Persistent Systems Limited — Interim / Quarterly Report 2019

Jul 25, 2019

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PERS!STE

NSE & BSE / 2019-20 / 047

July 25, 2019

The Manager, Corporate Services, National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai 400051

Ref: Symbol: PERSISTENT

The Manager, Corporate Services, BSE Limited 14'" Floor, P J Towers, Dalal Street, Mumbai 400001

Ref: Scrip Code: 533179

Dear Sir/ Madam,

Sub.: Financial Statements for the quarter ended June 30, 2019

We wish to inform you that the Board of Directors at its meeting held on July 24, 2019 and concluded or, July 25, 2019, has approved the Financial Statements for the quarter ended June 30, 2019.

Accordingly, please find enclosed the following documents:

1. Audited Consolidated Financial Statements for the quarter ended June 30, 2019;

2. Audited Unconsolidated Financial Statements for the quarter ended June 30, 2019.

Please acknowledge the receipt.

Thanking you,

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Yours sincerely,
�.
re
�Amit
Co pany Secretary
Encl: As above
For Persi:Ai?1ed
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Persistent Systems Limited, Bhageerath, 402, Senapati Bapat Road, F'une 411016 I Tel: +91 (20) 670 30000 Persistent Systems Inc., 2055, Laurelwood Rd, Suite 210, Santa Clara, CA 95054, USA I Tel: +1 (408) 216 7010 CIN - L72300PN1990PLC056696 I Fax - +91 (20) 6703 0009 I e-mail - info@persistenl.comIWebsite·www.persistent.com

Chartered Accountants 706, 'B' Wing, 7[,;, ] Floor ICC Trade Tower Senapati Bapat Road Pune-411 016 Maharashtra, India

Deloitte Haskins & Sells LLP

Tel: +91 20 6624 4600 Fax: +91 20 6624 4605

INDEPENDENT AUDITOR'S REPORT

TO THE BOARD OF DIRECTORS OF PERSISTENT SYSTEMS LIMITED

Report on the Audit of the Interim Condensed Consolidated Financial Statements

Opinion

We have audited the accompanying interim condensed consolidated financial statements ("the Consolidated Condensed Financial Statements") of Persistent Systems Limited ("the Parent") and its subsidiaries (the Parent and its subsidiaries together referred to as "the Group"), its associate, which comprise the Consolidated Condensed Balance Sheet as at 30 June 2019, the Consolidated Condensed Statement of Profit and Loss for the quarter ended on that date, the Consolidated Condensed Cash Flows Statement and the Consolidated Condensed Statement of Changes in Equity for the quarter ended on that date, and notes to the Consolidated Condensed Financial Statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of the other auditors on separate condensed financial statements of the subsidiaries, associate referred to in the Other Matters paragraph below, the aforesaid Consolidated Condensed Financial Statements give a true and fair view in conformity with the Indian Accounting Standard 34 ("Ind AS 34") prescribed under section 133 of the Companies Act, 2013 ("the Act") and other accounting principles generally accepted in India, of their consolidated state of affairs of the Parent as at 30 June 2019, of consolidated profit for the quarter ended on that date, its consolidated cash flows and consolidated changes in equity for the quarter ended on that date.

Basis for Opinion

We conducted our audit of the Consolidated Condensed Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibility for the Audit of the Consolidated Condensed Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the !CAI together with the ethical requirements that are relevant to our audit of the consolidated financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matters paragraph below is sufficient and appropriate to provide a basis for our audit opinion on the Consolidated Condensed Financial Statements.

t

Regd. Office: lndiabulls Finance Centre, Tower 3, 2T[h ] -32["" ] Floor, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013, Maharashtra, India. {LLP ldentification No. MB·8737)

Deloitte Haskins & Sells LLP

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

The Parent Company's Board of Directors is responsible for the preparation and presentation of these Consolidated Condensed Financial Statements that give a true and fair view of the consolidated financial position, consolidated financial performance, consolidated changes in equity and consolidated cash flows of the Group including its associate in accordance with the Ind AS 34 and other accounting principles generally accepted in India.

The respective Board of Directors of the companies included in the Group and of its associate are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group, its associate 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 the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Consolidated Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the Consolidated Financial Statements by the Directors of the Parent Company, as aforesaid.

In preparing the Consolidated Condensed 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 of 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 management either intends to liquidate or cease operations, or has no realistic alternative but to do so.

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

Auditor's Responsibility for the Audit of the Consolidated Condensed Financial Statements

Our objectives are to obtain reasonable assurance about whether the Consolidated Condensed Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's 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 SAs 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 Condensed Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Consolidated Condensed 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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Deloitte Haskins & Sells LLP

• Obtain an understanding of internal financial 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 the effectiveness of the internal financial control of the Group, its associate.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting 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 attention in our auditor's report to the related disclosures in the Consolidated Condensed Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions 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 Condensed Financial Statements, including the disclosures, and whether the Consolidated Condensed Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group and its associate to express an opinion on the Consolidated Condensed Financial Statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the Consolidated Condensed Financial Statements of which we are the independent auditors. For the other entities included in the Consolidated Condensed Financial Statements, which have been audited by other auditors, such other auditors remain responsible for the direction, supervision and performance of the audits carried out by them. We remain solely responsible for our audit opinion.

Materiality is the magnitude of misstatements in the Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Financial Statements.

We communicate with those charged with governance of the Parent and such other entities included in the Consolidated Condensed Financial Statements of which we are the independent auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings 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.

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Deloitte Haskins & Sells LLP

Other Matters

• a) We did not audit the condensed financial statements of 14 (fourteen) subsidiaries whose condensed financial statements reflect total assets of Rs. 4,893.21 Million, net total assets of Rs. 2,101.98 Million as at 30 June 2019, total revenues of Rs. 1,170.26 Million and net cash flows amounting to Rs. 478.99 Million for the quarter ended 30 June 2019, as considered in the Consolidated Condensed Financial Statements whose financial statements have not been audited by us. These condensed financial statements have been audited by other auditors whose reports have been furnished to us by the Management and our opinion on the Consolidated Condensed 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.

• b) The Consolidated Condensed Financial Statements include the Group's share of net profit/loss of Rs. Nil for the quarter ended 30 June 2019, as considered in the Consolidated Condensed Financial Statements, in respect of 1 (one) associate, whose condensed financial statements have not been audited by us. This condensed financial statements are unaudited and have been furnished to us by the Management and our opinion on the Consolidated Condensed Financial Statements, in so far as it relates to the amounts and disclosures included in respect of this associate is based solely on such unaudited condensed financial statements. In our opinion and according to the information and explanations given to us by the Management, this condensed financial statements are not material to the Group.

Our opinion on the Consolidated Condensed Financial Statements is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the condensed financial statements certified by the Management.

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W/W-100018)

Place: Pune Date: 25 July 2019

l H . t t M. Joshi ;'. .[, ] r� . Partner (UDIN -19j'.)3 019AAAABY8494) (Mem9/r hip No. 038019) •

Persistent Systems Limited CONDENSEO CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2019

Persistent Systems Limited CONDENSEO CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 2019
ASSETS Non-curront as sots Properly, p1an1 and equipmen! Capital work�n-prog,ess Right· of· use assets Goodll OHmr /n1angibc as,ets !n1angiblc asse1s under devolo1lment Financial a•so1s · lnves!ments . Loans ·Olhcr non·crent financial assets Deforrod !a• asse1s {nel) 011,er non-cu!fent asse1s Curront assets Financial asGc1s · lnvos1monts • Trade rnceivables {nel) . Cas1 and casl, equivalents · Ottier bank balances · loans . Other cuuenl financial a�sols Cmron1 tax assets (not) Olt,or curron1 asse1s TOTAL EQUITY AND LIABILITIES EQUITY Eqtii!y share capi1al OUwr equity LIABILITIES Non· curront tiab!liUes Financal lrabililios · Bono.nos Olher l<mg-10,m financal liabili1ies Provisions Currant liahili!ios Financal liabililies • T,ade payables !{dues of micro and small enterp<ises , 6.08 million {Correspondang period: , 18.74 million I Previous year: , 15.63 million)) · OU10, !inancial liabilities Olher curren1 liahililies Provisions Current lax liabilities (net) TOTAL Noll$ '' '' " " " " "". " " ,0" " """ A$ at June 30, 2019 fn f Million 2,307.54 15.17 660.83 81.13 1,501.45 255.06 4,821.18 4,087.34 165.19 180.22 552.45 59.98 9,666.36 1,165.93 4,n2.18 2,079.23 5,887.96 8.58 2,356 25 8.85 1,51.84 ----- " 17,600,92 - --2767.28 764.25 21.700.69 22,464.94 11.97 529.03 224.37 76S.37 1,569 33 745.15 1.126.44 996.05 4,436.97 27 667.28	As at June 30, 2018 ln f Million 2,520.19 6.57 80.49 2,337.20 54.68 5,001.13 3,100.29 160.61 2.81 513.39 As a! Ma«h 31, 2019 Inf Million 2,331.24 12.10 81.24 1,595.41 303.54 4,323.63 4,345.71 164.00 349.29 405.05 66.49 --�=' ----"'"'" 8,844.72 6,759.15 5,630.63 1,084.50 576.00 9,655.89 3,295.53 4,923.01 1,739.45 4,984.39 6.26 3,204.93 15 98 1,751.02 7.87 2,377.00 185.06 ---" '-----"2'<"C·'"- 19 028.47 27 873.19 800.00 21,347.13 22,147.13 16.55 1.83 152.36 18,900.10 28,555.99 791.19 22,655.61 23,446.80 11.97 1.63 252.80
	170.74 2,091.56 707.55 1,417.55 1,338.66 5 655.32 27 873.19 266.60 1,517.07 441.93 1,122.44 1,686.35 74.80 4,842.59 26,555.99

Summary of signincant accouriling pol<cies

The accompanying notes are an ln1egral par1 of lhe condensed consolidated financial s!atcmcnls A,; per our repoit of e,en date

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For Dc!oitta Haskin$ & Sens LLP
lCAl Firm registration no. 11736GW/W·100018
Char1orll<l Accounlanls
Place: Pune
Dale , July 25, 2019
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For and on b<>half of the Board or Oirocton; of
Pcr.;!stcnt Systems Umitod
Place: Pune
Date :July25.20\9
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Page 1 of 46

Persistent Systems Limited CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FO Notes Income Revenue from operations {net) 26 Other incom 27 Total income {A) Expenses Employee benefits expense 28.1 Cost of professionals 28.2 Finance costs (refer note 39) Depreciation and amortization expense 6.5 Other exenses 29 Total expenses {B) Profit before tax (A - B) Tax expense Current tax Tax credit in respect of earlier years Deferred tax charge f {credit) Total tax expense Net proft for the period f year {C) Other comprehensive Income Items that will not be reclasslfled to profit and loss (D) • Remeasurer ts of the defined benefit liabilities I (asset) (net of !ax) Items that may be rectass!fled to profit and loss (E) • Effective portion of cash flow hedge (net of tax) • Exchange differences in translating the financial statemnts of foreign operations Total other comprehensive Income for the period I year (DJ + (E) Total comprehensive Income for the period I year (C) +(DJ+ (E) Earings per equity share jNom!nal value of share f10 (Corresponding period / Previous year: f10)] Basic (ln ') Diluted (ln ') Summry of signifcant accounting policies 30 4	R THE QUARTER ENDED JUNE 30, 2019 For the quarer ended June 30, 2019 Inf MIilion 8,321.14 300.36 8,621.50 4,916.25 859.82 18.50 386.17 1,343.15 7,523.89 1 097.61 350.55 (77.6) 272.91 June 30, 2018 Inf MHllon 8,342.81 186.75 8,529.56 4,618.37 844.68 0.28 400.81 1,479.17 7 343.31 1,186.25 35.05 j43.28) 312.77 For the year ended March 31, 2019 Inf MIIUon 33,659.41 876.55 34,535.96 19,249.53 3,490.45 3.05 1,572.51 5.357.03 29,672.57 4 863.39 1,343.20 88.81 j85.41) 1,346.60	R THE QUARTER ENDED JUNE 30, 2019 For the quarer ended June 30, 2019 Inf MIilion 8,321.14 300.36 8,621.50 4,916.25 859.82 18.50 386.17 1,343.15 7,523.89 1 097.61 350.55 (77.6) 272.91 June 30, 2018 Inf MHllon 8,342.81 186.75 8,529.56 4,618.37 844.68 0.28 400.81 1,479.17 7 343.31 1,186.25 35.05 j43.28) 312.77 For the year ended March 31, 2019 Inf MIIUon 33,659.41 876.55 34,535.96 19,249.53 3,490.45 3.05 1,572.51 5.357.03 29,672.57 4 863.39 1,343.20 88.81 j85.41) 1,346.60
		824.70 (26.37) (26.37) (23.19) (0.63) (23.82) (50.19) 774.51 10.65 10.65 873.48 (13.05) (13.05) {159.13) 151.80 (7.33) (20.38) 853.10 10.92 10.92 3,516.79 {47.15) (47.15) 168.43 113.82 282.25 235.10 3 751.89 43.99 43.99

