.41	290.51	57.71	35.75	49.95	10,087.74	(244.09)	588.32	23,093.30

Particulars				Reserves and surplus				Items of other comprehensive income		Total
	Securities premium	General reserve	Share options outstanding reserve	Gain on bargain purchase	Capital redemption reserve	Special Economic Zone re-investment reserve	Retained earnings	Effective portion of cash flow hedges	Exchange differences on translating the financial statements of foreign operations
Balance as at April 1, 2018 Net profit for the year Other comprehensive income for the year Dividend Tax on dividend Transfer to general reserve	1,336.70 - - - - -	9,306.27 - - - - 1,260.03	90.52 - - - - -	26.39 - - - - -	- - - - - -	- - - - - -	9,544.13 3,516.79 (47.15) (880.00) (137.41) (1,260.03)	16.63 - 168.43 - - -	151.35 - 113.82 - - -	20,471.99 3,516.79 235.10 (880.00) (137.41) -
Transfer to capital redemption reserve	-	-	-	-	8.81	-	(8.81)	-	-	-
Transfer to Special Economic Zone re-investment reserve	-	-	-	-	- - - -	70.00	(70.00)	-	-	-
Adjustments towards employees stock options	-	14.23	(14.23)	-		- - - -	-	-	-	-
Addition on business combination	-	-	-	0.25			-	-	-	0.25
Utilised towards buy back of shares (refer note 5) Other changes duringtheyear	(562.60)	-	-	-			-	-	-	(562.60)
	-	(14.58)	-	26.07			-	-	-	11.49
Balance at March 31, 2019	774.10	10,565.95	76.29	52.71	8.81	70.00	10,657.52	185.06	265.17	22,655.61

Summary of significant accounting policies - refer note 4

The accompanying notes are an integral part of the consolidated financial statements.

As per our report of even date

For Walker Chandiok & Co LLP

Chartered Accountants

For and on behalf of the Board of Directors of Persistent Systems Limited

Firm Registration No.: 001076N/N500013

Bharat Shetty Partner Membership No.: 106815

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Dr. Anand Deshpande Chairman and Managing Director

Kiran Umrootkar Director

Place: Mumbai Date : May 5, 2020

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Sunil Sapre
Executive Director and
Chief Financial Officer
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Amit Atre
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Company Secretary

Place: Pune Date : May 5, 2020

Persistent Systems Limited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

Nature and purpose of reserves

a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) General reserve

General reserve represents amounts transferred from profit for the year and from Share options outstanding reserve on exercise / expiry of employee share options. It is a free reserve as per section 2 (43) of the Companies Act, 2013.

c) Share options outstanding reserve

Share options outstanding reserve represents the cumulative expense recognized for equity-settled transactions at each reporting date until the employee share options are exercised / expired upon which such amount is transferred to General reserve.

d) Gain on bargain purchase

The excess of the portion of equity of the acquired company over its cost is treated as gain on bargain purchase in the financial statements.

e) Capital redemption reserve

Capital redemption reserve represents the nominal value of the shares bought back; and is created and utilised in accordance with Section 69 of the Companies Act, 2013.

f) Special Economic Zone re-investment reserve

The Special Economic Zone re-investment reserve has been created out of the profit in terms of the provisions of Section 10AA(1)(ii) of the Income tax Act, 1961. The reserve should be utilised by the Group for acquiring new plant and machinery for the purpose of its business in accordance with Section 10AA(2) of the Income tax Act, 1961.

g) Cash flow hedge reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into towards highly probable transactions. Such gains or losses are subsequently recognised in the statement of profit and loss in the period in which the said transaction occurs / hedging instruments are cancelled.

h) Foreign currency translation reserve

The foreign exchange differences arising from the translation of financial statements of foreign operations with functional currency other than Indian rupees is recognised in other comprehensive income and is presented under equity in the foreign currency translation reserve. The amount is transferred to retained earnings upon disposal of investment in foreign operation.

Persistent Systems Limited

Notes forming part of consolidated financial statements

1. Nature of operations

Parent under the provisions of the Companies Act, 1956. The shares of the Company are listed on Bombay Stock Exchange and National Stock Exchange. The Company is a global Company specializing in software products, services and technology innovation. The Company offers complete product life cycle services.

Persistent Systems, Inc. (PSI) based in the USA, a wholly owned subsidiary of PSL, is engaged in software product, services and technology innovation.

Persistent Systems Pte. Ltd. (PS Pte.) based in Singapore, a wholly owned subsidiary of PSL, is engaged in software development, professional and marketing services.

Persistent Systems France SAS (PSFS) based in France, a wholly owned subsidiary of PSL, is engaged in software products, services and technology innovation

Persistent Telecom Solutions, Inc. (PTSI) based in the USA, a wholly owned subsidiary of Persistent Systems, Inc., is engaged in software products, services and technology innovation in telecom and Product Lifecycle Management domains.

Persistent Systems Malaysia Sdn. Bhd. (PSM) based in Malaysia, a wholly owned subsidiary of PSL, is engaged in software products and services.

Akshat Corporation (RGen Solutions) based in USA, is a wholly owned subsidiary of Persistent Systems, Inc.

Akshat Corporation has been dissolved with effect from December 21, 2018. Persistent Systems, Inc., its holding Company, took over all the assets and liabilities of Akshat Corporation on the date of dissolution.

Aepona Holdings Limited (was an Ireland based wholly owned subsidiary of Persistent Systems, Inc.) operated as the holding Company of Aepona Group Limited.

Aepona Holdings Limited has been dissolved with effect from October 24, 2019. Persistent Systems, Inc., its holding Company, took over all the assets and liabilities of Aepona Holdings Limited on the date of dissolution.

Aepona Group Limited, an Ireland based wholly owned subsidiary of Persistent Systems, Inc. (previously owned by Aepona Holdings Limited) operates as the holding Company of Aepona Limited and Valista Limited.

Aepona Limited (a UK based wholly owned subsidiary of Aepona Group Limited) is engaged in the business of a telecommunication API gateway for defining, exposing, controlling and monetizing telecom services to partners and application developers and an Internet of Things service creation platform that allows enterprises to add a service layer s, and to expose and monetize these APIs.

Valista Limited (an Ireland based wholly owned subsidiary of Aepona Group Limited) has adopted indirect sales model, with services revenue being billed to Aepona Limited. Sale of services are then contracted between Aepona Limited and customers. The company is under liquidation.

Persistent Systems Lanka (Private) Limited (a Sri Lanka based wholly owned subsidiary of Valista Limited) has adopted indirect sales model, with services revenue being billed to Aepona Limited. Sale of services are then contracted between Aepona Limited and customers.

Persistent Systems Mexico, S.A. de C.V (a Mexico based wholly owned subsidiary of Persistent Systems Inc.) has adopted indirect sales model, with services revenue being billed to Persistent Systems Inc. Sale of services are then contracted between Persistent Systems Inc. and customers.

Persistent Systems Israel Ltd. (an Israel based wholly owned subsidiary of Persistent Systems Inc.) has adopted indirect sales model, with services revenue being billed to Persistent Systems Inc. Sale of services are then contracted between Persistent Systems Inc. and customers.

Persistent Systems Germany GmbH (wholly owned subsidiary of Persistent Systems Limited) operates as the holding Company of PARX Werk AG.

PARX Werk AG (a Switzerland based wholly owned subsidiary of Persistent Systems Germany GmbH) is engaged in the business of software products, services and technology innovation in the digital practice.

PARX Consulting GmbH (a Germany based wholly owned subsidiary of PARX Werk AG) is engaged in the business of software products, services and technology innovation in the digital practice.

Persistent Systems Limited

Notes forming part of consolidated financial statements

Herald Technologies Inc. (HTI), based in the USA a wholly owned subsidiary of Persistent Systems Inc., was working on implementation of platforms and related IT services for the healthcare industry.

Herald Technologies Inc. has been dissolved with effect from June 24, 2019. Persistent Systems Inc, its holding company, took over all the assets and liabilities of Herald Technologies, Inc. on the date of dissolution.

Youperience GmbH (a Germany based wholly owned subsidiary of Persistent Systems Germany GmbH) is engaged in Salesforce related implementation services. (refer note 44)

Youperience Limited (a United Kingdom based wholly owned subsidiary of Youperience GmbH) is engaged in Salesforce related implementation services. (refer note 44)

Klisma e-Services Private Limited is engaged in the business of internet, telecommunications, mobile technology and other media enabling electronic commerce.

2. Basis of preparation

The consolidated financial statements of the Group have been prepared on an accrual basis and under the historical cost convention except for certain financial instruments, equity settled employee stock options and initial recognition of assets acquired under business combinations which have been measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The accounting policies are consistently applied by the Group during the year and are consistent with those used in previous year except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

All assets and liabilities have been classified as current or non-current as per the Group operating cycle and other criteria set out in the Schedule III of the Companies Act, 2013 . Based on the nature of products/ services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Group has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities

Statement of compliance:

In accordance with the notification issued by the Ministry of Corporate Affairs, the Group has adopted Indian Accounting

.

3. Principles of consolidation

The consolidated financial statements of the Parent year ended March 31, 2020 are prepared in accordance with generally accepted accounting principles applicable in India, and the Indian Accounting Standard

by the Parent Company for its separate financial statements.

The Parent Company consolidates entities which it owns or controls. The consolidated financial statements comprise the financial statements of the company and its subsidiaries as disclosed below. Control exists when the parent company has power over the entity, is exposed or has rights to variable returns from its involvement with the entity; and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity's returns. Subsidiaries are consolidated from the date control commences until the date control ceases.

The financial statements of the Parent Company and its subsidiary companies have been combined on line by line basis by adding together the book values of like items of assets and liabilities, income and expenses after eliminating intra group balances and intra group transactions except where cost cannot be recovered. The unrealized profits or losses resulting from the intra group transactions and balances have been eliminated.

The consolidated financial statements include the share of profit / loss of associate companies, which are accounted for and which is neither a subsidiary nor a joint venture.

sidiary on the date at which investment in the subsidiary is made, is described as goodwill and recognized separately as an asset in the consolidated financial statements. cost is treated as gain on bargain purchase in the financial statements. Goodwill arising on consolidation is not amortized. It is tested for impairment on a periodic basis and written off if found impaired.

Persistent Systems Limited

Notes forming part of consolidated financial statements

The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and necessary adjustments required for deviations, if any, are made in the consolidated financial statements. The consolidated financial statements are presented in the same manner as the Parent separate financial statements.

The financial statements of the subsidiary companies used in the consolidation are drawn up to the same reporting date as of the Parent Company.

The subsidiary and associate companies considered in consolidated financial statements are as follows:

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Name of the subsidiary/ associate Ownership Percentage as at Country of
incorporation
March 31, 2020 March 31, 2019
Persistent Systems, Inc. 100% 100% USA
Persistent Systems Pte Ltd. 100% 100% Singapore
Persistent Systems France SAS 100% 100% France
Persistent Telecom Solutions Inc. 100% 100% USA
Persistent Systems Malaysia Sdn. Bhd. 100% 100% Malaysia
Aepona Holdings Limited
(Dissolved with effect from October 24, - 100% Ireland
2019)
Aepona Group Limited 100% 100% Ireland
Aepona Limited 100% 100% UK
Valista Limited 100% 100% Ireland
Persistent Systems Lanka (Private)
100% 100% Sri Lanka
Limited
Persistent Systems Mexico, S.A. de
100% 100% Mexico
C.V.
Persistent Systems Israel Ltd. 100% 100% Israel
Persistent Systems Germany GmbH 100% 100% Germany
PARX Werk AG 100% 100% Switzerland
PARX Consulting GmbH 100% 100% Germany
Herald Technologies Inc
(Dissolved with effect from June 24, - 100% USA
2019)
Youperience GmbH
(Acquired with effect from July 1, 2019) 100% - Germany
(Refer note 44)
Youperience Limited
(Acquired with effect from July 1, 2019) 100% - United Kingdom
(Refer note 44)
Klisma e-Services India Pvt. Ltd. 50% 50% India
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Persistent Systems Limited

Notes forming part of consolidated financial statements

The share of subsidiaries in the consolidated net assets, consolidated profit or loss and consolidated other comprehensive income is as follows:

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Name of the Company Share in Net assets Share in Profit or (loss) Share in Other Share in Total Comprehensive
Comprehensive Income Income
(OCI)
As a % of Amount As a % of Amount As a % of Amount As a % of Amount
consolidated consolidated consolidated consolidated million)
net assets profit OCI Total
Comprehensive
Income
Parent Company:
Persistent Systems Limited 83.14 22,985.38 107.51 4,077.23 99.06 (459.61) 108.69 3,617.62
Foreign subsidiaries:
Persistent Systems, Inc. 11.53 3188.75 (8.45) (320.62) - - (9.63) (320.62)
Persistent Systems Pte. Ltd. 0.40 111.72 0.23 8.55 - - 0.26 8.55
Persistent Systems France SAS 0.60 165.98 (0.29) (11.02) - - (0.33) (11.02)
Persistent Telecom Solutions Inc. (0.25) (67.84) 4.41 167.32 - - 5.03 167.32
Persistent Systems Malaysia Sdn. Bhd. 0.70 193.71 1.48 56.29 - - 1.69 56.29
Aepona Group Limited (0.82) (227.61) (3.23) (122.16) - - (3.67) (122.16)
Aepona Limited (1.34) (370.65) 1.90 71.99 - - 2.16 71.99
Valista Limited 0.95 261.97 0.01 0.23 - - 0.01 0.23
Persistent Systems Lanka (Private) Limited 0.62 171.28 0.87 33.04 0.94 (4.34) 0.86 28.70
Persistent Systems Israel Ltd. 0.44 121.66 (0.08) (3.09) - - (0.09) (3.09)
Persistent Systems Mexico, S.A. de C.V. 0.03 8.60 0.61 23.05 - - 0.69 23.05
Persistent Systems Germany GmbH 4.22 1,168.79 (1.47) (55.87) - - (1.68) (55.87)
PARX Werk AG 0.22 60.95 (0.07) (2.72) - - (0.08) (2.72)
PARX Consulting GmbH (0.34) (94.97) (1.29) (48.85) - - (1.47) (48.85)
Youperience Limited 0.08 20.92 0.06 2.33 0.07 2.33
Youperience GmbH (0.18) (50.86) (2.20) (83.36) (2.50) (83.36)
Subtotal 100.00% 27,647.78 100.00% 3,792.34 100.00% (463.95) 100.00% 3,328.39
Associates:
Klisma e-Service Private Limited - - - - - - - -
FCTR 323.15 323.15
Consolidation adjustments (3,790.23)
Amortization of Intangibles recognized on (225.70) (225.70)
Business Combination
Adjustment for eliminating margin on cost 12.78 12.78
transfer for capitalization
DTA on items recognised on consolidation 3.58 3.58
Dividend from subsidiaries (396.73) (396.73)
Others 216.62 216.62
Total 23,857.55 3,402.89 (140.80) 3,262.09
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Persistent Systems Limited

Notes forming part of consolidated financial statements

4. Summary of significant accounting policies

(a) Use of estimates

The preparation of the consolidated financial statements in conformity with Ind AS requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

Estimation of uncertainties relating to the global health pandemic from COVID-19:

The Group has evaluated likely impact of the COVID - 19 on the overall business of the Group. Though it is too early to estimate the same in view of the volatility in the global economic condition pursuant to this pandemic; the Group as at the date of the approval of these financials, has used various available sources of information to analyse the carrying amount of its financial assets and exposures. The impact of COVID - 19 on the Group from the estimate as on the date of the approval of the financial statements.

Expected credit loss:

The Group has considered the current and anticipated future economic conditions relating to the industries the Group deals with and the countries where it operates. In calculating expected credit loss, the Group has also considered related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19 using the forward looking approach prescribed by Ind AS 109.

Impact on unhedged foreign currency exposure:

Based on its assessment, the Group believes that the probability of occurrence of its forecasted transaction are not likely to be impacted by COVID - 19. Hence, the Group continues to believe that there is no foreseeable impact on effectiveness of its cash flow hedges due to this global pandemic.

Carrying value of financial instruments:

Investments in mutual funds are classified as evel 1 having fair value marked to an active market which factors in the uncertainties arising out of COVID - 19. These financial assets, are mainly investments in liquid debt securities and hence, any material volatility in their carrying value is not expected.

Impact on revenue:

The Group has re-evaluated the probable revenue from customers in various verticals to assess any possible drops in revenue from any of these verticals due to the economic stress caused by COVID - 19. Accordingly, it is of the opinion that the customers could re-prioritise their discretionary spend in immediate future to conserve resources.

The impact assessment of COVID - 19 is a continuing process given the uncertainties associated with its nature and duration. The Group has considered the same to the extent known currently and has taken steps to measure the cost budget required to complete its performance obligations in respect of fixed price contracts and incorporated impact of likely delays and costs in meeting its obligations.

Critical accounting estimates

i. Revenue recognition

The Group uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentageof-completion method requires the Group to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

Further, the Group uses significant judgement while determining the transaction price allocated to performance obligations using the expected cost plus margin approach.

In respect of the contracts where the transaction price is payable as revenue share at pre-defined percentage of customer revenue and bearing in mind, the time gap between the close of the accounting period and availability of the revenue report from the customer, the Group is required to use its judgement to ascertain the income from revenue share on the basis of historical trends of customer revenue.

ii. Income taxes

The Group's two major tax jurisdictions are India and the United States, though the Group also files tax returns in other overseas jurisdictions. Significant judgements are involved in determining the provision for income taxes.

Persistent Systems Limited

Notes forming part of consolidated financial statements

iii. Intangible assets and contingent consideration in business combinations

Business combinations are accounted for using Ind AS 103, Business Combinations. Ind AS 103 requires the identifiable intangible assets and contingent consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These valuations are conducted by independent valuation experts.

iv. Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of the end of its life. The useful lives and residual values of Group's assets are determined by management at the time the asset is acquired and reviewed periodically. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

v. Impairment of Goodwill

Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit is less than its carrying amount based on a number of factors including operating results, business plans, future cash flows and economic conditions. The recoverable amount of cash generating units is determined based on higher of value-in-use and fair value less cost to sell. The goodwill impairment test is performed at the level of the cashgenerating unit or groups of cash-generating units which are benefiting from the synergies of the acquisition and which represents the lowest level at which goodwill is monitored for internal management purposes. Market related information and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of recoverable amount include estimated long term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections take into account past experience and represent estimate about future developments.

vi. Provisions

Provisions are determined based on the best estimate required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the best estimates of the amount required.

vii. Internally generated Intangible assets

During the year, the management continued to assess the recoverability of the G assets including those under development. Based on the current revenue generated from these lines of business, expected future revenue and the basis of amortization followed, the management considers the carrying value of these intangible assets as recoverable.

Viii. Leases

I nd AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to the Group operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Group has concluded that no changes are required to lease periods relating to the existing lease contracts.

(b) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Capital work-in-progress includes cost of Property, Plant and Equipment that are not ready to be put to use.

Subsequent expenditure related to an item of Property, Plant and Equipment is added to its original cost only if it is probable that future economic benefits associated with the item will flow to the Group. All other expenses on existing Property, Plant and Equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from disposal of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Persistent Systems Limited

Notes forming part of consolidated financial statements

(c) Intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Group can demonstrate:

• technical feasibility of completing the intangible asset so that it will be available for use or sale;

• its intention to complete the asset;

• its ability to use or sell the asset;

• how the asset will generate probable future economic benefits;

• the availability of adequate resources to complete the development and to use or sell the asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such development expenditure, until capitalization, is reflected as intangible assets under development.

Following the initial recognition, internally generated intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization of internally generated intangible asset begins when the development is complete and the asset is available for use.

(d) Business combinations

Business combinations are accounted for using the acquisition method under the provisions of Ind AS 103 - Business Combinations.

The cost of an acquisition is measured at the fair value of the assets acquired and liabilities incurred or assumed on the date of acquisition, which is the date on which control is transferred to the Group. The cost of acquisition also includes the fair value of contingent consideration, if any. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.

Transaction costs that the Group incurs in connection with a business combination are expensed as incurred.

(e) Goodwill/ Gain on bargain purchase

Goodwill represents the cost of business acquisition in excess of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. When the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the cost of business acquisition, a gain is recognized in the other comprehensive income as gain on bargain purchase. Goodwill is measured at cost less accumulated impairment losses.

(f) Depreciation and amortization

the assets estimated by the management.

The management estimates the useful lives for the Property, Plant and Equipment as follows:

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Assets Useful lives
Buildings 25 years
Computers 3 years
Computers - Servers and networks 3 years
Office equipments 5 years
Plant and equipment 5 years
Plant and equipment (Windmill) 20 years
Plant and equipment (Solar Energy System) * 10 years
Furniture and fixtures 5 years
Vehicles 5 years
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*For these classes of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that the useful lives as given above best represent the period over which the management expects to use these assets. Hence the useful lives of these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

Individual assets whose cost does not exceed 5,000 are fully depreciated in the year of acquisition.

Persistent Systems Limited

Notes forming part of consolidated financial statements

Leasehold improvements are amortized over the period of lease or useful life, whichever is lower.

Intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 6 years from the day the asset is made available for use.

(g) Financial instruments

i) Financial assets

Initial recognition and measurement

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value of the financial assets on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified as:

• Financial assets at amortized cost

Financial assets that are held within a business model whose objective is to hold assets for collecting contractual cash flows and whose contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance income in the statement of profit and loss.

• Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets that are held within a business model whose objective is achieved both by collecting contractual principal and interest on the principal amount outstanding are subsequently measured at fair value. Fair value movements are recognized in other comprehensive income.

• Financial assets at fair value through profit or loss (FVTPL)

Any financial asset which does not meet the criteria for categorization as financial assets at amortized cost or as FVTOCI, is classified as financial asset at FVTPL. Financial assets except derivative contracts included within the FVTPL category are subsequently measured at fair value with all changes recognized in the statement of profit and loss.

- Forward exchange contracts not intended for trading or speculation purposes, classified as derivative financial instruments

As per the accounting principles laid down in Ind AS 109 derivative financial instruments which qualify for cash flow hedge accounting are fair valued at balance sheet date and the effective portion of the resultant loss / (gain) is debited / (credited) to the hedge reserve under other comprehensive income and the ineffective portion is recognized to the statement of profit and loss. Derivative financial instruments are carried as forward contract receivable when the fair value is positive and as forward contract payable when the fair value is negative.

Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the statement of profit and loss as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized under other comprehensive income is transferred to the statement of profit and loss when the forecasted transaction occurs or affects profit or loss or when a hedged transaction is no longer expected to occur.

Derecognition

The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income, and accumulated in equity, if any is recognised in profit or loss.

Persistent Systems Limited

Notes forming part of consolidated financial statements

ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair value of the financial liabilities on initial recognition. Transaction costs directly attributable to the issue of financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial liabilities are classified as:

- Financial liabilities at amortized cost

Financial liabilities such as loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance costs in the statement of profit and loss.

• Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities include financial liabilities held for trading and financial liabilities designated upon initial recognition as fair value through profit or loss if the recognition criteria as per Ind AS 109 are satisfied. Gains or losses on liabilities held for trading are recognized in statement of profit and loss. Fair value gains or losses on liabilities designated as FVTPL attributable to changes in own credit risk are recognized in other comprehensive income. All other changes in fair value of liabilities designated as FVTPL are recognized in the statement of profit and loss. The Group has not designated any financial liability as FVTPL.

Derecognition

The Group derecognizes financial liabilities when The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognised in profit or loss.

(h) Impairment

i) Financial assets

The Group applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on financial assets measured at amortized cost and financial assets that are debts instruments and are measured at fair value through other comprehensive income (FVTOCI). ECL is the difference between contractual cash flows that are due and the cash flows that the Group expects to receive, discounted at the original effective interest rate.

For trade receivables, the Group recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. For other financial assets, the Group determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.

ii) Non-financial assets

The carrying amounts of Property, Plant and Equipment and Goodwill are reviewed at each balance sheet date or whenever there is any indication of impairment based on internal/external factors. If any indications exist, the Group unless the asset does not generate cash flows that are largely independent of those from other assets.

In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The recoverable amount is the greater of the asset's fair value and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. An impairment loss is recognised in the statement of profit and loss.

Recoverable amount of intangible assets under development that is not yet available for use is estimated at least at each financial period end even if there is no indication that the asset is impaired.

(i) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year they occur.

Persistent Systems Limited

Notes forming part of consolidated financial statements

(j) Leases

The Group lease asset classes primarily consist of leases for land and office premises. The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

(i) the contract involves the use of an identified asset (ii) the Group has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Group has the right to direct the use of the asset

Where the Group is a lessee

The Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Group recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located.

The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment.

Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Group measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses incremental borrowing rate.

The lease payments shall include fixed payments, variable lease payments based on an index or rate, residual value guarantees, exercise price of a purchase option where the Group is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or statement of profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease expenses associated with these leases are recognized in the statement of profit and loss on a straight line basis.

Group as a lessor

At the inception of the lease, the Group classifies each of its leases as either an operating lease or a finance lease. The Group recognises lease payments received under operating leases as income over the lease term on a straight line basis.

Transition

Effective April 1, 2019, the Group to all applicable lease contracts existing on April 1, 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on the date of initial application. Consequently, the Group recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at its carrying amount as if the standard had been applied since the commencement date of the lease, but discounted at the Group borrowing rate at the date of initial application. Comparatives as at and for the year ended March 31, 2019 have not been retrospectively adjusted and therefore will continue to be reported under the accounting policies included as part of our Annual Report for year ended March 31, 2019.

On transition, the adoption of the new standard resulted in recognition of 'Right of Use' asset of 760.01 million, and a lease liability of 811.10 million. The cumulative effect of applying the standard, amounting to 123.60 million (net of taxes) was debited to retained earnings. The effect of this adoption is insignificant on the profit before tax, profit for the

Persistent Systems Limited

Notes forming part of consolidated financial statements

period and earnings per share. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

(k) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the Group. Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

(i) Income from software services and products

The Group derives revenues primarily from IT services comprising of software development and related services and from the licensing of software products.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to receive in exchange for those products or services. Arrangements with customers for software related services are either on a time-and-material or a fixed-price basis.

Revenue on time-and-material contracts are recognized as and when the related services are performed. Revenue from fixed-price contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.

over the access period.

. When support services are provided in conjunction with the licensing arrangement and the license and the support services have been identified as two separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. Maintenance revenue is recognized proportionately over the period in which the services are rendered.

Revenue from royalty is recognized in accordance with the terms of the relevant agreements.

The Group accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the proportionate allocation of the discounts amount to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount. Also, when the level of discount varies with increases in levels of revenue transactions, the Group recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The Group recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.

Unbilled revenue represents revenue recognized in relation to work done until the balance sheet date for which billing has not taken place.

Unearned revenue represents the billing in respect of contracts for which the revenue is not recognized.

The Group collects Goods and Services Tax, on behalf of the government and, therefore, these are not economic benefits flowing to the Group. Hence, they are excluded from revenue.

(ii) Interest

Interest income is recognized on a time proportion basis taking into account the carrying amount and the effective interest statement of profit and loss.

(iii) Dividend

. Dividend income is included

(l) Government grants

Government grants are recognised at fair value when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Grants related to purchase of assets are treated as deferred income and allocated to income statement over the useful lives of the related assets while grants related to expenses are deducted in reporting the related expenses in the income statement.

Persistent Systems Limited

Notes forming part of consolidated financial statements

(m) Foreign currency translation

Foreign currency transactions and balances

Initial recognition

Foreign currency transactions are recorded in the respective functional currencies of the entities in the Group, by applying to the foreign currency amount the exchange rate between the functional currency of each individual entity and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.

Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign currency liabilities relating to Property, Plant and Equipment acquisition are recognized as income or expenses in the year in which they arise.

Translation of foreign operations

The Group presents the financial statements in INR which is the functional currency of the Parent Company.

The assets and liabilities of a foreign operation are translated into the reporting currency (INR) at the exchange rate prevailing at the reporting date. Their statement of profit and loss are translated at exchange rates prevailing at the dates of transactions or weighted average rates, where such rates approximate the exchange rate at the date of transaction. The exchange differences arising on translation are accumulated in the foreign currency translation reserve under other comprehensive income. On disposal of a foreign operation, the accumulated foreign currency translation reserve relating to that foreign operation is recognized in the statement of profit and loss.

(n) Retirement and other employee benefits

(i) Provident fund

Provident fund is a defined contribution plan covering eligible employees. The Parent Company and the eligible employees make a monthly contribution to the provident fund maintained by the Regional Provident Fund Commissioner equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year when the contributions are due. The Parent Company has no obligation, other than the contribution payable to the provident fund.

(ii) Gratuity

Gratuity is a defined benefit obligation plan operated by Persistent Systems Limited and Persistent Systems Lanka (Private) Limited for their employees covered under Group Gratuity Scheme. The cost of providing benefit under gratuity plan is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date and are charged to the statement of profit and loss, except for the remeasurements, comprising of actuarial gains and losses which are recognized in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.

(iii) Superannuation

Superannuation is a defined contribution plan covering eligible employees of the Parent Company. The contribution to the superannuation fund managed by the insurer is equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contribution to this scheme is charged to the statement of profit and loss on an accrual basis. There are no other contributions payable other than contribution payable to the respective fund.

(iv) Leave encashment

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation

Persistent Systems Limited

Notes forming part of consolidated financial statements

using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

The Group presents the entire leave encashment liability as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement beyond twelve months after the reporting date.

(v) Long service awards

Long The cost of providing benefit under long service awards scheme is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss.

(o) Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Group operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in statement of profit and loss.

Deferred income taxes reflect the impact of temporary differences between tax base of assets and liabilities and their carrying amounts. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except deferred tax liability arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, except deferred tax assets arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized only to the extent that sufficient future taxable income will be available against which such deferred tax assets can be realized.

In the situations where the Group is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the year in which the temporary differences originate.

The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.

Deferred tax relating to items recognized outside the statement of profit and loss is recognized in co-relation to the underlying transaction either in other comprehensive income or directly in equity.

Minimum alternate tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Group recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the asset at each reporting date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.

(p) Segment reporting

(i) Identification of segment

full life cycle of product to its customers.

The components of the Group that engage in business activities from which they earn revenue and incur expenses, whose segments.

Persistent Systems Limited

Notes forming part of consolidated financial statements

(ii) Allocation of income and direct expenses

Income and direct expenses allocable to segments are classified based on items that are individually identifiable to that segment such as salaries, project related travel expenses etc. The remainder is considered as un-allocable expense and is charged against the total income.

(iii) Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

Segregation of assets, liabilities, depreciation and amortization and other non-cash expenses into various reportable segments have not been presented except for trade receivables as these items are used interchangeably between segments and the Group is of the view that it is not practical to reasonably allocate these items to individual segments and an ad-hoc allocation will not be meaningful.

(iv) Inter-segment transfers

There are no inter-segments transactions.

(v) Segment accounting policies

The Group prepares its segment information in conformity with accounting policies for preparing and presenting the financial statements of the Group as a whole.

(q) Earnings per share (EPS)

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the reporting period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.

The number of shares and potential dilutive equity shares are adjusted retrospectively for all periods presented for any bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.

(r) Provisions

A provision is recognized when the Group has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate of the amount required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(s) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

(t) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.

(u) Employee stock compensation expenses

Employees of the Group receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments granted (equity-settled transactions).

In accordance with Ind AS 102 , the cost of equity-settled transactions is determined by the fair value of the options at the date of the grant and recognized as employee compensation cost over the vesting period. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects

Persistent Systems Limited

Notes forming part of consolidated financial statements

will ultimately vest.

The expense or credit recognized in the statement of profit and loss for a year represents the movement in cumulative expense recognized as at the beginning and end of that year and is recognized in employee benefits expense. In case of the employee stock option schemes having a graded vesting schedule, each vesting tranche having different vesting period has been considered as a separate option grant and accounted for accordingly.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification.

The employee stock option expenses in respect of the employees of the subsidiaries are charged to the respective subsidiary.

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Persistent Systems Limited

Notes forming part of consolidated financial statements

5. Share capital

	As at As at March 31, 2020 March 31, 2019 In Million In Million
Authorized shares (No. in million) 200 (Previous year: 200) equity shares of 10 each Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Previous year: 79.12) equity shares of 10 each Issued, subscribed and fully paid-up share capital	2,000.00 2,000.00
	2,000.00 2,000.00
	764.25 791.19
	764.25 791.19

a) Reconciliation of the shares outstanding at the beginning and at the end of the year

The reconciliation of the number of shares outstanding and the amount of share capital is set out below:

			(In Million)
		As at	As at
	March 31, 2020		March 31,	2019
	No of	Amount	No of	Amount
	shares		shares
Number of shares at the beginning of the year	79.12	791.19	80.00	800.00
Less: Shares bought back	2.69	26.94	0.88	8.81
Number of shares at the end of the year	76.43	764.25	79.12	791.19

b) Terms / rights attached to equity shares

The Group has only one class of equity shares having a par value of 10 per share. Each holder of equity shares is entitled to one vote per share. The Group declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Parent Company paid -19.

The Parent

-20.

The Parent Company declares and pays dividends in Indian rupees. The Finance Act, 2020 in India has repealed Dividend Distribution Tax (DDT). The Companies are now required to pay/ distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates as per Finance Act, 2020.

In the event of liquidation of the Parent Company, the holders of equity shares will be entitled to receive remaining assets of the Parent Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

	For the period of	For the period of
	five years ended	five years ended
	March 31, 2020	March 31, 2019
	No in Million	No in Million
Equity shares allotted on March 12, 2015 as fully paid bonus	40.000	40.000
shares by capitalization of securities premium 400 million
Equity shares bought back	3.575	0.881

d) Buyback of Equity Shares of the Parent Company:

• The Board of Directors, at its meeting in January 2019, had approved the buyback of the Parent up equity shares of the face value of 10 each from its shareholders/beneficial owners excluding promoters, promoter group and persons who are in control of the Parent

for a total amount not exceeding 750 per

Persistent Systems Limited

Notes forming part of consolidated financial statements

The buyback was offered to all eligible equity shareholders of the Parent Company (other than the Promoters, the Promoter Group and Persons in Control of the Group) under the open market route through the stock exchanges. The buyback of equity shares through the stock exchange commenced on February 8, 2019 and was completed on June 27, 2019. During this buyback period the Parent Company had purchased and extinguished a total of 3,575,000 equity - per equity share comprising 4.47% of the pre buyback paid-up equity share capital of the Parent million (excluding transaction costs). The Parent Company funded the buyback from utilization of its securities premium and free reserves. The total number of equity shares outstanding as on March 31, 2020 post buyback stands at 76,425,000.

e) Details of shareholders holding more than 5% shares in the Group

Name of the shareholder*	As at March	31, 2020	As at March	31, 2019
	No. in million	% Holding	No. in million	% Holding
Dr. Anand Deshpande jointly with Mrs.	22.96	30.04	22.95	29.01
Sonali Anand Deshpande
Schemes of HDFC Mutual Fund	6.53	8.54	3.73	4.71

• The shareholding information is based on legal ownership of shares and has been extracted from the records of the Group including register of shareholders / members.

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Persistent Systems Limited
Notes forming part of consolidated financial statements 6.1 Property, plant and equipment
	Land - Freehold Buildings * Computers Office equipments Plant and Equipment Leasehold improvements Furniture and fixtures Vehicles Total**
Gross block (At cost) As at April 1, 2019 Additions Additions through business combination (refer note 44)	220.47 2,447.72 2,441.59 89.63 1,408.24 94.23 679.87 8.44 7,390.19 - 0.30 294.11 0.40 14.38 - 9.91 - 319.10 - - 5.23 - 0.06 - - - 5.29
Disposals	- - 328.80 0.03 25.10 46.43 7.45 1.20 409.01 eporting currency 0.90 4.02 45.64 3.20 1.83 (1.88) 10.79 - 64.50
Effect of foreign currency translation from functional currency to r
As at March 31, 2020 Accumulated Depreciation As at April 1, 2019	221.37 2,452.04 2,457.77 93.20 1,399.41 45.92 693.12 7.24 7,370.07 - 983.41 2,160.36 70.13 1,166.93 76.58 597.31 4.23 5,058.95
Additions through business combination (refer note 44) Charge for the period Disposals	- - 1.69 - 0.06 - - - 1.75 - 98.93 234.72 8.16 59.02 6.62 44.88 1.02 453.35 - - 328.80 0.03 20.78 46.43 7.30 1.20 404.54 eporting currency - 1.24 24.08 2.31 0.97 (1.26) 8.62 - 35.96
Effect of foreign currency translation from functional currency to r
As at March 31, 2020 Net block As at March 31, 2020 As at March 31, 2019 *Note: Buildings include those constructed on leasehold land:	- 1,083.58 2,092.05 80.57 1,206.20 35.51 643.51 4.05 5,145.47 221.37 1,368.46 365.72 12.63 193.21 10.41 49.61 3.19 2,224.60 220.47 1,464.31 281.23 19.50 241.31 17.65 82.56 4.21 2,331.24

439.96 million)

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Persistent Systems Limited

Notes forming part of consolidated financial statements

6.1 Property, plant and equipment

	Land - Freehold Buildings Computers Office equipments Plant and Equipment Leasehold improvements Furniture and fixtures Vehicles Total
Gross block (At cost) As at April 1, 2018 Additions Additions through business combination Disposals Effect of foreign currency translation from functional currency to reporting currency As at March 31, 2019 Accumulated Depreciation As at April 1, 2018 Charge for the year Additions through business combination Disposals Effect of foreign currency translation from functional currency to reporting currency As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018	221.03 2,450.18 2,392.46 86.63 1,408.62 94.84 665.41 4.73 7,323.90 - 0.07 179.46 3.75 22.56 - 8.86 4.66 219.36 - - 0.08 - - - 0.03 - 0.11 - 0.04 143.23 2.70 22.82 - 0.59 0.95 170.33 (0.56) (2.49) 12.82 1.95 (0.12) (0.61) 6.16 - 17.15
	220.47 2,447.72 2,441.59 89.63 1,408.24 94.23 679.87 8.44 7,390.19
	- 885.26 2,078.80 62.14 1,097.81 69.78 544.39 4.42 4,742.60 - 98.95 214.59 9.59 92.06 7.66 50.78 0.76 474.39 - - 0.02 - - - 0.01 - 0.03 - 0.03 142.52 2.40 22.82 - 0.59 0.95 169.31 - (0.77) 9.47 0.80 (0.12) (0.86) 2.72 - 11.24
	- 983.41 2,160.36 70.13 1,166.93 76.58 597.31 4.23 5,058.95
	220.47 1,464.31 281.23 19.50 241.31 17.65 82.56 4.21 2,331.24 221.03 1,564.92 313.66 24.49 310.81 25.06 121.02 0.31 2,581.30

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Notes forming part of consolidated financial statements

Persistent Systems Limited

6.2 Right -of- use assets

		Leasehold Land	Office premises Total	Office premises Total	Office premises Total
Office premises Gross block (At cost)
As at April 1, 2019 Additions (Transitional impact on adoption of Ind AS 116) Additions during the period		- 37.50 -	- - 722.51 760.01 77.80 77.80
Disposals Effect of foreign currency translation of foreign operations from functional currency to reporting currency		- -	9.35 9.35 5.79 5.79
As at March 31, 2020 Accumulated Depreciation As at April 1, 2019 Charge for the period Disposals As at March 31, 2020 Net block Effect of foreign currency translation of foreign operations from functional currency to reporting currency		37.50	796.75 834.25
		- 0.60 - -	- - 260.73 261.33 1.12 1.12 7.23 7.23
		0.60	266.84 267.44
As at March 31, 2020		36.90	529.91 566.81
6.3 Goodwill
			As at As at March 31, 2020 March 31, 2019
Cost Balance at beginning of year Effect of foreign currency translation of foreign operations from functional currency to reporting currency Balance at end of year 6.4 Other Intangible assets			81.24 76.61 7.70 4.63
			88.94 81.24
		Software	Acquired contractual rights Total
Gross block As at April 1, 2019 Additions Additions through business combination Effect of foreign currency translation from functional currency As at March 31, 2020 Accumulated Amortization As at April 1, 2019 Charge for the period Effect of foreign currency translation from functional currency As at March 31, 2020 Net block As at March 31, 2020 As at March 31, 2019	to reporting currency to reporting currency	2,575.58 30.88 - 173.11	4,208.58 6,784.16 97.75 128.63 527.31 527.31 380.78 553.89
		2,779.57	5,214.42 7,993.99
		2,479.52 80.84 172.36	2,709.23 5,188.75 864.10 944.94 253.01 425.37
		2,732.72	3,826.34 6,559.06
		46.85	1,388.08 1,434.93
		96.06	1,499.35 1,595.41
		Software	Acquired contractual rights Total
Gross block As at April 1, 2018 Additions Effect of foreign currency translation from functional currency As at March 31, 2019 Accumulated Amortization As at April 1, 2018 Charge for the year Effect of foreign currency translation from functional currency As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018 6.5 Depreciation and amortization	to reporting currency to reporting currency	2,422.24 52.38 100.96	3,983.87 6,406.11 39.61 91.99 185.10 286.06
		2,575.58	4,208.58 6,784.16
		2,076.02 319.05 84.45	1,866.55 3,942.57 779.07 1,098.12 63.61 148.06
		2,479.52	2,709.23 5,188.75
		96.06	1,499.35 1,595.41
		346.22	2,117.32 2,463.54
			March 31, 2020 March 31, 2019 For the year ended
On Property, Plant and Equipment On Other Intangible assets			453.35 474.39 944.94 1,098.12
On Right of Use assets			261.33 -
			1,659.62 1,572.51

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Notes forming part of consolidated financial statements

Persistent Systems Limited

7. Non-current financial assets : Investments (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Investments carried under equity accounting method Unquoted Investments Investments in equity instruments In associates Klisma e-Services Private Limited [Holding 50%. (Previous year 50%)] Less : Impairment of non-current unquoted investments Total investments carried equity accounting method (A) Investments carried at amortised cost Quoted Investments In bonds 223681	0.05 0.05 (0.05) (0.05)
	- -
	- - 2,171.52 2,088.35 68.69 68.33
,. Add: Interest accrued on bonds Total investments carried at amortised cost (B) Designated as fair value through profit and loss Quoted Investments - Investments in mutual funds Fair value of long term mutual funds (refer Note 7a) Unquoted Investments Investments in Common Stocks / Preferred Stocks - Others* Ciqual Limited [Holding 2.38% (Previous year 2.38%)] 0.04 million (Previous year : 0.04 million) shares of GBP 0.01 each, fully paid up Less : Impairment of non-current unquoted investments Altizon Systems Private Limited up Hygenx Inc. 0.25 million (Previous year : 0.25 million) Preferred stock of $ 0.001 each, fully paid up Less : Impairment of non-current unquoted investments OpsDataStore Inc. 0.20 million (Previous year : 0.20 million) Preferred stock of $ 0.001 each, fully paid up Less : Impairment of non-current unquoted investments Trunomi Inc. 0.28 million (Previous year : 0.28 million) Preferred stock of $ 0.002 each, fully paid up Jocata Corporation Nil (Previous year : 0.006 million) Preferred stock of $ 0.001 each, fully paid up Ampool Inc. 0.55 million (Previous year : 0.55 million) Preferred stock of $ 0.4583 each, fully paid up Cazena Inc. 0.59 million Common Stock of $ 0.0001 each (Previous year: 0.35 million Preferred Stock of $ 0.0001 each), fully paid up
	2,240.21 2,156.68 2,174.51 1,974.91
	2,174.51 1,974.91
	14.36 13.81 (14.36) (13.81)
	- -
	6.00 6.00
	6.00 6.00
	15.13 13.82 (15.13) (13.82)
	- -
	15.13 13.82 (15.13) (13.82)
	- -
	18.92 17.28 - 25.22 18.92 17.28 151.33 138.22
	189.17 198.00

Persistent Systems Limited

Notes forming part of consolidated financial statements

7. Non-current financial assets : Investments (refer note 32) (contd)

	As at As a March 31, 2020 March 31, 2019
- Investments in Convertible Notes DxNow 1 (Previous year : 1) convertible note of USD 125,000 each, fully paid up Less : Impairment of non-current unquoted investments Ustyme 1 (Previous year : 1) convertible note of USD 250,000 each, fully paid up Less : Impairment of non-current unquoted investments Akumina Inc. 1 (Previous year : 1) convertible note of USD 146,429 each, fully paid up Total Investments carried at Fair Value (C) Total investments (A) + (B) + (C) Aggregate amount of impairment in value of investments Aggregate amount of quoted investments Aggregate amount of unquoted investments	9.46 8.64 (9.46) (8.64
	- -
	18.92 17.28 (18.92) (17.28
	- -
	11.08 10.12
	11.08 10.12
	2,380.76 2,189.03
	4,620.97 4,345.71 73.05 67.42 4,414.72 4,131.59 279.30 281.54

• Investments, where the Group does not have joint-control or significant influence including situations where such jointcontrol or significant influence is intended to be temporary, are classified as "investments in others".

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Persistent Systems Limited

Notes forming part of consolidated financial statements

7 a) Details of fair value of investment in long term Mutual Funds (Quoted)

	As at March 31, 2020 As at March 31, 2019
Axis Mutual Fund IDFC Mutual Fund ICICI Prudential Mutual Fund Kotak Mutual Fund UTI Mutual Fund Aditya Birla Sun Life Mutual Fund SBI Mutual Fund HDFC Mutual Fund PGIM India Mutual Fund (formerly known as DHFL Pramerica Mutual Fund) DSP Mutual Fund Sundaram Mutual Fund Nippon India Mutual Fund (formerly known as Reliance Mutual Fund)	898.93 304.96 630.06 50.13 141.38 550.21 105.86 294.32 105.73 160.32 82.65 191.44 71.06 65.18 35.66 205.96 35.03 32.10 35.00 32.09 33.15 30.15 - 58.05
	2,174.51 1,974.91

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Persistent Systems Limited

Notes forming part of consolidated financial statements 8. Non-current financial assets : Loans (refer note 32)

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Carried at amortised cost Security deposits Unsecured, considered good Loan to others (Unsecured, considered good) Loans Other loans and advances Unsecured, considered good- Deposits Unsecured, credit impaired Less: Impairment of non-current loans 9. Other non-current financial assets (refer note 32)	176.13 142.80
	176.13 142.80
	- 21.20
	- 21.20
	- - 0.58 0.58
	0.58 0.58 (0.58) (0.58)
	- -
	176.13 164.00
	As at As a March 31, 2020 March 31, 2019
Non-current bank balances (refer note 15) Add: Interest accrued but not due on non-current bank deposits (refer note 15) Non-current deposits with banks (Carried at amortised cost) Deposits with financial institutions Add: Interest accrued on deposit with financial institutions	344.55 94.39 14.38 1.46
	358.93 95.85 430.00 430.00 0.98 0.98 (430.98) (182.50)
Less: Credit impaired (refer note 45)
	- 248.48
	358.93 344.33

**10. Deferred tax asset (net) ***

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Deferred tax liabilities Differences in book values and tax base values of block of Property, Plant and Equipment and intangible assets Capital gains Others Deferred tax assets Provision for leave encashment Provision for long service awards Provision for doubtful debts Provision for gratuity Differences in book values and tax base values of block of Property, Plant and Equipment and intangible assets Brought forward and current year losses Tax credits Difference in Book values and tax base values of ROU asset and Lease liability Others Deferred tax liabilities after set off Deferred tax assets after set off	120.96 226.85 76.67 79.12 21.63 105.04
	219.26 411.01
	127.70 141.33 83.27 124.16 62.50 39.98 2.86 2.41 91.81 83.81 112.94 60.30 328.80 226.35 37.29 - 332.17 137.72
	1,179.34 816.06
	219.26 411.01 1,179.34 816.06

• Deferred tax assets and deferred tax liabilities have been offset wherever the Group has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority. In all other cases the same have been separately disclosed.