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

As per our report of even date

For Oeloltte Haskins & Sells LLP !CAI Flnn registration no. 117366W/W·100018 Chartered Accountants

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�0-
H,m,at j [�. J ]
Partner · :
Memb7r hip n' . 038019
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Place: Pune Date · July 25. 2019

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

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Dr. Anand Deshpande
Chairman and Managing Director Director
�/
-1/°4y/
Sunll Sapre Am;tAtre�,
Executive Director and Company Secretar)'
Chief Financial Officer
Place: Pune
Date July 25, 2019
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Persistent Systems Limited CONSOLIDATED CASH FLOW STATEMENT FOR THE QUARTER ENDED JUNE 30, 201$

	Jun I	For U,e quarter ended e 30, 2019 June 30, 2018 nf Millio n Inf Mil ion 1,097.61 1,186.2S (\38.22) {70.53) 15.04 13.ol 18.50 0.28 (10.54) {40.71) 386.17 400.81 "" 0.15 (18.49) (7.04) (57.45) 51.13 (36.83) 55.85 7.77 {5.83) 39 93 7.23 (2.61) 31.15 100.00 (38.53) (18.75) (0.27) {18.81) 70.36 130.37 (128.81) (151.84) (0.17) (0.34) For tho yoar ondod Marh 31, 2019 Inf Mi llion 4,863.39 (287.72) 76.92 3.05 (180.77) 1.572.51 0.58 10.54 (86.85) 20.51 71.36 1.40 71.18 {4.89) 182.50 13.98 {10.36) (33.89) 68.92 (366.o9) (4.02)
Casi> flow frorn operating activitios Pro lit horore t� Adjus!mentsfo, Interest income D,�coun1 allowed Finance costs Dividend Income Deprecation and amor!iza1ion e,pcnse Amortization of lease premium Unrealised exc>ange loss/ (gain) (net) Change in foreign currency (raO\slation rese,ve Exchange loss/ (gain) on derioativc con1rncts fa cange (gain) I loss on transl�lion of foreign currency cas and casl, equivalents Dor,ations in klnd Bad dellts Provision for doubtful rnccivables (ncl) Employee s!ock compensaton expenses P,ovislon for doublfl deposits and advances P,ovi,ion fm diminution in value of investmens Remeasuromen1s of t10 defined beneft liabilities/ (ass,t) (befo,e lax effects) facess prov is on in respect of earlier years ,;tten ( back) I off {Gain)] loss on fair valuation of asso!s dcsionaled as al fVTPl {Profit)/ loss on sale of investments (net) {Prnfit) / loss on sale o( fxed assets {nel) Operating profit before working capi!al changes Movements In working capital: (lncoaso) I Do crease in non·cmren1 and cummt loans (Increase) I Oocrcaso in othor non cunonl assets (Inccase)/ Decrease In other c en\ finMciaf assets (lneoaso) / Decrease in other cuncnt assets (lncrnaso) / Deciease in trade rcceioables Inc.case/ (Decreas) in !rade payables and cunent lial i@es lneeaso I (Deceaso) in provisions Operating profit aflar working capital changes Dime! taxes paid (ne1 ol ref,mds) Not cash generated lrorn operating Dctivities Cash !tows from investing activities Payment towards capi!nl cxpcnd,turc (including lntangib1c ass cl�) Prnceeds from sale o! fixed asse1s Acquistion of s!ep,down subsidla1y Purchase of bonds Proceeds lrom sale/ maluri1y of bonds Purchase of non·current investments Proceeds from sale of non-cmrnnl !nves1mcn1s Investments in mutual funds Proceeds from sale I matwily of mutual funds Invesments in bank deposits having original malurily oveo U,ree months Maturity of bank deposits having original matuiily over th1ee months Investments in deposits V(h fir1ar1cial ms1ilutions Maturity of deposits OU> financial ms1'1u1tons Non current loans placed Interest received Dlvidcnds rnceived Nat cash goneratad frm I (used in) invosting activities ,,, '"
		1,304.6! 1,561.37 6.018.26
		(2.00) {15.58) 6.27 (1.92) (239.03) (287.23) {174.05) (187.61) 195 34 (822.46) (8.02) 705.15 {718.73) (268.22) 364.47 683.40 (236.98) (252.34) 127.49 431.06 {152.77) (101.35) 0.17 0.47 (5' 02) (477.15) (134.07) (3,473.04) (5,470.08) 5,993.08 5.077.92 (1,230.54) {792.02) 500.00 1,157.32 {300.00) 250.00 140.35 72.04 157.46 10 54 40.71 ~~,~~1,915.46--- (700.44) (5.55) (1.68) (135.26) 175.62 (322.95) (180.13) 179.91 5.728.21 (1,405.07) 4,323.14 (379.06) 5.04 (148.17) (1,175.31) 199.43 (144.96) (22.418.13) 25.010.64 (8,094.22) 4,044.26 {300.00) 650.35 {16.96) 327.33 180.77
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Persistent S stems Limited

CONSOUOATEO CASH fl OW STATEMENT fOR THE QUARTER ENDEO JUNE 30, 2019

Cash nows from financing aclivitios (Repayment ol) 10110 term borrowngs Shares bought back Specir.c project related grant rnceivod Interest paid Dividends pa;d Tax on dividend paid Net cash generated from I (used in! financing actMtlos Net im;rnase / (decrease) in cash and cash equivalents (A• B • C) Cash and cash equivalents at lhe beginning of !ho period I year Effect of exchange d<fference o" translation of foreign cmrency cash Md cash equivalents Cash and cash <uivakmls at trn end ol the porfod I yoar Components of cash and cash e<JUivalents CashOhand(Relernole 14) Cheques on hand (Refe, note 14) Balances vi1h banks On cmrnnt accoun!s # (Ro fer note 14) On saving accounts (Refer note 14) On Exchange Earner's Foreign Curre.,cy accounls {Refer note 14) On deposil accounts w1h original ma!urily le�s than thrne months (Refe, no!e 14) On Esc1ow ac.oun!s" {Refer note 14) On unpaid dividend accow,ts• (Refer note 15) Cash and cash oqulvalon\$ '"	for tho quarer ended Juno 30, 2019 Juno 30, 20 tn, MIilion t ,677.01) {18 39) 0.15 ----1,695.25) -- 347.70 1.741.72 (7.17) ln f Milli 4. {0. 0. 4. (264. 1,345. 5. ---20.- .. ------1 086. 0.28 0. 64.90 41. 1.7�2 82 913. 4.98 14. 196.20 114. 60.05 2.42 1. 2,081.65 1 086.	ed no 30, 20 ln f Milli 4. {0. 0.	18 on 50 17) 18 Forthc year,de Manh 31, 2019 In, Mlllion (4.58) (571.41) (3.66) (879.14) (137.41)
			51 87) 13 83 (1,596.20) 467.95 1.345.13 (71.36)
			09 21 42 85 88 14 59 09 1,741.72 0.22 1.300.93 0.91 114.91 229.54 92 94 2.27 1 741.72

# Out of Urn cash and cash equtvalcnt balance as nl June 30, 2019, u,e G1oup cm, utilise f 2. 15 million (Conosponding period. { 4.60 millio,ll Prnvious yea,: , 2.15 million) on!y !ow,nds research and development activities specified In Um agreement

' The Group can utilize tlrnsc balances only towards sotllement of (he respective unpaid dividend " The Parent Company completed bu\'Uack on June 27, 2019 and minimum balance majn1aincd In Escrow account v,;11 be iclascd on completion or formali1ies S"mma,y of si 11mcnnt �ccounting policies. Refer note 4

The accompanying no1es are an lnlogral part of lho cm,densed consolidated financial statements

As per our report or oven dale

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For Ocloitto Haskins & Solis LLP For and on bohaU of tho 8oard or Oiroctors of
ICAI fillll registration no. 117356WIW,100018 Por.'"'"'-"' " ;'J � �.:::>
"' M 1 o,, Anand Oeshpande
�
Papne, Mel{ rnh,p no. 038019 /'ti, f_ _ Chairman and Ma!laging Oirecior �/ //·
,·
Sunil Saprc ""')?"' . Ami tro )
Executive Director and Company Sccrot,i,y
Chief Finar,dal Offtccr
Place: Pune Place: Pune
Oatc : July 25, 2019 Dato : July 25, 2019
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Place: Pune Oatc : July 25, 2019

Page 4 of 46

Persistent Systems Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED JUNE 30, 2019

A. Share capital (Refer note 5)

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(In f Million)
Balance as at April 1, 2019 Changes in equity share capital Balance as at June 30, 2019
during the year (refer note Sd)
791.19 (26.94) 764.25
fin f Million)
Balance as at April 1, 2018 Changes in equity share capital Balance as at June 30, 2018
during the period
800.00 - 800.00
(In f Million
Balance as at April 1, 2018 Changes in equity share capital Balance as at March 31, 2019
during the year (refer note 5d)
800.00 (8.81) 791.19
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Persistent Systems Limited

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED JUNE 30, 2019

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 I expired upon which such amount is transferred to General reserve.

d) Gain on bargain purchase

The excess of the Group's 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 1 OAA(2) of the Income tax Act, 1961.

g) Cash flow hedge reserve

The cash flow hedge reserve represents the aggregate 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 such transaction occurs I 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.

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Page 7 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

1. Nature of operations

Persistent Systems Limited (the "Company'' or '"PSL") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (the "Act"). 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 (d.b.a. RGen Solutions) 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. The company is under liquidation.

Aepona Group Limited, (an Ireland based wholly owned subsidiary of 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 "business logic") to the basic APls exposed to by connected devices, and to expose and monetize these APls.

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.

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Page 8 of 46

Persistent Systems Limited Notes forming part of condensed consolidated financial statements

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.

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Page 9 of46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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 Company and its subsidiaries ("the Group") for the quarter ended June 30, 2019 are prepared in accordance with generally accepted accounting principles applicable in India, and the Indian Accounting Standard 110 (Ind AS 110) on 'Consolidated Financial Statements', notified by Companies (Accounting Standards) Rules, 2015, ("Indian Accounting Standards") by and to the extent possible in the same format as that adopted by the Company for its separate financial statements.

The Company consolidates entities which it owns or controls. The consolidated financial statements comprise the financial statements of the company, its subsidiaries as disclosed below. Control exists when the parent 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 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 the 'Equity method'. The share of profit/ loss of the associate company has been adjusted to the cost of investment in the associate, as per the 'Equity method'. An associate is an enterprise in which the investor has significant influence and which is neither a subsidiary nor a joint venture.

The excess of the cost to the Company of its investment in a subsidiary and the Company's portion of equity of subsidiary 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. The excess of the Company's portion of equity of the subsidiary over the cost of investment in the subsidiary is treated as gain on bargain purchase in the consolidated financial statements. Goodwill 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 Company's 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 Company.

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Page 10 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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

Name of the subsidiary ""-----------·--·-··"· Persistent Systems, Inc. Persistent Systems Pte Ltd.		Ownership Percentage as at June 30, 2019 100% 100% June 30, 2018 100% 100% March 31, 2019 100% 100%	Ownership Percentage as at June 30, 2019 100% 100% June 30, 2018 100% 100% March 31, 2019 100% 100%	Ownership Percentage as at June 30, 2019 100% 100% June 30, 2018 100% 100% March 31, 2019 100% 100%	Country of incorporation USA Singapore
Persistent Systems France SAS		100%	100%	100%	France
Persistent Telecom Solutions Inc.-- Persistent Systems Malaysia Sdn. Bhd.	_,,	100% 100%	100% 100%	100% 100%	USA Malaysia
Akshat Corporation (d.b.a. RGen Solutions) (Dissolved with effect from December 21, 2018\ • --- Aepona Holdings Limited Aepona Group Limited Aepona Limited	--·	- 100% 100% 100%	100% 100% 100% 100% ·-··-	�-- . - 100% 100% 100%	USA Ireland Ireland UK Ireland
Valista Limited		100%	100%	100%
Persistent Systems Lanka (Private) Limited		100%	100%	100%	Sri Lanka
Persistent Systems Mexico, S.A. de C.V. ·-------····----·· Persistent Systems Israel Ltd.		100% 100%	100% 100%	100% 100%	Mexico Israel
Persistent Systems GermanyGmbH		100%	100%	100%	Germany
PARX Werk AG - PARX ConsultingGmbH		100% 100%	100% 100%	100% 100%	Switzerland Germany.
Herald Technologies Inc (Dissolved with effect from June 24, 2019)		-	- - --	-- 100%	USA

• Refer note 33.

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Page 11 of 46

Persistent Systems Limited

Notes forming part of condensed 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 disclosure of contingent liabilities at the end of period / year. Although these estimates are based on the management's best 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.

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-of-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 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.

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 estimate of an asset's expected useful life and the expected residual value at 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 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 managem een. tc:t,as-{) ed its determination · . /�\ 'SYS/0 .. ,.. <"""-·-.[.] ,,.�} .. l,; / . (" / ·y,r, \J ,C{ �,. . ./* . \ r7·• a0.ge12of46 ' ., . " ., . '< .. "<«%-CS"'"i---· u \ :/"["" ] '

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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 management's best 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 current best estimates.

vii. Internally generated Intangible assets

During the period, the management continued to assess the recoverability of the Group's internally generated intangible 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 the these intangible assets as recoverable.

(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.

(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.

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Page 13 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

(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 on Property, Plant and Equipment is provided using the Straight Line Method ('SLM') over the useful lives of the assets estimated by the management.

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

Assets Useful lives Buildings• Computers Computers - Servers and networks• Ofice equipments Plant and equipment' Plant and equipment (Windmill)' Plant and equipment (Solar Energy System)' Furniture and fixtures• Vehicles· 25 years 3 years 3 years 5 years 5 years 20 years 10 years 5 years 5ears	Assets Useful lives Buildings• Computers Computers - Servers and networks• Ofice equipments Plant and equipment' Plant and equipment (Windmill)' Plant and equipment (Solar Energy System)' Furniture and fixtures• Vehicles· 25 years 3 years 3 years 5 years 5 years 20 years 10 years 5 years 5ears
Buildings• Computers Computers - Servers and networks• Ofice equipments Plant and equipment' Plant and equipment (Windmill)' Plant and equipment (Solar Energy System)' Furniture and fixtures• Vehicles·

·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 commencing 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.

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Page 14 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated 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 cash flows and selling the financial assets and the assets' contractual cash flows represent solely payments 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 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 - "Financial Instruments" relating 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 derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum 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.

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Page 15 of 46

Persistent Systems Limited

Notes forming part of condensed 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 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. 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 at FVTPL.

Derecognition

The Group derecognizes financial liabilities when the Group's obligations are discharged, cancelled or have expired. The 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 asset's recoverable amount.

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Page 16 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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

(i) Borrowing costs

Borrowing cost includes interest, 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.

U) Leases

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, 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.

The Group recognises the amount of the re-measurement of lease liability as an adjustment to the right-of­ use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Group recognises any remaining amount of the re-

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Page 17of46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

measurement in statement of profit and loss.

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 accrual 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.

(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.

Revenue from licenses where the customer obtains a "right to use" the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a "right to access" is recognized over the access period.

The Group has applied the principles under Ind AS 115 to account for revenues from these performance obligations.

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.

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Page 18 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

The Group collects Goods and Service Tax, value added taxes (VAT) 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. Interest income is included under the head 'Other income' in the statement of profit and loss.

(iii) Dividend

Dividend income is recognized when the Group's right to receive dividend is established. Dividend income is included under the head 'Other income' in the statement of profit and loss.

(I) 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.

(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 I 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.

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Page 19of46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

(n) Retirement and other employee benefits

(i) Provident fund

Provident fund is a defined contribution plan covering eligible employees. The Group 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 I year when the contributions are due. The Group has no obligation, other than the contribution payable to the provident fund.

(ii) Gratuity

Gratuity is a defined benefit obligation plan operated by the Group for its 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. 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.

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 for twelve months after the reporting date.

(v) Long service awards

Long service awards are other long term benefits to all eligible employees, as per Group's policy. 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.

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Page 20 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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 profil/ 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 profiU 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 of temporary differences which reverse during the tax holiday period, to the extent the Group's gross total 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 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 and loss and shown as "MAT Credit Entitlement." The Group reviews the "MAT credit entitlement" 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

The Group's operations predominantly relate to providing software products, services and technology innovation covering 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 operating results are regularly reviewed by the Group's Chief Operating Decision Maker are identified as operating segments.

(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.

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Page 21 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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. Further, the weighted average number of equity shares used in computing the basic earnings per share is reduced by the shares held by PSPL ESOP Management Trust at the balance sheet date, which were obtained by subscription to the shares from finance provided by the Group.

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 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.

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Page 22 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

(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 - "Share Based Payments", 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 refiects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments 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.

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Page 23 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

5. Share capital

hare capital
Authorized shares (No. in million) 200 (Previous period /Previous year: 200) equity shares of { 10 each Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Corresponding period: 80 / Previous year: 79.12) equity shares of { 1 O each Issued, subscribed and fully paid-up share capital	As at As at As at June 30, June 30, 2018 March 31, 2019 2019 In f Million Inf Million Inf Million
	2,000.00 2,000.00 2,000.00 2,000.00 2,000.00 2,000.00
	764.25 800.00 791.19 764.25 800.00 791.19

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		As at
	June 30,	2019	June 30,	2018	March 31,	2019
	No. of shares	Amount	No. of shares	Amount	No. of share�	Amount
Number of	79.12	791.19	80.00	800.00	80.00	800.00
shares at the
beginning of the
period/year
Less: Shares	2.69	26.94			0.88	8.81
bought back
Number of	76.43	764.25	80.00	800.00	79.12	791.19
shares at the
end of the
eriod/ ear

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.

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.

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 c)

			Nos.in Million
	For the period	For the period	For the period of
	of five years	of five years	five years ended
	ended June 30,	ended June 30,	March 31, 2019
	2019	2018
Equity shares allotted on March 12, 2015 as	40.00	40.00	40.00
fully paid bonus shares by capitalization of
securities premium { 400.00 million
Shares bought back	3.575		0.88

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Page 24 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

d) Buyback of Equity Shares of the Parent Company:

The Board of Directors of Persistent Systems Limited (the Parent Company"), in its meeting held in January 2019, approved the buyback by the Company of its fully paid-up equity shares having face value of� 10 each. The window for buying the shares opened on February 8, 2019 and the Company has purchased 3,575,000 equity shares between February 2019 and June 2019 and has extinguished these shares after following the due process. The Parent Company has completed the Buyback on June 27, 2019 and the total number of equity shares outstanding as on June 30, 2019 post buyback stands at 76,425,000.

549,887 equity shares purchased in June 2019 have been extinguished on July 3, 2019 after following the due process. Since these shares have been extinguished after June 30, 2019, the same have not been excluded from the shareholding details.

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

Name of the shareholder•	As at June 30,	2019	As at June	30, 2018	As at March	As at March	31,
	No. in	%			2019
			No. in	%	No. in		%
	Million		million	Holding	million	Holding
Holding
Dr. Anand Deshpande jointly with	22.95	30.03	22.93	28.66	22.95		29.01
Mrs. Sonali Anand Deshpande

• 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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Page 25 of 46

ersistent Systems Limited

Notes forming part of condensed consolidated financial statements

6.1 Property, plant and equipment

6.1 Propery, plant and equipment
			In, Million
	Land • Freehold Buildings•	Computers	Ofce Plant and Leasehold Furiture and equipments Equpment lmprovements f:ures Vehicles Total
Gross block (At cost) AsatApril1,2019 Addiions Disposals Effect of fore1gn currency translaion fom funcional currency to reporing currency As at June30, 2019 Depreciation and Impaiment As at April i, 2019 Clage for the peiod Disposals Efec of foregn curency translaion from fnctional currency to reporing currency As at June 30, 2019 Net block As at June 30, 2019 As at March 31, 2019	220.47 2,447.72 0.30 0.16 0.71 220.63 2,48.73 983.41 24.60 0.22 1,008.23 220.63 1,40.50 220.47 1,464.31 Land - Freehold Bulldlngs• 221.03 2,450.18 0.07 (0.18) (0.78) 220.85 2,49.47 885.26 24.62 (0.21)	2.441.59 77.70 6.57 (9.43) 2,50329 2,160.36 51.16 6.57 (9.34) 2,195.61 307.68	89.63 1.408.24 94.23 679.87 0.33 7.12 0.04 0.01 0.42 (0.05) 0.14 {1.41) 0.02 89.90 1,415.08 92.82 679.93 70.13 1,166.93 76.58 597.31 2.20 19.47 1.6 10.68 0.01 0.42 (0.04) 0.02 (1. 49) {0.10) 72.28 1,186.00 76.75 607.89 17.62 2.29.08 16.07 72.04 8. 44 7,390.19 85.49 7.00 (9.8) 8.4 7,458.82 4.23 5,058.95 0.29 110.0 7.00 (10.73) 4.52 5,151.28 3.92 2,307.54
		**28123 **	19.50 241.31 17.65 82.56 4.21 2 33124
		Computer 2,392.46 49.07 11.60 9.89 2,43�--�:2 2,07880 58.57 11.47 8.17	Ofce Plant and Leasehold Furiture and equipments Equipment Improvements fl:ures 86.63 1,40862 94.8 665.41 2.20 397 0.33 9.T 0.10 1.63 0.07 (1.50) 5.22 90.46 1,402.89 93.34 670.86 62.14 1,097.81 69.78 544.39 1.8� 22.92 1.95 12.92 9.T 0,10 0.78 0.19 (1.23} 2.74 (Inf Mllllon) Vehicles Total 4.73 7,323.90 2.33 57.97 21.47 14.35 7.06 7,374.75 4.42 4,742.60 0.07 122.86 21.34 10.44
Gross block (At cost) As at April 1. 2018 Additions Disposals Efect o foreign currency translation from functional currency to reporing curency As at June 30, 2018 Depreciation and impairent As at April 1. 2018 Charge for the period Disposals E ect o foreign currency transation from funcional currency to reporting currency As at June 30, 2018 Net block As at June 30, 2018
	909.67 220.85 __539,80	2,13�:�!. 305,� .	6.73 1 25.73 .	,111.15 70.50 559.95 . 291.74. 2.8 110.91 4.49 4,85.SS �57 2,520.19

• Note· §u1ldings incude tlose consrced on leaselold !and·

a) Gross block as on June 30, 2019 , 1.454.30 million (Corresponding period , 1.454.10 mil ion/ Previous year, 1.454.06 mil ion) b) Depreciation charge for the period , 14.70 million {Corresponding period 14.70 million I Previous year, 58.95 million} c) Accumulated depreciation as on June 30. 2019 � 454.66 million (Corresponding period, 395.75million / Previous year, 439.96 million)

d) Net book value as on June 30, 2019 � 999.64 million (Cor esponding period , 1,058.35 million/ Previous year, 1.014.10 million)

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Q•/ 0 '�) �(. .·. ls: !�· ;,\�*/" Pu,,�/ e �· ...