11. Other non-current assets

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Capital advances (Unsecured, considered good) Balances with government authorities (refer note 43) Advances recoverable in cash or kind or for value to be received	27.14 2.06 296.55 -
	7.62 66.25
	331.31 68.31

Persistent Systems Limited

Notes forming part of consolidated financial statements

12. Current financial assets : Investments (refer note 32)

	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019
Designated as fair value through profit and loss - Quoted investments Investments in mutual funds Total carrying amount of investments Aggregate amount of quoted investments Aggregate amount of unquoted investments Fair value of current mutual funds (refer Note 12a)	5,164.77 3,295.53
	5,164.77 3,295.53
	5,164.77 3,295.53 5,164.77 3,295.53 - -
12 (a) Details of fair value of current investment in mutual funds (Quoted)
	As at As at March 31, 2020 March 31, 2019
Aditya Birla Sun Life Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund L&T Mutual Fund IDFC Mutual Fund Kotak Mutual Fund Axis Mutual Fund HDFC Mutual Fund Nippon India Mutual Fund (formerly known as Reliance Mutual Fund) SBI Mutual Fund DSP Mutual Fund Tata Mutual Fund Sundaram Mutual Fund	973.04 386.73 940.50 399.98 809.46 625.92 734.90 407.39 640.78 106.40 421.51 - 396.02 426.87 185.88 493.59 62.68 - - 162.14 - 103.35 - 115.97 - 67.19
	5,164.77 3,295.53

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Notes forming part of consolidated financial statements

Persistent Systems Limited

13. Trade receivables (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Unsecured, considered good Unsecured, credit impaired Less : Allowance for credit loss 14. Cash and cash equivalents (refer note 32)	5,921.96 4,923.01 242.13 134.54
	6,164.09 5,057.55 (242.13) (134.54
	5,921.96 4,923.01
	5,921.96 4,923.01
	As at As a March 31, 2020 March 31, 2019
Cash and cash equivalents as presented in cash flow statement Cash in hand Cheques on hand Balances with banks On current accounts On saving accounts On Exchange Earner's Foreign Currency accounts On deposit accounts with original maturity less than three months On Escrow account*	0.24 0.22 - - 1,566.06 1,300.93 0.36 0.91 261.86 114.91 71.47 229.54 - 92.94
	1,899.99 1,739.45

** The Parent Company completed buyback on June 27, 2019 and minimum balance maintained in Escrow account was rel ased on completion of formalities.

15. Other bank balances (refer note 32)

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Deposits with banks Add: Interest accrued but not due on deposits with banks Deposits with banks (carried at amortised cost) Less: Deposits with maturity more than twelve months from the balance sheet date disclosed under other non-current financial assets (refer note 9) Less: Interest accrued but not due on non-current deposits with banks (refer note 9) Balances with banks on unpaid dividend accounts*- Earmarked balances with	2,909.58 5,017.73 117.49 65.20
	3,027.07 5,082.93 (344.55) (94.39 (14.38) (1.46
	2,668.14 4,987.08
	4.05 2.27
	2,672.19 4,989.35

credit facilities and bank guarantees availed by the Group.

** The Group can utilize these balances only towards settlement of the respective unpaid dividend.

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Notes forming part of consolidated financial statements

Persistent Systems Limited

16. Current financial assets : Loans (refer note 32)

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Carried at amortised cost Loan to related parties (Unsecured, credit impaired) (refer note 41) Unsecured, considered good- Deposits Long term Klisma e-Services Private Limited Less: Impairment of current loans Security deposits Unsecured, considered good- Deposits Long term 17. Other current financial assets (refer note 32)	- - - 27.43 27.43
	27.43 27.43 (27.43) (27.43)
	- -
	13.71 7.87
	13.71 7.87
	As at As a March 31, 2020 March 31, 2019
Fair value of derivatives designated and effective as hedging instruments Forward contracts receivable Advances to related parties (Unsecured, credit impaired) (refer note 41) Unsecured, credit impaired Less: Impairment of current financial assets Deposits with financial institutions Add: Interest accrued but not due on deposits with financial institutions Deposits with financial institutions (Carried at amortised cost) Unbilled revenue	- 281.27 0.81 0.81 (0.81) (0.81
	- -
	- 250.00 - 10.97
	- 260.97
	2,068.54 1,834.76
	2,068.54 2,377.00
18. Other current assets
	As at As a March 31, 2020 March 31, 2019
Advances to suppliers (Unsecured, considered good) Advances recoverable in cash or kind or for value to be received Excess fund balance with Life Insurance Corporation (refer note 31) Other advances (Unsecured, considered good) VAT receivable (net) Service tax and GST receivable (net) (refer note 43)	931.97 432.25 128.54 31.50 35.07 858.51 920.47
	890.01 955.54
	1,950.52 1,387.79

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Persistent Systems Limited

Notes forming part of consolidated financial statements

19. Non-current financial liabilities : Borrowings (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Unsecured Borrowings carried at amortised cost Term loans Indian rupee loan from others Interest accrued but not due on term loans Foreign currency loan from others Less: Current maturity of long-term borrowings transferred to other current financial liabilities (refer note 23) Less: Current maturity of interest accrued but not due on term loan transferred to other current financial liabilities (refer note 23)	11.93 16.55 0.18 0.17 39.14 -
	51.25 16.72 (4.85) (4.58) (0.18) (0.17)
	(5.03) (4.75)
	46.22 11.97

The term loans from Government departments have the following terms and conditions:

Loan I - amounting to 2.69 million (Previous year 5.46 million) with interest payable @ 2% per annum has been guaranteed by a bank guarantee by the Group and is repayable in ten equal semi annual installments over a period of five years commencing from September 2016. Loan II - amounting to 9.24 million (Previous year 11.09 million) with Interest payable @ 3% per annum repayable in ten equal annual installments over a period of ten years commencing from October 2015. Loan III - amounting to 39.14 million (Previous year Nil). The interest free loan is given under a Covid-19 scheme for medium and small scale Industries by the Government of Switzerland to a subsidiary company with a repayment period of five years from March 2020.

20. Other long term financial liabilities (refer note 32)

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Security Deposits Lease liabilities Less: Current maturity of lease liabilities (refer note 23) Movement of lease liabilities Opening balance Additions (Transitional impact on adoption of Ind AS 116) Additions during the year Add: Interest recognised during the year Less: Payments made Closing balance	7.96 1.83 662.42 - (309.06) -
	361.32 1.83
	March 31, 2020 March 31, 2019 For the year ended
	- - 811.10 - 77.80 61.22 - 287.70 -
	662.42 -

Notes forming part of consolidated financial statements

Persistent Systems Limited

21. Non current liabilities : Provisions

	As at As a March 31, 2020 March 31, 2019
Provision for employee benefits (refer note 31) - Gratuity - Long service awards 22. Trade payables (refer note 32)	- 16.48 182.79 158.46
	182.79 174.94
	As at As a March 31, 2020 March 31, 2019
	2,247.09 1,517.07
Trade payables for goods and services
Disclosure of payable to vendors as defined under the Small and Medium Enterprise D information available with the Parent Company regarding the status of registration of such v intimation received from them on requests made by the Parent Company. There are no overdu amounts for delayed payments to such vendors at the Balance Sheet date. There are no dela during the period or for any earlier years and accordingly there is no interest paid or outstandi payment made during the period or on balance brought forward from previous year.	2,247.09 1,517.07 evelopment Act, is based on the endors under the said Act, as per the e principal amounts / interest payable ys in payment made to such suppliers ng interest in this regard in respect o

23. Other current financial liabilities (refer note 32)

	As at As at March 31, 2020 March 31, 2019
Capital creditors Current maturity of long-term borrowings (refer note 19) Current maturity of interest on long-term borrowings (refer note 19) Current maturity of lease liabilities (refer note 20) Accrued employee liabilities Unpaid dividend Other liabilities Fair value of derivatives designated and effective as hedging instruments* Forward contracts payable	36.24 55.16 4.85 4.58 0.18 0.17 309.06 - 421.17 377.88 4.05 2.27 - 1.87 387.89 -
	1,163.44 441.93

• Unpaid dividend is transferred to Investor Education and Protection Fund as and when due.

Notes forming part of consolidated financial statements

Persistent Systems Limited

24.Other current liabilities

	As at As at March 31, 2020 March 31, 2019
Unearned revenue	887.20 842.08
Advance from customers Other payables - Statutory liabilities - Other liabilities 25. Current liabilities : Provisions	264.82 26.34 157.19 247.67 10.92 6.35
	1,320.13 1,122.44
	As at As a March 31, 2020 March 31, 2019
Provision for employee benefits - Gratuity (refer note 31) - Leave encashment - Long service awards- Short term provisions - Other employee benefits
	20.41 95.06
	638.05 548.87 21.35 19.02 931.18 1,101.26
	1,610.99 1,764.21

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Notes forming part of consolidated financial statements

Persistent Systems Limited

26. Revenue from operations (net)

	March 31, 2020 March 31, 2019 For the year ended
Software services Software licenses	34,494.34 32,169.39 1,163.74 1,490.02
	35,658.08 33,659.41

The table below presents disaggregated revenues from contracts with customers by segments, geography and customers' industry type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.

	For the year ended For the year ended	For the year ended For the year ended
	March 31, 2020 March 31, 2019
Segment wise disclosure
Technology Services	24,922.47	22,018.03
Alliance	9,358.16	9,759.92
Accelerite (Products)	1,377.45	1,881.46
Total	35,658.08	33,659.41
Geographical disclosure
India	2,657.29	2,349.29
North America	28,891.15	27,507.46
Rest of the World	4,109.64	3,802.66
Total	35,658.08	33,659.41
Customers' Industry wise disclosure
ISV	14,148.50	13,403.64
Enterprise	14,247.31	11,868.44
IP Led	7,262.27	8,387.33
Total	35,658.08	33,659.41

While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially) satisfied performance obligations, along with the broad time band for the expected time to recognize those revenues, the Group has applied the practical expedient in Ind AS 115. Accordingly, the Group has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts.

During the year, 1,721.62 million of opening unbilled revenue has been reclassified to trade receivables upon billing to customers on completion of milestones.

In respect of the contracts wherein the transaction price is in the form of revenue share, the estimated revenue for the customer is considered based on the historical trends and management judgement with respect to customer business. The

27. Other income

	March 31, 2020 March 31, 2019 For the year ended
Interest income On deposits carried at amortised cost On Others Foreign exchange gain (net) Profit on sale of Property, Plant and Equipment (net) Dividend income from investments Profit on sale of investments (net) Net gain/(loss) arising on financial assets designated as FVTPL Excess provision in respect of earlier years written back Miscellaneous income	389.59 103.10 155.69 184.62 364.35 - - 4.02 13.98 180.77 164.81 366.09 119.02 (68.92) 6.95 33.89 109.38 72.98
	1,323.77 876.55

28. Personnel expenses

	March 31, 2020 March 31, 2019 For the year ended
28.1 Employee benefits expense Salaries, wages and bonus Contribution to provident and other funds (refer note 31) Staff welfare and benefits Share based payments to employees (refer note 37) 28.2 Cost of professionals	19,594.62 17,428.04 1,199.20 1,329.94 525.79 491.55 236.79 -
	21,556.40 19,249.53
	3,918.94 3,490.45
	25,475.34 22,739.98

Persistent Systems Limited

Notes forming part of consolidated financial statements

29. Other expenses

	March 31, 2020 March 31, 2019 For the year ended
Travelling and conveyance Electricity expenses (net) Internet link expenses Communication expenses Recruitment expenses Training and seminars Royalty expenses Purchase of software licenses Bad debts Provision for doubtful receivables/ (provision for doubtful receivables written back) (net) Rent (refer note 35) Insurance Rates and taxes Legal and professional fees Repairs and maintenance - Plant and Machinery - Buildings - Others Selling and marketing expenses Advertisement, conference and sponsorship fees	936.86 933.11 114.94 109.45 73.30 67.37 105.72 100.72 128.80 116.63 34.63 30.22 76.82 65.01 1,724.51 1,473.20 - 71.18 83.86 (4.89) 135.25 463.72 34.49 24.84 88.07 79.26 517.13 566.92 123.04 114.67 24.10 29.56 21.60 20.43 7.85 4.12 191.01 199.06 127.41 76.92 7.01 7.95 18.89 21.71 86.35 80.64 38.05 77.58 5.96 - - 243.10 6.58 5.32 14.85 14.21 248.48 182.50 - 13.98 284.59 168.54
Discount allowed
Computer consumables Auditors' remuneration (refer note 39) Donations Books, memberships, subscriptions Loss on sale of Property, Plant and Equipment Foreign exchange loss (net) Directors' sitting fees Directors' commission Provision for doubtful deposits and advances (refer note 45) Impairment of non current investments Miscellaneous expenses
	5,260.15 5,357.03

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Persistent Systems Limited

Notes forming part of consolidated financial statements

30. Earnings per share

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For the year ended
March 31, 2020 March 31, 2019
Numerator for Basic and Diluted EPS
(A) 3,402.89 3,516.79
Denominator for Basic EPS
Weighted average number of equity shares (B) 76,684,672 79,943,943
Denominator for Diluted EPS
Number of equity shares (C) 76,684,672 79,943,943
(A/B) 44.38 43.99
(A/C) 44.38 43.99
For the year ended
March 31, 2020 March 31, 2019
Number of shares considered as basic weighted average shares 76,684,672 79,943,943
outstanding
Add: Effect of dilutive issues of stock options - -
Number of shares considered as weighted average shares 76,684,672 79,943,943
and potential shares outstanding
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Notes forming part of consolidated financial statements

Persistent Systems Limited

31. Gratuity plan:

Persistent Systems Limited and Persistent Systems Lanka (Private) Limited have defined benefit gratuity plans. Each employee in the companies is eligible for gratuity on completion of minimum five years of service at 15 days basic salary (last drawn basic salary) for each completed year of service. The scheme is funded with an insurance Company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

Statement of profit and loss

Net employee benefit expense (recognized in statement of profit and loss)

Net employee benefit expense (recognized in statement of profit and loss)	Net employee benefit expense (recognized in statement of profit and loss)	Net employee benefit expense (recognized in statement of profit and loss)
	For theyear ended
	March 31, 2020	March 31, 2019
Current service cost Interest cost on benefit obligation	194.9 70.6 (68.8 (272.5 (3.5	1 156.88 5 55.82 9) (60.96) 9) - 0) 3.71
Expected return on plan assets Curtailment of benefits*
Other
Net benefit expense	(79.4	2) 155.45
Net actuarial(gain)/ loss recognized in theyear	36.6	7 70.51
Actual return onplan assets		68.89

Balance sheet

Changes in the fair value of plan assets (recognized in the Balance Sheet) are as follows:

	For theyear ended	For theyear ended
	March 31, 2020	March 31, 2019
Opening fair value of plan assets Expected return Adjustment to expected return Contribution by employer Benefitspaid	831.3 68.8 (8.8 184.2 (89.9	1 773.89 9 60.96 8) (4.97) 5 85.95 6) (84.52)
Closing fair value ofplan assets	985.6	1 831.31

Changes in the present value of the defined benefit obligation (recognized in Balance Sheet) are as follows:

follows:	follows:	follows:
	For theyear ended
	March 31, 2020	March 31, 2019
Curtailments* Opening defined benefit obligation Interest cost Current service cost Benefits paid Actuarial losses on obligation Exchange difference	942.8 70.6 194.9 (95.3 (272.5 36.6 0.3	5 745.50 5 55.82 1 156.88 7) (84.52) 9) - 7 70.51 6 (1.34)
Closing defined benefit obligation	877.4	8 942.85

Benefit asset / (liability)

Benefit asset / (liability)
	As at
	March 31, 2020	March 31, 2019
Fair value of plan assets (Less): Defined benefit obligations	985.6 (857.0	1 831.31 7) (942.85)
Plan asset /(liability) for Persistent Systems Limited	128.5	4 (94.34)
Gratuity liability for Persistent Systems Lanka(Private) Limited	(20.4	1) (17.20)

Persistent Systems Limited

Notes forming part of consolidated financial statements

Persistent Systems Limited

Persistent Systems Limited
	As at
	March 31, 2020	March 31, 2019
Discount rate Attrition rate Increment rate	6.77% PS: 0 to 1 : 17% PS: 1 to 3 : 14% PS: 3 to 4 : 10% PS: 4 to 7 : 5% PS: 7 to 10 : 3% PS:10 to 47 :1% 5.50%	7.60 PS: 1 to 5 : 16.5% PS: 5 to 42 : 3.5% 5.50

The major categories of plan assets as a percentage of the fair value of total plan assets:

	As at	As at
	March 31, 2020	March 31, 2019
Investments with insurer includingaccrued interest	100%	100
Persistent Systems Lanka(Private) Limited
	As at
	March 31, 2020	March 31, 2019
Discount rate Attrition rate Increment rate	10.17% PS: 0 to 5 : 1% PS: 5 to 42 : 2% 6.00%	11.35 PS: 0 to 5 : 1% PS: 5 to 42 : 2% 6.00

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

As at March 31, 2020, every percentage point increase / decrease in discount rate will affect the gratuity benefit obligation by approximately 97.26 million / 115.94 million (previous year: 104.67 million/ 124.96 million) respectively.

As at March 31, 2020, every percentage point increase / decrease in rate of increase in compensation levels will affect the gratuity benefit obligation by approximately 108.86 million / 87.88 million (previous

Amounts for the current and previous year are as follows:

Amounts for the current and previous year are as follows:	Amounts for the current and previous year are as follows:	Amounts for the current and previous year are as follows:
	As at
	March 31, 2020	March 31, 2019
Gratuity liability for Persistent Systems Lanka (Private) Limited Plan assets Defined benefit obligation Plan asset / (liability) for Persistent Systems Limited Experience adjustments onplan liabilities - Loss/(gain)	985.61 (857.07) 108.13 (20.41) 36.67	831.3 (942.8 (94.3 (17.2 70.5
Maturity Profile of defined benefit obligations:
	As at
	March 31, 2020	March 31, 2019
Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-10years	46.27 43.40 36.71 32.76 35.57 181.58	42.9 47.0 50.4 51.4 50.8 302.

Superannuation Fund

The Group contributed 41.12 million and 39.25 million to superannuation fund during the years ended March 31, 2020 and March 31, 2019 respectively and the same is recognised in the Statement of profit and loss under the head employee benefit expenses.

Defined contribution plan - Provident Fund

The Parent Company has certain defined contribution plans. Contributions are made to provident fund for its employees @ 12% of Basic salary as per regulation. The contributions are made to registered provident fund administered by the Government of India. The obligation of the Parent Company is limited to the amount contributed. and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan (provident fund) is INR 404.90 million (Previous year - INR 328.33 million).

*The gratuity scheme has an element in its structure which caps the basic salary beyond a certain amount. Giving effect to that in valuation of benefit obligation has resulted into curtailment of benefits to the extent of INR 272.59 million which is reflected in the report.

Notes forming part of consolidated financial statements

Persistent Systems Limited

32. Financial assets and liabilities

The carrying values and fair values of financial instruments by categories are as follows:

Financial assets/ financial liabilities	Basis of measurement	As at March 31, 2020	As at March 31, 2020	As at March 31, 2019	As at March 31, 2019	Fair value hierarchy
		Carrying value	Fair value	Carrying value	Fair value
Assets: Investments in associates (net) Investments in equity instruments, preferred stock and convertible notes F Investments in bonds* Investments in mutual funds F Loans Deposit with banks and financial institutions (net) Cash and cash equivalents (including unpaid dividend) Trade receivables (net) Unbilled revenue Forward contracts receivables F	Equity accounting air value Amortised cost air value Amortised cost Amortised cost Amortised cost Amortised cost Amortised cost air value	- 206.25 2,240.21 7,339.28 189.84 3,027.07 1,904.04 5,921.96 2,068.54 -	- 206.25 2,236.81 7,339.28 189.84 3,027.07 1,904.04 5,921.96 2,068.54 -	- 214.12 2,156.68 5,270.44 171.87 5,592.38 1,741.72 4,923.01 1,834.76 281.27	- 214.12 2,120.86 5,270.44 171.87 5,592.38 1,741.72 4,923.01 1,834.76 281.27	Level 3 Level 1 Level 2
Total		22,897.19	22,893.79	22,186.25	22,150.43
Liabilities: Borrowings (including accrued interest) Trade payables Other financial liabilities (excluding borrowings) Other long term financial liabilities Forward contractspayable F	Amortised cost Amortised cost Amortised cost Amortised cost air value	51.25 2,247.09 770.52 361.32 387.89	51.25 2,247.09 770.52 361.32 387.89	16.72 1,517.07 437.18 1.83 -	16.72 1,517.07 437.18 1.83 -	Level 2
Total		3,818.07	3,818.07	1,972.80	1,972.80

• Fair value includes interest accrued.

Fair value hierarchy:

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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Notes forming part of consolidated financial statements

Persistent Systems Limited

32 (b) Financial risk management

Financial risk factors and risk management objectives

The Group's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Group is foreign exchange risk. The Group uses derivative financial instruments to mitigate foreign exchange related risk exposures. The use of financial derivatives is governed by the Group's policies approved by the Board of Directors which provide written principles on foreign exchange hedging. The Group's exposure to credit risk is mainly for receivables that are overdue for more than 90 days. The Credit Task Force is responsible for credit risk management. Investment of excess liquidity is governed by the Investment policy of the Group. The Group's Risk Management Committee monitors risks and policies implemented to mitigate risk exposures.

Market risk

The Group operates globally with its operations spread across various geographies and consequently the Group is exposed to foreign exchange risk. Around 80% to 90% of the Group's foreign currency exposure is in USD. The Group holds plain vanilla forward contracts against expected future sales in USD to mitigate the risk of changes in exchange rates.

The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2020:

	USD	EUR	GBP	Other currencies	Total
Trade receivables Cash and cash equivalents and bank balances	63.56 373.54 - 21.48	105.93 29.52 0.14 8.78	123.40 11.45 8.67 34.91	79.11 30.47 1.80 10.00	372.00 444.98 10.61 75.17
Other financial assets
Trade and otherpayables

The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019:	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019:	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019:	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019:	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019:	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019:
	USD	EUR	GBP	Other currencies	Total
Trade receivables Cash and cash equivalents and bank balances Other financial assets Trade and otherpayables	126.29 226.68 - 40.28	101.62 5.43 0.14 0.34	41.84 13.72 3.33 11.74	47.58 30.07 1.82 -	317.33 275.90 5.29 52.36

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Persistent Systems Limited

Notes forming part of consolidated financial statements

Foreign currency sensitivity analysis

For the year ended March 31, 2020 and March 31, 2019, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and foreign currencies, would affect the Group's profit before tax margin (PBT) by approximately 0.02% and 0.02% respectively.

Derivative financial instruments

The Group holds derivative foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. These derivative financial instruments are valued based on quoted prices for similar assets in active markets or inputs that are directly or indirectly observable in the marketplace. The Group has designated foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast sales transactions.

The following table gives details in respect of outstanding foreign currency forward contracts:

	As at March 31, 2020	As at March 31, 2020	As at March 31, 2020	As at March 31, 2019	As at March 31, 2019	As at March 31, 2019
	Foreign currency (million)	Average rate	(million)	Foreign currency (million)	Average rate	(million)
Derivatives designated as cash flow hedges Forward contracts
USD	125.00	74.03	9,253.21	112.00	73.00	8,175.45
The foreign exchange forward contracts mature withi period as of the balance sheet date:
	As at March 31, 2020			As at March 31, 2019
	Foreign currency (million)	Average rate	(million)	Foreign currency (million)	Average rate	(million)
Not later than 3 months Later than 3 months and not later than 6 months Later than 6 months and not later than 9 months Later than 9 months and not later than 12 months	30.00 32.00 30.00 33.00	72.74 73.70 74.16 75.40	2,182.07 2,358.34 2,224.70 2,488.10	30.00 30.00 30.00 22.00	69.95 74.00 74.84 73.26	2,098.38 2,220.06 2,245.19 1,611.82
Total	125.00		9,253.21	112.00		8,175.45

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Persistent Systems Limited

Notes forming part of consolidated financial statements

Credit risk

Credit risk refers to the risk of default on its obligation by the counter party resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk is managed by the Group by Credit Task Force through credit approvals, establishing credit limits and continuously monitoring the recovery status of customers to which the Group grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Group uses expected credit loss model to assess the impairment loss. The Group uses a provisioning policy approved by the Board of Directors to compute the expected credit loss allowance for trade receivables. The policy takes into account available external and internal credit risk factors and the Group's historical experience for customers.

Credit risk is perceived mainly in case of receivables overdue for more than 90 days. The following table gives details of risk concentration in respect of percentage of receivables overdue for more than 90 days:

	As at	As at
	March 31, 2020	March 31, 201
Receivables overdue for more than 90 days (` million)* Total receivables (gross) ( million) Overdue for more than 90 days as a % of total receivables	409.44 6,164.09 6.6%	28 5,05
* Ot f thi t illi Mh 31 2019	134.54 million) have been provided f
u o s amoun, mon (arc , Ageing of trade receivables
	As at
	March 31, 2020	March 31, 201
Within the credit period 1 to 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 120 days past due 121 and above past due Less: Expected credit loss	4,196.46 1,070.08 234.12 253.99 89.41 320.03	4,18 32 15 11 7 21
	(242.13)	(13
Net trade receivables	5,921.96	4,92
Movement in expected credit loss allowance
	As at
	March 31, 2020	March 31, 201
Opening balance Movement in expected credit loss allowance Translation differences	134.54 83.86 23.73	14 ( (
Closing balance	242.13	13

Credit risk on cash and cash equivalents is limited as the Group generally invests in deposits with banks and financial institutions with high credit ratings. Investments primarily include investment in debts mutual funds, quoted bonds.

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Persistent Systems Limited

Notes forming part of consolidated financial statements

Liquidity risk

The Group's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Group has no outstanding bank borrowings. The investment of surplus cash is governed by the Group's investment policy approved by the Board of Directors. The Group believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.

As at March 31, 2020, the Group had a working capital of 13,381.80 million including cash and cash equivalents and current fixed deposits of 4,465.02 million and current investments of 5,164.77 million. As at March 31, 2019, the Group had a working capital of 13,984.61 million including cash and cash equivalents and current fixed deposits of 6,912.79 million and current investments of 3,295.53 million.

The table below provides details regarding the contractual maturities of significant financial liabilities:

	As at	As at	As at	As at
	March 31, 2020		March 31, 2019
	Less than 1 year	More than 1 year	Less than 1 year	More than 1 year
Borrowings (including accrued interest) Trade payables and deferred payment liabilities Other financial liabilities(excludingborrowings)	5.03 2,247.09 1,158.41	46.22 - 361.32	4.75 1,517.07 437.18	11.97 - 1.83

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Persistent Systems Limited

Notes forming part of consolidated financial statements

32. c) Derivative instruments and un-hedged foreign currency exposures

• (i) Forward contracts outstanding at the end of the year:

i) Forward contracts outstanding at the end of the year:
		(In	Million)
	As at	As at
	March 31, 2020	March	31, 2019
Forward contracts to sell USD: Hedging of expected future receivables of	9,253.21	8,175.45
USD 125 Million (Previous year USD 112 Million)

• (ii) Details of un-hedged foreign currency exposures at the end of the year:

	As at March 31, 2020 As at March 31, 2019 In million Foreign currency (In million) Conversion rate ( ) In million Foreign currency (In million) Conversion rate ( ) 0.34 JPY 0.49 0.70 0.91 JPY 1.47 0.62 373.54 USD 4.93 75.66 226.68 USD 3.28 69.11 11.45 GBP 0.12 93.49 13.72 GBP 0.15 90.50 6.10 CAD 0.11 53.06 15.71 CAD 0.31 51.51 29.52 EUR 0.35 82.76 5.43 EUR 0.07 77.62 6.19 AUD 0.13 46.07 2.56 AUD 0.05 48.99 17.84 ZAR 4.20 4.25 10.89 ZAR 2.28 4.77 21.48 USD 0.28 75.66 40.28 USD 0.58 69.11 34.91 GBP 0.37 93.49 11.74 GBP 0.13 90.50 8.78 0.32 0.63 8.53 0.42 EUR 0.11 SGD 0.01 ZAR 0.15 CAD 0.16 AUD 0.01 82.76 53.03 4.25 53..06 46.07 0.34 - - - - EUR 0.004 - - - - 77.62 - - - - 0.10 CHF 0.001 78.28 - - - 0.36 AUD 0.01 46.07 0.36 AUD 0.007 48.99 8.67 GBP 0.10 93.49 3.33 GBP 0.04 90.50 0.14 EUR 0.001 82.76 0.14 EUR 0.002 77.62 - - - 0.01 ZAR 0.002 4.77 - - - 0.01 MYR 0.001 16.94 1.40 CAD 0.03 53.06 1.40 CAD 0.03 51.51 0.04 JPY 0.06 0.70 0.04 JPY 0.064 0.62
Bank balances
Trade and other payables
Advances given and deposits placed
Trade receivables	63.56 USD 0.84 75.66 126.29 USD 1.83 69.11 105.93 EUR 1.28 82.76 101.62 EUR 1.31 77.62 123.40 GBP 1.32 93.49 41.84 GBP 0.46 90.50 - - - 0.84 CAD 0.02 51.51 41.00 AUD 0.89 46.07 26.30 AUD 0.54 48.99 29.47 ZAR 6.93 4.25 20.44 ZAR 4.29 4.77 8.49 SGD 0.16 53.03 - - - 0.15 BRL 0.01 14.61 - - -

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Persistent Systems Limited

Notes forming part of consolidated financial statements

33. Income taxes

The reconciliation of estimated income tax expense at Indian statutory income tax rate to income tax expense reported in statement of profit and loss is as follows:

	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended
	March 31, 2020				March 31, 2019
Profit before tax Enacted tax rate in India Computed tax expense at enacted tax rate Effect of exempt income Effect of non-deductible expenses Effect of concessions (R&D allowance) Effect of concessions (Tax holidays) Effect of unused tax losses not recognised as deferred tax assets Effect of previously unrecognised deferred tax assets now recognised Effect of different tax rates of subsidiaries operating in other jurisdictions Effect of different tax rates for different heads of income Effect of change in tax rates in India Short Tax Provision of earlier years(Net) Others	4,523.42 25.17% 1,138.45				4,863.39 34.94%
					1,699.46
	(69.30) 42.06 (127.18) (12.37) 78.54 (58.40) (4.11) (31.80) 24.76 52.55 87.33				(176.56) 205.58 (56.00) (233.82) 26.64 (18.44) (13.78) (30.69) - 88.81 (144.60)
Income tax expense	1,120.53				1,346.60

Note:

The Parent Company has decided to opt for the new tax regime announced by the Government of India and avail of the benefit of Section 115BAA of the Income Tax Act. This provides for concessional tax rate of 22% plus applicable surcharge and cess (totalling 25.17% ) from April 1, 2019, without claiming the following major tax exemptions / incentives which were availed till earlier financial year.

• Tax holiday under section 10AA of the Income Tax Act available for units set up under the Special Economic Zone Act, 2005 (SEZ units)

• Weighted Deduction under section 35 (2AB) of the Income Tax Act on the expenditure on scientific research carried out in in-house research and development facility as approved by the prescribed authority under Income Tax Act.

The Income Tax expense and deferred tax expense for the year ended March 31, 2020 include the effect of the net benefit of section 115BAA opted for by the Parent Company from April 1, 2019.

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Notes forming part of consolidated financial statements

Persistent Systems Limited

34. Segment information

Operating segments are components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision makers, in deciding how to allocate resources and assessing performance. The Group's chief operating decision makers are the Chief Executive Officer and the Chairman.

The Group reorganised itself into three business units from April 1, 2018, which form the operating segments for segment reporting. The operating segments are:

a. Technology Services

b. Alliance

c. Accelerite (Products)

Particulars		Technology Services	Alliance	Accelerite(Products) To
Revenue Identifiable expense Segmental result	Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019			1,377.45 35,6 1,881.46 33,6 734.02 22,7 889.32 20,8 643.43 12,9 992.14 12,7
		24,922.47	9,358.16
		22,018.03	9,759.92
		15,461.49 13,510.36 9,460.98 8,507.67	6,546.05 6,461.91 2,812.11 3,298.01
Unallocable expenses Operating income Other income (net of expenses) Profit before taxes Tax expense Profit after tax	Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019 Year ended Mar-31-2020 Year ended Mar-31-2019			9,7 8,8 3,1 3,9 1,3 8 4,5 4,8 1,1 1,3 3,4 3,5
Particulars		Technology Services	Alliance	Accelerite (Products) To
Segmental trade receivables (net Unallocated assets	) As at Mar-31-2020 As at Mar-31-2019 As at Mar-31-2020 As at Mar-31-2019	4,780.49 3,547.07 - -	637.13 1,021.77 - -	504.34 5,9 354.17 4,9 - 24,9 - 23,6

Segregation of assets (other than trade receivables), liabilities, depreciation and amortization and other non-cash expenses into various reportable segments have not been presented as the assets are used interchangeably between segments and the Group is of the view that it is not practical to reasonably allocate the other assets, liabilities and other non-cash expenses to individual segments and an ad-hoc allocation will not be meaningful.

Geographical Information

	Particulars		India	North America	Rest of the World To
Revenue		Year ended Mar-31-2020 Year ended Mar-31-2019	2,657.29 2,349.29	28,891.15 27,507.46	4,109.64 35,6 3,802.66 33,6
The reve	nue from individual customers in excess of ten percent of total revenue of the Group is 11,623.30 million for the year ended March 31

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Persistent Systems Limited

Notes forming part of consolidated financial statements

35. Leases

The table below provides details regarding the contractual maturities of lease liabilities as of March 31, 2020 on an undiscounted basis:

discounted basis:
	(In	Million)
		As at
	March 31, 2020
- Less than one year		309.06
- One to five years		436.94
- More than fiveyears		68.11

The Group does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

Rental expense recorded for short135.25 million for the year ended March 31, 2020.

Effective April 1, 2019, the Group has adopted Ind AS 116, Leases; and has recognized interest on lease liability of 61.22 million under finance costs.

The aggregate depreciation on ROU assets has been included under depreciation and amortisation expense in the Statement of Profit and Loss.

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Persistent Systems Limited

Notes forming part of consolidated financial statements

36. Related Party Disclosures

(i) Names of related parties and related party relationship

Relatedparties with whom transactions have takenplace	Relatedparties with whom transactions have takenplace	Relatedparties with whom transactions have takenplace
Associates	i.	Klisma e-Services Private Limited
Key management personnel	i.	Dr. Anand Deshpande, Chairman and Managing Director
	ii.	Mr. Christopher O'Connor, Chief Executive Officer and Director@
	iii.	Mr. Sunil Sapre, Executive Director and Chief Financial Officer
	iv.	Mr. Amit Atre, Company Secretary
	v.	Mr. Sudhir Kulkarni, Director, Persistent Systems, Inc., USA**
	vi.	Mr. Narayanan Rajagopalan, President and Director, Persistent
		Telecom Solutions Inc., USA$
	vii.	Mr. Azlin Ghazali, Director, Persistent Systems Malaysia Sdn. Bhd.
	viii.	Ms. Audrey Reutens, Director, Persistent Systems Malaysia Sdn. Bhd.
	ix.	Mr. Arnaud Pierrel, Director General, Persistent Systems France SAS
	x.	Mr. Steven Ward, Director, Youperience Limited, United Kingdom
	xi.	Mr. Bruno Orsier, Director, Persistent Systems France SAS
	xii.	Mr. Thomas Klein, Director, Persistent Systems, Inc., USA
	xiii.	Ms. Roshini Bakshi, Independent Director
	xiv.	Mr. Pradeep Bhargava, Independent Director
	xv.	Mr. Sanjay Bhattacharya, Independent Director*
	xvi.	Dr. Anant Jhingran, Independent Director
	xvii.	Mr. Thomas Kendra, Independent Director
	xviii.	Mr. Prakash Telang, Independent Director
	xix.	Mr. Kiran Umrootkar, Independent Director
	xx.	Mr. Deepak Phatak, Independent Director
	xxi.	Mr. Guy Eiferman, Independent Director
	xxii.	Mr. Silvio Galfetti, Director, Parx Werk AG, Switzerland
	xxiii.	Mr. Steffen Drilich, Director, Youperience GmbH, Germany
	xxiv.Mr. Sandeep Kalra, President and Director, Persistent Solutions Inc., USA^
	xxv.	Mr. Daniel Seiler, Chief executive officer, PARX Consulting GmbH^^
Relatives of Key management	i.	Mr. Suresh Deshpande
personnel		(Father of the Chairman and Managing Director)
	ii.	Mrs. Sulabha Suresh Deshpande
		(Mother of the Chairman and Managing Director)
	iii.	Mrs. Sonali Anand Deshpande
		(Wife of the Chairman and Managing Director)
	iv.	Dr. Mukund Deshpande
		(Brother of the Chairman and Managing Director)
	v.	Mrs. Chitra Buzruk
		(Sister of the Chairman and Managing Director)
	vi.	Dr. Asha Sapre
		(Wife of Executive Director and Chief Financial Officer)
Members of Promoter Group	i.	Rama Purushottam Foundation
Entities over which a key	i.	Deazzle Services Private Limited
management personnel have	ii.	Azure Associates, LLC
significant influence	iii.	Persistent Foundation

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Persistent Systems Limited

Notes forming part of consolidated financial statements

36. (ii) Related party transactions

36. (ii) Related party transactions
	Name of the related party and nature of relationship	For the year ended
		March 31, 2020	March 31, 2019
Sale of software services Enti Dea Tota	ty over which a key management personnel has significant influence zzle Services Private Limited	7.47	18.46
	l	7.47	18.46
Legal and professional fees Enti Azur Tota	ty over which a key management personnel has significant influence e Associates,LLC	10.63	23.07
	l	10.63	23.07
Donation given Enti Pers	ty over which a key management personnel has significant influence istent Foundation	79.21	70.51
		79.21	70.51
Rent paid Key Mr. Rela Dr. A Tota	management personnel Sunil Sapre tives of Key Management Personnel sha Sapre	- -	0.16 0.16
	l	-	0.32
Remuneration # Key (Salaries, bonus and contribution to other funds) Dr. A Mr. milli Mr. Mr. Sud Mr. 13.6 Ms. Mr. Mr. Mr. Mr. Mr. Mr. Mr. Inde Ms. Mr. Mr. Dr. A Mr. Mr. Mr. Mr. Dr. D Rela Mrs. Dr. Tota	Management Personnel nand Deshpande Christopher O'Connor@ on during the year 2018-19) Amit Atre Narayan Rajagopalan$ hir Kulkarni Sandeep Kalra^ 1 million during the year 2018-19 Audrey Reutens Arnaud Pierrel Bruno Orsier Thomas Klein Steffen Drilich Steven Ward Silvio Galfetti Daniel Seiler^^ pendent directors: Roshini Bakshi Pradeep Bhargava Sanjay Bhattacharyya* nant Jhingran Thomas Kendra Prakash Telang Kiran Umrootkar Guy Eiferman eepak Phatak tives of Key Management Personnel** Chitra Buzruk Mukund Deshpande (including value of perquisites for stock options 343 illi dith201819	23.88 58.35 13.31 3.38 - 10.77 43.64 9.66 5.12 13.01 10.26 35.47 6.87 6.08 35.01 25.16 2.48 3.13 0.78 2.23 2.33 3.00 3.05 2.28 2.40 2.10 14.20	21.79 6.62 12.47 2.92 43.02 42.31 - 23.27 5.05 13.16 10.36 32.21 - - 24.71 - 2.20 2.78 2.30 1.98 2.03 2.48 2.80 1.99 1.95 4.71 8.05
	. mon urngeyear -) l	337.95	271.16
Dividend paid Key Dr. A Mr. Inde Prad Sanj Prak Kira Rela Mr. Mrs. Dr. Mrs. Mrs. Ram Tota	Management Personnel nand Deshpande Sunil Sapre pendent directors: eep Bhargava ay Bhattacharyya ash Telang n Umrootkar tives of Key Management Personnel* Suresh Deshpande Chitra Buzruk Mukund Deshpande Sonali Anand Deshpande Sulabha Suresh Deshpande a Purushottam Foundation	342.71 0.07 0.20 0.04 0.27 0.09 0.08 7.04 5.65 1.68 2.49 4.92	251.25 0.05 0.15 0.15 0.20 0.07 0.06 5.25 4.12 1.23 6.23 -
	l	365.24	268.76
(iii) Outstanding balances
	Name of the related party and nature of relationship	As at
		March 31, 2020	March 31, 2019
Trade receivables Enti Dea Tota	ty over which a key management personnel has significant influence zzle Services Private Limited	-	2.14
	l	-	2.14
Trade payables Enti Azur Tota	ty over which a key management personnel has significant influence e Associates,LLC	-	2.83
	l	-	2.83
Advances given Ass Klis Tota	ociate ma e-Services Private Limited@	0.81	0.81
	l	0.81	0.81
Investments Ass Klis Tota	ociate ma e-Services Private Limited@	0.05	0.05
	l	0.05	0.05
Loans given Ass Klis Tota	ociate ma e-Services Private Limited@	27.43	27.43
	l	27.43	27.43

• @ Mr. Christopher O' Connor has been appointed as Chief executive officer Designate w.e.f. February 25, 2019 via Persistent Systems, Inc. (wholly owned subsidiary) and was appointed as a Director in Persistent Systems Limited w.e.f. June 11, 2019

• ** Mr. Sudhir Kulkarni resigned as Director of Persistent Systems, Inc (wholly owned subsidiary) w.e.f. April 19, 2019.

• *Mr. Sanjay Kumar Bhattacharyya resigned as an Independent Director of the Company w.e.f. July 1, 2019.

• $Mr. Narayan Rajagopalan resigned as a Director of the Persistent Telecom Solutions Inc., USA (wholly owned subsidary) w.e.f. March 22, 2019.

• ^Mr. Sandeep Kalra appointed as Director of the Company w.e.f. June 11, 2019.

• ^^Mr. Daniel Seiler is appointed as director with effect from October 01, 2019, however his remuneration for the financials year ended March 31, 2020 has been disclosed from April 01, 2019 to March 31, 2020.

• The remuneration to the key managerial personnel does not include the provisions made for gratuity, long service awards and leave benefits, as they are determined on an actuarial basis for the Company/Group as a whole. @These balances are fully provided for.

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Persistent Systems Limited

Notes forming part of consolidated financial statements

37. Employees stock option plans (ESOP)

Certain information in this note relating to number of shares, options and per share/option price has been disclosed in full and is not rounded off.

a) Details of Employee stock option plans

The Group has framed various share-based payment schemes for its employees. The details of various equity-settled

ESOP scheme	No. of options	Date of adoption	Initial	Exercise period
	granted #	by the	Grant date
		Board/Members
Scheme I	4,560,500	Dec 11, 1999	Dec 11, 1999	*
Scheme II	753,200	Apr 23, 2004	Apr 23, 2004	10 Years
Scheme III	2,533,300	Apr 23, 2004	Apr 23, 2004	*
Scheme IV	6,958,250	Apr 23, 2006	Apr 23, 2006	10 Years
Scheme V	1,890,525	Apr 23, 2006	Apr 23, 2006	*
Scheme VI	1,216,250	Oct 31, 2006	Oct 31, 2006	10 Years
Scheme VII	1,784,975	Apr 30, 2007	Apr 30, 2007	10 Years
Scheme VIII	42,000	Jul 24, 2007	Jul 24, 2007	3 Years
Scheme IX	1,374,462	Jun 29, 2009	Jun 29, 2009	10 Years
Scheme X	3,062,272	Jun 10, 2010	Oct 29, 2010	2-3 Years
Scheme XI **	1,062,000	Jul 26, 2014	Nov 03, 2014	1 Year
Scheme XII ***	67,300	Feb 04, 2016	Apr 08, 2016	2.5 Months
Scheme XIII	975,000	Jul 27, 2017	Aug 01, 2019	5 Years
Scheme XIV	80,000	Jul 27,2017	May01,2019	4 Years

Adjusted for bonus issue of shares.

*No contractual life is defined in the scheme.

**The options under Scheme XI, which is a performance based ESOP scheme will vest after 2-3 years in proportion of credit points earned by the employees every quarter based on performance. The maximum options which can be granted under this scheme are 2,000,000.

***The options under Scheme XII, ESOP scheme would vest after 1 year. The maximum options which granted under this scheme are 50 per employee.