Page 26 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

6.1 Property, plant and equipment

Gross block (At cost) As atApri!1,2018 Additions Additions thrugh business combination Disposals Effect of foreign currency trnslation from functonal curency to reporing curency As at March 31, 2019 Depreciaton and impairment As at Aprl 1, 2018 Charge for the year Additions through business combination Disposals Efect of foreign curency trnslation from functional curency to reporting currency As at March 31, 2019 Net block As at March 31, 2019	Land- Buildings Computers Ofice equipment Freehold 221.03 2,450.18 2,392.46 86,63 0.07 i79.46 3.75 0.08 0.04 143.23 2.70 (0.56) (2.49) 12.82 1.95 220.47 2,447.72 2,441.59 89.63 885.26 2,078.80 62.14 98.95 214.59 9.59 0.02 0.03 142.52 2.40 (0.77) 9.47 0.80 Plant and Leasehold Furnitufe·and Equipment improvements 1,408.62 94.84 22.56 22.82 (0.12) (0.61) 1,408.24 94.23 1,097.81 69.78 92.06 7.66 22.82 (0.12) (0.86) fxures 665.41 8.86 0.03 0.59 6.16 679.87 544.39 50.78 0.01 0.59 2.72 (In � Mi(�!�f Vehicles Total 4.73 7,323.90 4.66 219.36 0.11 0.95 170.33 17.15 8. 7,390.19 4.42 4.742.60 0.76 474.39 0.03 0.95 169.31 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

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Page 27 of 46

Persistent Systems Limited

Notes forming part of condensed conso!ldated financial statements

6.2 Right .of. use assets

	ln" Million
	Asat June 30, 2019 As at As at June 30, 2018 March 31, 2019
Office premises Gross block (At cost) AsatApril1.2019 Additions {Transitional impact on adoption of Ind AS 116) Effect of foreign currency \ran station of foregn operations from functional currency to reportng currency As at Juno 30, 2019 Amortization and impairment As atAprl1.2019 Charge for the period Effect of foreign currency translation of foreign operations from functional currency to repo1ti g currency As at June 30, 2019 Net block As at June 30, 2019	722.51 (0.19)
	722.32
	6163 {0.14)
	61.49
	660.83

6.3 Goodwill

			In, Mil ion
	As at	As at	Asat
	June 30, 2019	June 30, 2018	March 31, 2019
Cost
Balance at beginning of period/ year	81.24	76.61	76.61
Efect of foreign currency exchange differences	(011)	388	463
Balance at end of period/ year	81.13	80.49	81.24

6.4 Other Intangible assets

64 Other Intangible assets
	Software 2,575.58 1441 (420) 2,585.79 2.47952 31.69 {4 29) 2,506.92 78.87 96.06 In I Million Acquired contractual Total rights 4,208.58 6,784.18 97.75 112.16 (7.58) (11.78) 4,298.75 6,884.54 2,709.23 5,188.75 182.79 214.48 (15.85) {20.14) 2876.17 5,38309 1,42258 1,501.45 149935 1 595.41
Gross block AsatApril1.2019 Additions Effect of foreign currency translafion from functional currency to reportng currency As at June 30, 2019 Amori�aUon and impairment Asa!April1.2019 Charge for the period Effect of foreigrl currency trans!a\ion from functional currency to reportng currency As at June 30, 2019 Net block As at June 30, 2019 As at March 31, 2019

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Page 28 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

Gross block AsatApri11,2018 Additions Effect of roreign currency translation from functional currency to reporting currency As at June 30, 2018 Amorization and Impairment AsatApril1,2018 Charge for the period Effect of foreign currency translation from functional currency to reporting currency As at June 3 0, 2018 Net block As at Juno 30, 2016 Gross block AsatApri11,2018 Additions Effect or foreign currency translation from functional currency lo reporting currency As at March 31, 2019 Amorization and impairment As at April 1, 2018 Charge for the year Effect of freign currency translation from functional cmrency to reporting currency As at March 31, 2019 Net block As at March 31, 2019 As at Mar,h 31, 2018 6.5 Oepre,lation and amortization	Software Acquired contractual r his 2,422.24 3,983.87 13.21 39.61 75.86 162.70 2,511 31 4,18618 2,076.02 1,666.55 63.31 214.64 67.73 72.04 2207.06 2,15323 304.25 2032.95 Software Acquired contractual ri his 2,422.24 3,983 67 52 38 3961 100.96 165.10 2,575.56 4,208.58 2,076.02 1,866.55 319.05 779.07 84.45 63.61 Inf Million Total 6,406.11 52.82 238.56 6,697.49 3,942.57 277.95 139.77 4,360.29 2,337.20 ln" Milllon Total 6,40.11 91.99 286.0 6 ,784.16 3,942 57 1,098.12 146.06
	2,479.52 2 70923 5,188.75
	96.06 1,499.35 346.22 2117.32 1, 595.41 2 463.54 In, M!111on
On P1operty, Plant and Equipment On other intngible assets On Right of Use asse1s	For the quarter ended June 30, 2019 June 30 , 2018 110.06 122.86 214.48 61.63 277.95 For the year ended March 31, 2019 474.39 1,098.12
	366.17 40 0 .81 1,572.51

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Page 29 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

7. Non-current financial assets : Investments (refer note 31)

	Asat June 30, 2019 In { Million As at June 30, 2016 In { Million Asal March 31, 2019 In' Million	Asat June 30, 2019 In { Million As at June 30, 2016 In { Million Asal March 31, 2019 In' Million
Investments carried under equity accounting method Unquoted Investments Investments in equity Instruments In associates Klisma e,Services Private Limited [Holding 50%. (Previous year 50%)] 0.005 million {Correspond ing period I Previous year: 0.005 million) shares of f10 each. fHy paid up Less : Impairent of non-current unquoted investments Total Investments carried equity accounting method (A) Investments carried at amortised cost Quoted Investments In bonds [Market value t 2,165.51 million (Correspondillg period t 1,628.26 million I Previous year: t 2,120.86 million)] Add: Interest accrued on bonds Total Investments carried at amortised cost {BJ Designated as fair value through profit and toss Quoted Investments - Investments In mutual funds Fair value of !011( term mutual funds {Refer Note 7a) Unquoted Investments - Others• Ciqual limited (Holding 2.36% (Previous year 2.38%)] 0.04 million (Corresponding periodIPrevious year: 0.04 million) shares otGBP0.01 each, fully paid "' Loss : Impairment of non·current unquoted investments A!lizon Systems P1ivate limited 3,766 equit shares (Corresponding period I Previous year: 3,766 equity shares) o1 t 10 each. fully paid up Hygem: Inc 0.25 million {Corresponding period I Previous year: 0.25 millron) Preferred stock of S 0.001 each. fully paid up Less: lmpairme11t of non.current unquoted investments OpsDataStore Inc 0 20 million (Correspnding period I Previous year : 0.20 million) Preferred stock of S 0.001 each, fully paid up Less : Impairment of non-current unquoted investments Trunomi Inc. 0.28 million (Corresponding period I Previous year : 0.28 million) Preferred slack of S 0.002 each. flly paid up Jocsta Corporation 0.006 million {Corresponding period I Previous year : 0.06 million} Preferred stock of$ 0.001 each, fully paid up Ampoot Inc 0.55 million (Corresponding period I Previous year: 0.55 million) Preferred stock of$ 0.4583 each, fully paid up Ca;ena Inc 0.35 million (Coresponding period I Previous year : 0.35 million) P1eferred stock of$ 0.0001 each. fully paid up	0.05 /0.05) 0.05 {0.05) 0.05 **(0.05) **
	2,142.37 88.22 1,589 62 64.38 2,088.35 68.33
	2,230.59 1.642.90 1,653.98 1,228.29 2,156.68 1.974.91
	1,642.90 1,228.29 1,974.91
		13.81 (3.81) 6.00 6.00 13.59 (13.59) 6.00 6.00 13.61 (13.81) 6.00 6.00
		13.80 (13.80) 13.80 13.60 1369 (13.69) 13.69 13.82 (3.82) 13.82 13.82
		17.26 25.16 17.26 138.04 13.69 17.12 17.12 17.12 136.94 17.28 25.22 17.28 138.22
		197.74 201.99 196.00

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Page 30 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

7. Non-current financial assets : Investments (refer note 31)

• Investments in Convertible Notes DxNow 1 (Corresponding period I Previous year· 1) convertible note of USD !25,000 each. fully paid up Less : Impairment of non-current unquoted investments Ustyme 1 (Corresponding perio/ Previous year· 1) convertible note of USO 250,000 each, fully paid up Less : Impairment of non-current unquoted inves1men1s Akumina Inc 1 {Cor1espond1ng period I Previous year: 1) convertible note of USO 146,429 each, fully paid up Total Investments carried at Fair Value (C) Total investments (A)+ {BJ+ (CJ Aggregate amount or Impairment in value of Investments Aggregate amount of quoted Investments Aggregate amount of unquoted lnvestllents	As at June 30, 2019 Int' Million 8.63 (8.63) As at As at June 30, 2018 March 31, 2019 Int Million Int Million 8.56 8.64 (8.58) (8.64)	As at June 30, 2019 Int' Million 8.63 (8.63) As at As at June 30, 2018 March 31, 2019 Int Million Int Million 8.56 8.64 (8.58) (8.64)
	17.26 1� 17.12 (7.12)	17.28 (17.28)
	10,11 10.11 10.03 10.03	10.12 **10.12 **
	1 856.75 4,087.34 67.35 3,873.49 281.20 1,446.31 2,189.03 3,100.29 4,345.71 53.01 67.42 2,662.27 4,131.59 271.03 261.54

• !nvestments. v.tiere the Group does not have joint-control or significant influence inc!uding situations v.tiere such join!-control or significant infiuence is intended to be temporary. are classified as "inv'estments in others".

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Page 31 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

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

	As at June 30, 2019	As at June 30, 2018	As at March 31, 2019
	Inf Million	InfMillion	In, Million
Axis Mutual Fund	309.97		304.96
Kotak Mutual Fund	300.31	214.88	294.32
HDFC Mutual Fund	209.93	192.40	205.96
Adita Birla Sun Life Mutual Fund	195.06	158.45	191.44
ICICI Prudential Mutual Fund	191.30	458.21	550.21
UTI Mutual Fund	163.45	89.70	160.32
SBI Mutual Fund	66.46	60.64	65.18
Reliance Mutual Fund	59.20	54.01	58.05
IDFC Mutual Fund	51.07		50.13
DHFL Pramerica Mutual Fund	32.75		32.10
DSP Mutual Fund	32.71		32.09
Sundaram Mutual Fund	30.69		30.15
	1,642.90	1,228.29	_ _1,974.91

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Page 32 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

8. Non•Current financial assets: loans (refer note 31)

	Asat June 30, 2019 Inf Million As at June 30, 2018 In" Million As at March 31, 2019 In\ MIiiion
Carried at amorised cost Security deposits Unsecured, considered good Unsecured, credit impaired less: Impairment of non-current loans Loan to others (Unsecured, considered good) Loans Other loans and advances Inter corporate deposits Unsecured, considered good Unsecured, cedit impaired less: Impairment of non-current loans	143.89 143.89 143.89 21.30 21.30 0.58 0.58 (0.58) 143.39 2.19 145.58 2. 19 143.39 17.22 17.22 0.58 0.58 (0.58) 142.80 142.80 142.80 21.20 21.20 0.58 0.58 (0.58)
	165.19 160.61 '164.00

9. Other non-current financial assets

Non-current bank balances (Refer note 15) Add. Interest accrued but not due on non-curre Non-current deposits with banks (Carried a Deposits wth fnancial institutions Add: Interest accrued on deposil with financial less: Credit impaired (Refe1 note 38)		As at June 30, 2019 In, Million As at June 30, 2018 In\ MIiiion As at March 31, 2019 In" MIiiion
	nt bank deposits {Refer note 15) t amortised cost) institutions	25.32 1.46 26.78 430.00 5.94 (282.50) 2.81 2.81 94.39 1.<16 95.85 430.00 5.94 (182.50)
		153.44 160.22 2.81 253.44 349.29

10. Deferred tax asset/ liability {net)•

Deferred tax liabilities Differences in book values and tax base values o! block or Property, Plant and Equipment and intangible assets Capital gains Ott1ers Deferred ta> assets Provision for leave encshment Provision for long service awards Provision for doubtful debts Provision for gratuity Differences in book vallles Md tax base values of block or Property, Plant and Equipment and intangible assets {overseas} Brought forward and current year losses Tax credits Difference in Sook values and tax base values of ROU asset and Lease liability Ott1ers Defered tax liabilities after set off Deferred ta> assets afer set off