The vesting period and conditions of the above ESOP schemes is as follows:

All the above ESOP schemes have service condition (other than scheme XI which Is based on performance criteria), which require the employee to complete a specified period of service, as a vesting condition. The vesting pattern of various schemes has been provided below:

schemes has been provided below:	schemes has been provided below:
(i) Scheme I to V, VII, VIII, X, XIII and XIV:
Service period from the		% of Options vesting
date of grant	Scheme I to V & X	Scheme VII	Scheme VIII & XIII	Scheme
				XIV
12 Months	10%	20%	25%	0.00%
24 Months	30%	40%	50%	33.33%
36 Months	60%	60%	75%	66.66%
48 Months	100%	80%	100%	100.00%
60Months	NA	100%	NA	NA
(ii) Scheme VI:
Service period from the date of grant			% of Options vesting
18 Months			30%
Every quarter thereafter			5%
(iii) Scheme IX:
Service period from the date of grant			% of Options vesting
3~~0~~ 60 Months varying from	employee to		100%
employee
(iv) Scheme XI:
Service period from the date of grant			% of Options vesting
2-3 years varying from employee to employee		Based on credit points earned
(v) Scheme XII:
Service period from the date of grant			% of Options vesting
1 year			100%

Persistent Systems Limited

Notes forming part of consolidated financial statements

b) Details of activity of the ESOP schemes

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Movement for the year ended March 31, 2020 and March 31, 2019:
ESOP Year Outstanding at the Granted Forfeited Exercised Outstanding Exercisable
Scheme Particulars Ended beginning of during the Year during the Year during the Year at the end of the Year at the end of the Year
the Year
Scheme I Number of Option March 31, 2020 18 - - 1 17 17
Weighted Average Price March 31, 2020 4.42 - - 5.05 4.42 4.42
Number of Option March 31, 2019 20 - - 2 18 18
Weighted Average Price March 31, 2019 4.19 - - 4.22 4.42 4.42
Scheme II Number of Option March 31, 2020 3 - 3 - - -
Weighted Average Price March 31, 2020 24.18 - 24.18 - - -
Number of Option March 31, 2019 103 - - 100 3 3
Weighted Average Price March 31, 2019 47.51 - - 48.21 24.18 24.18
Scheme III Number of Option March 31, 2020 158,625 - - 10,790 147,835 147,835
Weighted Average Price March 31, 2020 31.89 - - 31.20 31.94 31.94
Number of Option March 31, 2019 203,392 - 11,288 33,479 158,625 158,625
Weighted Average Price March 31, 2019 31.36 - 25.75 30.74 31.89 31.89
Scheme IV Number of Option March 31, 2020 499,773 - - 93,425 406,348 406,348
Weighted Average Price March 31, 2020 52.37 - - 48.66 53.07 53.07
Number of Option March 31, 2019 708,946 - 17,542 191,631 499,773 499,773
Weighted Average Price March 31, 2019 52.34 - 24.79 54.78 52.37 52.37
Scheme V Number of Option March 31, 2020 62,793 - - 2,461 60,332 60,332
Weighted Average Price March 31, 2020 27.37 - - 22.23 27.58 27.58
Number of Option March 31, 2019 96,856 - 10,952 23,111 62,793 62,793
Weighted Average Price March 31, 2019 26.33 - 24.13 24.55 27.37 27.37
Scheme VI Number of Option March 31, 2020 - - - - - -
Weighted Average Price March 31, 2020 - - - - - -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Scheme VII Number of Option March 31, 2020 34,996 - - 28,035 6,961 6,961
Weighted Average Price March 31, 2020 33.55 - - 27.44 58.18 58.18
Number of Option March 31, 2019 37,996 - - 3,000 34,996 34,996
Weighted Average Price March 31, 2019 35.73 - - 61.12 33.55 33.55
Scheme VIII Number of Option March 31, 2020 - - - - - -
Weighted Average Price March 31, 2020 - - - - - -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
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Persistent Systems Limited

Notes forming part of consolidated financial statements

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ESOP Year Outstanding at the Granted Forfeited Exercised Outstanding Exercisable
Scheme Particulars Ended beginning of during the Year during the Year during the Year at the end of the Year at the end of the Year
the Year
Scheme IX Number of Option March 31, 2020 142,120 - - 6,200 135,920 135,920
Weighted Average Price March 31, 2020 54.74 - - 54.74 54.74 54.74
Number of Option March 31, 2019 150,552 - - 8,432 142,120 142,120
Weighted Average Price March 31, 2019 54.74 - - 54.74 54.74 54.74
Scheme X Number of Option March 31, 2020 155,650 - - 30,588 125,062 125,062
Weighted Average Price March 31, 2020 206.73 - - 221.47 188.75 188.75
Number of Option March 31, 2019 461,351 - 31,124 274,577 155,650 155,650
Weighted Average Price March 31, 2019 201.74 - 204.64 204.64 206.73 206.73
Scheme XI Number of Option March 31, 2020 - 570,000 - - 570,000
Weighted Average Price March 31, 2020 - 10.00 - - 10.00
Number of Option March 31, 2019 36,000 - 9,600 26,400 - -
Weighted Average Price March 31, 2019 5.00 - 5.00 5.00 - -
Scheme XII Number of Option March 31, 2020 - - - - - -
Weighted Average Price March 31, 2020 - - - - - -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Scheme XIII Number of Option March 31, 2020 - 975,000 55,000 - 920,000 -
Weighted Average Price March 31, 2020 - 451.13 442.47 - 451.65 -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Scheme XIV Number of Option March 31, 2020 - 80,000 - - 80,000 -
Weighted Average Price March 31, 2020 - 540.82 - - 540.82 -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Total Number of Option March 31, 2020 1,053,978 1,625,000 55,003 171,500 2,452,475 827,475
Number of Option March 31, 2019 1,695,216 - 80,506 560,732 1,053,978 1,053,978
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623.69 697.09

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Persistent Systems Limited

Notes forming part of consolidated financial statements

c) Details of exercise price for stock option outstanding at the end of the year

					As at	March 31, 2020		As at March 31, 2019	As at March 31, 2019
Scheme		Range of exercise price		No. of Options outstanding*		Weighted average remaining contractual life	No. of Options outstanding		Weighted average remaining contractual life
						(in years)			(in years)
Scheme	I	2.04	9.57		17	Note (i)		18	Note (i)
Scheme	II	12.96	48.21		-	-		3	2.40
Scheme	III	12.96	48.21		147,835	Note (i)		158,625	Note (i)
Scheme	IV	22.23	61.12		406,348	3.02		499,773	3.93
Scheme	V	22.23	44.14		60,332	Note (i)		62,793	Note (i)
Scheme	VI	22.23	30.67		-	-		-	-
Scheme	VII	24.17	61.12		6,961	3.52		34,996	3.37
Scheme	VIII	48.21	48.21		-	-		-	-
Scheme	IX	54.74	54.74		135,920	3.24		142,120	4.03
Scheme	X	157.58	279.70		125,062	5.55		155,650	1.85
Scheme	XI	10.00			570,000	2.30		-	-
Scheme	XII	10.00			-	-		-	-
Scheme	XIII	442.47	602.31		920,000	4.36		-	-
Scheme	XIV	540.82	540.82		80,000	4.08		-	-

Note (i) No contractual life is defined in the scheme.

• Amongst the above schemes, certain options have been lapsed on December 31, 2019 since those were not exercised by the respective employees during their contracted Exercise Period. However, before cancelling the said options, the Management has decided to take guidance from the Nomination and Governance Committee. The appropriate action will be taken upon receipt of the aforementioned guidance from the Committee on further extension / immediate cancellation. Hence, being prudent, the same are still considered outstanding as at March 31, 2020. The weighted average contractual life disclosed above has been computed only for the unexpired options.

d) Effect of the employee share-based payment plans on the statement of profit and loss and on its financial position

Compensation expense arising from equity-settled employee share-based payment plans for the year ended March 236.79 million (Previous year Nil). The liability for employee stock options outstanding as at

e) Weighted average exercise prices and weighted average fair values of options

The Binomial tree and Black-Scholes valuation models have been used for computing the weighted average fair value of the stock options granted during the financial year 2019-20:

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Particulars March 31, 2020 March 31, 2019
RSU ESOP ESOP RSU ESOP ESOP
Scheme XI Scheme Scheme IV Scheme XI Scheme XIII Scheme
XIII IV
Weighted average share 637.32 620.86 636.25 NA NA NA
price (Rs.)
Weighted Exercise Price 10 451.13 540.82 NA NA NA
(Rs.)
Weighted Average Fair 446.15 202.78 171.45 NA NA NA
Value (Rs.)
Expected Volatility 26.54 26.54 26.54 NA NA NA
Life of the options granted 4 yrs 5 yrs 5 yrs NA NA NA
(Vesting and exercise
period)
Dividend Yield 2.00% 2.00% 2.00% NA NA NA
Average risk-free interest 6.80% 6.24% 7.10% NA NA NA
rate
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Persistent Systems Limited

Notes forming part of consolidated financial statements

38. Capital and other commitments

Capital and other commitments
		(In	million)
	As at
	March 31, 2020	March	31, 2019
Capital commitments
Estimated amount of contracts remaining to be executed on capital	143.37		342.67
account and not provided for
Other commitments
Forward contracts	9,253.21		8,175.45

39.

	(In million)
	For the year ended March 31, 2020 March 31, 2019
As auditor: - Audit fee - Tax audit fee In other capacity: - Other services Reimbursement of expenses	17.03 9.20 - - 1.63 12.51 0.23 -
	18.89 21.71

40. Research and development expenditure

The particulars of expenditure incurred on in-house research and development are as follows:

			(In million)
		For the year ended
	March	31, 2020	March 31, 2019
Capital		1.04	0.46
Revenue		778.89	865.21
		779.93	865.67

-20 (Previous

41. The Parent -20 (Previous year million) on Corporate Social Responsibility in accordance with section 135(5) of the Companies Act, 2013. The Parent - million was spent in kind) on purposes other than construction / acquisition of any asset.

42. Net dividend remitted in foreign exchange

Particulars	Period to	No. of non-	No. of equity	For the year ended	For the year ended
	which	resident	shares held
	dividend	shareholders	on which	March 31, 2020	March	31, 2019
	relates		dividend
			was due
			(in million)
Final dividend	2018-19	3	0.37	0.02		-
Interim dividend	2019-20	3	0.37	0.05
Final dividend	2017-18	3	0.37	-	0.02
Interim dividend	2018-19	3	0.37	-	0.0001

Persistent Systems Limited

Notes forming part of consolidated financial statements

43. Contingent liabilities

Parent Tax on December 19, 2016 for non-payment of service tax of 452.15 million under import of services on reverse charge basis, excluding interest and penalty if applicable. The issue relates to the professional and technical services rendered by overseas subsidiaries on behalf of the Parent Company to its overseas customers for the period 2011-12 to 2014-15.

Post representations made by the Parent Company, the Learned Principal Commissioner of Service Tax, Pune, adjudicated the aforesaid show173.78 million based on the period of limitation and as a result of that, the said demand now covers financial year 2014-15. The Parent Company has filed an appeal against the order passed by Learned Principal Commissioner of Service Tax, STAT) on September 23, 2017.

The Group, based on independent legal opinion obtained in respect of issues related to this matter, believes that the liability is not likely to arise and therefore, no provision is considered necessary in the financial statements. If the appeal filed as mentioned above results in a demand, there will be no impact on the profitability as the Group will be eligible to claim credit/refund for the amount paid.

The GST department has filed an appeal on October 11, 2017 with appellate authorities against the Order passed by Learned Principal Commissioner of Service Tax, Pune. Though the GST department has acknowledged the ground of revenue neutrality, the said appeal mainly questions non-application of extended period of limitation. The Parent Company has filed reply to this appeal on December 18, 2017.

Considering the view of the Service Tax Authorities, based on legal advice and due prudence, the Company has of the above matter, for the period from April al credit under GST Regime and 165.58 million was paid under protest and forms part of the aforementioned GST receivable balance.

As on March 31, 2020 20.30 million and in respect of indirect taxes amount to 26.51 million (excluding the show cause received from Commissioner of Service Tax on May 73.78 million under import of services on reverse charge basis as mentioned above). Based on the advice obtained and judgments in favour of the Parent Company at the first appellate authority in the earlier years, management does not expect any outflow in respect of these litigations.

under protest based on show cause notice from Directorate of Revenue Intelligence (DRI), the Parent Company has filed an application before the relevant authorities. Further, the Parent Company is in the process of making representations through the industry associations to ensure continued applicability of the said incentives to the eligible information technology companies.

Additionally, in the context of the Parent

.

Persistent Systems Limited has given a performance guarantee upto $ 10 million to HSBC Bank USA in respect of payment obligations under the Receivables Purchase agreement entered into by Persistent Systems, Inc. with HSBC Bank, USA (Previous year: $10 million). Persistent Systems Limited has also given performance guarantee upto $ 5 million to Citibank USA (Previous year: $ 5 million) in respect of working capital facilities for Persistent Systems, Inc. and $ 0.17 million to Sun Life Assurance Company of Canada for timely payment of rent instalments and damages, in respect of office rented to Persistent Systems, Inc.

Persistent Systems, Inc., has given commercial guarantee of 30 million Euros (Previous year: 30 Million euros) to Tech Data Europe GmbH on behalf of Persistent Systems France S.A.S. For the said guarantee, Persistent Systems, Inc. has charged guarantee fees of 0.25% of the guarantee amount.

Persistent Systems, Inc., subsidiary of Persistent Systems Limited, has also given a performance guarantee of upto $ 3 million to United States Cellular Corporation (USCC) Services & its affiliates towards trade payable of Aepona Limited.

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Persistent Systems Limited

Notes forming part of consolidated financial statements

44. Persistent Systems Germany GmbH, wholly owned subsidiary of Persistent Systems Limited, acquired 100% share capital of Youperience GmbH, a Salesforce Certified Gold Partner in Germany and Youperience Limited, a company based in United Kingdom.

• a) The amount

The fair value of assets acquired and liabilities assumed as on the date of acquisition are as follows:

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Youperience Youperience
Particulars Total
GmbH Limited
Current Assets
Cash and & cash equivalents 25.01 12.34 37.35
Trade receivables 38.55 20.71 59.26
Other current assets 3.24 0.39 3.63
Other current financial assets - 1.63 1.63
Non-current assets
Property, Plant and Equipment 3.15 0.39 3.54
Loans 3.32 0.21 3.53
Contractual rights 377.31 - 377.31
Other non-current assets 2.21 0.41 2.62
Current liabilities
Trade and other payables 28.35 14.19 42.54
Current tax liabilities (net) 6.65 4.20 10.85
Net assets 417.79 17.69 435.48
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Acquisition related costs amounting to 10.03 million have been excluded from the intangible assets transferred and

• b) Net cash outflow on acquisition of subsidiaries

Particulars
Consideration paid/ payable in cash	435.48
Less: cash and cash equivalent balances acquired	(37.35)
	398.13

• c) Revenue of 196.81 million for the period ended March 31, 2020 100.54 million for the period ended March 31, 2020 of Youperience Limited is included in the consolidated financial statements. The consolidated loss included for both these subsidiaries for the period ended March 31, 2020 94.36 million.

Had the business combination been effected on April 1, 2019, the revenue for the year ended March 31, 2020 for 35,794.91 million and the net profit for the year ended March 31, 2020 3,411.63 million.

45. The Parent

• date. These were due for maturity from January 2019 to June 2019. In view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, Management of the Parent Company has fully provided for these deposits, along with interest accrued thereon till the date the deposits had become doubtful of recovery. The Management is hopeful of recovery though with a time lag. The Parent Company continues to monitor developments in the matter and is committed to take steps including legal action that may be necessary to ensure full recovery of the said deposits.

(This space is intentionally left blank)

Persistent Systems Limited

Notes forming part of consolidated financial statements

46. The financial statements are presented in million and decimal thereof except for per share information or as otherwise stated.

47. Previous figures have been regrouped where necessary to conform to current year classification.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

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Bharat Shetty Partner Membership No.: 106815

Dr. Anand Deshpande

Kiran Umrootkar

Chairman and Managing Director Director

Sunil Sapre

Executive Director and Chief Financial Officer

Amit Atre Company Secretary

Place: Mumbai Date: May 5, 2020

Place: Pune Date: May 5, 2020

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Walker Chandiok & Co LLP 16th floor, Tower II, Indiabulls Finance Centre, SB Marg, Prabhadevi (W) Mumbai 400 013 India T +91 22 6626 2699 F +91 22 6626 2601

To the Members of Persistent Systems Limited

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the accompanying standalone financial statements of Persistent Systems Limited 20, the Statement of Profit and Loss

(including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and a summary of the significant accounting policies and other explanatory information.

1. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 generally accepted in India including In Section 133 of the Act, of the state of affairs (financial position) of the Company as at 31 March 2020, and its profit (financial performance including other comprehensive income), its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

1. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Responsibilities for the Audit of the Financial Statements Section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

1. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Walker Chandiok & Co LLP is registered with limited liability with identification number AAC-2085 and its registered office at L-41 Connaught Circus, New Delhi, 110001, India

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1. We have determined the matters described below to be the key audit matters to be communicated in our report.

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Key audit matter How our audit addressed the key audit matter
Accuracy of revenues and onerous obligations in Our audit work included but was not restricted to the
respect of fixed-price contracts following procedures:
Refer Notes 3(h)(i) notes forming part of the Standalone Obtained an understanding of the systems,
Financial Statements. processes and controls implemented by
management for recording and calculating revenue,
The Company has entered into various fixed-price and the associated unbilled revenue, unearned and
software development contracts, for which revenue is deferred revenue balances, and onerous contract
recognized by the Company using the percentage of obligations.
completion computed as per the Input method prescribed Tested the design and operating effectiveness of
under Ind AS 115 Revenue from Contracts with
Customers. The said revenue recognition accounting experts to assess key information technology (IT)
policy involves exercise of significant judgement by the controls over:
management and the following factors requiring significant IT environment in which the business systems
auditor attention: operate, including access controls, segregation
of duties, program change controls, program
High inherent risk around accuracy of revenue, given development controls and IT operation
the customised and complex nature of these controls;
contracts and significant involvement of IT systems. Testing the IT controls over the completeness
High estimation uncertainty relating to determination and accuracy of cost/efforts and revenue
of the progress of each contract, costs incurred till reports generated by the system; and
date and additional costs required to complete the Testing the access and application controls
remaining contract. pertaining to allocation of resources and
Identification and determination of onerous contracts budgeting systems which prevents the
and related obligations. unauthorized changes to recording of efforts
Determination of unbilled revenue receivables and incurred and controls relating to the estimation
unearned revenue related to these contracts as at of contract efforts required to complete the
end of reporting period. project.
Selected a sample of contracts and performed a
Considering the materiality of the amounts involved, and retrospective review of efforts incurred with
significant degree of judgement and subjectivity involved estimated efforts to identify significant variations and
in the estimates as mentioned above, we have identified verify whether those variations have been
revenue recognition for fixed price contracts and considered in estimating the remaining efforts to
determination of onerous contracts and related provisions, complete the contract.
as a key audit matter for the current year audit. Reviewed a sample of contracts with unbilled
revenues to identify possible delays in achieving
milestones, which require change in estimated
efforts to complete the remaining performance
obligations.
Performed analytical procedures for reasonableness
of incurred and estimated efforts.
contracts based on estimates tested as above.
Evaluated the appropriateness of disclosures made
in the financial statements with respect to revenue
recognized during the year as required by applicable
Indian Accounting Standards.
Unbilled revenue in respect of revenue sharing Our audit work included but was not restricted to the
arrangements, i.e., Royalty income following procedures:
Refer Notes 3(h)(i) notes forming part of the Standalone Obtained an understanding of the systems,
Financial Statements. processes and controls implemented by
management for estimating revenue and the
Royalty income from one of the main customers is accrued associated unbilled revenue.
as a percentage of total onward sales made by the
customer during the period. Tested the design and operating effectiveness of the
internal controls relating to estimation of share of
revenue involved in recognition of royalty income.
Recognition of royalty income for the period of three Evaluated basis of estimation of aforesaid unbilled
months before year end, involves estimations made by the receivable from the terms of the contract and past
Company based on past trends and information available
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Key audit matter How our audit addressed the key audit matter
with the management during the particular period. Such trends, and verified arithmetical accuracy of
Royalty income is booked as unbilled receivable, since management computation.
actual sales for the aforesaid period by the customer is
determined subsequent to the period end. Assessed historical accuracy of the forecasts made
by the management in earlier period/s.
Considering the materiality of the amounts involved, and
significant degree of judgement and subjectivity involved Performed analytical procedures for reasonableness
in the estimates of the unbilled revenue, we have identified of revenue and associated unbilled revenue
unbilled receivable in respect of revenue sharing recorded and disclosed as at year end.
arrangements as a key audit matter for the current year
audit. Evaluated the appropriateness of disclosures made
in the financial statements with respect to unbilled
revenue recognized during the year as required by
applicable Indian Accounting Standards.
Impairment assessment of non-current investments Our audit work included but was not restricted to the
in subsidiary company following procedures:
As described in Note 6 to the standalone financial Performed detailed discussions with the
statements, carrying value of investment as at 31 March management to understand the impairment
2020 in Persistent Systems Germany GmbH (investee), a assessment process, assumptions used and
The estimates made by management and tested the
management has noted impairment indicators on account operating effectiveness of the controls implemented
of by management.
being lower than the carrying value of investment in the
said subsidiary company as at 31 March 2020. Reviewed the impairment indicators identified by the
management and also obtained the impairment
analysis carried out by the management.
impairment of the said investment requires estimation and
judgement with respect to certain inputs used and
assumptions made to prepare the forecasted financial We have assessed the methodology used by the
information of the subsidiary company, which is used to management to estimate the recoverable value of
calculate the recoverable value of the investment, using investment in subsidiaries, for which an impairment
discounted cash flow model. test was performed.
We evaluated the inputs used by the management
with respect to revenue and cost growth trends,
include expected growth rates, estimates of future among others, for reasonableness thereof.
financial performance and discount rates, among others,
as attributable to such subsidiary. Based on the Obtained the cash flow forecast approved by the
Board of Directors of the subsidiary company and
recognized on such investment.
forecasts made in earlier periods.
Considering the materiality of the amounts involved and
significant degree of judgement and subjectivity involved
Evaluated the sensitivity analysis performed by
in the estimates and key assumptions used in determining
management in respect of the key assumptions such
the cash flows used in the impairment evaluation, we have
as discount and growth rates. Also performed
determined evaluation of need for impairment of the
independent sensitivity analysis on such key
investment made in subsidiary as a Key audit matter.
assumptions.
Evaluated the appropriateness of disclosures made
in the financial statements in relation to such
investments as required by applicable Indian
Accounting Standards.
Contingent liabilities relating to export incentive Our audit work included but was not restricted to the
litigation following procedures:
Refer Note 36 notes forming part of the Standalone
Financial Statements regarding dispute on export process and the underlying controls for identification
incentives availed by the Company that have been and monitoring of the pending litigations and
refunded under protest. completeness of such litigations for financial
reporting
significant assumptions and assessments requiring
interpretation of various applicable rules, regulations, accounting policies relating to provisions and
practices and precedents, expo contingent liability disclosures, in accordance with
the applicable Indian Accounting Standards.
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Key audit matter How our audit addressed the key audit matter
accrued in earlier years, has been disclosed as a
contingent liability as at year end. Discussed developments during the year in the
export incentive matter with the management and
In view of the amounts involved and uncertainty pertaining
to the final outcome of the matter requiring significant
management judgement in determination of recognition of
provision or disclosure of contingent liability with respect underlying assumptions in estimating the export
to the said litigation, this matter is considered as a key incentive benefits and the possible outcome of the
matters. This involved assessing the probability of an
unfavorable outcome of a given proceeding and the
reliability of estimates of related amounts which
involved consideration of legal precedence and other
rulings and expert opinion obtained by the
management.
Assessed adequacy and appropriateness of the
contingent liability disclosure made in Note 36 to
determine whether management has presented the
facts and circumstances adequately.
Implementation of new ERP IT system Our audit work included, but was not limited to, the
During the current year, with effect from 01 October 2019, experts, where necessary:
the Company has implemented a new ERP IT System,
- Obtained an understanding of the systems,
overseas locations, covering certain key business processes and underlying controls of the new ERP
processes including financial information reporting
process. implementation experts.
The Company is highly dependent on information Obtained an understanding of the processes and
technology (IT) systems for carrying on its operations controls implemented by management during the
including automated interfaces between the various sub- data migration process and integration of the new
systems. ERP with continued other legacy IT systems.
Discussed, assessed and evaluated the
processes are dependent on the automated controls appropriateness of IT access and segregation of
enabled by IT systems which impacts key financial duties in the new IT system.
accounting and reporting items. The migration has
Performed walkthroughs to test design and also
process and the related controls. tested operating effectiveness of automated controls
including the IT general controls and key IT
Due to its importance and bearing on operating application controls in the financial reporting module
procedures and financial accounting controls and of the new IT system.
significant management efforts with regards to transition
and migration of data and required integration with Verified the SOC 1-Type II report provided by Oracle
continued other legacy IT systems, which required for Oracle Fusion Cloud Services-Oracle Fusion
increased audit efforts and robust discussions with the ERP.
management and those charged with governance, the
implementation of new ERP has been considered as a key
Obtained and reviewed exception report from the
audit matter for the current year audit.
management with respect to data migration and re-
performed reconciliations between old sub-ledgers
and general ledgers and data migrated to the new
system.
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1. comprises the information included in the Annual Report, but does not include the financial statements xpected to be made available to us after the

date of this auditor's report.

Our opinion on the financial statements does not cover the other information and we will not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above when it becomes available and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance.

Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements

1. Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs (financial position), profit or loss (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Ind AS specified under Section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

2. to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

3. reporting process.

4. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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1. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

2. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

3. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

4. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. and, based on the audit evidence obtained, whether a material uncertainty exists related to events concern. If we conclude that a material uncertainty exists, we are required to draw attention in our financial statements or, if such disclosures are

5. inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to cease to continue as a going concern.

6. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

7. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

8. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

9. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matter

1. The standalone financial statements of the Company for the year ended 31 March 2019 and for the quarter ended 30 June 2019 were audited by the predecessor auditor, Deloitte Haskins & Sells LLP, who have expressed an unmodified opinion on these standalone financial statements and standalone condensed financial statements vide their audit reports dated 27 April 2019 and 25 July 2019 respectively. Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 197(16) of the Act, we report that the Company has paid remuneration to its directors during the year in accordance with the provisions of and limits laid down under Section 197 read with Schedule V to the Act.

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1. Government of India in terms of Section 143(11) of the Act, we give in Annexure A, a statement on the matters specified in paragraphs 3 and 4 of the Order.

2. Further to our comments in Annexure A, as required by Section 143(3) of the Act, we report that:

3. a) we have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit;

4. b) in our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

5. c) the standalone financial statements dealt with by this report are in agreement with the books of account;

6. d) in our opinion, the aforesaid standalone financial statements comply with Ind AS specified under Section 133 of the Act;

7. e) on the basis of the written representations received from the directors and taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2020 from being appointed as a director in terms of Section 164(2) of the Act;

8. f) we have also audited the internal financial controls over financial reporting (IFCoFR) of the Company as on 31 March 2020 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date and our report dated 05 May 2020 as per Annexure B expressed an unmodified opinion;

9. g) of the Companies (Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to the explanations given to us:

   • i. the Company, as detailed in note 36 to the standalone financial statements, has disclosed the impact of pending litigations on its financial position as at 31 March 2020;

   • ii. the Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses as at 31 March 2020;

   • iii. there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year ended 31 March 2020;

   • iv. the disclosure requirements relating to holdings as well as dealings in specified bank notes were applicable for the period from 8 November 2016 to 30 December 2016, which are not relevant to these standalone financial statements. Hence, reporting under this clause is not applicable.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

==> picture [138 x 42] intentionally omitted <==

Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABD6071

Place : Mumbai Date : 05 May 2020

==> picture [152 x 22] intentionally omitted <==

Annexure A Limited on the standalone financial statements for the year ended 31 March 2020

nt Systems

Based on the audit procedures performed for the purpose of reporting a true and fair view on the standalone financial statements of the Company and taking into consideration the information and explanations given to us and the books of account and other records examined by us in the normal course of audit, and to the best of our knowledge and belief, we report that:

• (i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.

• (b) The Company has a regular program of physical verification of its property, plant and equipment under which property, plant and equipment are verified in a phased manner over a period of three years, which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. In accordance with this program, certain property, plant and equipment were verified during the year and no material discrepancies were noticed on such verification.

• (c) The title deeds of all the immovable properties (which are included under the head plant and equipment and Right of use asset

• Company.

• (ii) The Company does not have any inventory. Accordingly, the provisions of clause 3(ii) of the Order are not applicable.

• (iii) The Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships (LLPs) or other parties covered in the register maintained under Section 189 of the Act. Accordingly, the provisions of clauses 3(iii)(a), 3(iii)(b) and 3(iii)(c) of the Order are not applicable.

• (iv) In our opinion, the Company has complied with the provisions of Sections 185 and 186 of the Act in respect of loans, investments, guarantees and security.

• (v) In our opinion, the Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules, 2014 (as amended). Accordingly, the provisions of clause 3(v) of the Order are not applicable.

• (vi) The Central Government has not specified maintenance of cost records under sub.

• Accordingly, the provisions of clause 3(vi) of the Order are not applicable.

• (vii) (a) Undisputed statutory dues tax, sales-tax, service tax, duty of customs, duty of excise, goods and services tax, value added tax, cess and other material statutory dues, as applicable, have generally been regularly deposited to the appropriate authorities, though there has been a slight delay in a few cases. Further, no undisputed amounts payable in respect thereof were outstanding at the year-end for a period of more than six months from the date they became payable.

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• (b) The dues outstanding in respect of income-tax, sales-tax, service-tax, duty of customs, duty of excise and value added tax on account of any dispute, are as follows:

Statement of Disputed Dues

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Name of the Nature of Amount Amount paid Period to Forum where
statute dues Million) under Protest which the dispute is
Million) amount pending
relates
The Income Income 28.69 - 2009-10 Honourable
Tax Act, tax High Court
1961
The Income Income 19.06 - 2010-11 Honourable
Tax Act, tax High Court
1961
The Income Income 12.52 - 2008-09 Honourable
Tax Act, tax High Court
1961
The Customs Export 296.55 296.55 2015-16, Directorate of
Act, 1962 incentive 2016-17 and Revenue
2017-18 Intelligence
Maharashtra Sales Tax 26.51 23.44 2005-06 and Joint
Value added 2013-14 Commissioner
Tax Act, (Appeals) VAT
2002
The Finance Service 173.78 165.58 2014-15 Central Excise
Act, 1994 tax and Service Tax
Appellate
Tribunal
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• (viii) The Company has not defaulted in repayment of loans or borrowings to any bank or financial institution or government during the year. The Company did not have any outstanding debentures during the year.

• (ix) In our opinion, the Company did not raise moneys by way of initial public offer or further public offer (including debt instruments). In our opinion, the term loans were applied for the purposes for which the loans were obtained.

• (x) No fraud by the Company or on the Company by its officers or employees has been noticed or reported during the period covered by our audit.

• (xi) Managerial remuneration has been paid and provided by the Company in accordance with the requisite approvals mandated by the provisions of Section 197 of the Act read with Schedule V to the Act.

• (xii) In our opinion, the Company is not a Nidhi Company. Accordingly, provisions of clause 3(xii) of the Order are not applicable.

• (xiii) In our opinion, all transactions with the related parties are in compliance with Sections 177 and 188 of the Act, where applicable, and the requisite details have been disclosed in the financial statements etc., as required by the applicable Ind AS.

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• (xiv) During the year, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures.

• (xv) In our opinion, the Company has not entered into any non-cash transactions with the directors or persons connected with them covered under Section 192 of the Act.

• (xvi) The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

==> picture [138 x 38] intentionally omitted <==

Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABD6071

Place: Mumbai Date: 05 May 2020

==> picture [152 x 22] intentionally omitted <==

Annexure B Persistent Systems Limited on the standalone financial statements for the year ended 31 March 2020

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 the Act

1. In conjunction with our audit of the standalone financial statements of Persistent Systems Limited ( the Company as at and for the year ended 31 March 2020, we have audited the internal financial controls over financial reporting ( IFCoFR ) of the Company as at that date.

Responsibilities of Management and Those Charged with Governance for Internal Financial Controls

1. Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India ( ICAI ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of the business, including adherence to policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor s Responsibility for the Audit of the Internal Financial Controls

1. Our responsibility is to express an opinion on the Company's IFCoFR based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India ( ICAI ) prescribed under Section 143(10) of the Act, to the extent applicable to an audit of IFCoFR, and the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting ( the Guidance Note issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate IFCoFR were established and maintained and if such controls operated effectively in all material respects.

2. Our audit involves performing procedures to obtain audit evidence about the adequacy of the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining an understanding of IFCoFR, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the judgement, including the assessment of the risks of material misstatement of the financial

statements, whether due to fraud or error.

1. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

1. A company's IFCoFR is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's IFCoFR include those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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Inherent Limitations of Internal Financial Controls over Financial Reporting

1. Because of the inherent limitations of IFCoFR, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the IFCoFR to future periods are subject to the risk that the IFCoFR may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

1. In our opinion, the Company has, in all material respects, adequate internal financial controls over financial reporting and such controls were operating effectively as at 31 March 2020, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

==> picture [120 x 44] intentionally omitted <==

Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABD6071

Place: Mumbai Date: 05 May 2020

Persistent Systems Limited

BALANCE SHEET AS AT MARCH 31, 2020

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Notes As at As at
March 31, 2020 March 31, 2019
ASSETS
Non-current assets
Property, Plant and Equipment 5.1 2,048.77 2,130.26
Capital work-in-progress 48.27 11.81
Right of Use assets 5.2 269.40 -
Other Intangible assets 5.3 46.97 83.86
Intangible assets under development 137.20 60.32
2,550.61 2,286.25
Financial assets
- Investments 6 8,379.86 7,544.01
- Loans 7 123.57 116.01
- Other non current financial assets 8 358.93 423.05
Deferred tax assets (net) 9 317.35 55.56
Other non-current assets 10 329.39 68.35
12,059.71 10,493.23
Current assets
Financial assets
- Investments 11 5,164.77 3,295.53
- Trade receivables (net) 12 2,883.09 2,429.85
- Cash and cash equivalents 13 532.63 565.12
- Other bank balances 14 2,405.32 4,659.18
- Loans 15 4.76 6.63
- Other current financial assets 16 2,080.07 2,195.74
Other current assets 17 1,485.37 1,243.44
14,556.01 14,395.49
TOTAL 26,615.72 24,888.72
EQUITY AND LIABILITIES
EQUITY
Equity share capital 4 764.25 791.19
Other equity 22,221.13 21,420.71
22,985.38 22,211.90
LIABILITIES
Non- current liabilities
Financial liabilities
- Borrowings 18 7.08 11.97
Provisions 19 182.79 158.46
Other long-term financial liabilities 20 191.26 1.83
381.13 172.26
Current liabilities
Financial liabilities
- Trade payables [(dues of micro and small 21 972.49 1,019.07
million)]
- Other financial liabilities 22 715.11 138.17
Other current liabilities 23 851.02 630.28
Provisions 24 590.38 664.11
Current tax liabilities (net) 120.21 52.93
3,249.21 2,504.56
TOTAL 26,615.72 24,888.72
- 0.00 -
Summary of significant accounting policies 3
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The accompanying notes are an integral part of the financial statements. As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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Bharat Shetty Partner Membership No.: 106815

Place: Mumbai Date : May 5, 2020

For and on behalf of the Board of Directors of Persistent Systems Limited

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Dr. Anand Deshpande Kiran Umrootkar Chairman and Director Managing Director

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Amit Atre
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Sunil Sapre Amit Atre Executive Director and Company Secretary Chief Financial Officer Place: Pune Date : May 5, 2020

Persistent Systems Limited

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2020

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Notes For the year ended
March 31, 2020 March 31, 2019
Income
Revenue from operations (net) 25 21,081.22 19,598.67
Other income 26 1,599.04 1,037.90
Total income (A) 22,680.26 20,636.57
Expenses
Employee benefits expense 27.1 11,029.06 9,491.23
Cost of professionals 27.2 1,825.37 2,195.21
Finance costs (refer note 33) 44.51 0.51
Depreciation and amortization expense 5.4 555.12 458.84
Other expenses 28 3,897.14 4,107.02
Total expenses (B) 17,351.20 16,252.81
Profit before tax (A - B) 5,329.06 4,383.76
Tax expense
Current tax 1,297.91 1,283.16
Tax (credit) / charge in respect of earlier years (1.60) 65.00
Deferred tax charge / (credit) (44.48) (114.48)
Total tax expense (refer note 31) 1,251.83 1,233.68
Net profit for the year (C) 4,077.23 3,150.08
Other comprehensive income
Items that will not be reclassified to profit and loss (D)
- Remeasurements of the defined benefit liabilities / (asset) (net of tax) (30.46) (49.83)
(30.46) (49.83)
Items that may be reclassified to profit and loss (E)
- Effective portion of cash flow hedge (net of tax) (429.15) 168.43
(429.15) 168.43
Total other comprehensive income for the year (D) + (E) (459.61) 118.60
Total comprehensive income for the year (C) + (D) + (E) 3,617.62 3,268.68
Earnings per equity share 29
53.17 39.40
53.17 39.40
Summary of significant accounting policies 3
The accompanying notes are an integral part of the financial statements.
As per our report of even date
For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of
Chartered Accountants Persistent Systems Limited
Firm Registration No.: 001076N/N500013
Bharat Shetty Dr. Anand Deshpande Kiran Umrootkar
Partner Chairman and Director
Membership No.: 106815 Managing Director
Sunil Sapre Amit Atre
Executive Director and Company Secretary
Chief Financial Officer
Place: Mumbai Place: Pune
Date : May 5, 2020 Date : May 5, 2020
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CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

Persistent Systems Limited

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For the year ended
March 31, 2020 March 31, 2019
Cash flows from operating activities
Profit before tax 5,329.06 4,383.76
Adjustments for:
Interest income (525.76) (288.82)
Finance cost 44.51 0.51
Dividend income (410.72) (392.26)
Depreciation and amortization expense 555.12 458.84
Amortization of lease premium - 0.58
Unrealised exchange (gain) / loss (net) (128.86) 80.81
Exchange loss on derivative contracts 58.51 20.51
Exchange (gain) / loss on translation of foreign (46.82) 75.53
currency cash and cash equivalents
Donations in kind - 1.40
Bad debts - 23.55
Provision for doubtful debts (net)/ (Provision for doubtful debts written back) (net) 47.31 (6.99)
Provision for doubtful deposits 248.48 182.50
Employee stock compensation expenses 60.01 -
Remeasurements of the defined benefit liabilities / asset (before tax effects) (41.80) (49.83)
(Gain) / loss on fair valuation of mutual funds (119.02) 76.95
(Profit) on sale of investments (net) (164.81) (366.09)
(Profit) on sale of Property, Plant and Equipment (net) - (3.77)
Operating profit before working capital changes 4,905.21 4,197.18
Movements in working capital :
(Increase)/ Decrease in non-current and current loans (5.29) 0.16
(Increase) In other non current assets (261.04) (2.29)
(Increase) in other current financial assets (246.75) (864.55)
(Increase)/ Decrease in other current assets (241.93) 131.18
(Increase)/ Decrease in trade receivables (373.81) 875.95
Increase in trade payables, current liabilities and non current liabilities 65.30 197.79
(Decrease) / Increase in provisions (49.40) 251.17
Operating profit after working capital changes 3,792.29 4,786.59
Direct taxes paid (net of refunds) (1,217.69) (1,394.77)
Net cash generated from operating activities (A) 2,574.60 3,391.82
Cash flows from investing activities
Payment towards capital expenditure (including intangible assets) (483.57) (268.87)
Proceeds from sale of Property, Plant and Equipment 4.08 3.82
Investment in wholly owned subsidiaries (474.00) -
Share application money paid - (78.72)
Purchase of bonds (901.61) (1,175.31)
Proceeds from sale of bonds 819.87 199.43
Investments in mutual funds (19,456.95) (22,418.13)
Proceeds from sale / maturity of mutual funds 17,670.49 25,010.64
(Investments)/ maturity in bank deposits having original maturity over three months 2,044.25 (3,956.56)
Investments in deposit with financial institutions - (300.00)
Maturity of deposit with financial institutions 250.00 650.35
Inter corporate deposits refunded - 132.74
Interest received 484.68 341.93
Dividend received 410.72 392.26
Net cash generated from / (used in) investing activities (B) 367.96 (1,466.42)
Cash flows from financing activities
(Repayment of) long term borrowings (4.62) (4.58)
Shares bought back (1,677.01) (571.41)
Specific project related grant received 3.00 4.50
Dividend paid (1,144.60) (881.41)
Tax on dividend paid (154.14) (137.41)
Interest paid (44.50) (1.12)
Net cash used in financing activities (C ) (3,021.87) (1,591.43)
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For the year ended
March 31, 2020 March 31, 2019
Net (decrease) / increase in cash and cash equivalents (A + B + C) (79.31) 333.97
Cash and cash equivalents at the beginning of the year 565.12 306.68
Effect of exchange differences on translation of foreign currency 46.82 (75.53)
cash and cash equivalents
Cash and cash equivalents at the end of the year 532.63 565.12
Components of cash and cash equivalents
Cash on hand (refer note 13) 0.15 0.11
Balances with banks
On current accounts # (refer note 13) 198.79 126.71
On saving accounts (refer note 13) 0.36 0.91
On deposit account with maturity of less than three months (Refer note 13) 71.47 229.54
On Exchange Earner's Foreign Currency accounts (refer note 13) 261.86 114.91
On Escrow accounts (Refer note 13) - 92.94
Cash and cash equivalents 532.63 565.12
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Out of the cash and cash equivalent balance as at March 31, 2020, the Company can utilise 6.62 Million (Previous year: 2.15 Million) only towards research and development activities specified in the agreement.

** The Company concluded the buyback scheme on June 27, 2019 and minimum balance maintained in Escrow account was released on completion of statutory formalities.

Summary of significant accounting policies - Refer note 3

The accompanying notes are an integral part of the financial statements.

As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

Bharat Shetty Partner Membership No.: 106815

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Dr. Anand Deshpande Kiran Umrootkar Chairman and Director Managing Director

Place: Mumbai Date : May 5, 2020

Sunil Sapre Amit Atre Executive Director and Company Secretary Chief Financial Officer Place: Pune Date : May 5, 2020

Persistent Systems Limited

STATEMENT OF CHANGES IN EQUITY SHARE CAPITAL FOR THE YEAR ENDED MARCH 31, 2020

A. Equity share capital

(Refer note 4)

Balance as at April 1, 2019	Changes in equity share capital during theyear	Balance as at March 31, 2020
791.19	(26.94)	764.25
Balance as at April 1, 2018	Changes in equity share capital during theyear	Balance as at March 31, 2019
800.00	(8.81)	791.19

(This space is intentionally left blank)

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

Persistent Systems Limited

B. Other equity

Particulars				Reserves and surplus	Reserves and surplus	Reserves and surplus	Reserves and surplus		Items of other comprehensive income	Total
	Securities premium reserve	General reserve	Share opt outstand reserv	ions ing e	Capital redemption reserve	Special Economic Zone re-investment reserve	Retained earnings	E	ffective portion of cash flow hedges
Balance as at April 1, 2019 Net profit for the year Other comprehensive income for the year Dividend Tax on dividend Transfer to capital redemption reserve Transitional impact on adoption of Ind AS 116 Transfer from Special Economic Zone re-investment reserve Transfer to general reserve Employee stock compensation expenses Employee stock compensation expenses of subsidiaries Adjustments towards employees stock options Utilised towards buyback of shares(refer note 4d)	774.10 - - - - - - - - - - - (774.10)	10,570.73 - - - - - - - 1,630.89 - - 25.61 -	1 (	76.29 - - - - - - - - 60.01 79.82 25.61) -	8.81 - - - - 26.94 - - - - - - -	70.00 - - - - - - (20.05) - - - - -	9,735.72 4,077.23 (30.46) (1,146.38) (154.14) (26.94) (106.44) 20.05 (1,630.89) - - - (875.97)		185.06 - (429.15) - - - - - - - - - -	21,420.71 4,077.23 (459.61) (1,146.38) (154.14) - (106.44) - - 60.01 179.82 - (1,650.07)
Balance as at March 31, 2020	-	12,227.23	2	90.51	35.75	49.95	9,861.78		**(244.09) **	22,221.13

Particulars				Reserves and surplus	Reserves and surplus	Reserves and surplus	Reserves and surplus		Items of other comprehensive income	Total
	Securities premium reserve	General reserve	Share opt outstand reserv	ions ing e	Capital redemption reserve	Special Economic Zone re-investment reserve	Retained earnings	E	ffective portion of cash flow hedges
Balance as at April 1, 2018 Net profit for the year Other comprehensive income for the year Dividend Tax on dividend Transfer to general reserve Transfer to capital redemption reserve Transfer to Special Economic Zone re-investment reserve Adjustments towards employees stock options Utilised towards buyback of shares(refer note 4d)	1,336.70 - - - - - - - - (562.60)	9,296.47 - - - - 1,260.03 - - 14.23 -	(	90.52 - - - - - - - 14.23) -	- - - - - - 8.81 - - -	- - - - - - - 70.00 - -	8,991.72 3,150.08 (49.83) (880.00) (137.41) (1,260.03) (8.81) (70.00) - -		16.63 - 168.43 - - - - - - -	19,732.04 3,150.08 118.60 (880.00) (137.41) - - - - (562.60)
Balance at March 31, 2019	774.10	10,570.73		76.29	8.81	70.00	9,735.72		185.06	21,420.71

Summary of significant accounting policies - Refer note 3

The accompanying notes are an integral part of the financial statements.

As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

==> picture [57 x 20] intentionally omitted <==

Bharat Shetty Partner Membership No.: 106815

Dr. Anand Deshpande Kiran Umrootkar Chairman and Director Managing Director

Sunil Sapre Executive Director and

Amit Atre

Company Secretary

Chief Financial Officer

Place: Mumbai Date : May 5, 2020

Place: Pune Date : May 5, 2020

Persistent Systems Limited

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

Nature and purpose of reserves

a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) General reserve

General reserve represents amounts transferred from profit for the year and from Share options outstanding reserve on exercise / expiry of employee share options. It is a free reserve in terms of section 2 (43) of the Companies Act, 2013.

c) Share options outstanding reserve

Share options outstanding reserve represents the cumulative expense recognized for equity-settled transactions at each reporting date until the employee share options are exercised / expired on which such amount is transferred to General reserve.

d) Capital redemption reserve

Capital redemption reserve represents the nominal value of the shares bought back and is created and utilised in accordance with Section 69 of the Companies Act, 2013.

e) Special Economic Zone re-investment reserve

The Special Economic Zone re-investment reserve has been created out of the profit in terms of the provisions of Section 10AA(1)(ii) of the Income tax Act, 1961. The reserve should be utilised by the Company for acquiring new plant and machinery for the purpose of its business in accordance with Section 10AA(2) of the Income tax Act, 1961.

f) Cash flow hedge reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into towards highly probable transactions. Such gains or losses are subsequently recognised in the statement of profit and loss in the period in which the said transaction occurs / hedging instruments are cancelled.

Persistent Systems Limited

Notes forming part of financial statements

1. Nature of operations

of the Companies Act, 1956. The shares of the Company are listed on Bombay Stock Exchange and National Stock Exchange. The Company is a global company specializing in software products, services and technology innovation. The Company offers complete product life cycle services.

2. Basis of preparation

The financial statements of the Company have been prepared on an accrual basis and under the historical cost convention except for certain financial instruments and equity settled employee stock options which have been measured at fair value. Historical cost is generally based on the fair value of consideration given in exchange of goods and services. The accounting policies are consistently applied by the Company during the period and are consistent with those used in previous year except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

All assets and liabilities have been classified as current or noncriteria set out in the Schedule III of the Companies Act, 2013 . Based on the nature of products/ services and the time between the acquisition of assets for processing and their realisation in cash and cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current and non-current classification of assets and liabilities.

Statement of compliance

In accordance with the notification issued by the Ministry of Corporate Affairs, the Company has adopted Indian Accounting

3. Summary of significant accounting policies

(a) Use of estimates

The preparation of the financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the end of period.

current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

Estimation of uncertainties relating to the global health pandemic from COVID-19:

The Company has evaluated the likely impact of the COVI ~~D~~ 19 on the overall business of the Company. Though it is too early to estimate the same in view of the volatility in the global economic conditions pursuant to this pandemic; the Company as at the date of the approval of these financials, has used various available sources of information to analyse the carrying amount of its financial assets and exposures. The impact of COVIDstatements may differ from the estimate as on the date of the approval of the financial statements.

Expected credit loss:

The Company has considered the current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19 using the forward looking approach prescribed by Ind AS 109.

Impact on unhedged foreign currency exposure:

Based on its assessment, the Company believes that the probability of occurrence of its forecasted transactions are not likely to be impacted by COVID 19. Hence, the Company continues to believe that there is no foreseeable impact on the effectiveness of its cash flow hedges due to this global pandemic.

Carrying value of financial instruments:

Investments in mutual funds are classified as evel 1 having fair value marked to an active market which factors in the uncertainties arising out of COVID 19. These financial assets, are mainly investments in liquid debt securities and hence, any material volatility in their carrying value is not expected.

Impact on revenue:

The Company has re-evaluated the probable revenues from customers in various verticals to assess any possible drops in revenue from any of these verticals due to the economic stress caused by COVID 19. Accordingly, it is the opinion of the Company that the customers could re-prioritise their discretionary spend in the immediate future to conserve resources.

The impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The Company has considered the same to the extent known currently and has taken steps to measure the cost budgets required to complete its performance obligations in respect of fixed price contracts and incorporated the impact of likely delays and costs in meeting its obligations.

Persistent Systems Limited

Notes forming part of financial statements

Critical accounting estimates

i. Revenue recognition

The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

Further, the Company uses significant judgement while determining the transaction price allocated to performance obligations using the expected cost plus margin approach.

In respect of the contracts where the transaction price is payable as revenue share at pre-defined percentage of customer revenue and bearing in mind, the time gap between the close of the accounting period and availability of the revenue report from the customer, the Company is required to use its judgement to ascertain the income from revenue share on the basis of historical trends of customer revenue.

ii. Income taxes

The Company's major tax jurisdiction is India, though the Company also files tax returns in other overseas jurisdictions. Significant judgements are involved in determining the provision for income taxes.

iii. Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect at the end of its life. The useful lives and residual values of Company's assets are determined by management at the time the asset is acquired and reviewed periodically. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

iv. Provisions

Provisions are determined based on the best estimate required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the best estimates of amount required.

v. Leases

I nd AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Company has concluded that no changes are required to lease periods relating to the existing lease contracts.