As at June 30, 2019 In, Million 197.31 69.90 93.28 360.49 As at June 30, 2018 ln \ MHUon 241.18 63.33 3.57 308.08 As at March 31, 2019 Inf Million 226.65 79.12 105.04 411.01

136.88 71.46 51.91 2.70 86.24 108.54 226.11 56.59 172.51 912.94 552.45 130.04 92.17 40.07 2.65 128.33 46.25 269.78 112.18 821.47 513.39 141.33 124.16 39.98 2.41 83.81 60.30 226.35 137.72 816.06 405.05

' Deferred tax assets and deferied tax liabilities have been offset wherever U1e Group has a legally enforceable right to set off current tax assets against current ta� liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation auU1ority. In all 0U1er cases the same have been separately disclosed

11. Other non-current assets

	As at As at As at June 30, 2019 June 30, 2018 March 31, 2019 In, Million ln\ Million Inf MIilion
Capital advances (Unsecured, considered good) Advances recoverable in cash or kind or for val"e to be received	2.06 59 98 66.49 66.25 59.98 66.49 68.31 Page 33 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

12. Current financial assets: Investments

	Aal	As at	As at
	June30, 2019	June30, 2018	March 31, 2019
	Inf Million	Inf Million	Inf Million
Designated as fair value through profit and loss
- Quoted investments
Investments in mutual funds
Fair value of current mutual funds (Refer Note 12a)	1,165.93	6,759.15	3,295.53
	1,165.93	6,759.15	3,295.53
Total carrying amount of investments	1165.93	6,759.15	3,295.53
Aggregate amount of quoted investments	1,165.93	6,759.15	3,295.53
Aggregate amount of unquoted investments

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

	Asat	As at	As at
	June 30, 2019	June 30, 2018	March 31, 2019
	Inf Million	Inf Million	Inf Million
Ais Mutual Fund	334.62	588.82	426.87
Tata Mutual Fund	245.97	702.94	115.97
Aditya Birla Sun Life Mutual Fund	153.39	846.28	386.73
L& T Mutual Fund	116.51	748.74	407.39
IDFC Mutual Fund	108.22	711.76	106.40
OSP mutual fund	105.15	253.37	103.35
UT! Mutual Fund	102.07	956.48	625.92
ICICI Prudential Mutual Fund		597.82	399.98
DHFL Pramerica Mutual Fund		493.47
Kotak Mutual Fund		281.05
HDFC Mutual Fund		225.50	493.59
Sundaram Mutual Fund		204.8	67,19
SB! Mutual Fund		148.08	162.14
	1,165.93	6,759.15	3,295.53

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Page 34 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

13. Trade receivables (refer note 31)

	As at June 30, 2019 In, Million As at As at June 30, 2018 March 31, 2019 In, MIiiion ln, Mlllion
Unsecured. considered good Unsecured, credit impaired Less : Allowance for Cedit loss	4,732.18 141.72 4,873.90 141.72) 4,732.18 4,732.18 5.630.63 4,923.01 136.75 134.54 5,767.38 5,057.55 (136.75) {134.54) 5,630.63 4,923.01 5 630.63 4,923.01

14. Cash and cash equivalents (refer note 31)

	As at	As at	As at
	June 30, 2019	June 30, 2018	March 31, 2019
	ln, Million	In, MIiiion	In, Million
Cash and cash equivalents a; presented In cash flow statement
Cash in hand	0.28	0.21	0.22
Cheques on hand	84.90	41.42
Balances with banks
On current accounts·	1,752.82	913.85	1,30.93
On saving accounts	4.98	14.88	0.91
On Exchange Earer's Foreign Currency accounts	196.20	114.14	114.91
On deposit accunts with orginal maturity less lhan three months			229.54
On Escrow account ..	60.05		92.94
	2,079.23	1,084.50	1,739.45

• Out of the cash and cash equivalent balance as at June 30, 2019, the Group can utilise t 2.15 million {Corresponding period: f 4.60 million/ Previous year: , 2.15 million) only towards research and development activities specified in the loan/ grant agreement.

• " The Parent Company completed buyback with effect from June 27. 2019 and minimum balance maintained in Escrow account will be relased on completion of formalities

15. Other bank balances (refer note 31)

		As at June 30, 2019 In, Million As at As at June 30, 2018 March 31, 2019 Inf Million In, Million
Short term bank deposits On deposit account wilh original maturity more than twelve mont11s • Add: Interest accrued but not due on deposits with banks Deposits with banks (carred at amortised cost) Less: Deposits wilh maturt more thar telve months from the balance sheet date disclosed under other non-cunent 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 divide11d accounts ..		5,535.94 258.68 117.50 5,912.32 {25,32) (1.46) 5,885.54 2.42 5,887.96 4,789.02 571.62 228,71 5.60 60.24 577.22 5,077.97 (2.81) (94.39) 1.46) 574.41 4,982.12 1.59 2.27 576.00 4,984.39

• ' Out of the balance, fix:ed deposits off 1,836.33 million (Corresponding period : f 64,45 million I Previous year: f 87.99 million} have been earmarked against bank guarantees availed by the Group.

• " The Group can utilize these balances only towards settlement of the respective unpaid dividend

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Page 35 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

16. Current financial assets: Loans (rerer note 31)

16. Current financial assets: Loans (rerer note 31)
	As at June 30, 2019 In, Mllllon 27.43 27.43 {27.43) 8.68 6.66 6.66 As at June 30, 2019 In,MIiiion 282.46 0.81 0.81 2,073.79 2,356.25 As at June 30, 2019 In,Ml11ion 635.85 22.66 903.33 925.99 1 561.64 As at June 30, 2016 In, MIiiion 27.43 27.43 (27.43) 6.26 6.26 6.26 Asat June 30, 2016 In, Million 0.81 0.81 1,190.00 28.20 1,986.73 3 204.93 As at June 30, 2016 In, MIiiion 666.35 168.10 914.57 1,082.67 1,751.02 As at March 31, 2019 In, MUiien 27.43 27.43 (27.43) 7.87 7.87 7.87 As at March 31, 2019 In, Million 261.27 0.61 0.81 250.00 10.97 1,834.76 2,377.00 As at March 31, 2019 In, MIilion 432.25 S' 35.07 920.47 955.54 1,387.79
Carried at amortised cost Loan to related paries (Unsecured, credit Impaired) Unsecured, considered good Klisma e-Services Private Limited Less: Impairment of current loa11s Security deposits Unsecured, conskered good 17. Other current financial assets {refer note 31}
Fair value of derivatives designated and effective as hedging instruments Forward contracts receivable Advances to suppliers Unsecured, credit impaired Less: Impairment or current fnancial assets Deposits with fnancial institutions Add. Interest accrued but not due on depsits wilh financial institutions Less: Allowance for expected credit loss Deposits wth financial institutons (Carried al amortsed cost) Unbilled revenue
16. Other current assets
Advances to suppliers (Unsecurd, considered good) Advances recoverable in cash or kind or for value to be received Other advances (Unsecured, considered good) VAT receivable {net} Service tax and GST receivable (net} (Refer note 36)

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Page 36 of 46

Persistent Systems L1m1ted

Notes forming pa11 of condensed consolidated financial statements

19, Non-current financial liabilities; Borrowings (refer note 31)

	Asat June 30, 2019 In rMillion As at As at June 30, 2018 March 31, 2019 tn r MIiiion In r MIiiion
Unsecured Borrowings carried at amo1 sed cost Term loans lnd;an rupee loan trom others ln!ores! accrued bul no1 duo on 1err loans Less: Current maturtty of long-term borrowings transforrcd lo olher current financial lialJihhos (Reier note 23) Loss: Cu,renl mah1r�y of mtorost accrued bu! no! duo on !orm loan traosrorrodtoo!hor current financial liabilities {Retor no1e 23)	16.55 0.28 16.83 {4.56) {0.28) 21.13 16.55 0.89 0.17 22.02 16.72 (4.58) (4.58) (0.89) (0.17)
	(4.86) 11.97 (5.471 (4.75) 16.55 11.97

The term loans f1om Govommenl dopa11ments liave 1he following !enns and condilions

Loan I - amounting !o , 5.46 milllon (Corrospondino period: , 8. 19mjllion I Previous year: f 5.46 million) with interest payablo @ 2% per annum guaranteed by a bank guarantee by tho Company and ropayabk! In ten <..>qual sc111i annual lnstallm1m1s over a peliod of five years com111enclr10 from March 2016.

Loan II - amounting 10 f 11.09 million (Corresponding period., 12.94 million /Previous yoar: f 11.09 million) w�h Interest payablo@ 3% per annum repayable In ton equal annual lns1alfmcnts over a pe1iod of len years installments over a period of (on years commencing from Seplember 2015

20. Other long term financial liabll!Ues (refer note 31)

	As at As at As at Juno 30, 2019 June 30, 2018 March 31, 2019 In r Million In r M!Ulon In r Mlrtlon 7.9 1.83 1.83 838.32 (317.25)
Security Oeposi1s Lease liabilities Less: Current maturity of !ease liabilities (rfer 11010 23) Movement of leaso liabilities Opening balance Add: Interest rncogniscd during (ho period Less: Payments made Closing balance
	529.03 1.83 1.83
	For the qua11er ended For the year e11ded June 30, 2019 June 30, 2016 March 31, 2019 In t Mutlon In r MIiiion In r Ml111on 888.9 16.99 87.57 838.32

Add: Interest rncogniscd during (ho period Less: Payments made Closing balance

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Page 37 of 46

Persistent Systems Limited

Notes forming part of condensed consoHdated flnandal statements

21. Non current liab!!ities: Provisions

21. Non current liab!!ities: Provisions
	As at June 30, 2019 In rMimon 62.43 161.94 224.37 As at June 30, 2019 hi" Million 1 561.33 1 569.33 As at As at June 30, 2018 March 31, 2019 lnrMmlon In fMlllion 11.68 94.34 140.68 156.46 1S2.36 252.80 As at Asat June 30, 2018 March 31, 2019 lnrMmion In rMiltlon 2.01 .56 1.Si7.07 2 091.S6 1 517.07
Provis;on for employee benefts -Gratu�y • Long service awards 22. Trade payables (refer note 31)
Trade payables for goods and services 23. Other curent financial liabilities (rorer note 31)
Cap�al cred1lo1s Curren! matunty of long-teml borrowings (refer note 20) Cum.l maturi1y of lnlcrnsl on long-lorm borrowings (rofc1 note 20) Curren1 maturi1y Qf lease liabili1ies Accrued einployea liabi@es Unpai d.viend' Olhcr liabil�les Fair value of derivatives designated and erfective as hedging instrments Fo1ward con!rncls payable	Asal June 30, 2019 In rMilllon 52.68 4.58 0.28 317.25 367.39 2.42 0.55 745.15 As at As at June 30, 2018 March 31, 2019 ln r MIiiion In r Million 25.77 55.16 4.56 4.58 0.89 0.17 414.74 377.88 1.59 2.21 2.41 1.87 257.57 707.55 441.93

• Unpaid dividend is trensforred lo Investor Education and Protec1ion Fund as a,!([ wllen d"e

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Page 38 of 46

Persistent Systems L1m1ted

Notes forming part of condensed consolidated financial statements

24.0ther current Uabllit!es

24.0ther current Uabllit!es
		Asal Juno 30, 2019 ln,Million As at As at June 30, 2018 March 31, 2019 In, Million In, MIiiion
Unearned revenue Advancefrom cus1omcrs Other payables - Slalulory liabilities . Other liabirnics 25. Current liabilities : Provisions		781.21 33.14 306.19 3.90 1,126.44 962.48 842.08 26.32 26.34 420.16 247.67 '" 6.35 1,417.55 1.122.44

	As at Juno 30, 2019 In r MIiiion 19.26 552.34 19.27 405.18 996,05 As at As at June 30, 2018 March 31, 2019 In, Million In, Million 0.74 17.20 S07.14 546.87 23.87 19.02 80.91 1,101.28 1,338.66 1 686.35
Provision for employee bencnts - Gralu�y - Leave cncashmont • Long sorvico awards . Olhor empKyco benefrts

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Page 39 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

26. Revenue from operations (net)

Sofare serices Sofware licenses	For the quarer ended June 30, 2019 June 30, 2018 InfMillion IniMillion 8,024.56 7,674.20 296.58 668.61 8,321.14 8,342.81 For the year ended March 31, 2019 Inf Million 32,169.39 1,490.02 33,659.41