(b) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Capital work-in-progress includes cost of Property, Plant and Equipment that are not ready to be put to use.

Subsequent expenditure related to an item of Property, Plant and Equipment is added to its original cost only if it is probable that future economic benefits associated with the item will flow to the Company. All other expenses on existing Property, Plant and Equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from disposal of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

(c) Intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any directly attributable

Persistent Systems Limited

Notes forming part of financial statements

cost of bringing the asset to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate:

• technical feasibility of completing the intangible asset so that it will be available for use or sale;

• its intention to complete the asset;

• its ability to use or sell the asset;

• how the asset will generate probable future economic benefits;

• the availability of adequate resources to complete the development and to use or sell the asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such development expenditure, until capitalization, is reflected as intangible assets under development.

Following the initial recognition, internally generated intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization of internally generated intangible asset begins when the development is complete and the asset is available for use.

(d) Depreciation and amortization

the assets estimated by the management.

The management estimates the useful lives for the Property, Plant and Equipment as follows:

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Assets Useful lives
Buildings 25 years
Computers 3 years
Computers - Servers and networks 3 years
Office equipments 5 years
Plant and equipment 5 years
Plant and equipment (Windmill) 20 years
Plant and equipment (Solar Energy System) 10 years
Furniture and fixtures 5 years
Vehicles 5 years
----- End of picture text -----*

*For these classes of assets, based on internal assessment and independent technical evaluation carried out by external valuers, the management believes that the useful lives as given above best represent the period over which the management expects to use these assets. Hence the useful lives of these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

Individual assets whose cost does not exceed 5,000 are fully depreciated in the year of acquisition.

Leasehold improvements are amortized over the period of lease or useful life, whichever is lower.

Intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 6 years from the day the asset is made available for use.

(e) Financial instruments

i) Financial assets

Initial recognition and measurement

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value of the financial assets on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified as:

• Financial assets at amortized cost

Financial assets that are held within a business model whose objective is to hold assets for collecting contractual cash flows and whose contractual terms give rise on specified dates to cash flows that are solely payments of

Persistent Systems Limited

Notes forming part of financial statements

principal and interest on the principal amount outstanding are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance income in the statement of profit and loss.

• Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets that are held within a business model whose objective is achieved both by collecting contractual principal and interest on the principal amount outstanding are subsequently measured at fair value. Fair value movements are recognized in other comprehensive income.

• Financial assets at fair value through profit or loss (FVTPL)

Any financial asset which does not meet the criteria for categorization as financial asset at amortized cost or at FVTOCI, is classified as financial asset at FVTPL. Financial assets except derivative contracts included within the FVTPL category are subsequently measured at fair value with all changes recognized in the statement of profit and loss.

- Forward exchange contracts not intended for trading or speculation purposes, classified as derivative financial instruments

As per the accounting principles laid down in Ind AS 109 derivative financial instruments which qualify for cash flow hedge accounting are fair valued at balance sheet date and the effective portion of the resultant loss / (gain) is debited / (credited) to the hedge reserve under other comprehensive income and the ineffective portion is recognized to the statement of profit and loss. Derivative financial instruments are carried as forward contract receivable when the fair value is positive and as forward contract payable when the fair value is negative.

Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the statement of profit and loss as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized under other comprehensive income is transferred to the statement of profit and loss when the forecasted transaction occurs or affects profit or loss or when a hedged transaction is no longer expected to occur.

Derecognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity, if any, is recognised in profit or loss.

ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to issue of financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are deducted from the fair value of the financial liabilities on initial recognition. Transaction costs directly attributable to the issue of financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial liabilities are classified as:

• Financial liabilities at amortized cost

Financial liabilities such as loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance costs in the statement of profit and loss.

• Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss if the recognition criteria as per Ind AS 109 are satisfied. Gains or losses on liabilities held for trading are recognized in statement of profit and loss.

Persistent Systems Limited

Notes forming part of financial statements

Fair value gains or losses on liabilities designated as FVTPL attributable to changes in own credit risk are recognized in other comprehensive income. All other changes in fair value of liabilities designated as FVTPL are recognized in the statement of profit and loss. The Company has not designated any financial liability as FVTPL.

Derecognition

The Company derecognizes financial liabilities when the Company expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognised in profit or loss.

iii) Impairment

i) Financial assets

The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on financial assets measured at amortized cost and financial assets that are debts instruments and are measured at fair value through other comprehensive income (FVTOCI). ECL is the difference between contractual cash flows that are due and the cash flows that the Company expects to receive, discounted at the original effective interest rate.

For trade receivables, the Company recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. For other financial assets, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.

ii) Non-financial assets

The carrying amounts of Property, Plant and Equipment are reviewed at each balance sheet date or whenever there is recoverable amount unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The recoverable amount is the greater of the asset's fair value and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. An impairment loss is recognised in the statement of profit and loss.

Recoverable amount of intangible asset under development that is not yet available for use is estimated at least at each financial period end even if there is no indication that the asset is impaired.

(f) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the year they occur.

(g) Leases

and office premises. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset

Where the Company is a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located.

Persistent Systems Limited

Notes forming part of financial statements

The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment.

Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.

The lease payments shall include fixed payments, variable lease payments based on an index or rate, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or statement of profit and loss if the right-of-use asset is already reduced to zero.

The Company has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease expenses associated with these leases are recognized in the statement of profit and loss on a straight line basis.

Company as a lessor

At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income over the lease term on a straight line basis.

Transition

applicable lease contracts existing on April 1, 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on the date of initial application. Consequently, the Company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at its carrying amount as if the standard had been app

incremental borrowing rate at the date of initial application. Comparatives as at and for the year ended March 31, 2019 have not been retrospectively adjusted and therefore will continue to be reported under the accounting policies included as part of our Annual Report for year ended March 31, 2019.

lease 4 million (net of taxes) was debited to retained earnings. The effect of this adoption is insignificant on the profit before tax, profit for the period and earnings per share. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

(h) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the Company. Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

(i) Income from software services and products

The company derives revenues primarily from IT services comprising of software development and related services and from the licensing of software products.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to receive in exchange for those products or services.

Arrangements with customers for software related services are either on a time-and-material or a fixed-price basis.

Revenue on time-and-material contracts are recognized as and when the related services are performed. Revenue from fixed-price contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.

Persistent Systems Limited

Notes forming part of financial statements

over the access period.

When support services are provided in conjunction with the licensing arrangement and the license and the support services have been identified as two separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. Maintenance revenue is recognized proportionately over the period in which the services are rendered.

Revenue from revenue share is recognized in accordance with the terms of the relevant agreements.

The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the proportionate allocation of the discounts amount to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount. Also, when the level of discount varies with increases in levels of revenue transactions, the Company recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.

Unbilled revenue represents revenue recognized in relation to work done until the balance sheet date for which billing has not taken place.

Unearned revenue represents the billing in respect of contracts for which the revenue is not recognized.

The Company collects Goods and Services Tax on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.

(ii) Interest

Interest income is recognized on a time proportion basis taking into account the carrying amount and the effective interest

(iii) Dividend

end income is included

(i) Government grants

Government grants are recognised at fair value when there is reasonable assurance that the Company will comply with the conditions attaching to them and the grants will be received. Grants related to purchase of assets are treated as deferred income and allocated to income statement over the useful lives of the related assets while grants related to expenses are deducted in reporting the related expenses in the income statement.

(j) Foreign currency translation

Foreign currency transactions and balances

Initial recognition

Foreign currency transactions are recorded in the functional currency of the Company, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.

Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign currency liabilities relating to Property, Plant and Equipment acquisition are recognized as income or expenses in the period in which they arise.

Persistent Systems Limited

Notes forming part of financial statements

Translation of foreign operations

The Company presents the financial statements in INR which is the functional currency of the Company.

The assets and liabilities of a foreign operation are translated into the reporting currency (INR) at the exchange rate prevailing at the reporting date.

(k) Retirement and other employee benefits

(i) Provident fund

Provident fund is a defined contribution plan covering eligible employees. The Company and the eligible employees make a monthly contribution to the provident fund maintained by the Regional Provident Fund Commissioner equal to the specified percentage of the eligible salary of the entitled employees as per the scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year when the contributions are due. The Company has no obligation, other than the contribution payable to the provident fund.

(ii) Gratuity

Gratuity is a defined benefit obligation plan operated by the Company for its employees covered under Company Gratuity Scheme. The cost of providing benefit under gratuity plan is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date and are charged to the statement of profit and loss, except for the remeasurements, comprising of actuarial gains and losses which are recognized in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.

(iii) Superannuation

Superannuation is a defined contribution plan covering eligible employees. The contribution to the superannuation fund managed by the insurer is equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contribution to this scheme is charged to the statement of profit and loss on an accrual basis. There are no other contributions payable other than contribution payable to the respective fund.

(iv) Leave encashment

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

The Company presents the entire leave encashment liability as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement beyond twelve months after the reporting date.

(v) Long service awards

Long ser The cost of providing benefit under long service awards scheme is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss.

(l) Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in statement of profit and loss.

Deferred income taxes reflect the impact of temporary differences between tax base of assets and liabilities and their carrying amounts. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except deferred tax liability arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, except deferred tax assets arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized only to

Persistent Systems Limited

Notes forming part of financial statements

the extent that sufficient future taxable income will be available against which such deferred tax assets can be realized.

In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the period in which the temporary differences originate.

The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.

Deferred tax relating to items recognized outside the statement of profit and loss is recognized in co-relation to the underlying transaction either in other comprehensive income or directly in equity.

Minimum alternate tax (MAT) paid in a period is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the stateme

evidence that it will pay normal tax during the specified period.

(m) Segment reporting

In accordance with para 4 of Notified Indian Accounting Standard 108 (Ind AS-108 Operating Segments has disclosed segment information only on the basis of consolidated financial statements which are presented together with the unconsolidated financial statements.

(n) Earnings per share (EPS)

Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. The weighted average number of equity shares outstanding during the reporting period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the year, are adjusted for the effects of all dilutive potential equity shares.

The number of shares and potential dilutive equity shares are adjusted retrospectively for all periods presented for any bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.

(o) Provisions

A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate of the amount required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(p) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

(q) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.

Persistent Systems Limited

Notes forming part of financial statements

(r) Employee stock compensation expenses

Employees of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments granted (equity-settled transactions).

In accordance with Ind AS 102 , the cost of equity-settled transactions is determined by the fair value of the options at the date of the grant and recognized as employee compensation cost over the vesting period. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects ber of equity instruments that will ultimately vest.

The expense or credit recognized in the statement of profit and loss for a period represents the movement in cumulative expense recognized as at the beginning and end of that period and is recognized in employee benefits expense. In case of the employee stock option schemes having a graded vesting schedule, each vesting tranche having different vesting period has been considered as a separate option grant and accounted for accordingly.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification.

The employee stock option expenses in respect of the employees of the subsidiaries are charged to the respective subsidiary.

Persistent Systems Limited

Notes forming part of financial statements

4. Share capital

Share capital
	As at As at March 31, 2020 March 31, 2019 In Million In Million
Authorized shares (No. in million) 200 (Previous year:200 ) equity shares of 10 each Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Previous year: 79.12) equity shares of 10 each Issued, subscribed and fully paid-up share capital	2,000.00 2,000.00
	2,000.00 2,000.00
	764.25 791.19
	764.25 791.19

a) Reconciliation of the shares outstanding at the beginning and at the end of the year

The reconciliation of the number of shares outstanding and the amount of share capital is set out below:

				(In	Million)
	As at		As at
	March 31,	2020	March	31,	2019
	No of shares	Amount	No of	Amount
			shares
Number of shares at the beginning of	79.12	791.19	80.00		800.00
the year
Less: Shares bought back	2.69	26.94	0.88		8.81
Number of shares at the end of the	76.43	764.25	79.12		791.19
year

b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

The Company paid

-19.

The Company declared first 9 per share on January 30, 2020 and second interim dividend of 3 per share on March 11, 2020, on ; for the Financial Year 2019-20.

The Company declares and pays dividends in Indian rupees. The Finance Act, 2020 in India has repealed Dividend Distribution Tax (DDT). The Companies are now required to pay/ distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates as per Finance Act, 2020.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

	For the period of	For the period of
	five years ended	five years ended
	March 31, 2020	March 31, 2019
	No in Million	No in Million
Equity shares allotted on March 12, 2015 as fully paid bonus	40.000	40.000
shares by capitalization of securities premium 400 million
Equity shares bought back	3.575	0.881

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Persistent Systems Limited

Notes forming part of financial statements

d) Buyback of Equity Shares of the Company:

The Board of Directors, at its meeting in January 2019, had -up equity shares of the face value of 10 each from its shareholders/beneficial owners excluding promoters, promoter group and not exceeding mum

The buyback was offered to all eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under the open market route through the stock exchanges. The buyback of equity shares through the stock exchange commenced on February 8, 2019 and was completed on June 27, 2019. During this buyback period the Company had purchased and extinguished a total of 3,575,000 equity shares from the stock exchange at 628.93/- per equity share comprising 4.47% of the pre buyback paid2,248.42 million (excluding transaction costs). The Company funded the buyback from utilization of its securities premium and free reserves. The total number of equity shares outstanding as on March 31, 2020 post buyback stands at 76,425,000.

e) Details of shareholders holding more than 5% shares in the Company

Name of the shareholder*	As at March	31, 2020	As at March	31, 2019
	No. in million	% Holding	No. in million	% Holding
Dr. Anand Deshpande jointly with Mrs.	22.96	30.04	22.95	29.01
Sonali Anand Deshpande
Schemes of HDFC Mutual Fund	6.53	8.54	3.73	4.71

• The shareholding information is based on legal ownership of shares and has been extracted from the records of the Company including register of shareholders / members.

Persistent Systems Limited

Notes forming part of financial statements

5.1 Property, plant and equipment

Freehold land	Buildings* Computers Office equipments Plant and equipment Leasehold improvements Furniture and fixtures Vehicles Total
Gross block (at cost) As at April 1, 2019 206.9 Additions - Disposals - As at March 31, 2020 206.9 Accumulated depreciation As at April 1, 2019 - Charge for the year - Disposals - As at March 31, 2020 - Net block As at March 31, 2020 206.9 As at March 31, 2019 206.9	2 2,387.00 1,684.93 53.22 1,376.04 21.12 515.09 8.44 6,252.76
	0.06 248.42 0.39 25.29 - 9.06 - 283.22 - 82.01 0.03 23.95 - 2.84 1.20 110.03
	2 2,387.06 1,851.34 53.58 1,377.38 21.12 521.31 7.24 6,425.95
	964.75 1,460.02 48.77 1,144.38 17.88 482.47 4.23 4,122.50 96.36 170.46 2.19 66.30 1.44 22.86 1.02 360.63
	- 81.74 0.03 20.14 - 2.84 1.20 105.95
	1,061.11 1,548.74 50.93 1,190.54 19.32 502.49 4.05 4,377.18
	2 1,325.95 302.60 2.65 186.84 1.80 18.82 3.19 2,048.77
	2 1,422.25 224.91 4.45 231.66 3.24 32.62 4.21 2,130.26

• Note: Building includes those constructed on leasehold land:

439.96 million)

Persistent Systems Limited

Notes forming part of financial statements

5.1 Property, plant and equipment

5.1 Property, plant and equipment	5.1 Property, plant and equipment
	Freehold land Buildings Computers Office equipments Plant and equipment Leasehold improvements Furniture and fixtures Vehicles Total
Gross block (at cost) As at April 1, 2018 Additions Disposals As at March 31, 2019 Accumulated depreciation As at April 1, 2018 Charge for the year Disposals As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018	206.92 2,386.97 1,632.30 53.48 1,377.70 21.12 511.29 4.73 6,194.51 - 0.07 147.45 1.76 21.15 - 4.40 4.66 179.49 - 0.04 94.82 2.02 22.81 - 0.60 0.95 121.24
	206.92 2,387.00 1,684.93 53.22 1,376.04 21.12 515.09 8.44 6,252.76
	- 868.36 1,395.62 47.67 1,080.85 15.43 458.28 4.42 3,870.63 - 96.42 159.20 3.11 86.33 2.45 24.79 0.76 373.06 - 0.03 94.80 2.01 22.80 - 0.60 0.95 121.19
	- 964.75 1,460.02 48.77 1,144.38 17.88 482.47 4.23 4,122.50
	206.92 1,422.25 224.91 4.45 231.66 3.24 32.62 4.21 2,130.26
	206.92 1,518.61 236.68 5.81 296.85 5.69 53.01 0.31 2,323.88

5.2 Right of use assets

	Office premises Leasehold land Total
Gross block (at cost) As at April 1, 2019 Additions (transitional impact on adoption of Ind AS 116) As at March 31, 2020 Accumulated depreciation As at April 1, 2019 Charge for the year As at March 31, 2020 Net block As at March 31, 2020 As at March 31, 2019	- - - 358.91 37.50 396.41
	358.91 37.50 396.41
	- - - 126.41 0.60 127.01
	126.41 0.60 127.01
	232.50 36.90 269.40 - - -

Persistent Systems Limited

Notes forming part of financial statements

5.3 Other Intangible assets

	Software Acquired contractual rights Total	Software Acquired contractual rights Total	Software Acquired contractual rights Total	Software Acquired contractual rights Total
Gross block As at April 1, 2019 Additions As at March 31, 2020 Accumulated Amortization As at April 1, 2019 Charge for the year As at March 31, 2020 Net block As at March 31, 2020 As at March 31, 2019	713.08 261.74 974.82 30.59 - 30.59
	743.67 261.74 1,005.41
	629.22 261.74 890.96 67.48 - 67.48
	696.70 261.74 958.44
	46.97 - 46.97
	83.86 - 83.86
	Software Acquired contractual rights Total
Gross block As at April 1, 2018 Additions As at March 31, 2019 Accumulated Amortization As at April 1, 2018 Charge for the year As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018	660.92 261.74 922.66 52.16 - 52.16
	713.08 261.74 974.82
	543.44 261.74 805.18 85.78 - 85.78
	629.22 261.74 890.96
	83.86 - 83.86
	117.48 - 117.48

5.4 Depreciation and amortization expense

5.4 Depreciation and amortization expense	5.4 Depreciation and amortization expense
	March 31, 2020 March 31, 2019 For the year ended
On Property, plant and equipment On other intangible assets On Right of use assets	360.63 373.06 67.48 85.78 127.01 -
	555.12 458.84

Notes forming part of financial statements

Persistent Systems Limited

6. Non-current financial assets : Investments (refer note 32)

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As at As at
March 31, 2020 March 31, 2019
Investments carried at cost
Unquoted investments
Investments in equity instruments
- In wholly owned subsidiary companies (Refer note 34)
Persistent Systems, Inc.
402 million (Previous year: 402 million) shares of USD 0.10 each, fully paid up 2,478.01 2,478.01
2,478.01 2,478.01
Persistent Systems Pte Ltd.
0.50 million (Previous year: 0.50 million) shares of SGD 1 each, fully paid up 15.50 15.50
15.50 15.50
Persistent Systems France SAS
1.50 million (Previous year: 1.50 million) shares of EUR 1 each, fully paid up 97.47 97.47
97.47 97.47
Persistent Systems Malaysia Sdn. Bhd.
5.45 million (Previous year: 5.45 million) shares of MYR 1 each, fully paid up 102.25 102.25
102.25 102.25
Persistent Systems Germany GmbH
11.6527 million (Previous year: 8.525 million) shares of EUR 1 each, fully paid up 1,265.91 713.19
1,265.91 713.19
-In associates
Klisma e-Services Private Limited [Holding 50% (Previous year: 50%)]
0.05 0.05
Less : Impairment (0.05) (0.05)
- -
Total investments carried at cost (A) 3,959.14 3,406.42
Investments carried at amortised cost
Quoted Investments
In bonds 2,171.52 2,088.35
2,236.81
Add: Interest accrued on bonds 68.69 68.33
Total investments carried at amortised cost (B) 2,240.21 2,156.68
Designated as fair value through profit and loss
Quoted Investments
- Investments in mutual funds
Fair value of long term mutual funds (Refer Note 6a) 2,174.51 1,974.91
2,174.51 1,974.91
Unquoted Investments
-Others
Altizon Systems Private Limited
6.00 6.00
6.00 6.00
Total investments carried at fair value (C) 2,180.51 1,980.91
Total investments (A) + (B) + (C) 8,379.86 7,544.01
Aggregate provision for diminution in value of investments 0.05 0.05
Aggregate amount of quoted investments 4,414.72 4,131.59
Aggregate amount of unquoted investments 3,965.19 3,412.47
----- End of picture text -----*

• Investments, where the Company does not have joint-control or significant influence including situations where such joint-control or significant influence is intended to be temporary, are classified as "investments in others"

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Persistent Systems Limited

Notes forming part of financial statements

6(a) Details of fair value of investment in long term Mutual Funds (Quoted)

	As at As at March 31, 2020 March 31, 2019
Axis Mutual Fund IDFC Mutual Fund ICICI Prudential Mutual Fund Kotak Mutual Fund UTI Mutual Fund Aditya Birla Sun Life Mutual Fund SBI Mutual Fund HDFC Mutual Fund PGIM India Mutual Fund (formerly known as DHFL Pramerica Mutual Fund) DSP Mutual Fund Sundaram Mutual Fund Nippon India Mutual Fund (formerly known as Reliance Mutual Fund)	898.93 304.96 630.06 50.13 141.38 550.21 105.86 294.32 105.73 160.32 82.65 191.44 71.06 65.18 35.66 205.96 35.03 32.10 35.00 32.09 33.15 30.15 - 58.05
	2,174.51 1,974.91

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Persistent Systems Limited

Notes forming part of financial statements

7. Non-current financial assets : Loans (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Carried at amortised cost Security deposit Unsecured, considered good Inter corporate deposits Unsecured, credit impaired Less: Impairment 8. Other non-current financial assets (refer note 32) Other loans and advances	123.57 116.01
	123.57 116.01
	0.58 0.58
	0.58 0.58 (0.58) (0.58
	- -
	123.57 116.01
	As at As a March 31, 2020 March 31, 2019
Non-current bank balances (refer note 14) Add: Interest accrued but not due on non-current bank deposits Non-current deposits with banks (carried at amortised cost) Deposit with financial institutions Add: Interest accrued but not due on deposit with financial institutions Less: Credit impaired Non-current deposits with financial institutions (carried at amortised cost) Investment in Persistent Systems Germany GmbH (Shares pending allotment) (refer note 34)	344.55 94.39 14.38 1.46
	358.93 95.85
	430.00 430.00 0.98 0.98 (430.98) (182.50
	- 248.48
	- 78.72
	358.93 423.05

9. Deferred tax assets (net)

	As at As a March 31, 2020 March 31, 2019
Deferred tax liabilities Capital gains (net) Others Deferred tax assets Provision for leave encashment Provision for long service awards Provision for doubtful debts Tax credit Right of use asset and lease liability Others Deferred tax assets (net) Differences in book values and tax base values of block of Property, plant and equipment and other intangible assets	24.30 40.92 76.67 99.83 - 99.40
	100.97 240.15
	47.15 65.51 51.38 62.02 33.45 25.74 67.69 45.73 31.86 - 186.79 96.71
	418.32 295.71
	317.35 55.56

10. Other non current assets

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Capital advances (Unsecured, considered good) Advances recoverable in cash or kind or for value to be received Balances with government authorities (refer note 36)	27.14 2.06 5.70 66.29 296.55 -
	329.39 68.35

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Persistent Systems Limited

Notes forming part of financial statements

11. Current financial assets : Investments (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Designated as fair value through profit and loss - Quoted investments Investments in mutual funds Total carrying amount of investments Aggregate amount of quoted investments Aggregate amount of unquoted investments Fair value of current mutual funds (refer note 11a)	5,164.77 3,295.53
	5,164.77 3,295.53 5,164.77 3,295.53 - -

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Persistent Systems Limited

Notes forming part of financial statements

11(a) Details of fair value of current investment in mutual funds (Quoted)

	As at As at March 31, 2020 March 31, 2019
Aditya Birla Sun Life Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund L&T Mutual Fund IDFC Mutual Fund Kotak Mutual Fund Axis Mutual Fund HDFC Mutual Fund Nippon India Mutual Fund (formerly known as Reliance Mutual Fund) SBI Mutual Fund DSP Mutual Fund Tata Mutual Fund Sundaram Mutual Fund	973.04 386.73 940.50 399.98 809.46 625.92 734.90 407.39 640.78 106.40 421.51 - 396.02 426.87 185.88 493.59 62.68 - - 162.14 - 103.35 - 115.97 - 67.19
	5,164.77 3,295.53

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Persistent Systems Limited

Notes forming part of financial statements

12. Trade receivables (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Unsecured, considered good Unsecured, credit impaired Less : Allowance for credit loss *Includes dues from relatedparties(refer note 34)	2,883.09 2,429.85 132.91 73.66
	3,016.00 2,503.51 (132.91) (73.66
	2,883.09 2,429.85
	2,883.09 2,429.85

13. Cash and cash equivalents (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Cash and cash equivalents as presented in cash flow statement Cash on hand Balances with banks On current accounts# On saving accounts On Exchange Earner's Foreign Currency accounts On deposit accounts with original maturity less than three months On Escrow account**	0.15 0.11 198.79 126.71 0.36 0.91 261.86 114.91 71.47 229.54 - 92.94
	532.63 565.12

Out of the cash and cash equivalent balance as at March 31, 2020, the Company can utilise 6.62 Million (Previous year: 2.15 Million) only towards research and development activities specified in the agreement.

** The Company concluded the buyback scheme on June 27, 2019 and minimum balance maintained in Escrow account was released on completion of statutory formalities.

14. Other bank balances (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Deposits with banks Add: Interest accrued but not due on deposits with banks Deposits with banks (carried at amortised cost) Less: Interest accrued but not due on non-current deposits with banks (refer note 8) Balances with banks on unpaid dividend accounts*- Earmarked balances with banks Less: Deposit with maturity more than twelve months from the Balance Sheet date disclosed under non-current financial assets (refer note 8)	2,643.65 4,687.90 116.55 64.86
	2,760.20 4,752.76 (344.55) (94.39 (14.38) (1.46
	2,401.27 4,656.91
	4.05 2.27
	2,405.32 4,659.18

• Out of the balance, fixed deposits of 71.10 million (Previous year : 87.99 million) have been earmarked against credit facilities and bank guarantees availed by the Company. ** The Company can utilize these balances only towards settlement of the respective unpaid dividend.

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Notes forming part of financial statements

Persistent Systems Limited

15. Current financial assets : Loans (refer note 32)

	As at As a March 31, 2020 March 31, 2019
Carried at amortised cost Loan to related parties (Refer note 34 and note 43) Unsecured, credit impaired - Klisma e-Services Private Limited Less: Impairment Security deposits Unsecured, considered good	27.43 27.43
	27.43 27.43 (27.43) (27.43
	- -
	4.76 6.63
	4.76 6.63
	4.76 6.63

16. Other current financial assets (refer note 32)

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Fair value of derivatives designated and effective as hedging instruments Forward contracts receivable Advances to related parties (Unsecured, considered good) (refer note 34) Persistent Systems, Inc.- Short term adv to related parties Persistent Systems Pte Ltd. Persistent Systems France SAS- Short term adv to related parties Persistent Telecom Solutions Inc. Persistent Systems Malaysia Sdn. Bhd. Persistent Systems Lanka (Private) Limited PARX Consulting GmbH Persistent Systems Israel Ltd. Persistent Systems Mexico, S.A. de C.V Youperience GmbH PARX Werk AG Persistent Systems Germany GmbH Advances to related parties (Unsecured, credit impaired) (refer note 34) Klisma e-Services Private Limited Less: Impairment of current financial assets Deposit with financial institutions Add: Interest accrued but not due on deposit with financial institutions Current deposits with financial institutions (Carried at amortised cost) Unbilled revenue 17. Other current assets	- 281.27 63.08 63.19 - 0.11 6.71 4.14 3.05 4.56 0.15 0.08 2.67 2.41 0.04 - 1.05 0.38 1.12 0.59 0.05 - 1.79 - 0.31 0.57
	80.02 76.03
	0.81 0.81 (0.81) (0.81
	- -
	- 250.00 - 10.97
	- 260.97
	2,000.05 1,577.47
	2,080.07 2,195.74
	As at As a March 31, 2020 March 31, 2019
Advances to suppliers (Unsecured, considered good) Advances recoverable in cash or kind or for value to be received Excess fund balance with Life Insurance Corporation (Refer Note 30) Other advances (Unsecured, considered good) VAT receivable (net) Service tax and GST receivable (net) (refer note 36)	460.97 286.27 128.54 - 31.50 35.07 864.36 922.10
	895.86 957.17
	1,485.37 1,243.44

Persistent Systems Limited

Notes forming part of financial statements

18. Non-current financial liabilities : Borrowings (refer note 32)

	As at As at March 31, 2020 March 31, 2019
Unsecured Borrowings carried at amortised cost Term loans Indian rupee loan from others Interest accrued but not due on term loans Less: Current maturity of long-term borrowings transferred to other current financial liabilities (Refer note 22) Less: Current maturity of interest accrued but not due on term loan transferred to other current financial liabilities (Refer note 22)	11.93 16.55 0.18 0.17
	12.11 16.72 (4.85) (4.58) (0.18) (0.17)
	(5.03) (4.75)
	7.08 11.97

The term loans from Government departments have the following terms and conditions:

Loan I - amounting to 2.69 million (Previous year 5.46 million) with interest payable @ 2% per annum has been guaranteed by a bank guarantee by the Company and is repayable in ten equal semi annual installments over a period of five years commencing from September 2016.

Loan II - amounting to 9.24 million (Previous year 11.09 million) with Interest payable @ 3% per annum repayable in ten equal annual installments over a period of ten years commencing from October 2015.

19. Non current liabilities : Provisions

	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019
Provision for employee benefits - Long service awards- Long term provisions	182.79 158.46
	182.79 158.46

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Notes forming part of financial statements

Persistent Systems Limited

20. Other long term financial liabilities (refer note 32)

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----- Start of picture text -----

As at As at
March 31, 2020 March 31, 2019
Rent deposits accepted - 1.83
Lease liabilities 356.64 -
Less: Current maturity of lease liabilities (refer note 22) (165.38) -
191.26 1.83
Movement of lease liabilities (refer note 33)
For the year ended
March 31, 2020 March 31, 2019
Opening balance - -
Additions (transitional impact on adoption of Ind AS 116) 501.15 -
Add: Interest recognised during the year (refer note 33) 43.86 -
Less: Payments made (188.37) -
Closing balance 356.64 -
21. Trade payables (refer note 32)
As at As at
March 31, 2020 March 31, 2019
Trade payables for goods and services 972.49 1,019.07
972.49 1,019.07
----- End of picture text -----*

*Includes dues payable to related parties (refer note 34)

Disclosure of payable to vendors as defined under the Small and Medium Enterprise Development Act, is based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the period or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payment made during the period or on balance brought forward from previous year.

22. Other current financial liabilities (refer note 32)

	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019	As at As a March 31, 2020 March 31, 2019
Capital creditors Current maturity of long term-borrowings (refer note 18) Current maturity of interest on long-term borrowings (refer note18) Current maturity of lease liabilities (refer note 20) Accrued employee liabilities Unpaid dividend Other liabilities Fair value of derivatives designated and effective as hedging instruments Forward contracts payable Advance from related parties (Unsecured, considered good) (refer note 34)* Persistent Systems Pte Ltd PARX Werk AG Aepona Limited	36.23 55.16 4.85 4.58 0.18 0.17 165.38 - 105.64 75.79 4.05 2.27 4.40 0.04 387.89 - 2.77 - 2.55 - 1.17 0.16
	6.49 0.16
	715.11 138.17

• Unpaid dividend is credited to Investor Education and Protection Fund as and when due.

23. Other current liabilities

	As at As a March 31, 2020 March 31, 2019
Unearned revenue Advance from customers Other payables - Statutory liabilities - Other liabilities 24. Current liabilities : Provisions	135.88 130.80 558.34 347.05 146.89 145.46 9.91 6.97
	851.02 630.28
	As at As a March 31, 2020 March 31, 2019
Provision for employee benefits - Gratuity (refer note 30) - Leave encashment - Long service awards - Other employee benefits	- 94.34 187.35 187.46 21.35 19.02 381.68 363.29
	590.38 664.11

Notes forming part of financial statements

Persistent Systems Limited

25. Revenue from operations (net) (refer note 34)

	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended
Software services Software licenses	20,775.56 19,163.68 305.66 434.99
	21,081.22 19,598.67

The table below presents disaggregated revenues from contracts with customers by segments, geography and customers' industry type. The Company believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by industry, market and other economic factors.

March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended
Segment wise disclosure Technology Services 15,048.49 13,539.48 Alliance 5,424.97 5,238.77 Accelerite (products) 607.76 820.42 Total 21,081.22 19,598.67 Geographical disclosure India 2,682.26 2,311.63 North America 16,700.22 15,657.14 Rest of the World 1,698.74 1,629.90 Total 21,081.22 19,598.67 Customers' Industry wise disclosure ISV 15,916.36 14,220.47 Enterprise 3,478.38 3,359.82 IP Led 1,686.48 2,018.38 Total 21,081.22 19,598.67 Onsite / offshore / IP Led IP Led 1,686.48 2,018.38 Offshore 18,481.33 15,663.92 Onsite 913.41 1,916.37 Total 21,081.22 19,598.67

While disclosing the aggregate amount of transaction price yet to be recognised as revenue towards unsatisfied (or partially satisfied) performance obligations, along with the broad time band for the expected time to recognise those revenues, the Company has applied the practical expedient in Ind AS 115. Accordingly, the Company has not disclosed the aggregate transaction price allocated to unsatisfied (or partially satisfied) performance obligations which pertain to contracts where revenue recognised corresponds to the value transferred to customer typically involving time and material, outcome based and event based contracts.

customers on completion of milestones.

In respect of the contracts wherein the transaction price is in the form of revenue share, the estimated revenue for the customer is considered based on the historical trends and management judgement with respect to customer business. The estimated

26. Other income

	March 31, 2020 March 31, 2019 For the year ended
Interest income On deposits carried at amortised cost On bonds Foreign exchange gain (net) Profit on sale of Property, plant and equipment (net) Dividend income from investments Profit on sale of investments (net) Net gain/(loss) arising on financial assets designated as FVTPL Miscellaneous income	373.29 97.06 152.47 191.76 274.26 - - 3.77 410.72 392.26 164.81 366.09 119.02 (76.95) 104.47 63.91
	1,599.04 1,037.90

27. Personnel expenses

	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended
27.1 Employee benefits expense Salaries, wages and bonus Contribution to provident and other funds (refer note 30) Staff welfare and benefits Share based payments to employees (refer note 35) 27.2 Cost of professionals - Related parties (refer note 34) - Others	10,178.10 8,576.55 372.96 520.55 417.99 394.13 60.01 -
	11,029.06 9,491.23
	1,565.67 1,885.21 259.70 310.00
	1,825.37 2,195.21
	12,854.43 11,686.44

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Persistent Systems Limited

Notes forming part of financial statements

28. Other expenses*

	March 31, 2020 March 31, 2019 For the year ended
Travelling and conveyance Electricity expenses (net) Internet link expenses Communication expenses Recruitment expenses Training and seminars Purchase of software licenses and support expenses Bad debts Provision for doubtful debts/ (provision for doubtful debts written back) Rent (refer note 33) Insurance Rates and taxes Legal and professional fees Repairs and maintenance - Plant and Machinery - Buildings - Others Selling and marketing expenses Fees for sales enablement services Advertisement, conference and sponsorship fees Computer consumables Auditors' remuneration (refer note 38) Donations Books, memberships, subscriptions Provision for doubtful deposits (refer note 44) Loss on sale of Property, Plant and Equipment (net) Foreign exchange loss (net) Directors' sitting fees Directors' commission Miscellaneous expenses	338.29 338.77 97.02 89.96 48.83 44.44 72.52 69.13 69.43 58.51 22.82 13.66 852.77 687.86 - 23.55 47.31 (6.99) 68.33 245.51 25.91 18.00 49.17 55.14 187.49 206.96 109.12 101.41 21.32 28.09 18.21 19.31 660.03 754.73 627.90 642.92 23.02 21.29 4.47 6.19 10.26 13.73 86.11 80.43 22.42 23.06 248.48 182.50 5.50 - - 206.61 6.58 5.32 14.85 14.21 158.98 162.72
	3,897.14 4,107.02

• Includes expenses incurred with related parties (refer note 34)

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Persistent Systems Limited

Notes forming part of financial statements

29. Earnings per share

March 31, 2020 March 31, 2019 For the year ended	March 31, 2020 March 31, 2019 For the year ended
Numerator for Basic and Diluted EPS
(A) 4,077.23 3,150.08 Denominator for Basic EPS Weighted average number of equity shares (B) 76,684,672 79,943,943 Denominator for Diluted EPS Number of equity shares (C) 76,684,672 79,943,943 (A/B) 53.17 39.40 (After exceptional items) (A/C) 53.17 39.40
	March 31, 2020 March 31, 2019 For the year ended
Number of shares considered as basic weighted average shares outstanding Add: Effect of dilutive issues of stock options Number of shares considered as weighted average shares and potential shares outstanding	76,684,672 79,943,943 - -
	76,684,672 79,943,943

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Persistent Systems Limited

Notes forming part of financial statements

30. Gratuity plan:

The Company has a defined benefit gratuity plan. Each employee is eligible for gratuity on completion of minimum five years of service at 15 days basic salary (last drawn basic salary) for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The following tables summarize the components of net benefit expense recognized in the statement of profit and loss and the funded status and amounts recognized in the Balance Sheet for the respective plans.

Statement of profit and loss

Net employee benefit expense (recognized in statement of profit and loss)

	For theyear ended
	March 31, 2020	March 31, 2019
Curtailment effect* Others Current service cost Interest cost on benefit obligation Expected return on plan assets	192.44 68.74 (68.89) (272.59)	153.98 54.17 (60.96) -
	(0.02)	3.72
Net benefit(income) / expense	(80.32)	150.91
Net actuarial loss recognized in theyear	32.79	68.82
Actual return onplan assets		68.89

Balance sheet

Changes in the fair value of plan assets (recognized in the Balance Sheet) are as follows:

	For theyear ended
	March 31, 2020	March 31, 2019
Adjustment to expected return Expected return on plan assets Contribution by employer Benefitspaid Opening fair value of plan assets	831.31 68.89 (8.88) 184.25 (89.96)	773.89 60.96 (4.97) 80.72 (79.29)
Closing fair value ofplan assets	985.61	831.31

Changes in the present value of the defined benefit obligation (recognized in Balance Sheet) are as follows:

	For theyear ended
	March 31, 2020	March 31, 2019
Opening defined benefit obligation Interest cost Current service cost Benefits paid Actuarial losses on obligation Curtailments	925.65 68.74 192.44 (89.96) (272.59) 32.79	727.97 54.17 153.98 (79.29) - 68.82
Closing defined benefit obligation	857.07	925.65

Persistent Systems Limited

Notes forming part of financial statements

Benefit asset/ (liability)

Benefit asset/ (liability)	Benefit asset/ (liability)	Benefit asset/ (liability)
	As at
	March 31, 2020	March 31, 2019
Fair value of plan assets (Less): Defined benefit obligations	985.61 (857.07)	831.31 (925.65)
Plan asset /(liability)	128.54	(94.34)

The major categories of plan assets as a percentage of the fair value of total plan assets:

	As at	As at
	March 31, 2020	March 31, 2019
Investments with insurer includingaccrued interest	100%	100%
	As at
	March 31, 2020	March 31, 2019
Discount rate	6.77%	7.60%
Attrition rate	PS: 0 to 1 : 17% PS: 1 to 3 : 14% PS: 3 to 4 : 10% PS: 4 to 7 : 5% PS: 7 to 10 : 3% PS:10 to 47 :1%	PS: 1 to 5 : 16.5% PS: 5 to 42 : 3.5%
Increment rate	5.50%	5.50%

The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

Every percentage point increase / decrease in discount rate will affect the gratuity benefit obligation by approximately 94.85 million / 113.66

Every percentage point increase / decrease in rate of increase in compensation levels will affect the gratuity benefit obligation by approximately

Amounts for the current and previous year are as follows:

Amounts for the current and previous year are as follows:	Amounts for the current and previous year are as follows:	Amounts for the current and previous year are as follows:
	As at
	March 31, 2020	March 31, 2019
Plan assets Defined benefit obligation Surplus / (Deficit) Experience adjustments onplan liabilities - Loss	985.61 (857.07) 128.54 32.79	831.31 (925.65) (94.34) 68.82

Maturity Profile of defined benefit obligations:

Maturity Profile of defined benefit obligations:	Maturity Profile of defined benefit obligations:	Maturity Profile of defined benefit obligations:
	As at
	March 31, 2020	March 31, 2019
Within 1 year 1-2 years 2-3 years 3-4 years 4-5 years 5-10years	45.52 42.59 33.43 31.94 34.70 174.92	42.26 46.28 49.61 48.38 50.03 296.91

Persistent Systems Limited

Notes forming part of financial statements

Superannuation Fund

2019 respectively and the same is recognised in the Statement of profit and loss under the head employee benefit expenses.

Defined contribution plan - Provident Fund

The Company has certain defined contribution plans. Contributions are made to provident fund for employees @ 12% of Basic salary as per regulation. The contributions are made to registered provident fund administered by the government. The obligation of the company is limited to the amount contributed. and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan (provident fund) is INR 404.90 million (Previous year - INR 328.33 million).

*The gratuity scheme has an element in its structure which caps the basic salary beyond a certain amount. Giving effect to that in valuation of benefit obligation has resulted into curtailment of benefits to the extent of INR 272.59 million which is reflected in the report.

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Persistent Systems Limited

Notes forming part of financial statements

31. Income taxes

The reconciliation of estimated income tax expense at Indian statutory income tax rate to income tax expense reported in statement of profit and loss is as follows:

	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended	For theyear ended
	March 31, 2020				March 31, 2019
Profit before tax Enacted tax rate in India Computed tax expense at enacted tax rate Effect of exempt income Effect of non-deductible expenses Effect of concessions (Tax holidays) Effect of concessions (R&D allowance) Tax (credit) / charge in respect of earlier years Effect of diffferent tax rates for different heads of income Effect of Change in tax rate in current year (refer note below) Others	5,329.06 25.17% 1,341.22 (69.20) 12.62 - (21.95) (1.60) (31.80) 24.76 (2.22)				4,383.76 34.94% 1,531.86 (171.77) 21.77 (197.52) 21.85 65.00 (30.69) - (6.82)
Income tax expense	1,251.83				1,233.68

Note:

The Company has decided to opt for the new tax regime announced by the Government of India and avail the benefit of Section 115BAA of the Income Tax Act. This provides for the concessional tax rate of 22% plus applicable surcharge and cess (totalling to 25.17% ) from April 1, 2019, without claiming the following major tax exemptions / incentives which were availed till earlier financial year.

(i) Tax holiday under section 10AA of the Income Tax Act available for units set up under the Special Economic Zone Act, 2005 (SEZ units).

(ii) Weighted Deduction under section 35 (2AB) of the Income Tax Act on the expenditure on scientific research carried out in in-house research and development facility as approved by the prescribed authority under Income Tax Act.

(iii) The Income Tax expense and deferred tax expense for the year ended March 31, 2020 include the effect of the net benefit of section 115BAA opted for by the Company from April 1, 2019.

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Persistent Systems Limited

Notes forming part of financial statements

32. Financial assets and liabilities

The carrying values and fair values of financial instruments by categories are as follows:

The carrying values and fair values of financial instruments by categories are as follows:	The carrying values and fair values of financial instruments by categories are as follows:	The carrying values and fair values of financial instruments by categories are as follows:	The carrying values and fair values of financial instruments by categories are as follows:	The carrying values and fair values of financial instruments by categories are as follows:
Financial assets/ financial liabilities	Basis of measurement	Carrying value Fair value As at March 31, 2020		As at March 31, 2019		Fair value hierarchy
			Fair value	Carrying value Fa	ir value
Assets: Investments in subsidiaries and associates Investments in equity instruments Investments in bonds* Investments in mutual funds Loans Deposit with banks and financial institutions (including interest accrued but not due on deposits with banks) Cash and cash equivalents (including unpaid dividend) Trade receivables (net) Forward contracts receivable Unbilled revenue Other current financial assets Other non-current financialassets (Share application money paid)	Cost Fair value Amortised cost Fair value Amortised cost Amortised cost Amortised cost Amortised cost Fair value Amortised cost Amortised cost Cost	3,959.14 6.00 2,240.21 7,339.28 128.33 2,760.20 536.68 2,883.09 - 2,000.05 80.02 -	3,959.14 6.00 2,236.81 7,339.28 128.33 2,760.20 536.68 2,883.09 - 2,000.05 80.02 -	3,406.42 6.00 2,156.68 5,270.44 122.64 5,262.21 567.39 2,429.85 281.27 1,577.47 76.03 78.72	3,406.42 6.00 2,120.86 5,270.44 122.64 5,262.21 567.39 2,429.85 281.27 1,577.47 76.03 78.72	Level 3 Level 1 Level 2
Total		21,933.00	21,929.60	21,235.12 2	1,199.30
Liabilities: Borrowings (including accrued interest) Trade payables and deferred payment liabilities Other financial liabilities (excluding borrowings) Forward contractspayable	Amortised cost Amortised cost Amortised cost Fair value	12.11 972.49 513.45 387.89	12.11 972.49 513.45 387.89	16.72 1,019.07 135.25 -	16.72 1,019.07 135.25 -	Level 2
Total		1,885.94	1,885.94	1,171.04	1,171.04

• Fair value includes interest accrued.

Fair value hierarchy:

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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Notes forming part of financial statements

Persistent Systems Limited

Financial risk management

Financial risk factors and risk management objectives

The Company's activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Company's focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Company is foreign exchange risk. The Company uses derivative financial instruments to mitigate foreign exchange related risk exposures. The use of financial derivatives is governed by the Company's policies approved by the Board of Directors which provide written principles on foreign exchange hedging. The Company's exposure to credit risk is mainly for receivables that are overdue for more than 90 days. The Credit Task Force is responsible for credit risk management. Investment of excess liquidity is governed by the Investment policy of the Company. The Company's Risk Management Committee monitors risks and policies implemented to mitigate risk exposures.

Market risk

The Company operates globally with its operations spread across various geographies and consequently the Company is exposed to foreign exchange risk. Around 80% to 90% of the Company's foreign currency exposure is in USD. The Company holds plain vanilla forward contracts against expected future sales in USD to mitigate the risk of changes in exchange rates.

The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2020

	USD	EUR	GBP	Other currencies	Total
Trade receivables Cash and cash equivalents and bank balances Investments Other financial assets (including loans and interest accrued) Trade and other payables Other liabilities	233.54 297.77 3,041.63 66.13 423.83 400.81	121.73 5.26 1,409.40 5.58 32.30 -	125.08 11.45 - 8.67 59.04 1.17	135.39 30.47 121.97 8.30 10.00 5.32	615.74 344.95 4,573.00 88.68 525.17 407.30

The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.