27. Other income

	For the quarter	ended		For the year ended
	June 30, 2019	June	30, 2018	March 31, 2019
	Inf Million	Inf Million		Inf Million
Interest income
On financial assets carried at amortised cost	92.02		14.55	103.10
On others	46.20		55.98	184.62
Foreign exchange gain (net)	79.84		20.63
Profit on sale of fixed assets {net)	0.17		0.34	4.02
Dividend income from investments	10.54		40.71	180.77
Profit on sale of investments (net)	128.81		151.84	366.09
Net gain/(loss) arising on financial assets designated as at FVPL	(70.38)		(130.37)	(68.92)
Excess provision in respect of earlier period / years	0.27		18.81	33.89
written back
Miscellaneous income	12.89		14.26	72.98
	300.36		186.75	876.55

28.Personnelexpenses

28.1 Employee benefits expense Salaries, wages and bonus Contribution to provident fund Gratuity expenses Defined contribution to other funds Staff welfare and benefits Employee stock compensation expenses 28.2 Cost of professionals		For the quarter ended June 30, 2019 June 30, 2018 Inf Million Inf Million 4,553.56 4,310.69 107.86 90.12 45.20 42.01 50.59 50.96 127.89 124.59 31.15 4,916.25 4,618.37 859.82 844.68 For the year ended March 31, 2019 Inf Million 18,000.86 384.78 155.45 216.89 491.55 19,249.53 3,490.45
		5,776.07 5,463.05 22,739.98

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Page 40 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

29.0therexpenses

Persistent Systems Limited Notes forming part of condensed consolidated financial statements 29.0therexpenses
	For the quarter ended		For the year ended
	June 30, 2019	June 30, 2018	March 31, 2019
	Inf Million	Inf Million	Inf Million
Travelling and conveyance	279.61	263.39	933.11
Electricity expenses (net)	32.22	30.42	109.45
Internet link expenses	18.34	20.55	67.37
Communication expenses	25.16	25.91	100.72
Recruitment expenses	33.68	20.91	116.63
Training and seminars	5.20	7.43	30.22
Royalty expenses	18.31	14.78	65.01
Purchase of software licenses	377.61	541.68	1,473.20
Bad debts		39.93	71.18
Provision for doubtful receivables/ (provision for doubtful receivables	7.23	(2.61)	(4.89)
written back) (net)
Rent	38.55	118.32	463.72
Insurance	6.82	4.91	24.84
Rates and taxes	27.00	16.73	79.26
Legal and professional fees	150.27	160.72	572.88
Repairs and maintenance
- Plant and Machiner	26.41	32.66	114.67
- Buildings	7.38	10.40	29.56
- Others	5.01	6.77	20.43
Selling and marketing expenses	0.24	33.79	4.12
Advertisement, conference and sponsorship fees	68.42	16.18	199.06
Discount allowed	15.04	13.06	76.92
Computer consumables	1.54	2.42	7.95
Auditors' remuneration	4.07	4.41	15.75
Donations	19.01	17.98	80.64
Books, memberships, subscriptions	9.09	16.97	77.58
Foreign exchange loss (net)			243.10
Directors' sitting fees	2.40	1.58	5.32
Directors' commission	4.05	3.40	14.21
Provision for doubtful deposits and advances (refer note 38)	100.00		182.50
Impairment of non current investments			13.98
Miscellaneous expenses	60.49	56.48	168.54
	1,343.15	1,479.17	5,357.03

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Page41 of46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

30. Earnings per share

For the quarter ended June 30, 2019 June 30, 2018 For the year ended March 31, 2019	For the quarter ended June 30, 2019 June 30, 2018 For the year ended March 31, 2019
Numerator for Basic and Diluted EPS Net Profit afer tax (In � Million) Denominator for Basic EPS Weighted average number of equity shares Denominator for Diluted EPS Number of equity shares Basic Earnings per share of face value off 10 each (Inf) Diluted Earnings per share of face value off 10 each (Inf) (A) (B) (C) (A/B) (A/C) 824.70 77,469,396 77,469,396 10.65 10.65 873.48 80,000,000 80,000,000 10.92 10.92 For the quarter ended June 30, 2019 June30, 2018 3,516.79 79,943,943 79,943,943 43.99 43.99 For the year ended March 31, 2019
Number of shares considered as basic weighted average shares outstanding Number of shares considered as weighted average shares and potential shares outstanding	77,469,396 80,000,000 79,943,943
	77,469,396 80,000,000 79,943,943

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Page 42 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

31. Financial assets and liabilities

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

Te carring values and fair values of financial instruments by categories are as follows:	Te carring values and fair values of financial instruments by categories are as follows:	Te carring values and fair values of financial instruments by categories are as follows:	Te carring values and fair values of financial instruments by categories are as follows:	Te carring values and fair values of financial instruments by categories are as follows:
							"'' "'""�"
Financial assets/ fnancial liabilities Asset: Investments in associates {net) Investments in equity instrmets. prefered stock and convertible notes Investments in bonds• Investments in muual funds Loans Deposi with banks and financial insrnutions (net) Cash and cash equivalents (incluing unpaid dividend) Trade receivables (net) Unbilled revenue Forward contracts receivables	Basis of measurement Equity accounting Fair value Amortised cost Fair value Amortised cost Amorised cost Amorised cost Amorised cost Amorised cst Fair value	As at June 30, 2019 c, inQ value Fair value - 213,85 213.85 2,230.59 2,165.51 2,808.83 2,808.83 173.87 173.87 6,05.76 6,065.76 2,081.65 2,081.65 4,732.18 4,732.18 2,073.79 2,073.79 282.46 282.46		As at June 30, 2018 c, inQ value Fair value - 218.02 218.02 1.653.98 1,628.26 7.987.44 7.987.44 166.87 166.87 1,795.42 1.795.42 1,086.09 1,086.09 5,630.63 5,630.63 1,986.73 1.986.73 - -	ne 30, 2018 Fair value			As at March 31, 2019 Carrvinovalue Fair value		Fair value hierarchy
						- 218.02 1,628.26 7.987.44 166.87 1.795.42 1,086.09 5,630.63 1.986.73 -		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 2.120.85 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		20,66298	20,597.90	20,525.18		20,499.46		22,186.25	22,150.43
Liabilities: Borrowings (including accrued interest) Trade payables Other financial liabilities (excluding borrowings) Other long term financial liabilities Forard contractspayable	Amortised cost Amorised cost Amorised cost Amorised cost Fair value	16.83 1,569.33 740.29 529.03	16.83 1,569.33 740.29 529.03	22.02 2,091.56 444.51 1.83 257.57		22.02 2.091.56 444.51 1.83 257.57		16.72 1,517.07 437.18 1.83
Total		2,855.48	2,855.48	2,817.49		2,817.49		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 1hat are used to measure fair value that are e�her observable or unobservable and consists of the following three levels· Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabil�ies.

Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability. etther direclly (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 wtiole or in part using a valuation mode! based on assumptions that are netther supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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Page 43 of 46

Persistent Systems Llmlled

Notes rormlng part of condonsod consolldated llnanclal statements

32. Segmont Information

Operating segments are components or an enterpriso for which d1sc1ete f,nancoal ,nrormal1on 1s ava,1able that ,s evaluated regularly t,y lhe ci11ef opeial<ng decis;on makers. m dec.:J1n9 how to allocate resources and assess,rig performance. The Group"s chief operating decision makers are the Chier Executive Officer and the Chairman.

The Group rno,ganlocd ttself Into !h,co business )m<>nt< !or segment rapo,1•>8

The operntu,g segments are

a. Technology Sorvices

t, A�iance

c. Accelert e (Products)

a. Technoloy Sorces t A�iance c. Accelert e (Producs)	a. Technoloy Sorces t A�iance c. Accelert e (Producs)	a. Technoloy Sorces t A�iance c. Accelert e (Producs)	a. Technoloy Sorces t A�iance c. Accelert e (Producs)
				{In, Mllllon)
Pa,ticulau		Tehnoloy Se,vlcu	Alliance	Acee lo rite Total {P1ouct&) 303.98 8,321.14 408.96 8,342.81 1.881.46 33,659.41 196.0 5,396.52 246.69 5,321.61 669.32 20.861.59 107.92 2.924.62 162.27 3.021.20 992.14 12.797.82 2.127,37 2,021.70 8,810.96 797.25 999.50 3,986.84 3D0.36 18.75 876.55 1.097.61 1,186.25 4,863.39 272.91 312.77 1.346.60 824.70 873.4B 3.516.79	Total
Revenue ldentifialle expense Segmenlal resun Unallocable expenses Operating income O!hor Income (nel or expense�) Prof,! O!ore laxes Tax expense Profit aner tax	Quarter ended Jun.3(2019 5,704.51 2.312.65 Quarter cred Jun.3(.2018 5.243.17 2,690.68 Year ended Mat- ,2019 22.013m 9,759.92 Quarter ended Jun.3(2019 3.636.42 1,564.04 Quarter ended Jun·30-2018 3.244.61 1,830.31 Year ended Mm.31-2019 13,510.36 6.461.91 Quarter ended Jun-J0.2019 2.0 .09 748.61 Quarter ended Jun-30.2018 1.998.56 660.37 Year ended Mar-31-2019 8.507.67 3,298.01 Quarter ende Jun.3(.2019 Quarer ended Jun.30.2016 Year ended Mar-31.2019 Quarter ended Jun-30·2019 Quarter anded Jun<l(2018 Year onded Mat.31-:019 Qua1101 ende Jun·30-2019 Quar1cr ended Jun.30-2018 Year ended Ma<-31·2019 Quaile, ended Jun.3( 2019 Quarto/ ended Jun·30·2018 Year ended Mar-31-2019 Quarter ended Jun.30·2019 Quarter ended Jun.3( 2018 Year ended Mar-31-2019 Quarter e!lded Jun.3(.2019 Quarto, lndcd Jun.30·2018 Year ended Mar.J1·2019

Pa,tlculats Technology Alllance Sorvlce$ Semental trade rncerabes (nc!) As al Jun.3(20\9 3.836.43 700.25 Mat Jun-3(201B 3.657.36 1,618.23 As at Mar-31-2019 3.547.07 1,021.77 Unalloca(ed assets As a** Jun-J0.2019 As at Jun.3( 2018 ""' Ma!-31.2019**	(Inf MIH!on)	(Inf MIH!on)
	Ac le rite (P1oducts) 195.50 355.0 354.17	Total 4.732.16 5,630.63 4.923.01 22.935.10 2.242.5 23.632.98

Scgrcga\,on or assets {o!her than trade rec,,ivablcs), liabilrtics. dCj)teclatlon and amoit,zatlon arid o(her non.cash expenses in!o various repo!tablo seomon!• have not been PIC>ented •• \ho assets are used lnterchangeably OOlween segments arid the Group I,; o! the view that n is no! practical to ieasoMbly alloc.a!e the other assets, 1,at,1rt,es and ou,e, non-<:ash expenses to indr.klual se,gments and an ad·hoc allocation will no! 00 meaningful

Geographical Information

The !ollowing !able shows the dislnbuUon of1he Group·s consoloda1C<l sales by geographical market regardless of !rom where lhe services were rendered

		(Inf Mll!lonf
fartlcu1ar, Revenue	India Norlh Amorlca Quarter ended Jun·30-2019 557.21 6.864.27 Quarter ended Jun.30.2018 508.55 6,652.30 Yea, ended Mar-31-2019 2.349.29 27.507.46	Re$! of the World Total 899.6 6.321.14 1.181.9 8.342.81 3.802.66 33.659.41

The rnvenue from a single customer in excess of ten pcrrenl of to!al re�enue of the Group �, 1.%4.74 mill<on ror the quarter ended June 30, 2019 (corresponding period � 1.986.95 mil,ori/ pievious year : , 8,079.32 m;u,on)

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Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

1. On July 02, 2015, the Company, through its wholly owned subsidiary Persistent Systems Inc., acquired the entire equity capital of US based Akshat Corporation (d.b.a. RGen Solutions in USA). In addition to the upfront purchase consideration, the stock purchase agreement for additional consideration, contingent upon certain conditions being met in future years. The additional contingent consideration payable to the selling shareholders is subject to a maximum amount of USO 3.75 million. The fair value of the contingent consideration is estimated to be Nil as on the date of acquisition. The contingent consideration would be recorded, as and when the contingency is resolved and the consideration is payable.

2. Persistent Systems Inc. (a wholly owned subsidiary of Persistent Systems Limited) acquired Digital Content Management Solution product from the US based Akumina Inc. on November 9, 2015. In addition to the upfront purchase consideration, the asset purchase agreement provides for additional consideration, contingent upon certain conditions being met in future years. The additional contingent consideration payable to Akumina Inc., is subject to maximum amount of USO 5.00 million. The fair value of the contingent consideration is estimated to be Nil as on the date of acquisition. The contingent consideration would be recorded, as and when the contingency is resolved and the consideration is payable.

3. Persistent Telecom Solutions Inc. (a wholly owned subsidiary of Persistent Systems Inc.) acquired a cloud platform open source software from Citrix on February 28, 2016. In addition to the upfront purchase consideration, the asset purchase agreement provides for additional consideration, contingent upon certain conditions being met in future years. The fair value of the contingent consideration is estimated to be Nil as on the date of acquisition. The contingent consideration would be recorded, as and when the contingency is resolved and the consideration is payable.

4. Persistent Systems Limited ("the Holding Company") had received a show cause notice from Commissioner of Service Tax on December 19, 2016 for non-payment of service tax off 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 Holding Company to its overseas customers for the period 2011-12 to 2014-15.

Post representations made by the Holding Company, the Learned Principal Commissioner of Service Tax, Pune, adjudicated the aforesaid show-cause notice and issued an order on May 29, 2017, reducing the demand to< 165.51 million based on the period of limitation and as a result of that, the said demand now covers financial year 2014-15.

The Holding Company has filed an appeal against the order passed by Learned Principal Commissioner of Service Tax, Pune with the Hon'ble Central Excise and Service Tax Appellate Tribunal (CESTAT) on September 23, 2017.

The Holding 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 Holding 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 Holding 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 Holding Company has deposited, an amount of< 647.36 million towards service tax in respect of the above matter, for the period from April 01, 2014 to June 30, 2017, under protest.

As on June 30, 2019, the pending litigations in respect of direct taxes amount to< 234.92 million and in respect of indirect taxes amount to < 36.56 million (excluding the show cause received from Commissioner of Service Tax on May 29, 2017 of< 173. 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. In respect of export incentives, pertaining to previous years amounting to< 255.23 million, the Parent Company is in the process of representing before the relevant authorities including the representations through the industry associations to ensure continued applicability of the said incentives to the eligible ER&D companies.

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Page 45 of 46

Persistent Systems Limited

Notes forming part of condensed consolidated financial statements

1. Persistent Systems Inc., subsidiary of Persistent Systems Limited, has given a guarantee of€ 10.00 million (Corresponding period/ Previous year:€ 10.00 million) to Tech Data Europe GmbH & its Affiliates towards trade payable of Persistent Systems Inc & its Affiliates.

2. Persistent Systems Ltd has given a guarantee to customer of $ 15.17 million on behalf of Persistent Systems Inc. (Corresponding Period / Previous year: $ 15.17 million).

3. As reported in the previous quarters, Persistent Systems Limited ("the Parent Company") has deposits of t 430 million with the financial institutions viz. Infrastructure Leasing & Financial Services Ltd. (IL&FS) and IL&FS Financial Services Ltd. (referred to as "IL&FS Group") as on the balance sheet date. The Group has not accrued any interest on these deposits since April 1, 2018. In view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, Management of the Parent Company has provided an additional amount oft 100.00 million during quarter ended June 30,2019, thereby making the total provision tot 282.50 million for impairment in value of deposits as of June 30, 2019. The provision currently reflects the exposure that may arise given the uncertainty. With the resolution plan in progress, the Management of the Parent Company 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.

4. Effective April 1, 2019, the Group has adopted Ind AS 116 Leases; and has recognized interest expense of� 16.99 million on lease liabilities under finance costs.

5. Persistent Systems Germany GmbH, wholly owned subsidiary of Persistent Systems Limited has entered into a Share Purchase Agreement dated June 25, 2019 to acquire 100% share capital of Youperience GmbH, a Salesforce Certified Gold Partner in Germany. As on that date, Youperience GmbH was holding 30% stake in its associate Company - Youperience Limited, United Kingdom. Balance 70% stake in the said associate has also been acquired by Persistent Systems Germany GmbH through Youperience GmbH on June 27, 2019.

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

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Page 46 of 46

Chartered Accountants 706, 'B' Wing, 7'h Floor ICC Trade Tower Senapati Bapat Road Pune-411 016 Maharashtra, India

Deloitte Haskins & Sells LLP

Tel: +91 20 6624 4600 Fax: +91 20 6624 4605

INDEPENDENT AUDITOR'S REPORT

TO THE BOARD OF DIRECTORS OF PERSISTENT SYSTEMS LIMITED

Report on the Audit of the Interim Condensed Standalone Financial Statements

Opinion

We have audited the accompanying interim condensed standalone financial statements ("the Condensed Financial Statements") of Persistent Systems Limited ("the Company"), which comprise the Condensed Balance Sheet as at 30 June 2019, the Condensed Statement of Profit and Loss for the quarter ended on that date, the Condensed Statement of Cash Flows and the Condensed Statement of Changes in Equity for the quarter then ended, and notes to the Condensed Financial Statements, including a summary of significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Condensed Financial Statements give a true and fair view in conformity with the Indian Accounting Standard 34 ("Ind AS 34") prescribed under section 133 of the Companies Act, 2013 ("the Act") and other accounting principles generally accepted in India, of the state of affairs of the Company as at 30 June 2019, profit for the quarter ended on that date, changes in equity and its cash flows for the quarter ended on that date.

Basis for Opinion

We conducted our audit of the Condensed Financial Statements in accordance with the Standards on Auditing (SAs) specified under section 143 (10) of the Act. Our responsibilities under those Standards are further described in the Auditor's Responsibility for the Audit of the Condensed Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the !CAI together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Condensed Financial Statements.

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Regd. Office: lndiabulls Finance Centre, Tower 3, 27,;, - 32"" Floor, Senapati Bapat Marg, Elphinstone Road (West), Mumbai 400 013, Maharashtra, India. {LLP Identification No. MB"8737}

Deloitte Haskins & Sells LLP

Management's Responsibility for the Condensed Financial Statements

The Company's Board of Directors is responsible for the preparation and presentation of these Condensed Financial Statements that give a true and fair view of the financial position, financial performance, changes in equity and cash flows of the Company in accordance with the Ind AS 34 and other accounting principles generally accepted in India.

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 Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Condensed Financial Statements, management is responsible for assessing the Company's ability 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.

The Board of Directors are also responsible for overseeing the Company's financial reporting process.

Auditor's Responsibility for the Audit of the Condensed Financial Statements

Our objectives are to obtain reasonable assurance about whether the Condensed Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's 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 SAs 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 Financial Statements.

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

• Identify and assess the risks of material misstatement of the Condensed 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.

• Obtain an understanding of internal financial 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 the effectiveness of the Company's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists

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Deloitte Haskins & Sells LLP

related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the Condensed Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

Materiality is the magnitude of misstatements in the Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings 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.

Place: Pune Date: 25 July 2019

For DELOITTE HASKINS & SELLS LLP Chartered Accountants (Firm's Registration No. 117366W/W-100018) J1J· M. Joshi fmant Partner (Membership No. 038019) (UDIN - 19038019AAAABX8623)

Persistent Systems limited CONDENSED BALANCE SHEET AS AT JUNE 30, 2019

Notes ASSETS Non-current assets Property, plant and equipmen1 5., Capital wor-in-progre ss Ri{ht of Use assets 5.2 01her ln1angible assets 5.3 Intangible assets under developmen1 Financial assets - !nvestmen!s ' - Loans - Other non current financial asse1s Deferred tax asse!s (ne1) Other non-current assets ,0 Current assets Financial assets • trwestmen1s " - Trade receivables (net) " - Cash and cash equivalents '3 - Other bank balances " - Loa11s '5 - Other curren1 financial 1ssels '6 Other current assets " TOTAL EQUITY AND LIABILITIES EQUITY Equ�y share capital Other equry UAB!LITIES Non- current liabilities Financial liabil�ies "Borrowngs '6 Provisjons '9 Other long-term financial liabilities 20 Current liabilities Financial liabil11ies • Trade payables ((dues of m.Cro and small " enterprises ( 6,08 million {Corresponding period: , 18.74 million I Previous year:, 15.63 million)) - Othe1 financial liabilities 22 Other current tiabHilies 23 Provisions " Current lax liabilities (net) TOTAL		A" June 30, 2019 In, Million 2,108.93 15.15 327.46 78.42 91.53	Asat June 30, 2018 In, Million 2,266.64 8.22 110.43 10.18 Asat March 31, 2019 In, Million 2,130.26 11.61 83.86 60.32
		2,621.49 7,364.63 116.29 654.22 175.57 59.96	2,395.47 5,583.52 813.31 2.81 175.67 64.50 2,286.25 7,544.01 116.01 428.01 55.56 68.35
		10992.16	9,035.28 10,498.19
		1,165.93 2,070.75 664.92 5,511.63 56.61 2J5D.39 1.377.56 12,997.79 23 989.95 764.25 20,494.93 21,259.18	6,759.15 2,658.03 325.73 364.62 5.07 3,314.74 1,573.36 15 000.70 3,295.53 2,429.85 565.12 4,654.22 6.63 2,195.74 1,243.44 14,390.53
			24 035.98 800.00 20,483.25 24 888.72 791.19 21,420.71
			21,283.25 22,211.90
		11.97 161.94 300.63	16.55 140.68 1.83 11.97 158.46 1.83
		474.54	159.06 172.26
		849.76 333.96 597 .55 319.66 155.30	759.24 562.13 671.26 395.60 205.44 1,019.07 138.17 630.28 664.11 52.93
		2,256.23	2,593.67 2,504.56
		23 989.95	24 035.98 24 888.72

Summa ef si nificant accountin policies

The accompanying notes are an in1egral part of the conde11sed financial statements

As per our report of even dale

For 0e1ome Haskins & sens LLP ICA! Firm registration no.117366WfW-100018 Chartered Accountants 1[J,/] Hf: M. Joshi Membership no. 038019

Place Pune Date : July 25, 2019

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For and on behalf of the Board of Directors of
Persistent Systems Limited
Chairman and Managing Oireclor Director
Sunil Sapre Af{!l Aire
Execu1ive Oirec!or and Company Secretary
Chief Financial Officer
Place Pune
Date ; July 25, 20\9
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Page 1 of 37

Persistent Systems Limited CONDENSED STATEMENT OF PROFIT AND LOSS FOR THE QUARTER ENDED JUNE 30, 2019

Income Revenue from operations (net) Other income Total Income (A) Expenses Employee benefits expense Cost of professionals Finance costs (refer note34) Depreciation and amortization expense Other expenses Totat expenses (BJ Proft before tax (A-B) Tax expense Current tax Tax charge/ (credit) in respect of earier years Deferred tax charge I (credit) Total tax expense Net profit for the perlod I year(C) Other comprehensive Income Items thatwlllnot be reclasslfledto proft and loss(OJ - Remeasurements of the defined benefit liabilities I {asset} (net of tax) Items that may be reclassified to proft and loss(E) - Effective prtion of cash flow hedge {net of tax) Notes 25 26 27.1 27.2 5.4 28 Total other comprehensive income for tho period I year (D) + {E) Total comprehensive Income for the period I year (C) + (0) + (E) Earnings per equity share [Nominal value of sharef10{Corresponding period/ previous year:f10)] Basic (In�} Diluted {!n �) Summary of signifcant acounting policies 29 3	For the quarer ended June30, 2019 In, Mllllon 4,953.95 307.05 5 261.00 2,499.35 490.02 12.45 137.31 1,007.14 4,146.27 1,114.73 338.19 (57.85) 280.34 834.39 (25.30) (25.30) (23.19) (23.19) (48.49) 785.90 10.77 10.77 June30, 2018 In, MIiiion 4,619.91 194.82 4,814.73 2.260.79 50.18 0.11 117.19 725.0 3,609.33 1,205.40 340.80 (58.65) 282.15 923.25 (12.91) (12.91) (159.13) (159,13) (172.04) 751.21 11.54 11.54 For the year ended March31, 2019 Inf MIiiion 19,598.67 1,037.9 20,636.57 9,491.23 2,195.21 0.51 458.84 4,107.o2 16,252.81 4,383.76 1,283.16 65.00 (114.48) 1 233.68 3,150.08 (49.83) (49.83) 168.43 168.43 118.60 3,268.66 39.40 **39.40 **

The accompanying notes are an integral part of the condensed financial statements As per our report of even dale

For Deloitte Haskins & Sells LLP 117366WIW-100018 Charter�ICAt Firm registration no. d Acc ounj�[nts ] · .. f[A/ ] Jf Hemani M. Joshi Partner 038019 Membership no.