The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.	The following table analyses unhedged foreign currency risk from financial instruments as of March 31, 2019.
	USD	EUR	GBP	Other currencies	Total
Trade receivables Cash and cash equivalents and bank balances Investments Other financial assets (including loans and interest accrued) Trade and other payables Other liabilities	408.03 130.74 2,778.22 67.75 622.12 333.98	74.82 4.71 856.20 4.85 0.34 -	41.84 13.72 - 3.33 11.74 0.16	56.83 30.07 117.83 5.39 - 12.77	581.52 179.24 3,752.25 81.32 634.20 346.91

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Notes forming part of financial statements

Persistent Systems Limited

Foreign currency sensitivity analysis

For the year ended March 31, 2020 and March 31, 2019 every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and foreign currencies on foreign currency exposure would affect the Company's profit before tax margin (PBT) by approximately 0.22% and 0.18% respectively.

Derivative financial instruments

The Company holds derivative foreign currency forward contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. These derivative financial instruments are valued based on quoted prices for similar assets in active markets or inputs that are directly or indirectly observable in the marketplace. The Company has designated foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast sales transactions.

The following table gives details in respect of outstanding foreign currency forward contracts:

	As at March 31, 2020	As at March 31, 2020	As at March 31, 2020	As at March 31, 2019	As at March 31, 2019	As at March 31, 2019
	Foreign currency (million)	Average rate		Foreign currency (million)	Average rate
Derivatives designated as cash flow hedges Forward contracts
USD	125.00	74.03	9,253.21	112.00	73.00	8,175
The foreign exchange forward contracts mature within twelve months. The table below analyses the derivative fi
	As at March 31, 2020			As at March 31, 2019
	Foreign currency (million)	Average rate		Foreign currency (million)	Average rate
Not later than 3 months Later than 3 months and not later than 6 months Later than 6 months and not later than 9 months Laterthan9months andnotlaterthan 12 months	30.00 32.00 30.00 33.00	72.74 73.70 74.16 75.40	2,182.07 2,358.34 2,224.70 2,488.10	30.00 30.00 30.00 22.00	69.95 74.00 74.84 73.26	2,098 2,220 2,245 1,611	.38 .06 .19 .82
Total	125.00		9,253.21	112.00		8,175	.45

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Persistent Systems Limited

Notes forming part of financial statements

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to 2,883.09 million and million as at March 31, 2020 and March 31, 2019, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk is managed by the Company by Credit Task Force through credit approvals, establishing credit limits and continuously monitoring the recovery status of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provisioning policy approved by the Board of Directors to compute the expected credit loss allowance for trade receivables. The policy takes into account available external and internal credit risk factors and the Company's historical experience for customers.

Credit risk is perceived mainly in case of receivables overdue for more than 90 days. The following table gives details of risk concentration in respect of percentage of receivables overdue for more than 90 days:

		As at	As at	As at	As at
		March 31, 2020	March 31, 2019
Overdue for more than 90 days as a % of total rec	eivables	402.06 3,016.00 13.3%	244.00 2,503.51 9.7%
Ageing of trade receivables
		As at
		March 31, 2020	March 31, 2019
Within the credit period 1 to 30 days past due 31 to 60 days past due 61 to 90 days past due 91 to 120 days past due 121 and above past due Less: Expected credit loss		1,819.49 406.33 213.28 174.84 119.81 282.25	2,138.01 2.34 64.57 54.59 47.35 196.65
		(132.91)	(73.66)
Net trade receivables		2,883.09	2,429.85
Movement in expected credit loss allowance
		As at
		March 31, 2020	March 31, 2019
Opening balance Movement in expected credit loss allowance Translation differences		73.66 47.31 11.94	80.20 (6.99) 0.45
Closing balance		132.91	73.66
Credit risk on cash and cash equivalents is limited	as the Company generally invests in deposits with banks and	financial institutions with high credit ratings. Investments primarily include investment in debts mutual funds, quoted bonds.

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Persistent Systems Limited

Notes forming part of financial statements

Liquidity risk

The Company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The investment of surplus cash is governed by the Company's investment policy approved by the Board of Directors. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. As at March 31, 2020, the Company had a working capital of million including cash and cash equivalents and current fixed deposits of million.

The table below provides details regarding the contractual maturities of significant financial liabilities:

	Less than 1year More than 1year Less than 1year More than 1year As at March 31, 2020 March 31, 2019	Less than 1year More than 1year Less than 1year More than 1year As at March 31, 2020 March 31, 2019	Less than 1year More than 1year Less than 1year More than 1year As at March 31, 2020 March 31, 2019	Less than 1year More than 1year Less than 1year More than 1year As at March 31, 2020 March 31, 2019
			March 31, 2019
		r More than 1year	Less than 1year M	ore than 1year
Borrowings (including accrued interest) Trade payables and deferred payment liabilities Other financial liabilities (excluding borrowings)	5.0 972.4 710.0	3 7.08 9 - 8 191.26	4.75 1,019.07 133.42	11.97 - 1.83

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Persistent Systems Limited

Notes forming part of financial statements

32. (b) Derivative instruments and un-hedged foreign currency exposures

• (i) Forward contracts outstanding at the end of the year:

(In Million) As at As at March 31, 2020 March 31, 2019 Forward contracts to sell USD: Hedging of expected future receivables of 9,253.21 8,175.45 USD 125 Million (Previous year USD 112 Million)

(ii) Details of un-hedged foreign currency exposures at the end of the year:

	As at March 31, 2020 As at March 31, 2019 In million Foreign currency (In million) Conversion rate ( ) In million Foreign currency (In million) Conversion rate ( ) 0.34 JPY 0.49 0.70 0.91 JPY 1.47 0.62 297.77 USD 3.93 75.66 130.74 USD 1.89 69.11 11.45 GBP 0.12 93.49 13.72 GBP 0.15 90.50 6.10 CAD 0.11 53.06 15.71 CAD 0.31 51.51 5.26 EUR 0.06 82.76 4.71 EUR 0.06 77.72 6.19 AUD 0.13 46.07 2.56 AUD 0.05 48.99 17.84 ZAR 4.20 4.25 10.89 ZAR 2.28 4.77 3,041.63 USD 40.20 75.66 2,778.22 USD 40.20 69.11 26.52 SGD 0.50 53.03 25.50 SGD 0.50 51.00 1,409.40 EUR 17.03 82.76 856.20 EUR 11.03 77.62 95.45 MYR 5.45 17.51 92.33 MYR 5.45 16.94 0.32 SGD 0.01 53.03 622.12 USD 9.00 69.11 423.83 USD 5.60 75.66 11.74 GBP 0.13 90.50 59.04 GBP 0.63 93.49 - - - 8.53 CAD 0.16 53.06 - - - 32.30 EUR 0.39 82.76 - - - 0.42 AUD 0.01 46.07 - - - 0.10 CHF0.001 78.28 0.63 ZAR 0.15 4.25 - - -
Bank balances
Investments (including share application money paid)
Trade and other payables
Advances given and deposits placed	66.13 USD 0.87 75.66 67.75 USD 0.98 69.11 8.67 GBP 0.10 93.49 3.33 GBP 0.04 90.50 5.58 EUR 0.07 82.76 4.71 EUR 0.06 77.62 1.12 MXN 0.35 3.20 0.59 MXN 0.17 3.58 0.16 MYR 0.01 17.51 0.09 MYR 0.005 16.94 1.40 CAD 0.03 53.06 1.40 CAD 0.03 51.51 0.04 JPY 0.06 0.70 0.04 JPY 0.064 0.62 0.75 ILS 0.04 21.28 0.38 ILS 0.02 19.05 - - - 0.11 SGD 0.002 51.00 0.01 ZAR 0.002 4.25 0.01 ZAR 0.002 4.77 0.36 AUD 0.01 46.07 0.36 AUD 0.007 48.99 2.67 LKR 6.68 0.40 2.41 LKR 6.11 0.39 1.79 CHF 0.02 78.28
Advances received	2.55 CHF 0.03 78.28 12.77 CHF 0.18 69.39 2.77 SGD 0.05 53.03 - - - 400.81 USD 5.30 75.66 333.98 USD 4.83 69.11 1.17 GBP 0.01 93.49 0.16 GBP 0.002 90.50

Persistent Systems Limited

Notes forming part of financial statements

Trade receivables	233.54	USD 3.09		75.66	408.03	USD 5.90	69.11
	121.73	EUR 1.47		82.76	74.82	EUR 0.96	77.62
	125.08	GBP 1.34		93.49	41.84	GBP 0.46	90.50
	41.01	AUD 0.89		46.07	24.95	AUD 0.51	48.99
	8.42	SGD 0.16		53.03	-	-	-
	29.45	ZAR 6.93		4.25	20.44	ZAR 4.29	4.77
	0.04	CAD 0.001		53.06	10.08	CAD 0.20	51.51
	-		-	-	1.36	CHF 0.02	69.39
	56.47	MYR 3.22		17.51	-	-	-

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Persistent Systems Limited

Notes forming part of financial statements

33. Leases

The table below provides details regarding the contractual maturities of lease liabilities as of March 31, 2020 on an undiscounted basis:

discounted basis:
	(In	Million)
		As at
	March	31, 2020
- Less than one year		165.38
- One to five years		218.84
- More than fiveyears		68.11

The company does not face a significant liquidity risk with regard to its lease liabilities as the current assets are sufficient to meet the obligations related to lease liabilities as and when they fall due.

Rental expense recorded for short-

Effective April 1, 2019, the company has adopted Ind AS 116, Leases; and has recognized interest on lease liability of million under finance costs.

The aggregate depreciation on ROU assets has been included under depreciation and amortisation expense in the Statement of Profit and Loss. (Refer note 5.4)

34. Related party disclosures

(i) Names of related parties and related party relationship

Relatedparties where control exists	Relatedparties where control exists
Subsidiaries	i.	Persistent Systems, Inc.
	ii.	Persistent Systems Pte Ltd.
	iii.	Persistent Systems France SAS
	iv.	Persistent Systems Malaysia Sdn. Bhd.
	v.	Persistent Systems Germany GmbH
	vi.	Persistent Telecom Solutions Inc.
		(wholly owned subsidiary of Persistent Systems, Inc.)
	vii.	Akshat Corporation (d.b.a. RGen Solutions)
		(wholly owned subsidiary of Persistent Systems, Inc.)
		(Dissolved with effect from December 21, 2018)
	viii.	Aepona Holdings Limited
		(wholly owned subsidiary of Persistent Systems, Inc.)
		(Dissolved with effect from October 24, 2019)
	ix.	Aepona Group Limited
		(wholly owned subsidiary of Aepona Holdings Limited)
	x.	Aepona Limited
		(wholly owned subsidiary of Aepona Group Limited)
	xi.	Valista Limited
		(wholly owned subsidiary of Aepona Group Limited)
	xii.	Persistent Systems Lanka (Private) Limited (Formerly known
		as Aepona Software (Private) Limited)
		(wholly owned subsidiary of Valista Limited)
	xiii.	Persistent Systems Mexico, S.A. de C.V.
		(wholly owned subsidiary of Persistent Systems Inc.)
	xiv.	Persistent Systems Israel Ltd.
		(wholly owned subsidiary of Persistent Systems Inc.)
	xv.	PARX Werk AG
		(wholly owned subsidiary of Persistent Systems Germany GmbH)
	xvi.	PARX Consulting GmbH
		(wholly owned subsidiary of PARX Werk AG)
	xviii. Herald Technologies Inc
		(wholly owned subsidiary of Persistent Systems, Inc.)
		(Dissolved with effect from June 24, 2019)
	xviii. Youperience GmbH
		(wholly owned subsidiary of Persistent Systems Germany GmbH)
	xix.	Youperience Limited
		(wholly owned subsidiary of Youperience GmbH)

Related parties with whom transactions have taken place

Associate i. Klisma e-Services Private Limited Key management personnel i. Dr. Anand Deshpande, Chairman and Managing Director

Persistent Systems Limited

Notes forming part of financial statements

	ii. Mr. Christopher O' Connor Executive Director and CEO (Joined Wef
	11/06/2019)
	iii. Mr Sandeep Kalra, Executive Director and president (Joined Wef
	11/06/2019)
	iv. Mr. Sunil Sapre, Executive Director and Chief Financial Officer
	v. Mr. Amit Atre, Company Secretary
	vi. Ms. Roshini Bakshi, Independent Director
	vii. Mr. Pradeep Bhargava, Independent Director
	viii. Mr. Sanjay Bhattacharya*, Independent Director (Resigned Wef
	01/07/2019)
	ix. Dr. Anant Jhingran, Independent Director
	x. Mr. Thomas Kendra, Non executive non indpendent director
	xi. Mr. Prakash Telang, Independent Director
	xii. Mr. Kiran Umrootkar, Independent Director
	xiii. Mr. Guy Eiferman, Independent Director
	xiv. Dr. Deepak Phatak, Independent Director
Relatives of Key management	i. Mr. Suresh Deshpande
personnel	(Father of the Chairman and Managing Director)
	ii. Mrs. Sulabha Deshpande
	(Mother of the Chairman and Managing Director)
	iii. Mrs. Sonali Anand Deshpande
	(Wife of the Chairman and Managing Director)
	iv. Dr. Mukund Deshpande
	(Brother of the Chairman and Managing Director)
	v. Mrs. Chitra Buzruk
	(Sister of the Chairman and Managing Director)
	vi. Dr. Asha Sapre
	(Wife of Executive Director and Chief Financial Officer)
Members of Promoter Group	i. Rama Purushottam Foundation
Entities over which a key	i. Deazzle Services Private Limited
management personnel has	ii. Azure Associates, LLC
significant influence	iii. Persistent Foundation

35. Employees stock option plans (ESOP)

Certain information in this note relating to number of shares, options and per share/option price has been disclosed in full and is not rounded off.

a) Details of Employee stock option plans

The Company has framed various share-based payment schemes for its employees. The details of various equity-settled Board of Directors are as follows:

ESOP scheme	No. of options	Date of adoption	Initial	Exercise period
	granted #	by the	Grant date
		Board/Members
Scheme I	4,560,500	Dec 11, 1999	Dec 11, 1999	*
Scheme II	753,200	Apr 23, 2004	Apr 23, 2004	10 Years
Scheme III	2,533,300	Apr 23, 2004	Apr 23, 2004	*
Scheme IV	6,958,250	Apr 23, 2006	Apr 23, 2006	10 Years
Scheme V	1,890,525	Apr 23, 2006	Apr 23, 2006	*
Scheme VI	1,216,250	Oct 31, 2006	Oct 31, 2006	10 Years
Scheme VII	1,784,975	Apr 30, 2007	Apr 30, 2007	10 Years
Scheme VIII	42,000	Jul 24, 2007	Jul 24, 2007	3 Years
Scheme IX	1,374,462	Jun 29, 2009	Jun 29, 2009	10 Years
Scheme X	3,062,272	Jun 10, 2010	Oct 29, 2010	2-3 Years
Scheme XI **	1,062,000	Jul 26, 2014	Nov 03, 2014	1 Year
Scheme XII ***	67,300	Feb 04, 2016	Apr 08, 2016	2.5 Months
Scheme XIII	975,000	Jul 27, 2017	Aug 01, 2019	4 Years
Scheme XIV	80,000	Jul 27,2017	May01,2019	3 Years

Adjusted for bonus issue of shares.

*No contractual life is defined in the scheme.

**The options under Scheme XI, which is a performance based ESOP scheme will vest after 2-3 years in proportion of credit points earned by the employees every quarter based on performance. The maximum options which can be granted under this scheme are 2,000,000.

Persistent Systems Limited

Notes forming part of financial statements

***The options under Scheme XII, ESOP scheme would vest after 1 year. The maximum options which are granted under this scheme are 50 per employee.

The vesting period and conditions of the above ESOP schemes is as follows:

All the above ESOP schemes have service condition (other than scheme XI which Is based on performance criteria), which require the employee to complete a specified period of service, as a vesting condition. The vesting pattern of various schemes has been provided below:

(i) Scheme I to V, VII, VIII, X, XIII and XIV:	(i) Scheme I to V, VII, VIII, X, XIII and XIV:
Service period from the		% of Options vesting
date of grant	Scheme I to V & X	Scheme VII	Scheme VIII & XIII	Scheme
				XIV
12 Months	10%	20%	25%	0.00%
24 Months	30%	40%	50%	33.33%
36 Months	60%	60%	75%	66.66%
48 Months	100%	80%	100%	100.00%
60 Months	NA	100%	NA	NA
(ii) Scheme VI:
Service period from the date of grant			% of Options vesting
18 Months			30%
Every quarter thereafter			5%
(iii) Scheme IX:
Service period from the date of grant			% of Options vesting
3~~0~~ 60 Months varying from	employee to		100%
employee
(iv) Scheme XI:
Service period from the date of grant			% of Options vesting
2-3 years varying from employee to employee		Based on credit points earned
(v) Scheme XII:
Service period from the date of grant			% of Options vesting
1 year			100%

Persistent Systems Limited

Notes forming part of financial statements

b) Details of activity of the ESOP schemes

Movement for the year ended March 31, 2020 and March 31, 2019:

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Year Outstanding at Granted Forfeited Exercised Outstanding Exercisable at
ESOP Scheme Particulars Ended the beginning during the during the during the at the end of the end of the
of the Year Year Year Year the Year Year
Scheme I Number of Option March 31, 2020 18 - - 1 17 17
Weighted Average Price March 31, 2020 4.42 - - 5.05 4.42 4.42
Number of Option March 31, 2019 20 - - 2 18 18
Weighted Average Price March 31, 2019 4.19 - - 4.22 4.42 4.42
Scheme II Number of Option March 31, 2020 3 - 3 - - -
Weighted Average Price March 31, 2020 24.18 - 24.18 - - -
Number of Option March 31, 2019 103 - - 100 3 3
Weighted Average Price March 31, 2019 47.51 - - 48.21 24.18 24.18
Scheme III Number of Option March 31, 2020 158,625 - - 10,790 147,835 147,835
Weighted Average Price March 31, 2020 31.89 - - 31.20 31.94 31.94
Number of Option March 31, 2019 203,392 - 11,288 33,479 158,625 158,625
Weighted Average Price March 31, 2019 31.36 - 25.75 30.74 31.89 31.89
Scheme IV Number of Option March 31, 2020 499,773 - - 93,425 406,348 406,348
Weighted Average Price March 31, 2020 52.37 - - 48.66 53.07 53.07
Number of Option March 31, 2019 708,946 - 17,542 191,631 499,773 499,773
Weighted Average Price March 31, 2019 52.34 - 24.79 54.78 52.37 52.37
Scheme V Number of Option March 31, 2020 62,793 - - 2,461 60,332 60,332
Weighted Average Price March 31, 2020 27.37 - - 22.23 27.58 27.58
Number of Option March 31, 2019 96,856 - 10,952 23,111 62,793 62,793
Weighted Average Price March 31, 2019 26.33 - 24.13 24.55 27.37 27.37
Scheme VI Number of Option March 31, 2020 - - - - - -
Weighted Average Price March 31, 2020 - - - - - -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Scheme VII Number of Option March 31, 2020 34,996 - - 28,035 6,961 6,961
Weighted Average Price March 31, 2020 33.55 - - 27.44 58.18 58.18
Number of Option March 31, 2019 37,996 - - 3,000 34,996 34,996
Weighted Average Price March 31, 2019 35.73 - - 61.12 33.55 33.55
Scheme VIII Number of Option March 31, 2020 - - - - - -
Weighted Average Price March 31, 2020 - - - - - -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
----- End of picture text -----

Persistent Systems Limited

Notes forming part of financial statements

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Year Outstanding at Granted Forfeited Exercised Outstanding at Exercisable at
ESOP Scheme Particulars Ended the beginning during the during the during the the end of the the end of the
of the Year Year Year Year Year Year
Scheme IX Number of Option March 31, 2020 142,120 - - 6,200 135,920 135,920
Weighted Average Price March 31, 2020 54.74 - - 54.74 54.74 54.74
Number of Option March 31, 2019 150,552 - - 8,432 142,120 142,120
Weighted Average Price March 31, 2019 54.74 - - 54.74 54.74 54.74
Scheme X Number of Option March 31, 2020 155,650 - - 30,588 125,062 125,062
Weighted Average Price March 31, 2020 206.73 - - 221.47 188.75 188.75
Number of Option March 31, 2019 461,351 - 31,124 274,577 155,650 155,650
Weighted Average Price March 31, 2019 201.74 - 204.64 204.64 206.73 206.73
Scheme XI Number of Option March 31, 2020 - 570,000 - - 570,000 -
Weighted Average Price March 31, 2020 - 10.00 - - 10.00 -
Number of Option March 31, 2019 36,000 - 9,600 26,400 - -
Weighted Average Price March 31, 2019 5.00 - 5.00 5.00 - -
Scheme XII Number of Option March 31, 2020 - - - - - -
Weighted Average Price March 31, 2020 - - - - - -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Scheme XIII Number of Option March 31, 2020 - 975,000 55,000 - 920,000 -
Weighted Average Price March 31, 2020 - 451.13 442.47 - 451.65 -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Scheme XIV Number of Option March 31, 2020 - 80,000 - - 80,000 -
Weighted Average Price March 31, 2020 - 540.82 - - 540.82 -
Number of Option March 31, 2019 - - - - - -
Weighted Average Price March 31, 2019 - - - - - -
Total Number of Option March 31, 2020 1,053,978 1,625,000 55,003 171,500 2,452,475 827,475
Number of Option March 31, 2019 1,695,216 - 80,506 560,732 1,053,978 1,053,978
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Persistent Systems Limited

Notes forming part of financial statements

c) Details of exercise price for stock options outstanding at the end of the year

					As at	March 31, 2020		As at March 31, 2019	As at March 31, 2019
Scheme		Range of exercise price		No. of Options outstanding*		Weighted average remaining contractual life	No. of Options outstanding		Weighted average remaining contractual life
						(in years)			(in years)
Scheme	I	2.04	9.57		17	Note (i)		18	Note (i)
Scheme	II	12.96	48.21		-	-		3	2.40
Scheme	III	12.96	48.21		147,835	Note (i)		158,625	Note (i)
Scheme	IV	22.23	61.12		406,348	3.02		499,773	3.93
Scheme	V	22.23	44.14		60,332	Note (i)		62,793	Note (i)
Scheme	VI	22.23	30.67		-	-		-	-
Scheme	VII	24.17	61.12		6,961	3.52		34,996	3.37
Scheme	VIII	48.21	48.21		-	-		-	-
Scheme	IX	54.74	54.74		135,920	3.24		142,120	4.03
Scheme	X	157.58	279.70		125,062	5.55		155,650	1.85
Scheme	XI	10.00			570,000	2.30		-	-
Scheme	XII	10.00			-	-		-	-
Scheme	XIII	442.47	602.31		920,000	4.36		-	-
Scheme	XIV	540.82	540.82		80,000	4.08		-	-

Note (i) No contractual life is defined in the scheme.

• Amongst the above schemes, certain options have been lapsed on December 31, 2019 since those were not exercised by the respective employees during their contracted Exercise Period. However, before cancelling the said options, the Management has decided to take guidance from the Nomination and Governance Committee. The appropriate action will be taken upon receipt of the aforementioned guidance from the Committee on further extension / immediate cancellation. Hence, being prudent, the same are still considered outstanding as at March 31, 2020. The weighted average contractual life disclosed above has been computed only for the unexpired options.

d) Effect of the employee share-based payment plans on the statement of profit and loss and on its financial position

Compensation expense arising from equity-settled employee share-based payment plans for the year ended March 31, 2020 amounted to 60.01 million (Previous year Nil). The liability for employee stock options outstanding as at March 31, 2020 is 290.51 million 76.29 million).

e) Weighted average exercise prices and weighted average fair values of options

The Binomial tree and Black-Scholes valuation models have been used for computing the weighted average fair value of the stock options granted during the financial year 2019-20:

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Particulars March 31, 2020 March 31, 2019
RSU ESOP ESOP RSU ESOP ESOP
Scheme XI Scheme Scheme IV Scheme XI Scheme XIII Scheme
XIII IV
Weighted average share 637.32 620.86 636.25 NA NA NA
price (Rs.)
Weighted Exercise Price 10 451.13 540.82 NA NA NA
(Rs.)
Weighted Average Fair 446.15 202.78 171.45 NA NA NA
Value (Rs.)
Expected Volatility 26.54 26.54 26.54 NA NA NA
Life of the options granted 4 yrs 5 yrs 5 yrs NA NA NA
(Vesting and exercise
period)
Dividend Yield 2.00% 2.00% 2.00% NA NA NA
Average risk-free interest 6.80% 6.24% 7.10% NA NA NA
rate
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Persistent Systems Limited

Notes forming part of financial statements

36. Contingent liabilities

December 19, 2016 for nonexcluding interest and penalty, if applicable. The issue relates to the professional and technical services rendered by overseas subsidiaries on behalf of the Company to its overseas customers for the period 2011-12 to 2014-15.

Post representations made by the Company, the Learned Principal Commissioner of Service Tax, Pune, adjudicated the aforesaid show73.78 million based on the period of limitation and as a result of that, the said demand now covers financial year 2014-15. The Company has filed an and Service Tax Appellate Tribunal (CESTAT) on September 23, 2017.

The Company, based on independent legal opinion obtained in respect of issues related to this matter, believes that the liability is not likely to arise and therefore, no provision is considered necessary in the financial statements. If the appeal filed as mentioned above results in a demand, there will be no impact on the profitability as the Company will be eligible to claim credit/refund for the amount paid.

The GST department has filed an appeal on October 11, 2017 with appellate authorities against the Order passed by Learned Principal Commissioner of Service Tax, Pune. Though the GST department has acknowledged the ground of revenue neutrality, the said appeal mainly questions non-application of extended period of limitation. The Company has filed reply to this appeal on December 18, 2017.

Considering the view of the Service Tax Authorities, based on legal advice and due prudence, the Company has deposited, (i.e protest and forms part of the aforementioned GST receivable balance.

As on March 31, 2020, the pending litigations in respect of direct taxes amount to 220.30 million and in respect of indirect taxes amount to 26.51 million (excluding the show cause notice received from Commissioner of Service Tax on May 29, 73.78 million under import of services on reverse charge basis as mentioned above). Based on the advice obtained and judgments in favour of the Company at the first appellate authority in the earlier years, management does not expect any outflow in respect of these litigations.

protest based on show cause notice from Directorate of Revenue Intelligence (DRI), the Company has filed an application before the relevant authorities. Further, the Company is in the process of making representations through the industry associations to ensure continued applicability of the said incentives to the eligible information technology companies. Additional 113.49 Million pertaining to earlier years is subject to realisation in

Persistent Systems Ltd has given a performance guarantee up to $ 10 million to HSBC Bank USA in respect of payment obligations under the Receivables Purchase agreement entered into by Persistent Systems Inc with HSBC Bank, USA (Previous year: $10 million). Persistent Systems Ltd. has also given performance guarantee up to $ 5 million to Citibank USA (Previous year: $ 5 million) in respect of working capital facilities for Persistent Systems Inc. and $ 0.17 million to Sun Life Assurance Company of Canada for timely payment of rent instalments and damages, in respect of office rented to Persistent Systems Inc.

37. Capital and other commitments

Capital and other commitments
		(In Million)
	As at
	March 31, 2020	March 31, 2019
Capital commitments
Estimated amount of contracts remaining to be executed on capital	67.71	204.45
account and not provided for
Other commitments
Forward contracts	9,253.21	8,175.45

For commitments relating to lease agreements, please refer note 33.

Persistent Systems Limited

Notes forming part of financial statements

38. remuneration

remuneration
		Million)
	For the year ended March 31, 2020 March 31, 2019
As auditor: - Audit fee - Tax audit fee In other capacity: - Other services Reimbursement of expenses	8.50 8.20 - - 1.53 5.53 0.23 -
	10.26 13.73

39. Research and development expenditure

The particulars of expenditure incurred on in-house research and development are as follows:

		Million)
	For the year ended March 31, 2020 March 31, 2019
Capital Revenue	1.04 0.46 243.05 182.35
	244.09 182.81

40. The Company was required to spend an amount of 85.05 million during the financial year 2019-20 (Previous year 79.08 million) on Corporate Social Responsibility in accordance with section 135(5) of the Companies Act, 2013. The Company has spent 6.11 million during the financial year 2019-20 (Previous year 80.36 million, of which 1.40 million was spent in kind) on purposes other than construction / acquisition of any asset.

41. Details of dues to micro and small enterprises as defined under MSMED Act, 2006

There are no defaults and overdue amounts payable to suppliers, who have intimated about their status as Micro and Small Enterprises as per the provisions of Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006).

42. Net dividend remitted in foreign exchange

					(In USD Million)
Particulars	Period to	No. of non-	No. of equity	For the year ended
	which	resident	shares held
	dividend	shareholders	on which	March 31, 2020	March 31, 2019
	relates		dividend
			was due
			(in million)
Final dividend	2018-19	3	0.37	0.02	-
Interim dividend	2019-20	3	0.37	0.05
Final dividend	2017-18	3	0.37	-	0.02
Interim dividend	2018-19	3	0.37	-	0.0001

43. Loans and advances in the nature of loans given to subsidiaries and associates and firms / companies in which directors are interested

• a) Loan to Klisma e-Service Private Limited

Balance as at March 31, 2020 27.43 Maximum amount outstanding during the 27.43 Principal is receivable at the end of twelve months and interest is receivable quarterly @ 12 % p.a. This amount is utilized for meeting business requirements. The outstanding balance has been fully provided for.

Persistent Systems Limited

Notes forming part of financial statements

These were

• due for maturity from January 2019 to June 2019. In view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, Management of the Company has fully provided for these deposits along with interest accrued thereon till the date the deposits had become doubtful of recovery. The Management is hopeful of recovery though with a time lag. The Company continues to monitor developments in the matter and is committed to take steps including legal action that may be necessary to ensure full recovery of the said deposits.

The financial statements are presented in Million and decimal thereof except for per share information or as otherwise stated.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

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Bharat Shetty Partner Membership No: 106815

Dr. Anand Deshpande Chairman and Managing Director

Kiran Umrootkar Director

Sunil Sapre Executive Director and Chief Financial Officer

Amit Atre Company Secretary

Place: Mumbai Date: May 5, 2020

Place: Pune Date: May 5, 2020

==> picture [152 x 22] intentionally omitted <==

Walker Chandiok & Co LLP 16th floor, Tower II, Indiabulls Finance Centre, SB Marg, Prabhadevi (W) Mumbai 400 013 India T +91 22 6626 2699 F +91 22 6626 2601

To the Members of Persistent Systems Limited

Report on the Audit of the Condensed Interim consolidated Financial Statements

Opinion

1. We have audited the accompanying condensed interim consolidated financial statements of Persistent Systems Limited Holding and its subsidiaries (the Holding Company and its and its associate, which comprise the Condensed

interim consolidated Balance Sheet as at 31 March 2020, the Condensed interim consolidated Statement of Profit and Loss (including Other Comprehensive Income)for the quarter and year ended 31 March 2020, the Condensed interim consolidated Cash Flow Statement and the Condensed interim consolidated Statement of Changes in Equity for the year ended 31 March 2020, and a summary of the significant accounting policies and other explanatory information.

1. In our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the reports of the other auditors on separate condensed interim financial statements and on the other financial information of the subsidiaries and associate, the aforesaid condensed interim consolidated financial statements give the information required by the Companies principles generally accepted in India in accordance with Indian Accounting Standard 34, Interim specified under Section 133 of the Act, of the consolidated state of

affairs (consolidated financial position) of the Group and its associate as at 31 March 2020, and its consolidated profit (consolidated financial performance including other comprehensive income) for the quarter and year ended 31 March 2020, its consolidated cash flows and the consolidated changes in equity for the year ended 31 March 2020.

Basis for Opinion

1. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Our responsibilities under those standards are further described in the Responsibilities for the Audit of the condensed interim consolidated financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the relevant to our audit of the condensed interim consolidated financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in paragraph 11 of the Other Matters section below is sufficient and appropriate to provide a basis for our opinion.

Page 1 of 4

Walker Chandiok & Co LLP is registered with limited liability with identification number AAC-2085 and its registered office at L-41 Connaught Circus, New Delhi, 110001, India

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Persistent Systems Limited

on the Audit of the Condensed Interim consolidated Financial Statements

Responsibilities of Management and Those Charged with Governance for the Condensed Interim Consolidated Financial Statements

1. Section 134(5) of the Act with respect to the preparation of these condensed interim consolidated financial statements that give a true and fair view of the consolidated state of affairs (consolidated financial position), consolidated profit or loss (consolidated financial performance including other comprehensive income), consolidated changes in equity and consolidated cash flows of the Group including its associate in accordance with the accounting principles generally accepted in India including the Ind AS 34 specified under Section 133 of the Act.

2. ensuring accuracy of records including financial information considered necessary for the preparation of condensed interim consolidated Ind AS 34 financial statements. Further, in terms of the provisions of the Act, the respective Board of Directors /management of the companies included in the Group and its associate, covered under the Act are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the condensed interim consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. These condensed interim consolidated financial statements have been used for the purpose of preparation of the condensed consolidated financial statements by the Directors of the Holding Company, as aforesaid.

3. In preparing the condensed interim consolidated financial statements, the respective Board of Directors of the companies included in the Group and of its associate are responsible for assessing the ability of the Group and its associate to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group and its associate or to cease operations, or has no realistic alternative but to do so.

4. The Board of Directors are also responsible for overseeing the financial reporting process of the companies included in the Group and its associate.

Condensed Interim Consolidated Financial

Statements

1. Our objectives are to obtain reasonable assurance about whether the condensed interim consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and s our opinion. Reasonable assurance is a high level of

assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these condensed interim consolidated financial statements.

Page 2 of 4

Persistent Systems Limited

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on the Audit of the Condensed Interim consolidated Financial Statements

1. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

2. Identify and assess the risks of material misstatement of the condensed interim consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

3. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Group and its associate have in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls.

4. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

5. Conclude on the appropriateness of and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group and its associate to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw condensed interim consolidated

6. financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions events or conditions may cause the Group and its associate to cease to continue as a going concern.

7. Evaluate the overall presentation, structure and content of the condensed interim consolidated financial statements, including the disclosures, and whether the condensed interim consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

8. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

9. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Other Matters

1. We did not audit the condensed interim financial statements of fifteen subsidiaries, whose condensed interim financial statements reflect total assets of 4,751.45 million and net assets of 1473.65 million as at 31 March 2020, total revenues of 4,964.27 million and net cash inflows amounting to 115.88 million for the year ended on that date, as considered in the condensed interim consolidated financial statements. These condensed interim financial statements have been audited by other auditors whose reports have been furnished to us by the management and our opinion on the condensed interim consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, is based solely on the reports of the other auditors.

Our opinion above on the condensed interim consolidated financial statements, is not modified in respect of the above matter with respect to our reliance on the work done by and the reports of the other auditors.

Page 3 of 4

Persistent Systems Limited

on the Audit of the Condensed Interim consolidated Financial Statements

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1. The condensed interim consolidated financial s (including other comprehensive income) of Nil for the year ended 31 March 2020, as considered in the condensed interim consolidated financial statements, in respect of one associate, whose financial statements have not been audited by us. These financial statements are unaudited and have been furnished to us by the management and our opinion on the condensed interim consolidated financial statements, in so far as it relates to the aforesaid associate is based solely on such unaudited financial statements. In our opinion and according to the information and explanations given to us by the management, these financial statements are not material to the Group and its associate.

Our opinion above on the condensed interim consolidated financial statements, is not modified in respect of the above matter with respect to our reliance on the financial statements certified by management.

1. The condensed interim consolidated financial statements of the Company for the year and quarter ended 31 March 2019 and for the quarter ended 30 June 2019 were audited by the predecessor auditor, Deloitte Haskins & Sells LLP, who have expressed an unmodified opinion on these condensed interim consolidated financial statements vide their audit reports dated 27 April 2019 and 25 July 2019 respectively. Our opinion is not modified in respect of this matter.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABG5851

Place : Mumbai Date: 05 May 2020

Page 4 of 4

Persistent Systems Limited

CONDENSED INTERIM CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2020

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Notes As at As at
March 31, 2020 March 31, 2019
ASSETS
Non-current assets
Property, plant and equipment 6.1 2,224.60 2,331.24
Capital work-in-progress 166.18 12.10
Right of use assets 6.2 566.81 -
Goodwill 6.3 88.94 81.24
Other Intangible assets 6.4 1,434.93 1,595.41
Intangible assets under development 137.20 303.54
4,618.66 4,323.53
Financial assets
- Investments 7 4,620.97 4,345.71
- Loans 8 176.13 164.00
-Other non-current financial assets 9 358.93 344.33
Deferred tax assets (net) 10 960.08 405.05
Other non-current assets 11 331.31 68.31
11,066.08 9,650.93
Current assets
Financial assets
- Investments 12 5,164.77 3,295.53
- Trade receivables (net) 13 5,921.96 4,923.01
- Cash and cash equivalents 14 1,899.99 1,739.45
- Other bank balances 15 2,672.19 4,989.35
- Loans 16 13.71 7.87
- Other current financial assets 17 2,068.54 2,377.00
Current tax assets (net) 163.93 185.06
Other current assets 18 1,950.52 1,387.79
19,855.61 18,905.06
TOTAL 30,921.69 28,555.99
EQUITY AND LIABILITIES
EQUITY
Equity share capital 5 764.25 791.19
Other equity 23,093.30 22,655.61
23,857.55 23,446.80
LIABILITIES
Non- current liabilities
Financial liabilities
- Borrowings 19 46.22 11.97
- Other long-term financial liabilities 20 361.32 1.83
Provisions 21 182.79 174.94
590.33 188.74
Current liabilities
Financial liabilities
- Trade payables [(dues of micro and small 22 2,247.09 1,517.07
million)]
- Other financial liabilities 23 1,163.44 441.93
Other current liabilities 24 1,320.13 1,122.44
Provisions 25 1,610.99 1,764.21
Current tax liabilities (net) 132.16 74.80
6,473.81 4,920.45
TOTAL 30,921.69 28,555.99
- 0.00 -
Summary of significant accounting policies 4
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The accompanying notes are an integral part of the condensed consolidated financial statements. As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

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Bharat Shetty Partner Membership No.: 106815

==> picture [78 x 36] intentionally omitted <==

Place: Mumbai Date : May 5, 2020

Dr. Anand Deshpande Chairman and Managing Director

Sunil Sapre Executive Director and Chief Financial Officer

Kiran Umrootkar Director

==> picture [60 x 36] intentionally omitted <==

Amit Atre Company Secretary

Place: Pune Date : May 5, 2020

Persistent Systems Limited

CONDENSED INTERIM CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE QUARTER AND YEAR ENDED MARCH 31, 2020

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Notes For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Income
Revenue from operations (net) 26 9,263.65 8,318.54 35,658.08 33,659.41
Other income 27 293.20 283.96 1,323.77 876.55
Total income (A) 9,556.85 8,602.50 36,981.85 34,535.96
Expenses
Employee benefits expense 28.1 5,675.97 4,859.47 21,556.40 19,249.53
Cost of professionals 28.2 1,163.23 862.83 3,918.94 3,490.45
Finance costs (refer note 36) 11.68 1.03 63.32 3.05
Depreciation and amortization expense 6.5 420.25 376.80 1,659.62 1,572.51
Other expenses 29 1,155.29 1,389.23 5,260.15 5,357.03
Total expenses (B) 8,426.42 7,489.36 32,458.43 29,672.57
Profit before tax (A - B) 1,130.43 1,113.14 4,523.42 4,863.39
Tax expense
Current tax 366.06 298.75 1,354.70 1,343.20
Tax charge in respect of earlier years 6.58 12.52 52.55 88.81
Deferred tax credit (80.42) (42.86) (286.72) (85.41)
Total tax expense 292.22 268.41 1,120.53 1,346.60
Net profit for the period / year (C) 838.21 844.73 3,402.89 3,516.79
Other comprehensive income
Items that will not be reclassified to profit and loss (D)
- Remeasurements of the defined benefit liabilities / asset (net of tax) 2.37 12.19 (34.80) (47.15)
- Tax effect on remeasurements of the defined benefit liabilities / (asset) - - - -
2.37 12.19 (34.80) (47.15)
Items that may be reclassified to profit and loss (E)
- Effective portion of cash flow hedge (net of tax) (250.14) 115.57 (429.15) 168.43
- Exchange differences in translating the financial statements of foreign 369.96 (58.42) 323.15 113.82
operations
119.82 57.15 (106.00) 282.25
Total other comprehensive income for the period / year (D) + (E) 122.19 69.34 (140.80) 235.10
Total comprehensive income for the period / year (C) + (D) + (E) 960.40 914.07 3,262.09 3,751.89
Earnings per equity share 30
10.97 10.59 44.38 43.99
10.97 10.59 44.38 43.99
Summary of significant accounting policies 4
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The accompanying notes are an integral part of the condensed consolidated financial statements.

As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

Bharat Shetty Partner Membership No.: 106815

Dr. Anand Deshpande

Chairman and Managing Director

Kiran Umrootkar Director

Sunil Sapre

Amit Atre

Executive Director and Company Secretary Chief Financial Officer

Place: Mumbai Date : May 5, 2020

Place: Pune Date : May 5, 2020

CONSOLIDATED INTERIM CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

Persistent Systems Limited

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For the year ended
March 31, 2020 March 31, 2019
Cash flow from operating activities
Profit before tax 4,523.42 4,863.39
Adjustments for:
Interest income (545.28) (287.72)
Finance costs 63.32 3.05
Dividend income (13.98) (180.77)
Depreciation and amortization expense 1,659.62 1,572.51
Amortization of lease premium - 0.58
Unrealised exchange (gain) / loss (net) (131.29) 106.52
Change in foreign currency translation reserve 119.30 (86.85)
Exchange loss/ (gain) on derivative contracts 58.51 20.51
Exchange (gain) / loss on translation of (46.77) 71.36
foreign currency cash and cash equivalents
Donations in kind - 1.40
Bad debts - 71.18
Provision for doubtful receivables (net) / (provision written back) 83.86 (4.89)
Employee stock compensation expenses 236.79 -
Provision for doubtful deposits and advances 248.48 182.50
Provision for diminution in value of investments - 13.98
Remeasurements of the defined benefit liabilities / asset (before tax effects) (46.14) (70.36)
Excess provision in respect of earlier years written (back) (6.95) (33.89)
(Gain) / loss on fair valuation of assets designated at FVTPL (119.02) 68.92
Profit on sale of investments (net) (164.81) (366.09)
Loss / (Profit) on sale of property, plant and equipment (net) 5.96 (4.02)
Operating profit before working capital changes 5,925.02 5,941.31
Movements in working capital :
(Increase) in non-current and current loans (14.44) (5.55)
(Increase) in other non current assets (235.30) (1.68)
(Increase) in other current financial assets (232.15) (135.26)
(Increase) / decrease in other current assets (559.10) 175.62
(Increase) in trade receivables (894.77) (246.03)
Increase / (decrease) in trade payables, current liabilities and non current liabilities 712.56 (180.13)
(Decrease) / increase in provisions (145.37) 179.91
Operating profit after working capital changes 4,556.45 5,728.19
Direct taxes paid (net of refunds) (1,328.27) (1,405.07)
Net cash generated from operating activities (A) 3,228.18 4,323.12
Cash flows from investing activities
Payment towards capital expenditure (including intangible assets) (758.39) (379.06)
Proceeds from sale of property, plant and equipment 12.68 5.04
(435.48) (148.15)
Purchase of bonds (901.61) (1,175.31)
Proceeds from sale/ maturity of bonds 819.87 199.43
Purchase of non-current investments - (144.96)
Proceeds from sale of non-current investments 25.22 -
Investments in mutual funds (19,456.95) (22,418.13)
Proceeds from sale / maturity of mutual funds 17,670.49 25,010.64
Maturity / (Investments) of bank deposits having original maturity over three months 2,108.15 (4,049.96)
Investments in deposits with financial institutions - (300.00)
Maturity of deposits with financial institutions 250.00 650.35
Non current loans placed - (16.96)
Interest received 503.60 327.33
Dividends received 13.98 180.77
Net cash (used) in investing activities (B) (148.44) (2,258.97)
Cash flows from financing activities
(Repayment) of long term borrowings (4.62) (4.58)
Shares bought back (1,677.01) (571.41)
Loan received as a part of COVID-19 relief measures 39.14 -
Specific project related grant received 3.00 -
Interest paid (63.31) (3.66)
Dividends paid (1,146.38) (881.41)
Tax on dividend paid (154.14) (137.41)
Net cash used in financing activities (C ) (3,003.32) (1,598.47)
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Persistent Systems Limited

CONSOLIDATED INTERIM CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

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For the year ended
March 31, 2020 March 31, 2019
Net increase in cash and cash equivalents (A + B + C) 76.42 465.68
Cash and cash equivalents at the beginning of the year 1,739.45 1,345.13
Cash and cash equivalents acquired on acquisition 37.35 -
Effect of exchange difference on translation of foreign 46.77 (71.36)
currency cash and cash equivalents
Cash and cash equivalents at the end of the year 1,899.99 1,739.45
Components of cash and cash equivalents
Cash on hand (Refer note 14) 0.24 0.22
Balances with banks
On current accounts (Refer note 14) 1,566.06 1,300.93
On saving accounts (Refer note 14) 0.36 0.91
On Exchange Earner's Foreign Currency accounts (Refer note 14) 261.86 114.91
On deposit accounts with original maturity less than three months (Refer note 14) 71.47 229.54
On Escrow accounts (Refer note 14) - 92.94
Cash and cash equivalents 1,899.99 1,739.45
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development activities specified in the agreement.

** The Parent Company concluded the buyback scheme on June 27, 2019 and minimum balance maintained in Escrow account was released on completion of statutory formalities.

Summary of significant accounting policies - Refer note 4

The accompanying notes are an integral part of the condensed consolidated financial statements.

As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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For and on behalf of the Board of Directors of
Persistent Systems Limited
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Bharat Shetty
Partner
Membership No.: 106815
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Place: Mumbai Date : May 5, 2020

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Dr. Anand Deshpande Kiran Umrootkar
Chairman and Managing Director Director
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Amit Atre
Company Secretary
Place: Pune
Date : May 5, 2020
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Sunil Sapre
Executive Director and
Chief Financial Officer
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Persistent Systems Limited

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

A. Share capital

(Refer note 5)

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Balance as at April 1, 2019 Changes in equity share capital during Balance as at March 31, 2020
the year
791.19 (26.94) 764.25
Balance as at April 1, 2018 Changes in equity share capital during Balance as at March 31, 2019
the year
800.00 (8.81) 791.19
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(This space is intentionally left blank)

Persistent Systems Limited

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

B. Other equity

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Particulars Reserves and surplus Items of other comprehensive income Total
Securities General Share options Gain on Capital Special Retained Effective portion of Exchange differences
premium reserve outstanding bargain redemption Economic earnings cash flow hedges on translating the
reserve purchase reserve Zone re- financial statements of
investment foreign operations
reserve
Balance as at April 1, 2019 774.10 10,565.95 76.29 52.71 8.81 70.00 10,657.52 185.06 265.17 22,655.61
Net profit for the period - - - - - - 3,402.89 - - 3,402.89
Other comprehensive income for the period - - - - - - (34.80) (429.15) 323.15 (140.80)
Transfer to capital redemption reserve - - - - 26.94 - (26.94) - - -
Transitional impact on adoption of Ind AS 116 (net of taxes) - - - - - - (123.60) - - (123.60)
Dividend - - - - - - (1,146.38) - - (1,146.38)
Tax on dividend - - - - - - (154.14) - - (154.14)
Transfer from Special Economic Zone re-investment reserve - - - - - (20.05) 20.05 - - -
Transfer to general reserve 1,630.89 - - - (1,630.89) - - -
Employee stock compensation expenses - - 236.79 - - - - - - 236.79
Adjustments towards employees stock options - 25.61 (25.61) - - - - - - -
Utilised towards buy back of shares (refer note 5) (774.10) - - - - - (875.97) - - (1,650.07)
Other changes during the year - 4.96 3.04 5.00 - - - - - 13.00
Balance at March 31, 2020 - 12,227.41 290.51 57.71 35.75 49.95 10,087.74 (244.09) 588.32 23,093.30
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Balance as at April 1, 2018 Net profit for the year Other comprehensive income for the year Dividend Tax on dividend Transfer to general reserve Particulars	Securities premium General reserve Share opti outstandi reserve 1,336.70 9,306.27 90 - - - - - - - - - 1,260.03	ons ng Gain on bargain purchase Capital redemption reserve Special Economic Zone re- investment reserve Retained earnings Effective portion of cash flow hedges Exchange differences on translating the financial statements of foreign operations .52 26.39 - - 9,544.13 16.63 151.35 20,471.99 - - - - 3,516.79 - - 3,516.79 - - - - (47.15) 168.43 113.82 235.10 - - - - (880.00) - - (880.00) - - - - (137.41) - - (137.41) - - - - (1,260.03) - - - Total Reserves and surplus Items of other comprehensive income
Transfer to capital redemption reserve	- -	- - 8.81 - (8.81) - - -
Transfer to Special Economic Zone re-investment reserve	- -	- - - 70.00 (70.00) - - - .23) - - - - - - - - 0.25 - - - - - 0.25 - - - - - - - (562.60) - 26.07 - - - - 11.49 .29 52.71 8.81 70.00 10,657.52 185.06 265.17 22,655.61 -
Adjustments towards employees stock options Addition on business combination Utilised towards buy back of shares (refer note 5) Other changes during the year Balance at March 31, 2019	- 14.23 (14
	- -
	(562.60) -
	- (14.58) 774.10 10,565.95 76

Summary of significant accounting policies - Refer note 4

The accompanying notes are an integral part of the condensed consolidated financial statements.

As per our report of even date

For Walker Chandiok & Co LLP

Chartered Accountants Firm Registration No.: 001076N/N500013

Bharat Shetty Partner Membership No.: 106815

For and on behalf of the Board of Directors of Persistent Systems Limited

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Dr. Anand Deshpande Kiran Umrootkar Chairman and Managing Director Director

Place: Mumbai Date : May 5, 2020

Sunil Sapre

Executive Director and Chief Financial Officer

Amit Atre

Company Secretary

Place: Pune Date : May 5, 2020

Persistent Systems Limited

CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

Nature and purpose of reserves

a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) General reserve

General reserve represents amounts transferred from profit for the year and from Share options outstanding reserve on exercise / expiry of employee share options. It is a free reserve as per section 2 (43) of the Companies Act, 2013.

c) Share options outstanding reserve

Share options outstanding reserve represents the cumulative expense recognized for equity-settled transactions at each reporting date until the employee share options are exercised / expired upon which such amount is transferred to General reserve.

d) Gain on bargain purchase

The excess of the portion of equity of the acquired company over its cost is treated as gain on bargain purchase in the financial statements.

e) Capital redemption reserve

Capital redemption reserve represents the nominal value of the shares bought back; and is created and utilised in accordance with Section 69 of the Companies Act, 2013.

f) Special Economic Zone re-investment reserve

The Special Economic Zone re-investment reserve has been created out of the profit in terms of the provisions of Section 10AA(1)(ii) of the Income tax Act, 1961. The reserve should be utilised by the Group for acquiring new plant and machinery for the purpose of its business in accordance with Section 10AA(2) of the Income tax Act, 1961.

g) Cash flow hedge reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into towards highly probable transactions. Such gains or losses are subsequently recognised in the statement of profit and loss in the period in which the said transaction occurs / hedging instruments are cancelled.

h) Foreign currency translation reserve

The foreign exchange differences arising from the translation of financial statements of foreign operations with functional currency other than Indian rupees is recognised in other comprehensive income and is presented under equity in the foreign currency translation reserve. The amount is transferred to retained earnings upon disposal of investment in foreign operation.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

1. Nature of operations

Parent Stock Exchange and National Stock Exchange. The Company is a global company specializing in software products, services and technology innovation. The Company offers complete product life cycle services.

Persistent Systems, Inc. (PSI) based in the USA, a wholly owned subsidiary of PSL, is engaged in software product, services and technology innovation.

Persistent Systems Pte. Ltd. (PS Pte.) based in Singapore, a wholly owned subsidiary of PSL, is engaged in software development, professional and marketing services.

Persistent Systems France SAS (PSFS) based in France, a wholly owned subsidiary of PSL, is engaged in software products, services and technology innovation.

Persistent Telecom Solutions Inc. (PTSI) based in the USA, a wholly owned subsidiary of Persistent Systems Inc., is engaged in software products, services and technology innovation in telecom and Product Lifecycle Management domains.

Persistent Systems Malaysia Sdn. Bhd. (PSM) based in Malaysia, a wholly owned subsidiary of PSL, is engaged in software products and services.

Akshat Corporation (n) based in USA, was a wholly owned subsidiary of Persistent Systems Inc.

Akshat Corporation has been dissolved with effect from December 21, 2018. Persistent Systems, Inc., its holding company, took over all the assets and liabilities of Akshat Corporation on the date of dissolution.

Aepona Holdings Limited (an Ireland based wholly owned subsidiary of Persistent Systems Inc.) operates as the holding Company of Aepona Group Limited.

Aepona Holdings Limited has been dissolved with effect from October 24, 2019. Persistent Systems, Inc., its holding Company, took over all the assets and liabilities of Aepona Holdings Limited on the date of dissolution.

Aepona Group Limited, an Ireland based wholly owned subsidiary of Persistent Systems, Inc. (previously owned by Aepona Holdings Limited) operates as the holding Company of Aepona Limited and Valista Limited.

Aepona Limited (a UK based wholly owned subsidiary of Aepona Group Limited) is engaged in the business of a telecommunication API gateway for defining, exposing, controlling and monetizing telecom services to partners and application developers and an Internet of Things service creation platform that allows enterprises to add a service layer (or

Valista Limited (an Ireland based wholly owned subsidiary of Aepona Group Limited) has adopted indirect sales model, with services revenue being billed to Aepona Limited. Sale of services are then contracted between Aepona Limited and customers. The company is under liquidation.

Persistent Systems Lanka (Private) Limited (Formerly known as Aepona Software (Private) Limited) (a Sri Lanka based wholly owned subsidiary of Valista Limited) has adopted indirect sales model, with services revenue being billed to Aepona Limited. Sale of services are then contracted between Aepona Limited and customers.

Persistent Systems Mexico, S.A. de C.V (a Mexico based wholly owned subsidiary of Persistent Systems Inc.) has adopted indirect sales model, with services revenue being billed to Persistent Systems Inc. Sale of services are then contracted between Persistent Systems Inc. and customers.

Persistent Systems Israel Ltd. (an Israel based wholly owned subsidiary of Persistent Systems Inc.) has adopted indirect sales model, with services revenue being billed to Persistent Systems Inc. Sale of services are then contracted between Persistent Systems Inc. and customers.

Persistent Systems Germany GmbH (wholly owned subsidiary of Persistent Systems Limited) operates as the holding Company of PARX Werk AG. The Company is specializing in software development.

PARX Werk AG (a Switzerland based wholly owned subsidiary of Persistent Systems Germany GmbH) is engaged in the business of software products, services and technology innovation in the digital practice.

PARX Consulting GmbH (a Germany based wholly owned subsidiary of PARX Werk AG) is engaged in the business of software products, services and technology innovation in the digital practice.

Herald Technologies Inc. (HTI), based in the USA a wholly owned subsidiary of Persistent Systems Inc., was working on implementation of platforms and related IT services for the healthcare industry.

Herald Technologies Inc. has been dissolved with effect from June 24, 2019. Persistent Systems, Inc., its holding company, took over all the assets and liabilities of Herald Technologies, Inc. on the date of dissolution.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

Youperience GmbH (a Germany based wholly owned subsidiary of Persistent Systems Germany GmbH) is engaged in Salesforce related implementation services. (Refer Note 35)

Youperience Limited (a United Kingdom based wholly owned subsidiary of Youperience GmbH) is engaged in Salesforce related implementation services. (Refer Note 35)

Klisma e-Services Private Limited is engaged in the business of internet, telecommunications, mobile technology and other media enabling electronic commerce.

2. Basis of preparation

The financial statements of the Group have been prepared on an accrual basis and under the historical cost convention except for certain financial instruments, equity settled employee stock options and initial recognition of assets acquired under business combinations which have been measured at fair value. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. The accounting policies are consistently applied by the Group except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Statement of compliance:

These financial statements have been prepared in accordance with Ind AS 34 Interim Financial Reporting as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013.

3. Principles of consolidation

The consolidated financial statements of the Parent year ended March 31, 2020 are prepared in accordance with generally accepted accounting principles applicable in India, and the Indian Accounting Standard Parent Company

for its separate financial statements.

The Parent Company consolidates entities which it owns or controls. The consolidated financial statements comprise the financial statements of the company and its subsidiaries as disclosed below. Control exists when the parent company has power over the entity, is exposed or has rights to variable returns from its involvement with the entity; and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity's returns. Subsidiaries are consolidated from the date control commences until the date control ceases.

The financial statements of the Parent Company and its subsidiary companies have been combined on line by line basis by adding together the book values of like items of assets and liabilities, income and expenses after eliminating intra group balances and intra group transactions except where cost cannot be recovered. The unrealized profits or losses resulting from the intra group transactions and balances have been eliminated.

The consolidated financial statements include the share of profit / loss of associate companies, which are accounted for under ich is neither a subsidiary nor a joint venture.

the date at which investment in the subsidiary is made, is described as goodwill and recognized separately as an asset in the consolidated financial statements. treated as gain on bargain purchase in the financial statements. Goodwill arising on consolidation is not amortized. It is tested for impairment on a periodic basis and written off if found impaired.

The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances and necessary adjustments required for deviations, if any, are made in the consolidated financial statements. The consolidated financial statements are presented in the same manner as the Parent separate financial statements.

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

The subsidiary and associate companies considered in consolidated financial statements are as follows:

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Name of the subsidiary/ associate Ownership Percentage as at Country of
incorporation
March 31, 2020 March 31, 2019
Persistent Systems, Inc. 100% 100% USA
Persistent Systems Pte Ltd. 100% 100% Singapore
Persistent Systems France SAS 100% 100% France
Persistent Telecom Solutions Inc. 100% 100% USA
Persistent Systems Malaysia Sdn. Bhd. 100% 100% Malaysia
Aepona Holdings Limited
(Dissolved with effect from October 24, - 100% Ireland
2019)
Aepona Group Limited 100% 100% Ireland
Aepona Limited 100% 100% UK
Valista Limited 100% 100% Ireland
Persistent Systems Lanka (Private)
100% 100% Sri Lanka
Limited
Persistent Systems Mexico, S.A. de
100% 100% Mexico
C.V.
Persistent Systems Israel Ltd. 100% 100% Israel
Persistent Systems Germany GmbH 100% 100% Germany
PARX Werk AG 100% 100% Switzerland
PARX Consulting GmbH 100% 100% Germany
Herald Technologies, Inc.
(Dissolved with effect from June 24, - 100% USA
2019)
Youperience GmbH
(Acquired with effect from July 1, 2019) 100% - Germany
(Refer note 35)
Youperience Limited
(Acquired with effect from July 1, 2019) 100% - United Kingdom
(Refer note 35)
Klisma e-Services India Pvt. Ltd. 50% 50% India
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

4. Summary of significant accounting policies

(a) Use of estimates

The preparation of the condensed consolidated financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

Estimation of uncertainties relating to the global health pandemic from COVID-19:

The Group has evaluated likely impact of the COVID - 19 on the overall business of the Group. Though it is too early to estimate the same in view of the volatility in the global economic condition pursuant to this pandemic; the Group as at the date of the approval of these financials, has used various available sources of information to analyse the carrying amount of its financial assets and exposures. The impact of COVID - 19 on the Group fer from the estimate as on the date of the approval of the financial statements.

Expected credit loss:

The Group has considered the current and anticipated future economic conditions relating to the industries the Group deals with and the countries where it operates. In calculating expected credit loss, the Group has also considered related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19 using the forward looking approach prescribed by Ind AS 109.

Impact on unhedged foreign currency exposure:

Based on its assessment, the Group believes that the probability of occurrence of its forecasted transaction are not likely to be impacted by COVID - 19. Hence, the Group continues to believe that there is no foreseeable impact on effectiveness of its cash flow hedges due to this global pandemic.

Carrying value of financial instruments:

Investments in mutual funds are classified as evel 1 having fair value marked to an active market which factors in the uncertainties arising out of COVID - 19. These financial assets, are mainly investments in liquid debt securities and hence, any material volatility in their carrying value is not expected.

Impact on revenue:

The Group has re-evaluated the probable revenue from customers in various verticals to assess any possible drops in revenue from any of these verticals due to the economic stress caused by COVID - 19. Accordingly, it is of the opinion that the customers could re-prioritise their discretionary spend in immediate future to conserve resources.

The impact assessment of COVID - 19 is a continuing process given the uncertainties associated with its nature and duration. The Group has considered the same to the extent known currently and has taken steps to measure the cost budget required to complete its performance obligations in respect of fixed price contracts and incorporated impact of likely delays and costs in meeting its obligations.

Critical accounting estimates

i. Revenue recognition

The Group uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-ofcompletion method requires the Group to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

Further, the Group uses significant judgement while determining the transaction price allocated to performance obligations using the expected cost plus margin approach.

In respect of the contracts where the transaction price is payable as royalty at pre-defined percentage of customer revenue and bearing in mind, the time gap between the close of the accounting period and availability of the revenue report from the customer, the Group is required to use its judgement to ascertain the income from royalty on the basis of historical trends of customer revenue.

ii. Income taxes

The Group's two major tax jurisdictions are India and the United States, though the Group also files tax returns in other overseas jurisdictions. Significant judgements are involved in determining the provision for income taxes.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

iii. Intangible assets and contingent consideration in business combinations

Business combinations are accounted for using Ind AS 103, Business Combinations. Ind AS 103 requires the identifiable intangible assets and contingent consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These valuations are conducted by independent valuation experts.

iv. Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of depreciation is derived after determining an e

end of its life. The useful lives and residual values of Group's assets are determined by management at the time the asset is acquired and reviewed periodically. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

v. Impairment of Goodwill

Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit is less than its carrying amount based on a number of factors including operating results, business plans, future cash flows and economic conditions. The recoverable amount of cash generating units is determined based on higher of value-in-use and fair value less cost to sell. The goodwill impairment test is performed at the level of the cash-generating unit or groups of cash-generating units which are benefiting from the synergies of the acquisition and which represents the lowest level at which goodwill is monitored for internal management purposes. Market related information and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of recoverable amount include estimated long term growth rates, weighted average cost of capital and estimated operating developments

vi. Provisions

Provisions are determined based on the best estimate required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the best estimates of the amount required.

vii. Internally generated Intangible assets

During the year, the management continued to assess the recoverability of the G including those under development. Based on the current revenue generated from these lines of business, expected future revenue and the basis of amortization followed, the management considers the carrying value of these intangible assets as recoverable

viii. Leases

I nd AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the underlying asset to the Group operations taking into account the location of the underlying asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Group has concluded that no changes are required to lease periods relating to the existing lease contracts.

(b) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Capital work-in-progress includes cost of Property, Plant and Equipment that are not ready to be put to use.

Subsequent expenditure related to an item of Property, Plant and Equipment is added to its original cost only if it is probable that future economic benefits associated with the item will flow to the Group. All other expenses on existing Property, Plant and Equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from disposal of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

(c) Intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Group can demonstrate:

• technical feasibility of completing the intangible asset so that it will be available for use or sale;

• its intention to complete the asset;

• its ability to use or sell the asset;

• how the asset will generate probable future economic benefits;

• the availability of adequate resources to complete the development and to use or sell the asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such development expenditure, until capitalization, is reflected as intangible assets under development.

Following the initial recognition, internally generated intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization of internally generated intangible asset begins when the development is complete and the asset is available for use.

(d) Business combinations

Business combinations are accounted for using the acquisition method under the provisions of Ind AS 103 - Business Combinations.

The cost of an acquisition is measured at the fair value of the assets acquired and liabilities incurred or assumed on the date of acquisition, which is the date on which control is transferred to the Group. The cost of acquisition also includes the fair value of contingent consideration, if any. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.

Transaction costs that the Group incurs in connection with a business combinations are expensed as incurred.

(e) Goodwill/ Gain on bargain purchase

Goodwill represents the cost of business acquisition in excess of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. When the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the cost of business acquisition, a gain is recognized in the other comprehensive income as gain on bargain purchase. Goodwill is measured at cost less accumulated impairment losses.

(f) Depreciation and amortization

Depreciation assets estimated by the management.

The management estimates the useful lives for the Property, Plant and Equipment as follows:

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Assets Useful lives
Buildings 25 years
Computers 3 years
Computers - Servers and networks 3 years
Office equipments 5 years
Plant and equipment 5 years
Plant and equipment (Windmill) 20 years
Plant and equipment (Solar Energy System) 10 years
Furniture and fixtures 5 years
Vehicles 5 years
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*For these classes of assets, based on internal assessment and independent technical evaluation carried out by external valuers the management believes that the useful lives as given above best represent the period over which the management expects to use these assets. Hence the useful lives of these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

5,000 are fully depreciated in the year of acquisition.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

Leasehold improvements are amortized over the period of lease or useful life, whichever is lower.

Intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 6 years from the day the asset is made available for use.

(g) Financial instruments

i) Financial assets

Initial recognition and measurement

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value of the financial assets on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified as:

• Financial assets at amortized cost

Financial assets that are held within a business model whose objective is to hold assets for collecting contractual cash flows and whose contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance income in the statement of profit and loss.

• Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets that are held within a business model whose objective is achieved both by collecting contractual cash interest on the principal amount outstanding are subsequently measured at fair value. Fair value movements are recognized in other comprehensive income.

• Financial assets at fair value through profit or loss (FVTPL)

Any financial asset which does not meet the criteria for categorization as financial assets at amortized cost or as FVTOCI, is classified as financial asset at FVTPL. Financial assets except derivative contracts included within the FVTPL category are subsequently measured at fair value with all changes recognized in the statement of profit and loss.

• Forward exchange contracts not intended for trading or speculation purposes, classified as derivative financial instruments

As per the accounting principles laid down in Ind AS 109 ting to cash flow hedges, derivative financial instruments which qualify for cash flow hedge accounting are fair valued at balance sheet date and the effective portion of the resultant loss / (gain) is debited / (credited) to the hedge reserve under other comprehensive income and the ineffective portion is recognized to the statement of profit and loss. Derivative financial instruments are carried as forward contract receivable when the fair value is positive and as forward contract payable when the fair value is negative. Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the statement of profit and loss as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized under other comprehensive income is transferred to the statement of profit and loss when the forecasted transaction occurs or affects profit or loss or when a hedged transaction is no longer expected to occur.

Derecognition

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognitio the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income, and accumulated in equity, if any is recognised in profit or loss.

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the issue of financial liabilities (other than financial liabilities at fair value through profit or loss) are deducted from the fair value of the financial liabilities on initial recognition. Transaction costs directly attributable to the issue of financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Subsequent measurement

For the purpose of subsequent measurement, financial liabilities are classified as:

- Financial liabilities at amortized cost

Financial liabilities such as loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance costs in the statement of profit and loss.

• Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities include financial liabilities held for trading and financial liabilities designated upon initial recognition as fair value through profit or loss if the recognition criteria as per Ind AS 109 are satisfied. Gains or losses on liabilities held for trading are recognized in statement of profit and loss. Fair value gains or losses on liabilities designated as FVTPL attributable to changes in own credit risk are recognized in other comprehensive income. All other changes in fair value of liabilities designated as FVTPL are recognized in the statement of profit and loss. The Group has not designated any financial liability as FVTPL.

Derecognition

The Group difference between the carrying amount of the financial liability derecognized and the consideration paid and payable is recognized in profit or loss.

(h) Impairment

i) Financial assets

The Group applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on financial assets measured at amortized cost and financial assets that are debts instruments and are measured at fair value through other comprehensive income (FVTOCI). ECL is the difference between contractual cash flows that are due and the cash flows that the Group expects to receive, discounted at the original effective interest rate.

For trade receivables, the Group recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. For other financial assets, the Group determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.

ii) Non-financial assets

The carrying amounts of Property, Plant and Equipment and Goodwill are reviewed at each balance sheet date or whenever there is any indication of impairment based on internal/external factors. If any indications exist, the Group estimates the a recoverable amount.

In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The recoverable amount is the greater of the asset's fair value and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset.

An impairment loss is recognised in the statement of profit and loss.

Recoverable amount of intangible assets under development that is not yet available for use is estimated at least at each financial period / year end even if there is no indication that the asset is impaired.

(i) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period/ year they occur.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

(j) Leases

The lease asset classes primarily consist of leases for land and office premises. The Group assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether: (i) the contract involves the use of an identified asset (ii) the Group has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Group has the right to direct the use of the asset

Where the Group is a lessee

The Group accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Group recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located.

The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment.

Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Group measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Group uses incremental borrowing rate.

The lease payments shall include fixed payments, variable lease payments based on an index or rate, residual value guarantees, exercise price of a purchase option where the Group is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or statement of profit and loss if the right-of-use asset is already reduced to zero.

The Group has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease expenses associated with these leases are recognized in the statement of profit and loss on a straight line basis.

Group as a lessor

At the inception of the lease the Group classifies each of its leases as either an operating lease or a finance lease. The Group recognises lease payments received under operating leases as income over the lease term.

Transition

Effective April 1, 2019, the Group to all applicable lease contracts existing on April 1, 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on the date of initial application. Consequently, the Group recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at its carrying amount as if the standard had been applied since the commencement date of the lease, but discounted at the Group rate at the date of initial application. Comparatives as at and for the year ended March 31, 2019 have not been retrospectively adjusted and therefore will continue to be reported under the accounting policies included as part of our Annual Report for year ended March 31, 2019.

On transi as debited to retained earnings. The effect of this adoption is insignificant on the profit before tax, profit for the period and earnings per share. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

(k) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the Group. Revenue is recognized to the extent it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

(i) Income from sale of software services and products

The Group derives revenues primarily from IT services comprising of software development and related services and from the licensing of software products.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to receive in exchange for those products or services.

Arrangements with customers for software related services are either on a time-and-material or a fixed-price basis.

Revenue on time-and-material contracts are recognized as and when the related services are performed. Revenue from fixed-price contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.

access period.

.

When support services are provided in conjunction with the licensing arrangement and the license and the support services have been identified as two separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. Maintenance revenue is recognized proportionately over the period in which the services are rendered.

Revenue from royalty is recognized in accordance with the terms of the relevant agreements.

The Group accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the proportionate allocation of the discounts amount to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount. Also, when the level of discount varies with increases in levels of revenue transactions, the Group recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The Group recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.

Unbilled revenue represents revenue recognized in relation to work done until the balance sheet date for which billing has not taken place.

Unearned revenue represents the billing in respect of contracts for which the revenue is not recognized.

The Group collects Goods and Services Tax, on behalf of the government and, therefore, these are not economic benefits flowing to the Group. Hence, they are excluded from revenue.

(ii) Interest

Interest income is recognized on a time proportion basis taking into account the carrying amount and the effective interest rate.

(iii) Dividend

ive dividend is established. Dividend income is included under

(l) Government grants

Government grants are recognized at fair value when there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received. Grants related to purchase of assets are treated as deferred income and allocated to income statement over the useful lives of the related assets while grants related to expenses are deducted in reporting the related expenses in the income statement.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

(m) Foreign currency translation

Foreign currency transactions and balances

Initial recognition

Foreign currency transactions are recorded in the respective functional currencies of the entities in the Group, by applying to the foreign currency amount the exchange rate between the functional currency of each individual entity and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.

Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign currency liabilities relating to Property, Plant and Equipment acquisition are recognized as income or expenses in the period / year in which they arise.

Translation of foreign operations

The Group presents the financial statements in INR which is the functional currency of the parent company.

The assets and liabilities of a foreign operation are translated into the reporting currency (INR) at the exchange rate prevailing at the reporting date. Their statement of profit and loss are translated at exchange rates prevailing at the dates of transactions or weighted average rates, where such rates approximate the exchange rate at the date of transaction. The exchange differences arising on translation are accumulated in the foreign currency translation reserve under other comprehensive income. On disposal of a foreign operation, the accumulated foreign currency translation reserve relating to that foreign operation is recognized in the statement of profit and loss.

(n) Retirement and other employee benefits

(i) Provident fund

Provident fund is a defined contribution plan covering eligible employees. The Parent Company and the eligible employees make a monthly contribution to the provident fund maintained by the Regional Provident Fund Commissioner equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contributions to the provident fund are charged to the statement of profit and loss for the period / year when the contributions are due. The Parent Company has no obligation, other than the contribution payable to the provident fund.

(ii) Gratuity

Gratuity is a defined benefit obligation plan operated by Persistent Systems Limited and Persistent Systems Lanka (Private) determined on the basis of actuarial valuation using the projected unit credit method at the reporting date and are charged to the statement of profit and loss, except for the remeasurements, comprising of actuarial gains and losses which are recognized in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.

(iii) Superannuation

Superannuation is a defined contribution plan covering eligible employees of the Parent Company. The contribution to the superannuation fund managed by the insurer is equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contribution to this scheme is charged to the statement of profit and loss on an accrual basis. There are no other contributions payable other than contribution payable to the respective fund.

(iv) Leave encashment

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Group measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Group treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

The Group presents the entire leave encashment liability as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement beyond twelve months after the reporting date.

(v) Long service awards

The cost of providing benefit under long service awards scheme is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss.

(o) Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Group operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in statement of profit and loss.

Deferred income taxes reflect the impact of temporary differences between tax base of assets and liabilities and their carrying amounts. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except deferred tax liability arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, except deferred tax assets arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction.

In the situations where the Group is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in respect of o the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the period / year in which the temporary differences originate.

The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.

Deferred tax relating to items recognized outside the statement of profit and loss is recognized in co-relation to the underlying transaction either in other comprehensive income or directly in equity.

Minimum alternate tax (MAT) paid in a period / year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Group will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Group recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit date and writes down the asset to the extent the Group does not have convincing evidence that it will pay normal tax during the specified period.

(p) Segment reporting

(i) Identification of segment

life cycle of product to its customers.

The components of the Group that engage in business activities from which they earn revenue and incur expenses, whose

(ii) Allocation of income and direct expenses

Income and direct expenses allocable to segments are classified based on items that are individually identifiable to that segment such as salaries, project related travel expenses etc. The remainder is considered as un-allocable expense and is charged against the total income.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

(iii) Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

Segregation of assets, liabilities, depreciation and amortization and other non-cash expenses into various reportable segments have not been presented except for trade receivables as these items are used interchangeably between segments and the Group is of the view that it is not practical to reasonably allocate these items to individual segments and an ad-hoc allocation will not be meaningful.

(iv) Inter-segment transfers

There are no inter-segments transactions.

(v) Segment accounting policies

The Group prepares its segment information in conformity with accounting policies adopted for preparing and presenting the financial statements of the Group as a whole.

(q) Earnings per share (EPS)

Basic earnings per share are calculated by dividing the net profit for the period / year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period / year. The weighted average number of equity shares outstanding during the reporting period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the period / year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period / year, are adjusted for the effects of all dilutive potential equity shares.

The number of shares and potential dilutive equity shares are adjusted retrospectively for all periods presented for any bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.

(r) Provisions

A provision is recognized when the Group has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate of the amount required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(s) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

(t) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.

(u) Employee stock compensation expenses

Employees of the Group receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments granted (equity-settled transactions).

In accordance with Ind AS 102 -settled transactions is determined by the fair value of the options at the date of the grant and recognized as employee compensation cost over the vesting period. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent y vest.

The expense or credit recognized in the statement of profit and loss for a year represents the movement in cumulative expense recognized as at the beginning and end of that period / year and is recognized in employee benefits expense. In case of the employee stock option schemes having a graded vesting schedule, each vesting tranche having different vesting period has been considered as a separate option grant and accounted for accordingly.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

modification that increases the total fair value of the share-based payment transaction or is otherwise beneficial to the employee as measured at the date of modification.

The employee stock option expenses in respect of the employees of the subsidiaries are charged to the respective subsidiary.

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

5. Share capital

	As at As at March 31, 2020 March 31, 2019
Authorized shares (No. in million) 200 (Previous year: 200) equity shares of 10 each Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Previous year: 79.12) equity shares of 10 each Issued, subscribed and fully paid-up share capital	2,000.00 2,000.00
	2,000.00 2,000.00
	764.25 791.19
	764.25 791.19

a) Reconciliation of the shares outstanding at the beginning and at the end of the period/ year

The reconciliation of the number of shares outstanding and the amount of share capital is set out below:

			(In Million)	(In Million)
	As at		As at
	March 31, 2020		March 31, 2019
	No of shares Amount		No of shares	Amount
Number of shares at the beginning of the year	79.12	791.19	80.00	800.00
Less: Shares bought back	2.69	26.94	0.88	8.81
Number of shares at the end of the year	76.43	764.25	79.12	791.19

b) Terms / rights attached to equity shares

10 per share. Each holder of equity shares is entitled

to one vote per share. The Group declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

-19.

The Parent

-20.

The Parent Company declares and pays dividends in Indian rupees. The Finance Act, 2020 in India has repealed Dividend Distribution Tax (DDT). The Companies are now required to pay/ distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates as per Finance Act, 2020.

In the event of liquidation of the Parent Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

								(Nos.in	Million)
								For the period of	For the	period of
								five years ended	five years ended
								March 31, 2020	March	31, 2019
								No in Million	No in	Million
Equity shares	allotted on March 12, 2015 as fully paid bonus							40.000		40.000
							400 million
Equity shares	bought back							3.575		0.881

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

d) Buyback of Equity Shares of the Parent Company:

The Board of Directors, at its meeting in January 2019, had approved the buyback of the Parent -up equity shares of the face value of 10 each from its shareholders/beneficial owners excluding promoters, promoter group and persons who are in control of the Parent amount not exceeding 750 per Equity Share

The buyback was offered to all eligible equity shareholders of the Parent Company (other than the Promoters, the Promoter Group and Persons in Control of the Group) under the open market route through the stock exchanges. The buyback of equity shares through the stock exchange commenced on February 8, 2019 and was completed on June 27, 2019. During this buyback period the Parent Company had purchased and extinguished a total of 3,575,000 equity shares from the stock 3/- per equity share comprising 4.47% of the pre buyback paid-up equity share capital of the Parent million (excluding transaction costs). The Parent Company funded the buyback from utilization of its securities premium and free reserves. The total number of equity shares outstanding as on March 31, 2020 post buyback stands at 76,425,000.

e) Details of shareholders holding more than 5% shares in the Group

Name of the shareholder*	As at March	31, 2020	As at March	31, 2019
	No. in million	% Holding	No. in million	% Holding
Dr. Anand Deshpande jointly with Mrs.	22.95	30.04	22.95	29.01
Sonali Anand Deshpande
Schemes of HDFC Mutual Fund	6.53	8.54	3.73	4.71

• The shareholding information is based on legal ownership of shares and has been extracted from the records of the Group including register of shareholders / members.

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

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6.1 Property, plant and equipment
Land - Buildings Computers Office Plant and Leasehold Furniture and Vehicles Total
Freehold equipments Equipment improvements fixtures
Gross block (at cost)
As at April 1, 2019 220.47 2,447.72 2,441.59 89.63 1,408.24 94.23 679.87 8.44 7,390.19
Additions - 0.30 294.11 0.40 14.38 - 9.91 - 319.10
Additions through business combination (refer note 35) - - 5.23 - 0.06 - - - 5.29
Disposals - - 328.80 0.03 25.10 46.43 7.45 1.20 409.01
Effect of foreign currency translation from functional currency 0.90 4.02 45.64 3.20 1.83 (1.88) 10.79 - 64.50
to reporting currency
As at March 31, 2020 221.37 2,452.04 2,457.77 93.20 1,399.41 45.92 693.12 7.24 7,370.07
Accumulated depreciation
As at April 1, 2019 - 983.41 2,160.36 70.13 1,166.93 76.58 597.31 4.23 5,058.95
Additions through business combination (refer note 35) - - 1.69 - 0.06 - - - 1.75
Charge for the period - 98.93 234.72 8.16 59.02 6.62 44.88 1.02 453.35
Disposals - - 328.80 0.03 20.78 46.43 7.30 1.20 404.54
Effect of foreign currency translation from functional currency - 1.24 24.08 2.31 0.97 (1.26) 8.62 - 35.96
to reporting currency
As at March 31, 2020 - 1,083.58 2,092.05 80.57 1,206.20 35.51 643.51 4.05 5,145.47
Net block
As at March 31, 2020 221.37 1,368.46 365.72 12.63 193.21 10.41 49.61 3.19 2,224.60
As at March 31, 2019 220.47 1,464.31 281.23 19.50 241.31 17.65 82.56 4.21 2,331.24
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• Note: Buildings include those constructed on leasehold land:

439.96 million)

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

6.1 Property, plant and equipment

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Land - Buildings Computers Office equipments Plant and Leasehold Furniture and Vehicles Total
Freehold Equipment improvements fixtures
Gross block (at cost)
As at April 1, 2018 221.03 2,450.18 2,392.46 86.63 1,408.62 94.84 665.41 4.73 7,323.90
Additions - 0.07 179.46 3.75 22.56 - 8.86 4.66 219.36
Additions through business combination - - 0.08 - - - 0.03 - 0.11
Disposals - 0.04 143.23 2.70 22.82 - 0.59 0.95 170.33
Effect of foreign currency translation from functional (0.56) (2.49) 12.82 1.95 (0.12) (0.61) 6.16 - 17.15
currency to reporting currency
As at March 31, 2019 220.47 2,447.72 2,441.59 89.63 1,408.24 94.23 679.87 8.44 7,390.19
Accumulated depreciation
As at April 1, 2018 - 885.26 2,078.80 62.14 1,097.81 69.78 544.39 4.42 4,742.60
Charge for the year - 98.95 214.59 9.59 92.06 7.66 50.78 0.76 474.39
Additions through business combination - - 0.02 - - - 0.01 - 0.03
Disposals - 0.03 142.52 2.40 22.82 - 0.59 0.95 169.31
Effect of foreign currency translation from functional - (0.77) 9.47 0.80 (0.12) (0.86) 2.72 - 11.24
currency to reporting currency
As at March 31, 2019 - 983.41 2,160.36 70.13 1,166.93 76.58 597.31 4.23 5,058.95
Net block
As at March 31, 2019 220.47 1,464.31 281.23 19.50 241.31 17.65 82.56 4.21 2,331.24
As at March 31, 2018 221.03 1,564.92 313.66 24.49 310.81 25.06 121.02 0.31 2,581.30
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

6.2 Right of use assets

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As at
Office premises Leasehold Land March 31, 2020
Gross block (at cost)
As at April 1, 2019 - - -
Additions (Transitional impact on adoption of Ind AS 116) 37.50 722.51 760.01
Additions during the period - 77.80 77.80
Disposals - 9.35 9.35
Effect of foreign currency translation of foreign operations from functional currency to reporting currency - 5.79 5.79
As at March 31, 2020 37.50 796.75 834.25
Accumulated depreciation
As at April 1, 2019 - - -
Charge for the period 0.60 260.73 261.33
Disposals - 1.12 1.12
Effect of foreign currency translation of foreign operations from functional currency to reporting currency - 7.23 7.23
As at March 31, 2020 0.60 266.84 267.44
Net block
As at March 31, 2020 36.90 529.91 566.81
As at March 31, 2019 - - -
6.3 Goodwill
As at As at
March 31, 2020 March 31, 2019
Cost
Balance at beginning of year 81.24 76.61
Effect of foreign currency translation of foreign operations from functional currency to reporting currency 7.70 4.63
Balance at end of year 88.94 81.24
6.4 Other Intangible assets
Software Acquired contractual Total
rights
Gross block
As at April 1, 2019 2,575.58 4,208.58 6,784.16
Additions 30.88 97.75 128.63
Additions through business combination - 527.31 527.31
Effect of foreign currency translation from functional currency to reporting currency 173.11 380.78 553.89
As at March 31, 2020 2,779.57 5,214.42 7,993.99
Amortization and impairment
As at April 1, 2019 2,479.52 2,709.23 5,188.75
Charge for the period 80.84 864.10 944.94
Effect of foreign currency translation from functional currency to reporting currency 172.36 253.01 425.37
As at March 31, 2020 2,732.72 3,826.34 6,559.06
Net block
As at March 31, 2020 46.85 1,388.08 1,434.93
As at March 31, 2019 96.06 1,499.35 1,595.41
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

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Software Acquired contractual Total
rights
Gross block
As at April 1, 2018 2,422.24 3,983.87 6,406.11
Additions 52.38 39.61 91.99
Effect of foreign currency translation from functional currency to reporting currency 100.96 185.10 286.06
As at March 31, 2019 2,575.58 4,208.58 6,784.16
Amortization and impairment
As at April 1, 2018 2,076.02 1,866.55 3,942.57
Charge for the year 319.05 779.07 1,098.12
Effect of foreign currency translation from functional currency to reporting currency 84.45 63.61 148.06
As at March 31, 2019 2,479.52 2,709.23 5,188.75
Net block
As at March 31, 2019 96.06 1,499.35 1,595.41
As at March 31, 2018 346.22 2,117.32 2,463.54
6.5 Depreciation and amortization
For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
On Property, Plant and Equipment 116.32 115.98 453.35 474.39
On Other Intangible assets 236.65 260.82 944.94 1,098.12
On Right of use assets 67.28 - 261.33 -
420.25 376.80 1,659.62 1,572.51
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

7. Non-current financial assets : Investments (refer note 31)

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As at As at
March 31, 2020 March 31, 2019
Investments carried under equity accounting method
Unquoted Investments
Investments in equity instruments
In associates
Klisma e-Services Private Limited [Holding 50%. (Previous year 50%)]
0.05 0.05
Less : Impairment of non-current unquoted investments (0.05) (0.05)
- -
Total investments carried equity accounting method (A) - -
Investments carried at amortised cost
Quoted Investments
In bonds 2,171.52 2,088.35
2,236.81
Add: Interest accrued on bonds 68.69 68.33
Total investments carried at amortised cost (B) 2,240.21 2,156.68
Designated as fair value through profit and loss
Quoted Investments
- Investments in mutual funds
Fair value of long term mutual funds (Refer Note 7 (a)) 2,174.51 1,974.91
2,174.51 1,974.91
Investments in Common Stocks / Preferred Stocks
- Others
Ciqual Limited [Holding 2.38% (Previous year 2.38%)]
0.04 million (Previous year : 0.04 million) shares of GBP 0.01 each, fully paid up 14.36 13.81
Less : Impairment of non-current unquoted investments (14.36) (13.81)
- -
Altizon Systems Private Limited 6.00 6.00
6.00 6.00
Hygenx Inc. 15.13 13.82
0.25 million (Previous year : 0.25 million) Preferred stock of $ 0.001 each, fully paid up
Less : Impairment of non-current unquoted investments (15.13) (13.82)
- -
OpsDataStore Inc. 15.13 13.82
0.20 million (Previous year : 0.20 million) Preferred stock of $ 0.001 each, fully paid up
Less : Impairment of non-current unquoted investments (15.13) (13.82)
- -
Trunomi Inc. 18.92 17.28
0.28 million (Previous year : 0.28 million) Preferred stock of $ 0.002 each, fully paid up
Jocata Corporation - 25.22
Nil (Previous year : 0.006 million) Preferred stock of $ 0.001 each, fully paid up
Ampool Inc. 18.92 17.28
0.55 million (Previous year : 0.55 million) Preferred stock of $ 0.4583 each, fully paid up
Cazena Inc.
0.59 million Common Stock of $ 0.0001 each (Previous year: 0.35 million Preferred Stock of 151.33 138.22
$ 0.0001 each), fully paid up
189.17 198.00
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

7. Non-current financial assets : Investments (refer note 31) (continued)

- Investments in Convertible Notes DxNow 1 (Previous year : 1) convertible note of USD 125,000 each, fully paid up Less : Impairment of non-current unquoted investments Ustyme 1 (Previous year : 1) convertible note of USD 250,000 each, fully paid up Less : Impairment of non-current unquoted investments Akumina Inc. 1 (Previous year : 1) convertible note of USD 146,429 each, fully paid up Total Investments carried at Fair Value (C) Total investments (A) + (B) + (C) Aggregate amount of impairment in value of investments Aggregate amount of quoted investments Aggregate amount of unquoted investments

As at As a March 31, 2020 March 31, 2019 9.46 8.64 (9.46) (8.64) - - 18.92 17.28 (18.92) (17.28) - - 11.08 10.12 11.08 10.12 2,380.76 2,189.03 4,620.97 4,345.71 73.05 67.42 4,414.72 4,131.59 279.30 281.54

• Investments, where the Group does not have joint-control or significant influence including situations where such joint-control or significant influence is intended to be temporary, are classified as "investments in others".

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

7 (a) Details of fair value of investment in long term Mutual Funds (Quoted)

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As at As at
March 31, 2020 March 31, 2019
Axis Mutual Fund 898.93 304.96
IDFC Mutual Fund 630.06 50.13
ICICI Prudential Mutual Fund 141.38 550.21
Kotak Mutual Fund 105.86 294.32
UTI Mutual Fund 105.73 160.32
Aditya Birla Sun Life Mutual Fund 82.65 191.44
SBI Mutual Fund 71.06 65.18
HDFC Mutual Fund 35.66 205.96
PGIM India Mutual Fund (formerly known as DHFL Pramerica Mutual Fund) 35.03 32.10
DSP Mutual Fund 35.00 32.09
Sundaram Mutual Fund 33.15 30.15
Nippon India Mutual Fund (formerly known as Reliance Mutual Fund) - 58.05
2,174.51 1,974.91
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements 8. Non-current financial assets : Loans (refer note 31)

Carried at amortised cost Security deposits Unsecured, considered good Loan to others (Unsecured, considered good) Loans Other loans and advances Inter corporate deposits Unsecured, considered good- Deposits Unsecured, credit impaired Less: Impairment of non-current loans 9. Other non-current financial assets Non-current bank balances (Refer note 15) Add: Interest accrued but not due on non-current bank deposits (Refer note 15) Non-current deposits with banks (Carried at amortised cost) Deposits with financial institutions Add: Interest accrued on deposit with financial institutions	As at As a March 31, 2020 March 31, 2019 176.13 142.80 176.13 142.80 - 21.20 - 21.20 - - 0.58 0.58 0.58 0.58 (0.58) (0.58 - - 176.13 164.00 As at As a March 31, 2020 March 31, 2019 344.55 94.39 14.38 1.46 358.93 95.85 430.00 430.00 0.98 0.98 (430.98) (182.50 - 248.48 358.93 344.33
Less: Credit impaired (Refer note 34)
**10. Deferred tax asset (net) ***

	As at As at March 31, 2020 March 31, 2019
Deferred tax liabilities Differences in book values and tax base values of block of Property, Plant and Equipment and intangible assets Capital gains Others	120.96 226.85 76.67 79.12 21.63 105.04
	219.26 411.01
Deferred tax assets Provision for leave encashment Provision for long service awards Provision for doubtful debts Provision for gratuity Differences in book values and tax base values of block of Property, Plant and Equipment and intangible assets Brought forward and current year losses Tax credits Difference in Book values and tax base values of ROU asset and Lease liability Others	127.70 141.33 83.27 124.16 62.50 39.98 2.86 2.41 91.81 83.81 112.94 60.30 328.80 226.35 37.29 - 332.17 137.72
	1,179.34 816.06
Deferred tax liabilities after set off 219.26 411.01 Deferred tax assets after set off 1,179.34 816.06 11. Other non-current assets * Deferred tax assets and deferred tax liabilities have been offset wherever the Group has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority. In all other cases the same have been separately disclosed.
	As at As at March 31, 2020 March 31, 2019
Capital advances (Unsecured, considered good) Balances with government authorities (refer note 33) Advances recoverable in cash or kind or for value to be received	27.14 2.06 296.55 - 7.62 66.25
	331.31 68.31

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

12. Current financial assets : Investments (refer note 31)

Designated as fair value through profit and loss - Quoted investments Investments in mutual funds Total carrying amount of investments Aggregate amount of quoted investments Aggregate amount of unquoted investments Fair value of current mutual funds (Refer Note 12 (a))	As at As at March 31, 2020 March 31, 2019 5,164.77 3,295.53 5,164.77 3,295.53 5,164.77 3,295.53 5,164.77 3,295.53 - -

12 (a) Details of fair value of current investment in mutual funds (Quoted)

Aditya Birla Sun Life Mutual Fund ICICI Prudential Mutual Fund UTI Mutual Fund L&T Mutual Fund IDFC Mutual Fund Kotak Mutual Fund Axis Mutual Fund HDFC Mutual Fund Nippon India Mutual Fund (formerly known as Reliance Mutual Fund) SBI Mutual Fund DSP Mutual Fund Tata Mutual Fund Sundaram Mutual Fund	As at As at March 31, 2020 March 31, 2019 973.04 386.73 940.50 399.98 809.46 625.92 734.90 407.39 640.78 106.40 421.51 - 396.02 426.87 185.88 493.59 62.68 - - 162.14 - 103.35 - 115.97 - 67.19 5,164.77 3,295.53

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

13. Trade receivables (refer note 31)

Unsecured, considered good Unsecured, credit impaired Less : Allowance for credit loss 14. Cash and cash equivalents (refer note 31) Cash and cash equivalents as presented in cash flow statement Cash in hand Balances with banks On current accounts On saving accounts On Exchange Earner's Foreign Currency accounts On deposit accounts with original maturity less than three months On Escrow account*	As at March 31, 2020 March 3 5,921.96 4,9 242.13 1 6,164.09 5,0 (242.13) (1 5,921.96 4,9 5,921.96 4,9 As at March 31, 2020 March 3 0.24 1,566.06 1,3 0.36 261.86 1 71.47 - 1,899.99 1,7

towards research and development activities specified in the agreement.

** The Parent Company completed buyback on June 27, 2019 and minimum balance maintained in Escrow account was rel ased on completion of formalities.

15. Other bank balances (refer note 31)

Deposits with banks Add: Interest accrued but not due on deposits with banks Deposits with banks (carried at amortised cost) Less: Deposits with maturity more than twelve months from the balance sheet date disclosed under other non-current financial assets (refer note 9) Less: Interest accrued but not due on non-current deposits with banks (refer note 9) Balances with banks on unpaid dividend accounts*- Earmarked balances with banks

As at March 31, 2020 March 3 2,909.58 5,0 117.49 3,027.07 5,0 (344.55) (14.38) 2,668.14 4,9 4.05 2,672.19 4,9

guarantees availed by the Company.

** The Group can utilize these balances only towards settlement of the respective unpaid dividend.

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

16. Current financial assets : Loans (refer note 31)

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As at As at
March 31, 2020 March 31, 2019
Carried at amortised cost -
Loan to related parties (Unsecured, credit impaired)
Unsecured, considered good - Deposits Long term - -
Klisma e-Services Private Limited 27.43 27.43
27.43 27.43
Less: Impairment of current loans (27.43) (27.43)
- -
Security deposits
Unsecured, considered good - Deposits Long term 13.71 7.87
13.71 7.87
13.71 7.87
17. Other current financial assets (refer note 31)
As at As at
March 31, 2020 March 31, 2019
Fair value of derivatives designated and effective as hedging instruments
Forward contracts receivable - 281.27
Advances to suppliers
Unsecured, credit impaired 0.81 0.81
Less: Impairment of current financial assets (0.81) (0.81)
- -
Deposits with financial institutions - 250.00
Add: Interest accrued but not due on deposits with financial institutions - 10.97
Less: Allowance for expected credit loss - -
Deposits with financial institutions (Carried at amortised cost) - 260.97
Unbilled revenue 2,068.54 1,834.76
2,068.54 2,377.00
18. Other current assets
As at As at
March 31, 2020 March 31, 2019
Advances to suppliers (Unsecured, considered good)
Advances recoverable in cash or kind or for value to be received 931.97 432.25
Excess fund balance with Life Insurance Corporation 128.54 -
Other advances (Unsecured, considered good)
VAT receivable (net) 31.50 35.07
Service tax and GST receivable (net) (Refer note 33) 858.51 920.47
890.01 955.54
1,950.52 1,387.79
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

19. Non-current financial liabilities : Borrowings (refer note 31)

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As at As at
March 31, 2020 March 31, 2019
Unsecured Borrowings carried at amortised cost
Term loans
Indian rupee loan from others 11.93 16.55
Interest accrued but not due on term loans 0.18 0.17
Foreign currency loan from others 39.14 -
51.25 16.72
Less: Current maturity of long-term borrowings transferred to other current financial liabilities (Refer note 23) (4.85) (4.58)
Less: Current maturity of interest accrued but not due on term loan transferred to other current financial liabilities (0.18) (0.17)
(Refer note 23)
(5.03) (4.75)
46.22 11.97
The term loans from Government departments have the following terms and conditions:
Loan I - amounting to 2.69 million (Previous year 5.46 million) with interest payable @ 2% per annum has been guaranteed by a bank guarantee by the Group
and is repayable in ten equal semi annual installments over a period of five years commencing from September 2016.
Loan II - amounting to 9.24 million (Previous year 11.09 million) with Interest payable @ 3% per annum repayable in ten equal annual installments over a period
of ten years commencing from October 2015.
Loan III - amounting to 39.14 million (Previous year Nil). The interest free loan is given under a Covid-19 scheme for medium and small scale Industries by the
Government of Switzerland to a subsidiary company with a repayment period of five years from March 2020.
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20. Other long term financial liabilities (refer note 31)

Security Deposits Lease liabilities Less: Current maturity of lease liabilities (refer note 23) Movement of lease liabilities Opening balance Additions (Transitional impact on adoption of Ind AS 116) Additions during the year Add: Interest recognised during the period Less: Payments made Closing balance	As at As a March 31, 2020 March 31, 2019 7.96 1.83 662.42 - (309.06) - 361.32 1.83 March 31, 2020 March 31, 2019 - - 811.10 - 77.80 - 61.22 - 287.70 - 662.42 - For the year ended

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

21. Non current liabilities : Provisions

Provision for employee benefits - Gratuity - Long service awards 22. Trade payables (refer note 31)	As at As a March 31, 2020 March 31, 2019
	- 16.48
	182.79 158.46 182.79 174.94 As at As a March 31, 2020 March 31, 2019 2,247.09 1,517.07 2,247.09 1,517.07 is based on the information available with the ved from them on requests made by the Paren ndors at the Balance Sheet date. There are no rest paid or outstanding interest in this regard in
Trade payables for goods and services
Disclosure of payable to vendors as defined under the Small and Medium Enterprise Development Act, Parent Company regarding the status of registration of such vendors under the said Act, as per the intimation recei Company. There are no overdue principal amounts / interest payable amounts for delayed payments to such ve delays in payment made to such suppliers during the period or for any earlier years and accordingly there is no inte respect of payment made during the period or on balance brought forward from previous year.

23. Other current financial liabilities (refer note 31)

Capital creditors Current maturity of long-term borrowings (refer note 19) Current maturity of interest on long-term borrowings (refer note 19) Current maturity of lease liabilities (refer note 20) Accrued employee liabilities Unpaid dividend Other liabilities Fair value of derivatives designated and effective as hedging instruments* Forward contracts payable	As at As at March 31, 2020 March 31, 2019 36.24 55.16 4.85 4.58 0.18 0.17 309.06 - 421.17 377.88 4.05 2.27 - 1.87 387.89 - 1,163.44 441.93

• Unpaid dividend is transferred to Investor Education and Protection Fund as and when due.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

24.Other current liabilities

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As at As at
March 31, 2020 March 31, 2019
Unearned revenue 887.20 842.08
Advance from customers 264.82 26.34
Other payables
- Statutory liabilities 157.19 247.67
- Other liabilities 10.92 6.35
1,320.13 1,122.44
25. Current liabilities : Provisions
As at As at
March 31, 2020 March 31, 2019
Provision for employee benefits
- Gratuity 20.41 95.06
- Leave encashment 638.05 548.87
- Long service awards - Short term provisions 21.35 19.02
- Other employee benefits 931.18 1,101.26
1,610.99 1,764.21
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

26. Revenue from operations (net)

Software services Software licenses	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 9,112.41 7,928.87 34,494.34 32,169.39 151.24 389.67 1,163.74 1,490.02 9,263.65 8,318.54 35,658.08 33,659.41 For the quarter ended For the year ended

27. Other income

Interest income On deposits carried at amortised cost On Others Foreign exchange gain (net) Profit on sale of Property, Plant and Equipment Dividend income from investments Profit on sale of investments (net) Net gain/(loss) arising on financial assets designated as FVTPL Excess provision in respect of earlier period / years written back Miscellaneous income	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 86.76 56.65 389.59 103.10 30.52 41.81 155.69 184.62 44.50 - 364.35 - (0.49) 1.50 - 4.02 0.03 42.57 13.98 180.77 11.86 77.57 164.81 366.09 81.77 19.01 119.02 (68.92) 2.36 11.98 6.95 33.89 35.89 32.87 109.38 72.98 293.20 283.96 1,323.77 876.55 For the quarter ended For the year ended

28. Personnel expenses

28.1 Employee benefits expense Salaries, wages and bonus Contribution to provident and other funds Staff welfare and benefits Share based payments to employees 28.2 Cost of professionals	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 4,680.12 3,961.60 19,594.62 17,428.04 800.22 773.19 1,199.20 1,329.94 124.18 124.68 525.79 491.55 71.45 - 236.79 - 5,675.97 4,859.47 21,556.40 19,249.53 1,163.23 862.83 3,918.94 3,490.45 6,839.20 5,722.30 25,475.34 22,739.98 For the quarter ended For the year ended

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

29. Other expenses

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For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Travelling and conveyance 218.22 224.06 936.86 933.11
Electricity expenses (net) 24.56 20.47 114.94 109.45
Internet link expenses 25.49 18.28 73.30 67.37
Communication expenses 28.84 25.98 105.72 100.72
Recruitment expenses 34.76 46.24 128.80 116.63
Training and seminars 10.96 10.24 34.63 30.22
Royalty expenses 25.50 25.52 76.82 65.01
Purchase of software licenses 333.08 304.57 1,724.51 1,473.20
Bad debts 0.00 0.14 - 71.18
Provision for doubtful receivables/ (provision for doubtful 38.78 5.33 83.86 (4.89)
receivables written back) (net)
Rent 37.69 110.43 135.25 463.72
Insurance 11.02 7.39 34.49 24.84
Rates and taxes 22.92 28.83 88.07 79.26
Legal and professional fees 70.06 117.81 517.13 566.92
Repairs and maintenance
- Plant and Machinery 29.81 25.83 123.04 114.67
- Buildings 3.06 6.31 24.10 29.56
- Others 6.98 5.83 21.60 20.43
Selling and marketing expenses (2.46) (23.31) 7.85 4.12
Advertisement, conference and sponsorship fees 18.66 120.87 191.01 199.06
Discount allowed 20.14 15.26 127.41 76.92
Computer consumables 1.28 1.80 7.01 7.95
Auditors' remuneration 6.54 3.58 18.89 21.71
Donations 29.70 22.97 86.35 80.64
Books, memberships, subscriptions 10.74 15.61 38.05 77.58
Loss on sale of Property, Plant and Equipment 5.96 - 5.96 -
Foreign exchange loss (net) - 58.50 - 243.10
Directors' sitting fees 1.88 1.57 6.58 5.32
Directors' commission 3.60 3.59 14.85 14.21
Provision for doubtful deposits and advances (refer note 34) 48.48 182.50 248.48 182.50
Impairment of non current investments - 0.04 - 13.98
Miscellaneous expenses 89.04 2.99 284.59 168.54
1,155.29 1,389.23 5,260.15 5,357.03
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

30. Earnings per share

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For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Numerator for Basic and Diluted EPS
(A) 838.21 844.73 3,402.89 3,516.79
Denominator for Basic EPS
Weighted average number of equity shares (B) 76,425,000 79,772,658 76,684,672 79,943,943
Denominator for Diluted EPS
Number of equity shares (C) 76,425,000 79,772,658 76,684,672 79,943,943
(A/B) 10.97 10.59 44.38 43.99
(A/C) 10.97 10.59 44.38 43.99
For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Number of shares considered as basic weighted average shares 76,425,000 79,772,658 76,684,672 79,943,943
outstanding
Add: Effect of dilutive issues of stock options - - - -
Number of shares considered as weighted average shares and 76,425,000 79,772,658 76,684,672 79,943,943
potential shares outstanding
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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

31. Financial assets and liabilities

The carrying values and fair values of financial instruments by categories are as follows:

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Financial assets/ financial liabilities Basis of measurement As at March 31, 2020 As at March 31, 2019 Fair value hierarchy
Carrying value Fair value Carrying value Fair value
Assets:
Investments in associates (net) Equity accounting - - - -
Investments in equity instruments, preferred stock and Fair value 206.25 206.25 214.12 214.12 Level 3
convertible notes
Investments in bonds Amortised cost 2,240.21 2,236.81 2,156.68 2,120.86
Investments in mutual funds Fair value 7,339.28 7,339.28 5,270.44 5,270.44 Level 1
Loans Amortised cost 189.84 189.84 171.87 171.87
Deposit with banks and financial institutions (net) Amortised cost 3,027.07 3,027.07 5,592.38 5,592.38
Cash and cash equivalents (including unpaid dividend) Amortised cost 1,904.04 1,904.04 1,741.72 1,741.72
Trade receivables (net) Amortised cost 5,921.96 5,921.96 4,923.01 4,923.01
Unbilled revenue Amortised cost 2,068.54 2,068.54 1,834.76 1,834.76
Forward contracts receivables Fair value - - 281.27 281.27 Level 2
Total 22,897.19 22,893.79 22,186.25 22,150.43
Liabilities:
Borrowings (including accrued interest) Amortised cost 51.25 51.25 16.72 16.72
Trade payables Amortised cost 2,247.09 2,247.09 1,517.07 1,517.07
Other financial liabilities (excluding borrowings) Amortised cost 770.52 770.52 437.18 437.18
Other long term financial liabilities Amortised cost 361.32 361.32 1.83 1.83
Forward contracts payable Fair value 387.89 387.89 - - Level 2
Total 3,818.07 3,818.07 1,972.80 1,972.80
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• Fair value includes interest accrued.

Fair value hierarchy:

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 2 Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

32. Segment Information

Operating segments are components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision makers, in deciding how to allocate resources and assessing performance. The Group's chief operating decision makers are the Chief Executive Officer and the Chairman.

The Group reorganised itself into three business units from April 1, 2018, which form the operating segments for segment reporting. The operating segments are:

a. Technology Services

b. Alliance

c. Accelerite (Products)

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Particulars Technology Alliance Accelerite Total
Services (Products)
Revenue Quarter ended Mar-31-2020 6,803.83 2,086.93 372.89 9,263.65
Quarter ended Mar-31-2019 5,741.15 2,061.19 516.20 8,318.54
Year ended Mar-31-2020 24,922.47 9,358.16 1,377.45 35,658.08
Year ended Mar-31-2019 22,018.03 9,759.92 1,881.46 33,659.41
Identifiable expense Quarter ended Mar-31-2020 4,113.08 1,569.83 174.52 5,857.43
Quarter ended Mar-31-2019 3,401.39 1,511.31 212.05 5,124.75
Year ended Mar-31-2020 15,461.49 6,546.05 734.02 22,741.56
Year ended Mar-31-2019 13,510.36 6,461.91 889.32 20,861.59
Segmental result Quarter ended Mar-31-2020 2,690.75 517.10 198.37 3,406.22
Quarter ended Mar-31-2019 2,339.76 549.88 304.15 3,193.79
Year ended Mar-31-2020 9,460.98 2,812.11 643.43 12,916.52
Year ended Mar-31-2019 8,507.67 3,298.01 992.14 12,797.82
Unallocable expenses Quarter ended Mar-31-2020 2,568.99
Quarter ended Mar-31-2019 2,364.61
Year ended Mar-31-2020 9,716.87
Year ended Mar-31-2019 8,810.98
Operating income Quarter ended Mar-31-2020 837.23
Quarter ended Mar-31-2019 829.18
Year ended Mar-31-2020 3,199.65
Year ended Mar-31-2019 3,986.84
Other income (net of expenses) Quarter ended Mar-31-2020 293.20
Quarter ended Mar-31-2019 283.96
Year ended Mar-31-2020 1,323.77
Year ended Mar-31-2019 876.55
Profit before taxes Quarter ended Mar-31-2020 1,130.43
Quarter ended Mar-31-2019 1,113.14
Year ended Mar-31-2020 4,523.42
Year ended Mar-31-2019 4,863.39
Tax expense Quarter ended Mar-31-2020 292.22
Quarter ended Mar-31-2019 268.41
Year ended Mar-31-2020 1,120.53
Year ended Mar-31-2019 1,346.60
Profit after tax Quarter ended Mar-31-2020 838.21
Quarter ended Mar-31-2019 844.73
Year ended Mar-31-2020 3,402.89
Year ended Mar-31-2019 3,516.79
Particulars Technology Alliance Accelerite Total
Services (Products)
Segmental trade receivables (net) As at Mar-31-2020 4,780.49 637.13 504.34 5,921.96
As at Mar-31-2019 3,547.07 1,021.77 354.17 4,923.01
Unallocated assets As at Mar-31-2020 - - - 24,999.73
As at Mar-31-2019 - - - 23,632.98
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Segregation of assets (other than trade receivables), liabilities, depreciation and amortization and other non-cash expenses into various reportable segments have not been presented as the assets are used interchangeably between segments and the Group is of the view that it is not practical to reasonably allocate the other assets, liabilities and other non-cash expenses to individual segments and an ad-hoc allocation will not be meaningful.

Geographical Information

	Particulars			India	North America	Rest of the	Total
						World
Revenue		Quarter ended	Mar-31-2020	831.28	7,435.57	996.80	9,263.65
		Quarter ended	Mar-31-2019	642.59	6,729.01	946.94	8,318.54
		Year ended	Mar-31-2020	2,657.29	28,891.15	4,109.64	35,658.08
		Year ended	Mar-31-2019	2,349.29	27,507.46	3,802.66	33,659.41

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Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

33. Contingent liabilities

on December 19, 2016 for nonexcluding interest and penalty if applicable. The issue relates to the professional and technical services rendered by overseas subsidiaries on behalf of the Parent Company to its overseas customers for the period 2011-12 to 2014-15.

Post representations made by the Parent Company, the Learned Principal Commissioner of Service Tax, Pune, adjudicated the aforesaid show173.78 million based on the period of limitation and as a result of that, the said demand now covers financial year 2014-15. The Parent Company has filed an appeal against the order passed by Learned Principal Commissioner of Service Tax, e Tribunal (CESTAT) on September 23, 2017.

The Group, based on independent legal opinion obtained in respect of issues related to this matter, believes that the liability is not likely to arise and therefore, no provision is considered necessary in the financial statements. If the appeal filed as mentioned above results in a demand, there will be no impact on the profitability as the Group will be eligible to claim credit/refund for the amount paid.

The GST department has filed an appeal on October 11, 2017 with appellate authorities against the Order passed by Learned Principal Commissioner of Service Tax, Pune. Though the GST department has acknowledged the ground of revenue neutrality, the said appeal mainly questions non-application of extended period of limitation. The Parent Company has filed reply to this appeal on December 18, 2017.

Considering the view of the Service Tax Authorities, based on legal advice and due prudence, the Company has deposited, tax in respect of the above matter, for the period from April 01, 2014 to June (i.e. as transitional credit under GST Regime and recorded accordingly as protest and forms part of the aforementioned GST receivable balance.

As on March 31, 2020 20.30 million and in respect of indirect taxes amount to 26.51 million (excluding the show cause received from Commissioner of Service Tax on May 29, 2017 73.78 million under import of services on reverse charge basis as mentioned above). Based on the advice obtained and judgments in favour of the Parent Company at the first appellate authority in the earlier years, management does not expect any outflow in respect of these litigations.

protest based on show cause notice from Directorate of Revenue Intelligence (DRI), the Parent Company has filed an application before the relevant authorities. Further, the Parent Company is in the process of making representations through the industry associations to ensure continued applicability of the said incentives to the eligible information technology companies.

n

the context of the Parent

.

Persistent Systems Limited has given a performance guarantee upto $ 10 million to HSBC Bank USA in respect of payment obligations under the Receivables Purchase agreement entered into by Persistent Systems, Inc. with HSBC Bank, USA (Previous year: $10 million). Persistent Systems Limited has also given performance guarantee upto $ 5 million to Citibank USA (Previous year: $ 5 million) in respect of working capital facilities for Persistent Systems, Inc. and $ 0.17 million to Sun Life Assurance Company of Canada for timely payment of rent instalments and damages, in respect of office rented to Persistent Systems, Inc.

Persistent Systems, Inc., has given commercial guarantee of 30 million Euros (Previous year: 30 Million euros) to Tech Data Europe GmbH on behalf of Persistent Systems France S.A.S. For the said guarantee, Persistent Systems, Inc. has charged guarantee fees of 0.25% of the guarantee amount.

Persistent Systems, Inc., subsidiary of Persistent Systems Limited, has also given a performance guarantee of upto $ 3 million to United States Cellular Corporation (USCC) Services & its affiliates towards trade payable of Aepona Limited.

34. financial institutions viz. Infrastructure Leasing & Financial date. These were due for maturity from January 2019 to June 2019. In view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, Management of the Parent Company has fully provided for these deposits along with interest accrued thereon till the date the deposits had become doubtful of recovery. The Management is hopeful of recovery though with a time lag. The Parent Company continues to monitor developments in the matter and is committed to take steps including legal action that may be necessary to ensure full recovery of the said deposits.

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

35. Persistent Systems Germany GmbH, wholly owned subsidiary of Persistent Systems Limited, acquired 100% share capital of Youperience GmbH, a Salesforce Certified Gold Partner in Germany and Youperience Limited, a company based in United Kingdom.

• a) The amoun

The fair value of assets acquired and liabilities assumed as on the date of acquisition are as follows:

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Youperience Youperience
Particulars Total
GmbH Limited
Current Assets
Cash and & cash equivalents 25.01 12.34 37.35
Trade receivables 38.55 20.71 59.26
Other current assets 3.24 0.39 3.63
Other current financial assets - 1.63 1.63
Non-current assets
Property, Plant and Equipment 3.15 0.39 3.54
Loans 3.32 0.21 3.53
Contractual rights 377.31 - 377.31
Other non-current assets 2.21 0.41 2.62
Current liabilities
Trade and other payables 28.35 14.19 42.54
Current tax liabilities (net) 6.65 4.20 10.85
Net assets 417.79 17.69 435.48
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Acquisition related costs amounting to 10.03 million have been excluded from the intangible assets transferred and

• b) Net cash outflow on acquisition of subsidiaries

Particulars
Consideration paid/ payable in cash	435.48
Less: cash and cash equivalent balances acquired	(37.35)
	398.13

• c) Revenue of 196.81 100.54 million for the period ended March 31, 2020 of Youperience Limited is included in the consolidated financial statements. The consolidated loss included for both these s

Had the business combination been effected on April 1, 2019, the revenue for the year ended March 31, 2020 for the and the net profit for the year ended March

(This space is intentionally left blank)

Persistent Systems Limited

Notes forming part of condensed interim consolidated financial statements

Effective April 1, 2019, the Group has adopted Ind AS 116, Leases; and has recognized interest expense of .22 million for the year ended March 31, 2020 on lease liabilities under finance costs.

ecimal thereof except for per share information or as otherwise

• stated.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

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Bharat Shetty

Partner Membership No.: 106815

Dr. Anand Deshpande Chairman and Managing Director

Kiran Umrootkar Director

Sunil Sapre

Executive Director and Chief Financial Officer

Amit Atre

Company Secretary

Place: Mumbai Date: May 5, 2020

Place: Pune Date: May 5, 2020

==> picture [152 x 22] intentionally omitted <==

Walker Chandiok & Co LLP 16th floor, Tower II, Indiabulls Finance Centre, SB Marg, Prabhadevi (W) Mumbai 400 013 India T +91 22 6626 2699 F +91 22 6626 2601

To the Members of Persistent Systems Limited

Report on the Audit of the Condensed Interim Standalone Financial Statements

Opinion

1. We have audited the accompanying condensed interim standalone financial statements of Persistent Systems Limited Condensed Interim Balance Sheet as at 31 March 2020, the Condensed Interim Statement of Profit and Loss (including Other Comprehensive Income) for the quarter and year ended 31 March 2020, the Condensed Interim Cash Flow Statement and the Condensed Interim Statement of Changes in Equity for the year ended 31 March 2020, and a summary of the significant accounting policies and other explanatory information.

2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid condensed interim standalone financial statements give the information required by the the accounting principles generally accepted in India in accordance with Indian Accounting Standard specified under section 133 of the Act, of the state of affairs

(financial position) of the Company as at 31 March 2020, and its profit (financial performance including other comprehensive income) for the quarter and year ended 31 March 2020, its cash flows and the changes in equity for the year ended on that date.

Basis for Opinion

1. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act. Our responsibilities under those standards are further described in the Responsibilities for the Audit of the condensed interim standalone financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the relevant to our audit of the condensed interim standalone financial statements under the provisions of the Act and the rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Page 1 of 3

Walker Chandiok & Co LLP is registered with limited liability with identification number AAC-2085 and its registered office at L-41 Connaught Circus, New Delhi, 110001, India

on the Audit of the Condensed Interim Standalone Financial Statements

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Persistent Systems Limited

Responsibilities of Management and Those Charged with Governance for the condensed interim Standalone Financial Statements

1. Section 134(5) of the Act with respect to the preparation of these condensed interim standalone financial statements that give a true and fair view of the state of affairs (financial position), profit (financial performance including other comprehensive income), changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India, in accordance with the Ind AS 34 specified under section 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the condensed interim standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

2. In preparing the condensed interim standalone financial statements, management is responsible for related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

condensed interim standalone financial

statements

1. Our objectives are to obtain reasonable assurance about whether the condensed interim standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and assurance, but is not a guarantee that an audit conducted in accordance with Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these condensed interim standalone financial statements.

2. As part of an audit in accordance with Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

3. Identify and assess the risks of material misstatement of the condensed interim standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

4. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial controls system over financial reporting and the operating effectiveness of such controls.

Page 2 of 3

Persistent Systems Limited

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on the Audit of the Condensed Interim Standalone Financial Statements

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doub concern. If we conclude that a material uncertainty exists, we are required to draw attention in our condensed interim standalone financial statements

• or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the condensed interim standalone financial statements, including the disclosures, and whether the condensed interim standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

• We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

Other Matter

1. The condensed interim standalone financial statements of the Company for the year and quarter ended 31 March 2019 and for the quarter ended 30 June 2019 were audited by the predecessor auditor, Deloitte Haskins & Sells LLP, who have expressed an unmodified opinion on these condensed interim standalone financial statements vide their audit report dated 27 April 2019 and 25 July 2019 respectively. Our opinion is not modified in respect of this matter.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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Bharat Shetty Partner Membership No.: 106815

UDIN No:20106815AAAABF1147

Place : Mumbai Date : 05 May 2020

Page 3 of 3

Persistent Systems Limited

CONDENSED INTERIM BALANCE SHEET AS AT MARCH 31, 2020

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Notes As at As at
March 31, 2020 March 31, 2019
ASSETS
Non-current assets
Property, Plant and Equipment 5.1 2,048.77 2,130.26
Capital work-in-progress 48.27 11.81
Right of Use assets 5.2 269.40 -
Other Intangible assets 5.3 46.97 83.86
Intangible assets under development 137.20 60.32
2,550.61 2,286.25
Financial assets
- Investments 6 8,379.86 7,544.01
- Loans 7 123.57 116.01
-Other non current financial assets 8 358.93 423.05
Deferred tax assets (net) 9 317.35 55.56
Other non-current assets 10 329.39 68.35
12,059.71 10,493.23
Current assets
Financial assets
- Investments 11 5,164.77 3,295.53
- Trade receivables (net) 12 2,883.09 2,429.85
- Cash and cash equivalents 13 532.63 565.12
- Other bank balances 14 2,405.32 4,659.18
- Loans 15 4.76 6.63
- Other current financial assets 16 2,080.07 2,195.74
Other current assets 17 1,485.37 1,243.44
14,556.01 14,395.49
TOTAL 26,615.72 24,888.72
EQUITY AND LIABILITIES
EQUITY
Equity share capital 4 764.25 791.19
Other equity 22,221.13 21,420.71
22,985.38 22,211.90
LIABILITIES
Non- current liabilities
Financial liabilities
- Borrowings 18 7.08 11.97
Provisions 19 182.79 158.46
Other long-term financial liabilities 20 191.26 1.83
381.13 172.26
Current liabilities
Financial liabilities
21 972.49 1,019.07
- Other financial liabilities 22 715.11 138.17
Other current liabilities 23 851.02 630.28
Provisions 24 590.38 664.11
Current tax liabilities (net) 120.21 52.93
3,249.21 2,504.56
TOTAL 26,615.72 24,888.72
- -
Summary of significant accounting policies 3
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The accompanying notes are an integral part of the condensed financial statements. As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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Bharat Shetty Partner Membership No.: 106815

For and on behalf of the Board of Directors of Persistent Systems Limited

==> picture [59 x 21] intentionally omitted <==

Dr. Anand Deshpande Kiran Umrootkar Chairman and Director Managing Director

Place: Mumbai Date : May 5, 2020

Sunil Sapre Executive Director and Chief Financial Officer

Amit Atre Company Secretary Place: Pune Date : May 5, 2020

Persistent Systems Limited

CONDENSED INTERIM STATEMENT OF PROFIT AND LOSS FOR THE QUARTER AND YEAR ENDED MARCH 31, 2020

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Notes For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Income
Revenue from operations (net) 25 5,661.39 5,162.71 21,081.22 19,598.67
Other income 26 323.32 255.57 1,599.04 1,037.90
Total income (A) 5,984.71 5,418.28 22,680.26 20,636.57
Expenses
Employee benefits expense 27.1 2,944.26 2,468.52 11,029.06 9,491.23
Cost of professionals 27.2 394.63 549.06 1,825.37 2,195.21
Finance costs (refer note 34) 9.71 0.12 44.51 0.51
Depreciation and amortization expense 5.4 136.46 114.29 555.12 458.84
Other expenses 28 835.44 1,324.60 3,897.14 4,107.02
Total expenses (B) 4,320.50 4,456.59 17,351.20 16,252.81
Profit before tax (A - B) 1,664.21 961.69 5,329.06 4,383.76
Tax expense
Current tax 372.31 301.66 1,297.91 1,283.16
Tax (credit) / charge in respect of earlier years - 15.91 (1.60) 65.00
Deferred tax charge / (credit) 17.08 (75.88) (44.48) (114.48)
Total tax expense 389.39 241.69 1,251.83 1,233.68
Net profit for the period / year (C) 1,274.82 720.00 4,077.23 3,150.08
Other comprehensive income
Items that will not be reclassified to profit and loss (D)
- Remeasurements of the defined benefit liabilities / (asset) (net of tax) 3.09 4.29 (30.46) (49.83)
3.09 4.29 (30.46) (49.83)
Items that may be reclassified to profit and loss (E)
- Effective portion of cash flow hedge (net of tax) (250.14) 115.57 (429.15) 168.43
(250.14) 115.57 (429.15) 168.43
Total other comprehensive income for the period / year (D) + (E) (247.05) 119.86 (459.61) 118.60
Total comprehensive income for the period / year (C) + (D) + (E) 1,027.77 839.86 3,617.62 3,268.68
Earnings per equity share 29
16.68 9.03 53.17 39.40
16.68 9.03 53.17 39.40
Summary of significant accounting policies 3
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The accompanying notes are an integral part of the condensed financial statements.

As per our report of even date

For Walker Chandiok & Co LLP For and on behalf of the Board of Directors of Chartered Accountants Persistent Systems Limited Firm Registration No.: 001076N/N500013 Bharat Shetty Dr. Anand Deshpande Kiran Umrootkar Partner Chairman and Director Membership No.: 106815 Managing Director Sunil Sapre Amit Atre Executive Director and Company Secretary Chief Financial Officer Place: Mumbai Place: Pune Date : May 5, 2020 Date : May 5, 2020

Persistent Systems Limited

CONDENSED INTERIM CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

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For the year ended
March 31, 2020 March 31, 2019
Cash flows from operating activities
Profit before tax 5,329.06 4,383.76
Adjustments for:
Interest income (525.76) (288.82)
Finance cost 44.51 0.51
Dividend income (410.72) (392.26)
Depreciation and amortization expense 555.12 458.84
Amortization of lease premium - 0.58
Unrealised exchange (gain) / loss (net) (128.86) 80.81
Exchange loss on derivative contracts 58.51 20.51
Exchange (gain) / loss on translation of foreign (46.82) 75.53
currency cash and cash equivalents
Donations in kind - 1.40
Bad debts - 23.55
Provision for doubtful debts (net)/ (Provision for doubtful debts written back) (net) 47.31 (6.99)
Provision for doubtful deposits 248.48 182.50
Employee stock compensation expenses 60.01 -
Remeasurements of the defined benefit liabilities / asset (before tax effects) (41.80) (49.83)
(Gain) / loss on fair valuation of mutual funds (119.02) 76.95
(Profit) on sale of investments (net) (164.81) (366.09)
(Profit) on sale of Property, Plant and Equipment (net) - (3.77)
Operating profit before working capital changes 4,905.21 4,197.18
Movements in working capital :
(Increase)/ Decrease in non-current and current loans (5.29) 0.16
(Increase) in other non current assets (261.04) (2.29)
(Increase) in other current financial assets (246.75) (864.55)
(Increase)/ Decrease in other current assets (241.93) 131.18
(Increase)/ Decrease in trade receivables (373.81) 875.95
Increase in trade payables, current liabilities and non current liabilities 65.30 197.79
(Decrease) / Increase in provisions (49.40) 251.17
Operating profit after working capital changes 3,792.29 4,786.59
Direct taxes paid (net of refunds) (1,217.69) (1,394.77)
Net cash generated from operating activities (A) 2,574.60 3,391.82
Cash flows from investing activities
Payment towards capital expenditure (including intangible assets) (483.57) (268.87)
Proceeds from sale of Property, Plant and Equipment 4.08 3.82
Investment in wholly owned subsidiaries (474.00) -
Share application money paid - (78.72)
Purchase of bonds (901.61) (1,175.31)
Proceeds from sale of bonds 819.87 199.43
Investments in mutual funds (19,456.95) (22,418.13)
Proceeds from sale / maturity of mutual funds 17,670.49 25,010.64
(Investments)/ maturity in bank deposits having original maturity over three months 2,044.25 (3,956.56)
Investments in deposit with financial institutions - (300.00)
Maturity of deposit with financial institutions 250.00 650.35
Inter corporate deposits (made) / refunded - 132.74
Interest received 484.68 341.93
Dividend received 410.72 392.26
Net cash generated from / (used in) investing activities (B) 367.96 (1,466.42)
Cash flows from financing activities
(Repayment of) long term borrowings (4.62) (4.58)
Shares bought back (1,677.01) (571.41)
Specific project related grant received 3.00 4.50
Dividend paid (1,144.60) (881.41)
Tax on dividend paid (154.14) (137.41)
Interest paid (44.50) (1.12)
Net cash used in financing activities (C) (3,021.87) (1,591.43)
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Persistent Systems Limited

CONDENSED INTERIM CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2020

Net (decrease) / increase in cash and cash equivalents (A + B + C) Cash and cash equivalents at the beginning of the year Effect of exchange differences on translation of foreign currency cash and cash equivalents Cash and cash equivalents at the end of the year Components of cash and cash equivalents Cash on hand (refer note 13) Balances with banks On current accounts # (refer note 13) On saving accounts (refer note 13) On deposit account with maturity of less than three months (Refer note 13) On Exchange Earner's Foreign Currency accounts (refer note 13) On Escrow accounts (Refer note 13) Cash and cash equivalents**

March 31, 2020 March 31, 2019 (79.31) 333.97 565.12 306.68 46.82 (75.53) 532.63 565.12 0.15 0.11 198.79 126.71 0.36 0.91 71.47 229.54 261.86 114.91 - 92.94 532.63 565.12 For the year ended

Out of the cash and cash equivalent balance as at March 31, 2020, the Company can utilise 6.62 Million (Previous year: 2.15 Million) only towards research and development activities specified in the agreement.

** The Company concluded the buyback scheme with effect on June 27, 2019 and minimum balance maintained in Escrow account was rel ased on completion of statutory formalities.

Summary of significant accounting policies - Refer note 3

The accompanying notes are an integral part of the condensed financial statements.

As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

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For and on behalf of the Board of Directors of
Chartered Accountants Persistent Systems Limited
Firm Registration No.: 001076N/N500013
Bharat Shetty Dr. Anand Deshpande Kiran Umrootkar
Partner Chairman and Director
Membership No.: 106815 Managing Director
Sunil Sapre Amit Atre
Executive Director and Company Secretary
Chief Financial Officer
Place: Mumbai Place: Pune
Date : May 5, 2020 Date : May 5, 2020
----- End of picture text -----

Persistent Systems Limited

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

A. Equity share capital

(Refer note 4)

Balance as at April 1, 2019	Changes in equity share capital during theyear	Balance as at March 31, 2020
791.19	(26.94)	764.25
Balance as at April 1, 2018	Changes in equity share capital during theyear	Balance as at March 31, 2019
800.00	(8.81)	791.19

(This space is intentionally left blank)

Persistent Systems Limited

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

B. Other equity

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Items of other
Reserves and surplus comprehensive
income
Particulars Total
Securities Share options Capital Special Economic
premium General reserve outstanding redemption Zone re-investment Retained earnings Effective portion of
reserve reserve reserve reserve cash flow hedges
Balance as at April 1, 2019 774.10 10,570.73 76.29 8.81 70.00 9,735.72 185.06 21,420.71
Net profit for the year - - - - - 4,077.23 - 4,077.23
Other comprehensive income for the year - - - - - (30.46) (429.15) (459.61)
Dividend - - - - - (1,146.38) - (1,146.38)
Tax on dividend - - - - - (154.14) - (154.14)
Transfer to capital redemption reserve - - - 26.94 - (26.94) - -
Transitional impact on adoption of Ind AS 116 - - - - - (106.44) - (106.44)
Transfer to Special Economic Zone re-investment reserve - - - - (20.05) 20.05 - -
Transfer to general reserve - 1,630.89 - - - (1,630.89) - -
Employee stock compensation expenses - - 60.01 - - - - 60.01
Employee stock compensation expenses of subsidiaries - - 179.82 - - - - 179.82
Adjustments towards employees stock options - 25.61 (25.61) - - - - -
Utilised towards buy back of shares (refer note 4d) (774.10) - - - - (875.97) - (1,650.07)
Balance as at March 31, 2020 - 12,227.23 290.51 35.75 49.95 9,861.78 (244.09) 22,221.13
Items of other
Reserves and surplus comprehensive
Particulars income Total
Securities Share options Capital Special Economic
premium General reserve outstanding redemption Zone re-investment Retained earnings Effective portion of
reserve reserve reserve reserve cash flow hedges
Balance as at April 1, 2018 1,336.70 9,296.47 90.52 - - 8,991.72 16.63 19,732.04
Net profit for the year - - - - - 3,150.08 - 3,150.08
Other comprehensive income for the year - - - - - (49.83) 168.43 118.60
Dividend - - - - - (880.00) - (880.00)
Tax on dividend - - - - - (137.41) - (137.41)
Transfer to general reserve - 1,260.03 - - - (1,260.03) - -
Transfer to capital redemption reserve - - - 8.81 - (8.81) - -
Transfer to Special Economic Zone re-investment reserve - - - - 70.00 (70.00) - -
Adjustments towards employees stock options - 14.23 (14.23) - - - - -
Utilised towards buy back of shares (refer note 4d) (562.60) - - - - - - (562.60)
Balance at March 31, 2019 774.10 10,570.73 76.29 8.81 70.00 9,735.72 185.06 21,420.71
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Summary of significant accounting policies - Refer note 3

The accompanying notes are an integral part of the condensed financial statements.

As per our report of even date

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

==> picture [75 x 34] intentionally omitted <==

Bharat Shetty Partner Membership No.: 106815

For and on behalf of the Board of Directors of Persistent Systems Limited

==> picture [59 x 21] intentionally omitted <==

Dr. Anand Deshpande Kiran Umrootkar Chairman and Director Managing Director

Sunil Sapre Amit Atre Executive Director and Company Secretary Chief Financial Officer

Place: Mumbai Date : May 5, 2020

Place: Pune Date : May 5, 2020

Persistent Systems Limited

CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2020

Nature and purpose of reserves

a) Securities premium

Securities premium is used to record the premium on issue of shares. The reserve is utilised in accordance with the provisions of Section 52 of the Companies Act, 2013.

b) General reserve

General reserve represents amounts transferred from profit for the year and from Share options outstanding reserve on exercise / expiry of employee share options. It is a free reserve in terms of section 2 (43) of the Companies Act, 2013.

c) Share options outstanding reserve

Share options outstanding reserve represents the cumulative expense recognized for equity-settled transactions at each reporting date until the employee share options are exercised / expired on which such amount is transferred to General reserve.

d) Capital redemption reserve

Capital redemption reserve represents the nominal value of the shares bought back and is created and utilised in accordance with Section 69 of the Companies Act, 2013.

e) Special Economic Zone re-investment reserve

The Special Economic Zone re-investment reserve has been created out of the profit in terms of the provisions of Section 10AA(1)(ii) of the Income tax Act, 1961. The reserve should be utilised by the Company for acquiring new plant and machinery for the purpose of its business in accordance with Section 10AA(2) of the Income tax Act, 1961.

f) Cash flow hedge reserve

The cash flow hedge reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of hedging instruments entered into towards highly probable transactions. Such gains or losses are subsequently recognised in the statement of profit and loss in the period in which the said transaction occurs / hedging instruments are cancelled.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

1. Nature of operations

Exchange and National Stock Exchange. The Company is a global company specializing in software products, services and technology innovation. The Company offers complete product life cycle services.

2. Basis of preparation

The condensed interim financial statements of the Company have been prepared on an accrual basis and under the historical cost convention except for certain financial instruments and equity settled employee stock options which have been measured at fair value. Historical cost is generally based on the fair value of consideration given in exchange of goods and services. The accounting policies are consistently applied by the Company during the period and are consistent with those used in previous year except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

Statement of compliance

These financial statements have been prepared in accordance with Ind AS 34 Interim Financial Reporting as notified under the Companies (Indian Accounting Standards) Rules, 2015 read with Section 133 of the Companies Act, 2013.

3. Summary of significant accounting policies

(a) Use of estimates

The preparation of the condensed interim financial statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenue, expenses, assets and liabilities and disclosure of contingent liabilities at the end of period. knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

Estimation of uncertainties relating to the global health pandemic from COVID-19:

The Company has evaluated the likely impact of the COVID 19 on the overall business of the Company. Though it is too early to estimate the same in view of the volatility in the global economic conditions pursuant to this pandemic; the Company as at the date of the approval of these financials, has used various available sources of information to analyse the carrying amount of its financial assets and exposures. The impact of COVIDstatements may differ from the estimate as on the date of the approval of the financial statements.

Expected credit loss:

The Company has considered the current and anticipated future economic conditions relating to industries the Company deals with and the countries where it operates. In calculating expected credit loss, the Company has also considered related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID -19 using the forward looking approach prescribed by Ind AS 109.

Impact on unhedged foreign currency exposure:

Based on its assessment, the Company believes that the probability of occurrence of its forecasted transactions are not likely to be impacted by COVID 19. Hence, the Company continues to believe that there is no foreseeable impact on the effectiveness of its cash flow hedges due to this global pandemic.

Carrying value of financial instruments:

uncertainties arising out of COVID 19. These financial assets, are mainly investments in liquid debt securities and hence, any material volatility in their carrying value is not expected.

Impact on revenue:

The Company has re-evaluated the probable revenues from customers in various verticals to assess any possible drops in revenue from any of these verticals due to the economic stress caused by COVID 19. Accordingly, it is the opinion of the Company that the customers could re-prioritise their discretionary spend in the immediate future to conserve resources.

The impact assessment of COVID 19 is a continuing process given the uncertainties associated with its nature and duration. The Company has considered the same to the extent known currently and has taken steps to measure the cost budgets required to complete its performance obligations in respect of fixed price contracts and incorporated the impact of likely delays and costs in meeting its obligations.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

Critical accounting estimates

i. Revenue recognition

The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

Further, the Company uses significant judgement while determining the transaction price allocated to performance obligations using the expected cost plus margin approach.

In respect of the contracts where the transaction price is payable as revenue share at pre-defined percentage of customer revenue and bearing in mind, the time gap between the close of the accounting period and availability of the revenue report from the customer, the Company is required to use its judgement to ascertain the income from revenue share on the basis of historical trends of customer revenue.

ii. Income taxes

The Company's major tax jurisdiction is India, though the Company also files tax returns in other overseas jurisdictions. Significant judgements are involved in determining the provision for income taxes.

iii. Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of depreciation is deri at the end of its life. The useful lives and residual values of Company's assets are determined by management at the time the asset is acquired and reviewed periodically. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.

iv. Provisions

Provisions are determined based on the best estimate of the amount required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

v. Leases

I nd AS 116 requires lessees to determine the lease term as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the importance of the

asset and the availability of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances. After considering current and future economic conditions, the Company has concluded that no changes are required to lease periods relating to the existing lease contracts.

(b) Property, Plant and Equipment

Property, Plant and Equipment are stated at cost, less accumulated depreciation and accumulated impairment losses, if any. The cost comprises the purchase price and directly attributable costs of bringing the asset to its working condition for its intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Capital work-in-progress includes cost of Property, Plant and Equipment that are not ready to be put to use.

Subsequent expenditure related to an item of Property, Plant and Equipment is added to its original cost only if it is probable that future economic benefits associated with the item will flow to the Company. All other expenses on existing Property, Plant and Equipment, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from disposal of Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

(c) Intangible assets

Intangible assets including software licenses of enduring nature and contractual rights acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Cost comprises the purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use.

Gains or losses arising from disposal of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is disposed.

Research and development cost

Research costs are expensed as incurred. Development expenditure incurred on an individual project is recognized as an intangible asset when the Company can demonstrate:

• technical feasibility of completing the intangible asset so that it will be available for use or sale;

• its intention to complete the asset;

• its ability to use or sell the asset;

• how the asset will generate probable future economic benefits;

• the availability of adequate resources to complete the development and to use or sell the asset; and

• the ability to measure reliably the expenditure attributable to the intangible asset during development.

Such development expenditure, until capitalization, is reflected as intangible assets under development.

Following the initial recognition, internally generated intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Amortization of internally generated intangible asset begins when the development is complete and the asset is available for use.

(d) Depreciation and amortization

the assets estimated by the management.

The management estimates the useful lives for the Property, Plant and Equipment as follows:

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Assets Useful lives
Buildings 25 years
Computers 3 years
Computers - Servers and networks 3 years
Office equipments 5 years
Plant and equipment 5 years
Plant and equipment (Windmill) 20 years
Plant and equipment (Solar Energy System) 10 years
Furniture and fixtures 5 years
Vehicles 5 years
----- End of picture text -----*

*For these classes of assets, based on internal assessment and independent technical evaluation carried out by external valuers, the management believes that the useful lives as given above best represent the period over which the management expects to use these assets. Hence the useful lives of these assets are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

Individual assets whose cost does not exceed 5,000 are fully depreciated in the year of acquisition.

Leasehold improvements are amortized over the period of lease or useful life, whichever is lower.

Intangible assets are amortized on a straight-line basis over their estimated useful lives ranging from 3 to 6 years from the day the asset is made available for use.

(e) Financial instruments

i) Financial assets

Initial recognition and measurement

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition of financial assets (other than financial assets at fair value through profit or loss) are added to the fair value of the financial assets on initial recognition. Transaction costs directly attributable to the acquisition of financial assets at fair value through profit or loss are recognised immediately in profit or loss.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

Subsequent measurement

For the purpose of subsequent measurement, financial assets are classified as:

• Financial assets at amortized cost

Financial assets that are held within a business model whose objective is to hold assets for collecting contractual cash flows and whose contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance income in the statement of profit and loss.

• Financial assets at fair value through other comprehensive income (FVTOCI)

Financial assets that are held within a business model whose objective is achieved both by collecting contractual s of principal and interest on the principal amount outstanding are subsequently measured at fair value. Fair value movements are recognized in other comprehensive income.

• Financial assets at fair value through profit or loss (FVTPL)

Any financial asset which does not meet the criteria for categorization as financial asset at amortized cost or as FVTOCI, is classified as financial asset at FVTPL. Financial assets except derivative contracts included within the FVTPL category are subsequently measured at fair value with all changes recognized in the statement of profit and loss.

• Forward exchange contracts not intended for trading or speculation purposes, classified as derivative financial instruments

As per the accounting principles laid down in Ind AS 109 derivative financial instruments which qualify for cash flow hedge accounting are fair valued at balance sheet date and the effective portion of the resultant loss / (gain) is debited / (credited) to the hedge reserve under other comprehensive income and the ineffective portion is recognized to the statement of profit and loss. Derivative financial instruments are carried as forward contract receivable when the fair value is positive and as forward contract payable when the fair value is negative.

Changes in the fair value of derivative instruments that do not qualify for hedge accounting are recognized in the statement of profit and loss as they arise.

Hedge accounting is discontinued when the hedging instrument expires or is sold, or terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss on the hedging instrument recognized under other comprehensive income under other comprehensive income is transferred to the statement of profit and loss when the forecasted transaction occurs or affects profit or loss or when a hedged transaction is no longer expected to occur.

Derecognition

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

On derecognition of a financial asset in its entirety, the difference between t of the consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive income and accumulated in equity, if any, is recognised in profit or loss.

ii) Financial liabilities

Initial recognition and measurement

Financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to issue of financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are deducted from the fair value of the financial liabilities on initial recognition. Transaction costs directly attributable to the issue of financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

Subsequent measurement

For the purpose of subsequent measurement, financial liabilities are classified as:

- Financial liabilities at amortized cost

Financial liabilities such as loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. The change in measurements are recognized as finance costs in the statement of profit and loss.

• Financial liabilities at fair value through profit or loss (FVTPL)

Financial liabilities include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss if the recognition criteria as per Ind AS 109 Gains or losses on liabilities held for trading are recognized in statement of profit and loss. Fair value gains or losses on liabilities designated as FVTPL attributable to changes in own credit risk are recognized in other comprehensive income. All other changes in fair value of liabilities designated as FVTPL are recognized in the statement of profit and loss. The Company has not designated any financial liability at FVTPL.

Derecognition

obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

iii) Impairment

i) Financial assets

The Company applies Expected Credit Loss (ECL) model for measurement and recognition of impairment loss on financial assets measured at amortized cost and financial assets that are debts instruments and are measured at fair value through other comprehensive income (FVTOCI). ECL is the difference between contractual cash flows that are due and the cash flows that the Company expects to receive, discounted at the original effective interest rate.

For trade receivables, the Company recognizes impairment loss allowance based on lifetime ECL at each reporting date, right from its initial recognition. For other financial assets, the Company determines whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12 month ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used.

ii) Non-financial assets

The carrying amounts of Property, Plant and Equipment are reviewed at each balance sheet date or whenever there is recoverable amount unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) is reduced to its recoverable amount. The recoverable amount is the greater of the asset's fair value and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. An impairment loss is recognised in the statement of profit and loss.

Recoverable amount of intangible assets under development that is not yet available for use is estimated at least at each financial period end even if there is no indication that the asset is impaired.

(f) Borrowing costs

Borrowing cost includes interest and amortization of ancillary costs incurred in connection with the arrangement of borrowings.

Borrowing costs directly attributable to the acquisition, construction or development of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period / year they occur.

(g) Leases

remises. The Company assesses whether a contract contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

(i) the contract involves the use of an identified asset

(ii) the Company has substantially all of the economic benefits from use of the asset through the period of the lease and (iii) the Company has the right to direct the use of the asset

Where the Company is a lessee

The Company accounts for each lease component within the contract as a lease separately from non-lease components of the contract and allocates the consideration in the contract to each lease component on the basis of the relative standalone price of the lease component and the aggregate stand-alone price of the non-lease components.

The Company recognises right-of-use asset representing its right to use the underlying asset for the lease term at the lease commencement date. The cost of the right-of-use asset measured at inception shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset or restoring the underlying asset or site on which it is located.

The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, if any and adjusted for any remeasurement of the lease liability. The right-of-use assets is depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset. The estimated useful lives of right-of use assets are determined on the same basis as those of property, plant and equipment.

Right-of-use assets are tested for impairment whenever there is any indication that their carrying amounts may not be recoverable. Impairment loss, if any, is recognised in the statement of profit and loss.

The Company measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined. If that rate cannot be readily determined, the Company uses incremental borrowing rate.

The lease payments shall include fixed payments, variable lease payments based on an index or rate, residual value guarantees, exercise price of a purchase option where the Company is reasonably certain to exercise that option and payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease.

The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.

When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or statement of profit and loss if the right-of-use asset is already reduced to zero.

The Company has elected not to apply the requirements of Ind AS 116 to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease expenses associated with these leases are recognized in the statement of profit and loss on a straight line basis.

Company as a lessor

At the inception of the lease, the Company classifies each of its leases as either an operating lease or a finance lease. The Company recognises lease payments received under operating leases as income over the lease term on a straight line basis.

Transition

applicable lease contracts existing on April 1, 2019 using the modified retrospective method and has taken the cumulative adjustment to retained earnings, on the date of initial application. Consequently, the Company recorded the lease liability at the present value of the lease payments discounted at the incremental borrowing rate and the right of use asset at its carrying amount as if the standard had been app

incremental borrowing rate at the date of initial application. Comparatives as at and for the year ended March 31, 2019 have not been retrospectively adjusted and therefore will continue to be reported under the accounting policies included as part of our Annual Report for year ended March 31, 2019.

lease li taxes) was debited to retained earnings. The effect of this adoption is insignificant on the profit before tax, profit for the period and earnings per share. Ind AS 116 will result in an increase in cash inflows from operating activities and an increase in cash outflows from financing activities on account of lease payments.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

(h) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the Company. Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

(i) Income from sale of software services and products

The company derives revenues primarily from IT services comprising of software development and related services and from the licensing of software products.

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to receive in exchange for those products or services. Arrangements with customers for software related services are either on a time-and-material or a fixed-price basis.

Revenue on time-and-material contracts are recognized as and when the related services are performed. Revenue from fixed-price contracts, where the performance obligations are satisfied over time and where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved.

over the access period.

When support services are provided in conjunction with the licensing arrangement and the license and the support services have been identified as two separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone selling prices. Maintenance revenue is recognized proportionately over the period in which the services are rendered.

Revenue from revenue share is recognized in accordance with the terms of the relevant agreements.

The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the proportionate allocation of the discounts amount to each of the underlying performance obligation that corresponds to the progress by the customer towards earning the discount. Also, when the level of discount varies with increases in levels of revenue transactions, the Company recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.

Unbilled revenue represents revenue recognized in relation to work done until the balance sheet date for which billing has not taken place.

Unearned revenue represents the billing in respect of contracts for which the revenue is not recognized.

The Company collects Goods and Services Tax on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue.

(ii) Interest

Interest income is recognized on a time proportion basis taking into account the carrying amount and the effective interest

(iii) Dividend

(i) Government grants

Government grants are recognized at fair value when there is reasonable assurance that the Company will comply with the conditions attaching to them and the grants will be received. Grants related to purchase of assets are treated as deferred income and allocated to income statement over the useful lives of the related assets while grants related to expenses are deducted in reporting the related expenses in the income statement.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

(j) Foreign currency translation

Foreign currency transactions and balances

Initial recognition

Foreign currency transactions are recorded in the functional currency of the Company, by applying to the foreign currency amount the exchange rate between the functional currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are reported using the exchange rate prevailing at the reporting date. Non-monetary items, which are measured in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates at the date when the values were determined.

Exchange differences

Exchange differences arising on conversion / settlement of foreign currency monetary items and on foreign currency liabilities relating to Property, Plant and Equipment acquisition are recognized as income or expenses in the period in which they arise.

Translation of foreign operations

The Company presents the financial statements in INR which is the functional currency of the Company.

The assets and liabilities of a foreign operation are translated into the reporting currency (INR) at the exchange rate prevailing at the reporting date.

(k) Retirement and other employee benefits

(i) Provident fund

Provident fund is a defined contribution plan covering eligible employees. The Company and the eligible employees make a monthly contribution to the provident fund maintained by the Regional Provident Fund Commissioner equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contributions to the provident fund are charged to the statement of profit and loss for the period / year when the contributions are due. The Company has no obligation, other than the contribution payable to the provident fund.

(ii) Gratuity

Gratuity is a defined benefit obligation plan operated by the Company for its employees covered under Company Gratuity Scheme. The cost of providing benefit under gratuity plan is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date and are charged to the statement of profit and loss, except for the remeasurements, comprising of actuarial gains and losses which are recognized in full in the statement of other comprehensive income in the reporting period in which they occur. Remeasurements are not reclassified to profit and loss subsequently.

(iii) Superannuation

Superannuation is a defined contribution plan covering eligible employees. The contribution to the superannuation fund managed by the insurer is equal to the specified percentage of the basic salary of the eligible employees as per the scheme. The contribution to this scheme is charged to the statement of profit and loss on an accrual basis. There are no other contributions payable other than contribution payable to the respective fund.

(iv) Leave encashment

Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short-term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

The Company presents the entire leave encashment liability as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement beyond twelve months after the reporting date.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

(v) Long service awards

Long service The cost of providing benefit under long service awards scheme is determined on the basis of actuarial valuation using the projected unit credit method at the reporting date. Remeasurements, comprising of actuarial gains and losses are recognized in full in the statement of profit and loss.

(l) Income taxes

Tax expense comprises of current and deferred tax. Current income tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in statement of profit and loss.

Deferred income taxes reflect the impact of temporary differences between tax base of assets and liabilities and their carrying amounts. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except deferred tax liability arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses, except deferred tax assets arising from initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, affects neither accounting nor taxable profit/ loss at the time of transaction. Deferred tax assets are recognized only to the extent that sufficient future taxable income will be available against which such deferred tax assets can be realized.

In the situations where the Company is entitled to a tax holiday under the Income-tax Act, 1961 enacted in India or tax laws prevailing in the respective tax jurisdictions where it operates, no deferred tax (asset or liability) is recognized in income is subject to the deduction during the tax holiday period. Deferred tax in respect of temporary differences which reverse after the tax holiday period is recognized in the period / year in which the temporary differences originate.

The carrying amount of deferred tax asset is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available against which such deferred tax assets can be realized.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and deferred tax liabilities relate to the same taxable entity and the same taxation authority.

Deferred tax relating to items recognized outside the statement of profit and loss is recognized in co-relation to the underlying transaction either in other comprehensive income or directly in equity.

Minimum alternate tax (MAT) paid in a period / year is charged to the statement of profit and loss as current tax. MAT credit available is recognized as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of evidence that it will pay normal tax during the specified period.

(m) Segment reporting

In accordance with para 4 of Notified Indian Accounting Standard 108 (Ind AS-

has disclosed segment information only on the basis of consolidated financial statements which are presented together with the unconsolidated financial statements.

(n) Earnings per share (EPS)

Basic earnings per share are calculated by dividing the net profit for the period / year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period / year. The weighted average number of equity shares outstanding during the reporting period is adjusted for events such as bonus issue, bonus element in a rights issue, share split, and reverse share split (consolidation of shares), if any occurred during the reporting period, that have changed the number of equity shares outstanding, without a corresponding change in resources.

For the purpose of calculating diluted earnings per share, the net profit for the period / year attributable to the equity shareholders and the weighted average number of equity shares outstanding during the period / year, are adjusted for the effects of all dilutive potential equity shares.

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

The number of shares and potential dilutive equity shares are adjusted retrospectively for all periods presented for any bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.

(o) Provisions

A provision is recognized when the Company has a present obligation as a result of past event; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on the best estimate of the amount required to settle the obligation at the reporting date. If the effect of time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. These estimates are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

(p) Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably.

(q) Cash and cash equivalents

Cash and cash equivalents in the cash flow statement comprises of cash at bank, cash in hand and short term deposits with an original maturity period of three months or less.

(r) Employee stock compensation expenses

Employees of the Company receive remuneration in the form of share based payment transactions, whereby employees render services as consideration for equity instruments granted (equity-settled transactions).

In accordance with Ind AS 102 -settled transactions is determined by the fair value of the options at the date of the grant and recognized as employee compensation cost over the vesting period. The cumulative expense recognized for equity-settled transactions at each reporting date until the vesting date reflects the extent to wh that will ultimately vest.

The expense or credit recognized in the statement of profit and loss for a period / year represents the movement in cumulative expense recognized as at the beginning and end of that period / year and is recognized in employee benefits expense. In case of the employee stock option schemes having a graded vesting schedule, each vesting tranche having different vesting period has been considered as a separate option grant and accounted for accordingly.

Where the terms of an equity-settled transaction award are modified, the minimum expense recognized is the expense as if the terms had not been modified, if the original terms of the award are met. An additional expense is recognized for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The employee stock option expenses in respect of the employees of the subsidiaries are charged to the respective subsidiary.

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Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

4. Share capital

Share capital
	As at As at March 31, 2020 March 31, 2019 In Million In Million
Authorized shares (No. in million) Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Previous year: 79.12) equity shares of 10 each Issued, subscribed and fully paid-up share capital	2,000.00 2,000.00
	2,000.00 2,000.00
	764.25 791.19
	764.25 791.19

a) Reconciliation of the shares outstanding at the beginning and at the end of the year

The reconciliation of the number of shares outstanding and the amount of share capital is set out below:

				(In	Million)
	As at		As at
	March 31,	2020	March	31,	2019
	No of shares	Amount	No of	Amount
			shares
Number of shares at the beginning of	79.12	791.19	80.00		800.00
the year
Less:Shares boughtback	2.69	26.94	0.88		8.81
Number of shares at the end of the	76.43	764.25	79.12		791.19
year

b) Terms / rights attached to equity shares

The Company has only one class of equity shares having a par value of 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

-19.

The

-20.

The Company declares and pays dividends in Indian rupees. The Finance Act, 2020 in India has repealed Dividend Distribution Tax (DDT). The Companies are now required to pay/ distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed by Indian law on foreign exchange and is also subject to withholding tax at applicable rates as per Finance Act, 2020.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

c) Aggregate number of bonus shares issued, shares issued for consideration other than cash and shares bought back during the period of five years immediately preceding the reporting date

								For the period of	For the period of
								five years ended	five years ended
								March 31, 2020	March 31, 2019
								No in Million	No in Million
Equity shares	allotted on March 12, 2015 as fully paid bonus							40.000	40.000
							400 million
Equity shares	bought back							3.575	0.881

Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

d) Buyback of Equity Shares of the Company:

-up equity

persons who are in c

The buyback was offered to all eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under the open market route through the stock exchanges. The buyback of equity shares through the stock exchange commenced on February 8, 2019 and was completed on June 27, 2019. During this buyback period the Company had purchased and extinguished a total of 3,575,000 equity shares from the - per equity share comprising 4.47% of the pre buyback paidmillion (excluding transaction costs). The Company funded the buyback from utilization of its securities premium and free reserves. The total number of equity shares outstanding as on March 31, 2020 post buyback stands at 76,425,000.

e) Details of shareholders holding more than 5% shares in the Company

Name of the shareholder*	As at March	31, 2020	As at March	31, 2019
	No. in million	% Holding	No. in million	% Holding
Dr. Anand Deshpande jointly with Mrs.	22.95	30.04	22.95	29.01
Sonali Anand Deshpande
Schemes of HDFC Mutual Fund	6.53	8.54	3.73	4.71

• The shareholding information is based on legal ownership of shares and has been extracted from the records of the Company including register of shareholders / members.

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

5.1 Property, plant and equipment

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----- Start of picture text -----

Freehold Buildings Computers Office Plant and Leasehold Furniture and Vehicles Total
land equipments equipment improvements fixtures
Gross block (At cost)
As at April 1, 2019 206.92 2,387.00 1,684.93 53.22 1,376.04 21.12 515.09 8.44 6,252.76
Additions - 0.06 248.42 0.39 25.29 - 9.06 - 283.22
Disposals - 82.01 0.03 23.95 - 2.84 1.20 110.03
As at March 31, 2020 206.92 2,387.06 1,851.34 53.58 1,377.38 21.12 521.31 7.24 6,425.95
Accumulated depreciation
As at April 1, 2019 - 964.75 1,460.02 48.77 1,144.38 17.88 482.47 4.23 4,122.50
Charge for the year - 96.36 170.46 2.19 66.30 1.44 22.86 1.02 360.63
Disposals - 81.74 0.03 20.14 2.84 1.20 105.95
As at March 31, 2020 - 1,061.11 1,548.74 50.93 1,190.54 19.32 502.49 4.05 4,377.18
Net block
As at March 31, 2020 206.92 1,325.95 302.60 2.65 186.84 1.80 18.82 3.19 2,048.77
As at March 31, 2019 206.92 1,422.25 224.91 4.45 231.66 3.24 32.62 4.21 2,130.26
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• Note: Building includes those constructed on leasehold land:

439.96 million)

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

5.1 Property, plant and equipment

Gross block (At cost) As at April 1, 2018 Additions Disposals As at March 31, 2019 Accumulated depreciation As at April 1, 2018 Charge for the year Disposals As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018

Freehold land Buildings Computers Office equipments Plant and equipment Leasehold improvements Furniture and fixtures Vehicles Total 206.92 2,386.97 1,632.30 53.48 1,377.70 21.12 511.29 4.73 6,194.51 - 0.07 147.45 1.76 21.15 - 4.40 4.66 179.49 - 0.04 94.82 2.02 22.81 - 0.60 0.95 121.24 206.92 2,387.00 1,684.93 53.22 1,376.04 21.12 515.09 8.44 6,252.76 - 868.36 1,395.62 47.67 1,080.85 15.43 458.28 4.42 3,870.63 - 96.42 159.20 3.11 86.33 2.45 24.79 0.76 373.06 - 0.03 94.80 2.01 22.80 - 0.60 0.95 121.19 - 964.75 1,460.02 48.77 1,144.38 17.88 482.47 4.23 4,122.50 206.92 1,422.25 224.91 4.45 231.66 3.24 32.62 4.21 2,130.26 206.92 1,518.61 236.68 5.81 296.85 5.69 53.01 0.31 2,323.88

5.2 Right of use assets

Office premises Gross block (At cost) As at April 1, 2019 Additions (Transitional impact on adoption of Ind AS 116) As at March 31, 2020 Depreciation and impairment As at April 1, 2019 Charge for the year As at March 31, 2020 Net block As at March 31, 2020 As at March 31, 2019	Office premises Leasehold land Total - 358.91 37.50 396.41 358.91 37.50 396.41 - 126.41 0.60 127.01 126.41 0.60 127.01 232.50 36.90 269.40 - - -

Persistent Systems Limited

Notes forming part of condensed Interim financial statements

5.3 Other Intangible assets

	Software Acquired contractual rights Total
Gross block As at April 1, 2019 Additions As at March 31, 2020 Accumulated amortization As at April 1, 2019 Charge for the year As at March 31, 2020 Net block As at March 31, 2020 As at March 31, 2019	713.08 261.74 974.82 30.59 - 30.59
	743.67 261.74 1,005.41
	629.22 261.74 890.96 67.48 - 67.48
	696.70 261.74 958.44
	46.97 - 46.97
	83.86 - 83.86
	Software Acquired contractual rights Total
Gross block As at April 1, 2018 Additions As at March 31, 2019 Accumulated amortization As at April 1, 2018 Charge for the year As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018	660.92 261.74 922.66 52.16 - 52.16
	713.08 261.74 974.82
	543.44 261.74 805.18 85.78 - 85.78
	629.22 261.74 890.96
	83.86 - 83.86
	117.48 - 117.48

5.4 Depreciation and amortization expense

5.4 Depreciation and amortization expense	5.4 Depreciation and amortization expense
	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 For the year ended For the quarter ended
On Property, Plant and Equipment On other intangible assets On Right of use assets	92.33 92.50 360.63 373.06 12.11 21.79 67.48 85.78 32.02 - 127.01 -
	136.46 114.29 555.12 458.84

Persistent Systems Limited

Notes forming part of condensed Interim financial statements

6. Non-current financial assets : Investments (refer note 30)

M Investments carried at cost Unquoted investments Investments in equity instruments - In wholly owned subsidiary companies (Refer note 31) Persistent Systems, Inc. Persistent Systems Pte Ltd. Persistent Systems France SAS 1.50 million (Previous year: 1.50 million) shares of EUR 1 each, fully paid up -In associates Total investments carried at cost (A) Investments carried at amortised cost Quoted Investments In bonds 2,236.81 Add: Interest accrued on bonds Total investments carried at amortised cost (B) Designated as fair value through profit and loss Quoted Investments - Investments in mutual funds Unquoted Investments -Others Total investments carried at fair value (C) Total investments (A) + (B) + (C) Aggregate provision for diminution in value of investments Aggregate amount of unquoted investments 402 million (Previous year : 402 million) shares of USD 0.10 each, fully paid up 0.50 million (Previous year: 0.50 million) shares of SGD 1 each, fully paid up Klisma e-Services Private Limited [Holding 50% (Previous year: 50% )] 5.45 million (Previous year: 5.45 million) shares of MYR 1 each, fully paid up Persistent Systems Malaysia Sdn. Bhd. Persistent Systems Germany GmbH 11.6527 million (Previous year: 8.525 million) shares of EUR 1 each, fully paid up Fair value of long term mutual funds (Refer Note 6a) Less : Impairment Aggregate amount of quoted investments* Altizon Systems Private Limited

As at As a arch 31, 2020 March 31, 2019 2,478.01 2,478.01 2,478.01 2,478.01 15.50 15.50 15.50 15.50 97.47 97.47 97.47 97.47 102.25 102.25 102.25 102.25 1,265.91 713.19 1,265.91 713.19 0.05 0.05 (0.05) (0.05 - - 3,959.14 3,406.42 2,171.52 2,088.35 68.69 68.33 2,240.21 2,156.68 2,174.51 1,974.91 2,174.51 1,974.91 6.00 6.00 6.00 6.00 2,180.51 1,980.91 8,379.86 7,544.01 0.05 0.05 4,414.72 4,131.59 3,965.19 3,412.47

• Investments, where the Company does not have joint-control or significant influence including situations where such jointcontrol or significant influence is intended to be temporary, are classified as "investments in others"

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

6 a) Details of fair value of investment in long term Mutual Funds (Quoted)

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As at As at
March 31, 2020 March 31, 2019
Axis Mutual Fund 898.93 304.96
IDFC Mutual Fund 630.06 50.13
ICICI Prudential Mutual Fund 141.38 550.21
Kotak Mutual Fund 105.86 294.32
UTI Mutual Fund 105.73 160.32
Aditya Birla Sun Life Mutual Fund 82.65 191.44
SBI Mutual Fund 71.06 65.18
HDFC Mutual Fund 35.66 205.96
PGIM India Mutual Fund (formerly known as DHFL Pramerica Mutual Fund) [ 35.03 ] 32.10
DSP Mutual Fund 35.00 32.09
Sundaram Mutual Fund 33.15 30.15
Nippon India Mutual Fund (formerly known as Reliance Mutual Fund) - 58.05
2,174.51 1,974.91
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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

7. Non-current financial assets : Loans (refer note 30)

M Carried at amortised cost Security deposit Unsecured, considered good Inter corporate deposits Unsecured, credit impaired Less: Impairment 8. Other non-current financial assets (refer note 30) M Non-current bank balances (Refer note 14) Add: Interest accrued but not due on non-current bank deposits Non-current deposits with banks (Carried at amortised cost) Deposit with financial institutions Add: Interest accrued but not due on deposit with financial institutions Less: Credit impaired Non-current deposits with financial institutions (Carried at amortised cost) 9. Deferred tax assets (net) Investment in Persistent Systems Germany GmbH (Shares pending allotment) (Refer note 31) Other loans and advances

As at As a arch 31, 2020 March 31, 2019 123.57 116.01 123.57 116.01 0.58 0.58 0.58 0.58 (0.58) (0.58 - - 123.57 116.01 As at As a arch 31, 2020 March 31, 2019 344.55 94.39 14.38 1.46 358.93 95.85 430.00 430.00 0.98 0.98 (430.98) (182.50 - 248.48 - 78.72 358.93 423.05

M Deferred tax liabilities Capital gains (net) Others Deferred tax assets Provision for leave encashment Provision for long service awards Provision for doubtful debts Tax credit Right of use asset and lease liability Others Deferred tax assets (net) 10. Other non current assets M Capital advances (Unsecured, considered good) Advances recoverable in cash or kind or for value to be received Balances with government authorities (refer note 32) Differences in book values and tax base values of block of Property, plant and equipment and other intangible assets

As at As a arch 31, 2020 March 31, 2019 24.30 40.92 76.67 99.83 - 99.40 100.97 240.15 47.15 65.51 51.38 62.02 33.45 25.74 67.69 45.73 31.86 - 186.79 96.71 418.32 295.71 317.35 55.56 As at As a arch 31, 2020 March 31, 2019 27.14 2.06 5.70 66.29 296.55 - 329.39 68.35

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

11. Current financial assets : Investments (refer note 30)

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As at As at
March 31, 2020 March 31, 2019
Designated as fair value through profit and loss
- Quoted investments
Investments in mutual funds
Fair value of current mutual funds (Refer Note 11a) 5,164.77 3,295.53
5,164.77 3,295.53
Total carrying amount of investments 5,164.77 3,295.53
Aggregate amount of quoted investments 5,164.77 3,295.53
Aggregate amount of unquoted investments - -
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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

11 a) Details of fair value of current investment in mutual funds (Quoted)

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As at As at
March 31, 2020 March 31, 2019
Aditya Birla Sun Life Mutual Fund 973.04 386.73
ICICI Prudential Mutual Fund 940.50 399.98
UTI Mutual Fund 809.46 625.92
L&T Mutual Fund 734.90 407.39
IDFC Mutual Fund 640.78 106.40
Kotak Mutual Fund 421.51 -
Axis Mutual Fund 396.02 426.87
HDFC Mutual Fund 185.88 493.59
Nippon India Mutual Fund (formerly known as Reliance Mutual Fund) 62.68 -
SBI Mutual Fund - 162.14
DSP Mutual Fund - 103.35
Tata Mutual Fund - 115.97
Sundaram Mutual Fund - 67.19
5,164.77 3,295.53
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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

12. Trade receivables (refer note 30)

Unsecured, considered good Unsecured, credit impaired Less : Allowance for credit loss includes dues from related parties (refer note 31) 13. Cash and cash equivalents (refer note 30)*	As at As a March 31, 2020 March 31, 2019 2,883.09 2,429.85 132.91 73.66 3,016.00 2,503.51 (132.91) (73.66 2,883.09 2,429.85 2,883.09 2,429.85

Cash and cash equivalents as presented in cash flow statement Cash on hand Balances with banks On current accounts# On saving accounts On Exchange Earner's Foreign Currency accounts On deposit accounts with original maturity less than three months On Escrow account**	As at As a March 31, 2020 March 31, 2019 0.15 0.11 198.79 126.71 0.36 0.91 261.86 114.91 71.47 229.54 - 92.94 532.63 565.12

** The Company concluded the buyback scheme on June 27, 2019 and minimum balance maintained in Escrow account was released on completion of statutory formalities.

14. Other bank balances (refer note 30)

Deposits with banks Add: Interest accrued but not due on deposits with banks Deposits with banks (Carried at amortised cost) Balances with banks on unpaid dividend accounts* Less: Deposit with maturity more than twelve months from the Balance Sheet date disclosed under non-current financial assets (Refer note 8) Less: Interest accrued but not due on non-current deposits with banks (Refer note 8)	As at As a March 31, 2020 March 31, 2019 2,643.65 4,687.90 116.55 64.86 2,760.20 4,752.76 (344.55) (94.39 (14.38) (1.46 2,401.27 4,656.91 4.05 2.27 2,405.32 4,659.18

• Out of the balance, fixed deposits of 71.10 million (Previous year : 87.99 million) have been earmarked against credit facilities and bank guarantees availed by the Company.

** The Company can utilize these balances only towards settlement of the respective unpaid dividend.

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

15. Current financial assets : Loans (refer note 30)

Carried at amortised cost Loan to related parties (refer note 31) Unsecured, credit impaired - Klisma e-Services Private Limited Less: Impairment Security deposits Unsecured, considered good 16. Other current financial assets (refer note 30) Fair value of derivatives designated and effective as hedging instruments Forward contracts receivable Advances to related parties (Unsecured, considered good) (refer note 31) Persistent Systems, Inc. Persistent Systems Pte Ltd. Persistent Systems France SAS Persistent Telecom Solutions Inc. Persistent Systems Malaysia Sdn. Bhd. Persistent Systems Lanka (Private) Limited PARX Consulting GmbH Persistent Systems Israel Ltd. Persistent Systems Mexico, S.A. de C.V Youperience GmbH PARX Werk AG Persistent Systems Germany GmbH Advances to related parties (Unsecured, credit impaired ) (refer note 31) Klisma e-Services Private Limited Less: Impairment of current financial assets Deposit with financial institutions Add: Interest accrued but not due on deposit with financial institutions Current deposits with financial institutions (Carried at amortised cost) Unbilled revenue 17. Other current assets Advances to suppliers (Unsecured, considered good) Advances recoverable in cash or kind or for value to be received Excess fund balance with Life Insurance Corporation Other advances (Unsecured, considered good) VAT receivable (net) Service tax and GST receivable (net) (refer note 32)

As at As a March 31, 2020 March 31, 201 27.43 27.43 27.43 27.43 (27.43) (27.43 - - 4.76 6.63 4.76 6.63 4.76 6.63 As at As a March 31, 2020 March 31, 201 - 281.27 63.08 63.19 - 0.11 6.71 4.14 3.05 4.56 0.15 0.08 2.67 2.41 0.04 - 1.05 0.38 1.12 0.59 0.05 1.79 - 0.31 0.57 80.02 76.03 0.81 0.81 (0.81) (0.81 - - - 250.00 - 10.97 - 260.97 2,000.05 1,577.47 2,080.07 2,195.74 As at As a March 31, 2020 March 31, 201 460.97 286.27 128.54 - 31.50 35.07 864.36 922.10 895.86 957.17 1,485.37 1,243.44

Persistent Systems Limited

Notes forming part of condensed Interim financial statements

18. Non-current financial liabilities : Borrowings (refer note 30)

	As at As at March 31, 2020 March 31, 2019
Unsecured Borrowings carried at amortised cost Term loans Indian rupee loan from others Interest accrued but not due on term loans Less: Current maturity of long-term borrowings transferred to other current financial liabilities (Refer note 22) Less: Current maturity of interest accrued but not due on term loan transferred to other current financial liabilities (Refer note 22)	11.93 16.55 0.18 0.17
	12.11 16.72 (4.85) (4.58) (0.18) (0.17)
	(5.03) (4.75)
	7.08 11.97

The term loans from Government departments have the following terms and conditions:

Loan I - amounting to 2.69 million (Previous year 5.46 million) with interest payable @ 2% per annum has been guaranteed by a bank guarantee by the Company and is repayable in ten equal semi annual installments over a period of five years commencing from September 2016.

Loan II - amounting to 9.24 million (Previous year 11.09 million) with Interest payable @ 3% per annum repayable in ten equal annual installments over a period of ten years commencing from October 2015.

19. Non current liabilities : Provisions

	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019	As at As at March 31, 2020 March 31, 2019
Provision for employee benefits - Long service awards	182.79 158.46
	182.79 158.46

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

20. Other long term financial liabilities (refer note 30)

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As at As at
March 31, 2020 March 31, 2019
Rent deposits accepted - 1.83
Lease liabilities 356.64 -
Less: Current maturity of lease liabilities (refer note 22) (165.38) -
191.26 1.83
Movement of lease liabilities
For the year ended
March 31, 2020 March 31, 2019
Opening balance - -
Additions (Transitional impact on adoption of Ind AS 116) 501.15 -
Add: Interest recognised during the year (refer note 34) 43.86 -
Less: Payments made (188.37) -
Closing balance 356.64 -
21. Trade payables (refer note 30)
As at As at
March 31, 2020 March 31, 2019
Trade payables for goods and services 972.49 1,019.07
972.49 1,019.07
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*Includes dues payables to related parties (refer note 31)

based on the information available with the Company regarding the status of registration of such vendors under the said Act, as per the intimation received from them on requests made by the Company. There are no overdue principal amounts / interest payable amounts for delayed payments to such vendors at the Balance Sheet date. There are no delays in payment made to such suppliers during the period or for any earlier years and accordingly there is no interest paid or outstanding interest in this regard in respect of payment made during the period or on balance brought forward from previous year.

22. Other current financial liabilities (refer note 30)

Capital creditors Current maturity of long term-borrowings (refer note 18) Current maturity of interest on long-term borrowings (refer note18) Current maturity of lease liabilities (refer note 20) Accrued employee liabilities Unpaid dividend Other liabilities Fair value of derivatives designated and effective as hedging instruments Forward contracts payable Advance from related parties (Unsecured, considered good) (refer note 31)* Persistent Systems Pte Ltd PARX Werk AG Aepona Limited

As at As a March 31, 2020 March 31, 2019 36.23 55.16 4.85 4.58 0.18 0.17 165.38 105.64 75.79 4.05 2.27 4.40 0.04 387.89- 2.77 - 2.55 - 1.17 0.16 6.49 0.16 715.11 138.17

• Unpaid dividend is credited to Investor Education and Protection Fund as and when due.

23. Other current liabilities

Unearned revenue Advance from customers Other payables - Statutory liabilities - Other liabilities 24. Current liabilities : Provisions Provision for employee benefits - Gratuity - Leave encashment - Long service awards - Other employee benefits	As at As a March 31, 2020 March 31, 2019 135.88 130.80 558.34 347.05 146.89 145.46 9.91 6.97 851.02 630.28 As at As a March 31, 2020 March 31, 2019 - 94.34 187.35 187.46 21.35 19.02 381.68 363.29 590.38 664.11

Persistent Systems Limited

Notes forming part of condensed Interim financial statements

25. Revenue from operations (net) (refer note 31)

Software services Software licenses	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 5,624.46 4,987.02 20,775.56 19,163.68 36.93 175.69 305.66 434.99 5,661.39 5,162.71 21,081.22 19,598.67 For the quarter ended For the year ended

26. Other income

Interest income On deposits carried at amortised cost On others Foreign exchange (loss) / gain (net) (Loss) / Profit on sale of Property, Plant and Equipment (net) Dividend income from investments Profit on sale of investments (net) Net gain/(loss) arising on financial assets designated at FVTPL Miscellaneous income	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 84.21 54.49 373.29 97.06 33.27 40.48 152.47 191.76 (60.67) - 274.26 - (0.94) 1.50 - 3.77 138.46 42.57 410.72 392.26 11.86 77.57 164.81 366.09 81.77 10.98 119.02 (76.95) 35.36 27.98 104.47 63.91 323.32 255.57 1,599.04 1,037.90 For the quarter ended For the year ended

27. Personnel expenses

27.1 Employee benefits expense Salaries, wages and bonus Contribution to provident and other funds Staff welfare and benefits Share based payments to employees 27.2 Cost of professionals - Related parties (refer note 31) - Others	March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 2,674.30 2,229.37 10,178.10 8,576.55 137.79 134.68 372.96 520.55 111.46 104.47 417.99 394.13 20.71 - 60.01 - 2,944.26 2,468.52 11,029.06 9,491.23 333.54 477.38 1,565.67 1,885.21 61.09 71.68 259.70 310.00 394.63 549.06 1,825.37 2,195.21 3,338.89 3,017.58 12,854.43 11,686.44 For the quarter ended For the year ended

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

28. Other expenses*

Travelling and conveyance Electricity expenses (net) Internet link expenses Communication expenses Recruitment expenses Training and seminars Purchase of software licenses and support expenses Bad debts Provision for doubtful debts/ (provision for doubtful debts written back) (net) Rent Insurance Rates and taxes Legal and professional fees Repairs and maintenance - Plant and Machinery - Buildings - Others Selling and marketing expenses Fees for sales enablement services Advertisement, conference and sponsorship fees Computer consumables Auditors' remuneration Donations Books, memberships, subscriptions Provision for doubtful deposits (refer note 33) Loss on sale of Property, Plant and Equipment (net) Foreign exchange loss (net) Directors' sitting fees Directors' commission Miscellaneous expenses

March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019 89.04 92.24 338.29 338.77 20.29 15.71 97.02 89.96 18.02 13.63 48.83 44.44 20.48 16.93 72.52 69.13 20.73 23.32 69.43 58.51 6.51 5.75 22.82 13.66 172.76 192.80 852.77 687.86 - - - 23.55 19.43 1.10 47.31 (6.99) 22.98 60.23 68.33 245.51 6.97 4.91 25.91 18.00 14.78 19.66 49.17 55.14 53.52 42.94 187.49 206.96 25.01 23.15 109.12 101.41 3.63 6.16 21.32 28.09 4.66 5.71 18.21 19.31 142.74 188.96 660.03 754.73 43.40 256.84 627.90 642.92 7.43 6.06 23.02 21.29 0.77 1.59 4.47 6.19 3.62 7.34 10.26 13.73 29.70 22.76 86.11 80.43 6.60 6.40 22.42 23.06 48.48 182.50 248.48 182.50 5.50 - 5.50 - - 60.17 - 206.61 1.88 1.57 6.58 5.32 3.60 3.59 14.85 14.21 42.91 62.58 158.98 162.72 835.44 1,324.60 3,897.14 4,107.02 For the quarter ended For the year ended

• includes expenses incurred with related parties (refer note 31)

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

29. Earnings per share

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For the quarter ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Numerator for Basic and Diluted EPS
(A) 1,274.82 720.00 4,077.23 3,150.08
Denominator for Basic EPS
Weighted average number of equity shares (B) 76,425,000 79,772,658 76,684,672 79,943,943
Denominator for Diluted EPS
Number of equity shares (C) 76,425,000 79,772,658 76,684,672 79,943,943
(A/B) 16.68 9.03 53.17 39.40
(A/C) 16.68 9.03 53.17 39.40
For the quarter ended For the year ended For the year ended
March 31, 2020 March 31, 2019 March 31, 2020 March 31, 2019
Number of shares considered as basic weighted average shares outstanding 76,425,000 79,772,658 76,684,672 79,943,943
Add: Effect of dilutive issues of stock options - - - -
Number of shares considered as weighted average shares and potential shares outstanding 76,425,000 79,772,658 76,684,672 79,943,943
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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

30. Financial assets and liabilities

The carrying values and fair values of financial instruments by categories are as follows:

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Financial assets/ financial liabilities Basis of measurement As at March 31, 2020 As at March 31, 2019 Fair value hierarchy
Carrying value Fair value Carrying value Fair value
Assets:
Investments in subsidiaries and associates Cost 3,959.14 3,959.14 3,406.42 3,406.42
Investments in equity instruments Fair value 6.00 6.00 6.00 6.00 Level 3
Investments in bonds Amortised cost 2,240.21 2,236.81 2,156.68 2,120.86
Investments in mutual funds Fair value 7,339.28 7,339.28 5,270.44 5,270.44 Level 1
Loans Amortised cost 128.33 128.33 122.64 122.64
Deposit with banks and financial institutions (including interest accrued but Amortised cost 2,760.20 2,760.20 5,262.21 5,262.21
not due on deposits with banks)
Cash and cash equivalents (including unpaid dividend) Amortised cost 536.68 536.68 567.39 567.39
Trade receivables (net) Amortised cost 2,883.09 2,883.09 2,429.85 2,429.85
Forward contracts receivable Fair value - - 281.27 281.27 Level 2
Unbilled revenue Amortised cost 2,000.05 2,000.05 1,577.47 1,577.47
Other current financial assets Amortised cost 80.02 80.02 76.03 76.03
Other non-current financial assets(Share application money paid) Cost - - 78.72 78.72
Total 21,933.00 21,929.60 21,235.12 21,199.30
Liabilities:
Borrowings (including accrued interest) Amortised cost 12.11 12.11 16.72 16.72
Trade payables and deferred payment liabilities Amortised cost 972.49 972.49 1,019.07 1,019.07
Other financial liabilities (excluding borrowings) Amortised cost 513.45 513.45 135.25 135.25
Forward contracts payable Fair value 387.89 387.89 - - Level 2
Total 1,885.94 1,885.94 1,171.04 1,171.04
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• Fair value includes interest accrued.

Fair value hierarchy:

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels:

Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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Persistent Systems Limited

Notes forming part of condensed Interim financial statements

31. (i) Significant related party transactions (excluding transactions with Key Management personnel and their relatives)

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Name of the related party and nature of For the quarter ended For the year ended
relationship March 31, March 31, March 31, March 31,
2020 2019 2020 2019
Sale of software services Subsidiaries
Persistent Systems, Inc. 1,899.99 1,607.00 6,917.59 5,521.01
Other subsidiaries 87.08 101.33 379.68 415.59
Entity over which a key management personnel has
significant influence
Deazzle Services Private Limited 4.57 11.51 7.47 18.46
Total 1,991.64 1,719.84 7,304.74 5,955.06
Fees for sales & marketing services Subsidiaries
Other subsidiaries 15.28 14.82 20.77 22.41
Total 15.28 14.82 20.77 22.41
Cost of professionals (excluding Subsidiaries
reimbursement of expenses)
Persistent Systems, Inc. 256.56 283.82 1,175.54 1,394.40
Other subsidiaries 79.23 46.73 390.14 343.98
Total 335.79 330.55 1,565.68 1,738.38
Legal and professional fees Subsidiaries
Other subsidiaries 0.34 - 0.34 -
Entity over which a key management personnel has
significant influence
Azure Associates, LLC - 5.48 10.63 23.07
Total 0.34 5.48 10.97 23.07
Recovery of cost of assets Subsidiaries
Persistent Systems, Inc. 9.62 8.84 17.29 8.84
Total 9.62 8.84 17.29 8.84
Purchase of Software Subsidiaries
Persistent Systems, Inc. 6.41 11.01 17.94 13.75
Other subsidiaries 3.54 84.96 3.54 133.07
Total 9.95 95.97 21.48 146.82
Selling and marketing expenses Subsidiaries
Persistent Systems, Inc. 137.35 165.24 627.44 662.36
Other subsidiaries 5.18 21.56 31.00 87.83
Total 142.53 186.80 658.44 750.19
Fees for sales enablement services Subsidiaries
Persistent Systems, Inc. 30.02 256.84 614.52 642.92
Other subsidiaries 13.39 - 13.39 -
Total 43.41 256.84 627.91 642.92
Conversion of loan to equity Subsidiaries
Persistent Systems Germany GmbH - - - 711.17
Total - - - 711.17
Commission received on corporate Subsidiaries
guarantee Persistent Systems, Inc. 0.48 0.42 2.80 1.67
Total 0.48 0.42 2.80 1.67
Dividend Income Subsidiaries
Persistent Systems Pte Ltd 52.11 - 180.37 25.58
Persistent Systems France SAS - - - 85.37
Persistent Systems Malaysia Sdn. Bhd. 86.32 - 220.31 100.55
Total 138.43 - 400.68 211.50
Reimbursement of expenses received Subsidiaries
Persistent Systems, Inc. - - 19.44 -
Other subsidiaries - - 0.03 -
Total - - 19.47 -
Travelling and conveyance Subsidiaries
Persistent Systems, Inc. - 0.94 1.08 5.57
Other subsidiaries 0.46 0.22 0.46 0.76
Total 0.46 1.16 1.54 6.33
Interest income Subsidiaries
Persistent Systems, Inc. - - - 1.07
Other subsidiaries - - - 9.53
Total - - - 10.60
Repayment of intercorporate deposits# Subsidiaries
Persistent Systems, Inc. - - - 132.74
Total - - - 132.74
Investment in wholly owned subsidiary Subsidiaries
(including Shares pending allotment) Persistent Systems Germany GmbH - 78.72 552.72 78.72
Total - 78.72 552.72 78.72
Payment of liability on behalf of Subsidiaries
Persistent Systems, Inc. 67.60 - 67.60 -
Total 67.60 - 67.60 -
Employee stock compensation Subsidiaries
Persistent Systems, Inc. 53.19 - 179.82 -
Total 53.19 - 179.82 -
Advance given Subsidiaries
Other subsidiaries 1.87 1.87 -
Total 1.87 - 1.87 -
Advance received Subsidiaries
Other subsidiaries 6.49 - 6.49 -
Total 6.49 - 6.49 -
Donation given Entity over which a key management personnel has
significant influence
Persistent Foundation 22.81 18.57 79.21 70.51
22.81 18.57 79.21 70.51
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These transactions are disclosed at the exchange rates prevailing on the date of transaction.

(ii) Significant outstanding balances

Trade receivables Trade payables Advances given Advances received inclusive of Advances from customers Unbilled Receivable Loans given Investments Investment in Persistent Systems Germany (Shares pending allotment)	Subsidiaries Persistent Systems, Inc. Other subsidiaries Entity over which a key management personnel has significant influence Deazzle Services Private Limited Total Subsidiaries Persistent Systems, Inc. Other subsidiaries Entity over which a key management personnel has significant influence Azure Associates, LLC Total Subsidiaries Persistent Systems, Inc. Other subsidiaries Associate Klisma e-Services Private Limited @ Total Subsidiaries Persistent Systems, Inc. Other subsidiaries Subsidiaries Persistent Systems, Inc. Other subsidiaries Subsidiaries Persistent Systems, Inc. Other subsidiaries Associate Klisma e-Services Private Limited @ Total Subsidiaries Persistent Systems Germany GmbH Total Associate Klisma e-Services Private Limited @ Total Name of the related party and nature of relationship	March 31, March 31, 2020 2019 216.89 285.30 128.11 38.31 - 2.14 345.00 325.75 244.13 409.23 205.86 173.29 - 2.83 449.99 585.35 63.08 63.19 14.97 12.84 0.81 0.81 78.86 76.84 400.81 333.98 6.49 0.16 407.30 334.14 950.65 698.15 42.28 77.96 992.93 776.11 2,478.01 2,478.01 1,481.13 928.41 0.05 0.05 3,959.19 3,406.47 - 78.72 - 78.72 27.43 27.43 27.43 27.43 As at

@ These balances are fully provided for.

(iii) Guarantee given on behalf of subsidiary

Persistent Systems Ltd has given a performance guarantee upto $ 10 million to HSBC Bank USA in respect of payment obligations under the Receivables Purchase agreement entered into by Persistent Systems Inc with HSBC Bank, USA (Previous year: $10 million). Persistent Systems Ltd. has also given performance guarantee upto $ 5 million to Citibank USA (Previous year: $ 5 million) in respect of working capital facilities for Persistent Systems Inc. and $ 0.17 million to Sun Life Assurance Company of Canada for timely payment of rent instalments and damages, in respect of office rented to Persistent Systems Inc.

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Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

32 . Contingent liabilities

on December 19, 2016 for nonbasis, excluding interest and penalty, if applicable. The issue relates to the professional and technical services rendered by overseas subsidiaries on behalf of the Company to its overseas customers for the period 2011-12 to 2014-15.

Post representations made by the Company, the Learned Principal Commissioner of Service Tax, Pune, adjudicated the aforesaid showthe period of limitation and as a result of that, the said demand now covers financial year 2014-15. The Company has

Central Excise and Service Tax Appellate Tribunal (CESTAT) on September 23, 2017.

The Company, based on independent legal opinion obtained in respect of issues related to this matter, believes that the liability is not likely to arise and therefore, no provision is considered necessary in the financial statements. If the appeal filed as mentioned above results in a demand, there will be no impact on the profitability as the Company will be eligible to claim credit/refund for the amount paid.

The GST department has filed an appeal on October 11, 2017 with appellate authorities against the Order passed by Learned Principal Commissioner of Service Tax, Pune. Though the GST department has acknowledged the ground of revenue neutrality, the said appeal mainly questions non-application of extended period of limitation. The Company has filed reply to this appeal on December 18, 2017.

Considering the view of the Service Tax Authorities, based on legal advice and due prudence, the Company has 01, according was paid under protest and forms part of the aforementioned GST receivable balance.

As on March 31, 2020, the pending litigations in respect of direct taxes amount to 220.30 million and in respect of indirect taxes amount to million (excluding the show cause notice received from Commissioner of Service Tax on s as mentioned above). Based on the advice obtained and judgments in favour of the Company at the first appellate authority in the earlier years, management does not expect any outflow in respect of these litigations.

In respect of export incentives, pert under protest based on show cause notice from Directorate of Revenue Intelligence (DRI), the Company has filed an application before the relevant authorities. Further, the Company is in the process of making representations through the industry associations to ensure continued applicability of the said incentives to the eligible information technology 113.49 Million pertaining to earlier years is subject to

Persistent Systems Ltd has given a performance guarantee up to $ 10 million to HSBC Bank USA in respect of payment obligations under the Receivables Purchase agreement entered into by Persistent Systems Inc with HSBC Bank, USA (Previous year: $10 million). Persistent Systems Ltd. has also given performance guarantee up to $ 5 million to Citibank USA (Previous year: $ 5 million) in respect of working capital facilities for Persistent Systems Inc. and $ 0.17 million to Sun Life Assurance Company of Canada for timely payment of rent instalments and damages, in respect of office rented to Persistent Systems Inc.

• 33 . The Com

• due for maturity from January 2019 to June 2019. In view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, Management of the Company has fully provided for these deposits along with interest accrued thereon till the date the deposits had become doubtful of recovery. The Management is hopeful of recovery though with a time lag. The Company continues to monitor developments in the matter and is committed to take steps including legal action that may be necessary to ensure full recovery of the said deposits.

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Persistent Systems Limited

Notes forming part of Condensed Interim Financial Statements

• 43.86 million under finance costs for FY 2019-20.

• The financial statements are presented in million and decimal thereof except for per share information or as otherwise stated.

For Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.: 001076N/N500013

For and on behalf of the Board of Directors of Persistent Systems Limited

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Bharat Shetty Partner Membership No.: 106815

Dr. Anand Deshpande

Chairman and Managing Director

Kiran Umrootka r Director

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Sunil Sapre Executive Director and Chief Financial Officer

Amit Atre Company Secretary

Place: Mumbai Date: May 5, 2020

Place: Pune Date: May 5, 2020