Place: Pune Date . July 25, 2019

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

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Dr. Anand Deshpande -()-2??:---,. Kirnn U ,ootk"
Chairman and Managing Director Director
/
/ � · / / / ./
/ �1/3
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Sunll Sapre �_ltAtre
Executive Director and
Company Secretary
Chief Financial Officer Place: Pune
Date . July 25, 2019
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Page 2 of 37

Persistent Systems Limited CASH FLOW STATEMENT FOR THE QUARTER ENDED JUNE 30, 2019

Cash flows from operaUng activities Profit bfor tax Adjustments for: Interest income Finance cost Dividend income Depreciation and amortization expense Amortization of !ease premium Unrealised exchange loss/ (gain) (net) Excange (gain) / loss on derivative contracts Exchange (gain)/ loss on translation of foreign currency cash and cash equivalents Donations in kind Bad debts Provision for doubtful debts (net)/ (Pmvision for doubtful debts witten back) {net) Employee stock compensation expenses Provision for doubtful deposits Remeasuroments of the defned beneft liabilities I (asse!} (before tax effects) {Gain) I loss on fair valuation of mutual funds {Profi!) on sale of mvestments {net) {Profit) on sale of fixed assets {net) Operating proft before working capital changes Movements ill working capital (lncrease)I Decrease in non·curren\ arid current loans (Increase)/ Decrease in 0U1er non current assets (Increase)/ Decrease ir other current financial assets (Increase)/ Decrease in other current assets (Increase}/ Decrease in trade receivables Increase I (Decrease) in trade payables and curren! !,abilities Increase / {Decrease) in provisions Operating profit after working capital changes Direct ta1es paid (net of refunds) Net cash generted from/ (used In) operating activities Cash flows from Investing activities Payment towards caprtal expenditure (irclud111g inta11gible assets) Proceeds from sale of fxed assets Share application money paid Purcl1ase of bonds Proceeds from sale of bonds Investments in mutual funds Proceeds from sale/ maturity of mutual funds Investments in bank deposits having original maturity over three months Maturity of bank deposits having original maturity over three months (includirg Investments in deposits wth fnarcial instiluUons Maturity of deposits wth financial insttutions Inter corporate deposits (made) I refunded Interest received Dividend received Net cash generated from I {used in) investing acHvities Cash flows from financing activities (Repayment of) !0119 term borrowngs Shars bought back Specific project related grant received Dividend paid Ta1 on dividend paid Interest paid Net cash generated from/ (used in) financing activities (A( 181 (C)

For the quarer ended June30, 2019 Juno30, 2018 For tho year ended March31, 2019 Inf Million Inf Million Inf MIiiion 1,114.73 (131.60) 12.45 {10.54) 137.31 0.15 (22.99) (36.83) 7.18 9.67 3.04 100.00 {37.47) 70.38 {128.81) (0.17) 1,086.70 {50.14) 6.33 {186.54) {134.12) 375.58 {224.71) (340.97) 532.13 (223.65) 308.48 {99.38) 0.17 (474.00) (54.02) (3,473.04) 5,993.08 (1,230.54) 500.00 250.00 1,205.40 (74.90) 0.11 (61.95) 117.19 0.15 7.91 55.85 (6.04) 19.52 (11.62) (18.61) 130.37 {151.84) {0.47) 1,191.07 (7.25} (0.50) {1,307.59) (198.74) 765.66 165.71 (35. 12) 573.24 (229.20) 344.04 (63.29) 0.47 (477.15) 4,383.76 (266.62) 0.51 (392.26) 456.64 0.58 80.81 20.51 75.53 1.40 23.55 (6.99) 182.50 {49.63) 76.95 (366.09) {3.77) 4,197.18 0.16 (2.29) (864.55) 131.18 875.95 202.29 251.17 4,791.09 {1,394.77) 3,396.32 (268.67) 3.82 {78.72) {1,175.31) 199.43 (5,470.08) (22.418.13) 5,077.92 25,010.64 (113.50) {6,000.82) 500.00 4,044.26 (300.00) {300.00) 140.35 650.35 133.64 132.74 65.04 155.57 341.93 10.54 81.95 392.26 ______ a1 ·c _ (c c4c 1c2c ___ _(1o·4 (1,677.01) 0.15 4.50 0.18 (4.58) (571.41) (879.14) (137.41) (12.34) (1.12)

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Page 3 of 37

Persistent Systems Limited CASH FLOW STATEMENT FOR THE QUARTER ENDED JUNE 30 2019 Net (decrease) I increase in cash and cash equivalents (A+ B + C) Cash and cash equivalents at the beginning of !he period/ year Effect of exchange differences on translation of foreign currency cash and cash equivalents Cash and cash equivalents at the end of the period/ year Components of cash and cash equivalents Cash on hand {refer note 13) Balances wth banks On current accounts I (refer note 13) On saving accounts (refer no!e 13) On Exchange Earner's Foreign Curency accounts (refer note 13) On unpaid dividend accounts• (refer note 14) On Escrow accounts•• (Refer note 13) On deposits accounts wth original maturity less than t11ree months (Refer note 13) Cheques on hand Cash and cash equivalents I Out of the csh and cash equivalent balance as at June 30. 2019, the Company can ut only towards research and development activities specifed in the agreement

For the quarer ended June 30, 2019 In, Million 107.13 567.39 (7.18) 667.34 0.18 338.61 4.98 19620 2.42 60.05 64.90 667.34 For the year ended June 30, 2018 March 31, 2019 In, Millfon ln, Ml11ion 14.60 336.24 30.68 30.68 6.04 (75 53) 327.32 567.39 0.15 0.11 159.47 126.71 10.55 0.91 114.14 114.91 '9 2.27 92.94 229.54 41.42 327.32 567.39 ilise, 2.15 Million {Corresponding period: t 4.60 Million I Previous year: t 2. 15 Million)

• The Company can utiliw \11ese balances only towards sel\lement of \1111 respective unpaid d1videl\d •• TI1e Company closed buyback with effect from June 27, 2019 and minimum balance maintained in Escrow account will be relased on comptetjon of formalities

Summary of si911ifican1 accounting policies· Refer note 3

The accompanying notes are an integral part of Um condensed financial statements

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As per our report of even date
For Deloitte Haskins & Sells LLP
ICAI Firm registration no. 117366WIW-100018
Chartered Accountants
.
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H �ntM.l�hl
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bership no. 038019
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For and on behalf of the Board of Directors of Persistent Systems Limited

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

Dr. Anand Deshpande �---»-· >
Chairman and Managing Director Dm\o, N'> "/)
.��y
Sunll Sapre Jf Am,IAI"��
Chief Financial Officer Executi�e Director and Company �Jetary
Place: Pune
Date : July 25, 2019
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Place: Pune Dale : July 25, 2019

Page 4 of 37

Persistent Systems Limited

CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED JUNE 30, 2019

A. Equity share capital (Refer note 4)

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/In f Million
Balance as at April 1, 2019 Changes in equity share capital during Balance as at June 30, 2019
the year (refer note 4d)
791.19 (26.94) 764.25
lln f Million
Balance as at April 1, 2018 Changes in equity share capital during Balance as at June 30, 2018
the year
800.00 - 800.00
(Inf Million)
Balance as at April 1, 2018 Changes in equity share capital during Balance as at March 31, 2019
the year (refer note 4d)
800.00 f8.81 791.19
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Page 5 of 37

Persistent Systems limited

CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED JUNE 30, 2019

B. Other equity

B. Other equity
								In,	Mi1Uon'
							Items of o ther
			Reserves and surelus				comerehensive
							income
Pariculars	Securitis premium	General reserve	Share options outstanding reserve	Capitl redemption reserve	Special Economic Zone re-nvestmnt reserve	Retained earings	Effective porion of cash !!ow hedges	Total
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 profi1 for the period						834.39			834.39
Other comprehensive income for the yeai						(25.30)	(23.19)		(48.49)
Transitional impact on adoption of Ind AS 116						(92.54)			(92.54)
Transfer 10 capital redemption reserve				26.94		(26.94)
Employee stock cmpensation expenses			3.04						3.04
Employee stock cmpensa!ion expenses of subsidiaries			27.89						27.89
Utilised towards buv back of shares /refer note 4dl	*1774.10*					**1875.97\ **		11,650.071
Balance at June 30, 2019		10,570.73	107.22	35.75	70.00	9 549.36	161.87	20 'In,	494.93I MUHon

B. Other equity	B. Other equity	B. Other equity	B. Other equity	B. Other equity	B. Other equity	B. Other equity	B. Other equity
Pariculars Securitis General premium reserve Balance as at April 1, 2019 774.10 10,570.73 Net profi1 for the period Other comprehensive income for the yeai Transitional impact on adoption of Ind AS 116 Transfer 10 capital redemption reserve Employee stock cmpensation expenses Employee stock cmpensa!ion expenses of subsidiaries Utilised towards buv back of shares /refer note 4dl 1774.10** Balance at June 30, 2019 10,570.73 Reserves and surelus Share options Capitl outstanding redemption reserve reserve 76.29 8.81 26.94 3.04 27.89 107.22 35.75**										In, Mi1Uon'
								serves and surelus						Items of o ther comerehensive income	Total 21,420.71 834.39 (48.49) (92.54) 3.04 27.89 11,650.071
								ions ing e 6.29 3.04 7.89 7.22	Capitl redemption reserve 8.81 26.94 35.75		Special Economic Zone re-nvestmnt reserve 70.00	Retained earings 9,735.72 834.39 (25.30) (92.54) (26.94) **1875.97\ **		Effective porion of cash !!ow hedges 185 06 (23.19)
											70.00	9 549.3	6	161.87	20 494.93I
													'In, MUHon
Particulars Balance as at Aprif 1, 2018 Net profit for the period Other comprehensive income for the period Ad'us1men!s towards employees stoc op!ions		Securilies General premium reserve 1,336.70 9,296.47 4.95					Reserves and S! lus							Items of other comerehensive	Totl
														Income Effective portion of cash flow hedges
				General reserve 9,296.47 4.95		Share options outstanding reserve 90.52 14_95			Capital redemption reserve		Special Economic Zone re-investmnt reserve	Retained earnings
												8,991.72 923.25 (12.91)		16.63 (159.13)	19,732.04 923.25 {172.04)
Balance at June 30, 2018		1,336.70		9 301.42		85.57						9,902.06		1142.50 20 483.25
														lln, Mi!liQn
Partlculan		Securities premium	General reserve		Beserves and surelus Share options Capital outstanding redemption rserve reserve					Special Economic Zone re-investmnt reserve Retained earnings				Items of other comerehensive Income Effective portion of cash flow hedges	Total
Balance as at Apri l 1, 2018 Net profit for the year Other comprehensive income for the year Dividend Tax on dividend Transfer to general reserve Adjustmnts towards employees s1oc op!ions Utilised towards bllY back of shares (refer no1e 4d) Balance at March 31, 2019		1,336.70 /562.60 774.10		9,296.47 1,260.03 14.2 10 570.7	3 3		90.52 (14.23)					8,991.72 3,150.08 (49.83) (660.00) (137.41) (1,260.03)		16.63 168.43	19.732,04 3,150.08 118.60 {880.00) {137.41) 1562.601
							76.29		6.6	1 70.00 9,735.72				185.06	21 420.71

Balance at March 31, 2019 Summary of significant accoun1in9 policies • Refer note 3 The accompanying notes are an integral part of As per our report of even dale For Deloitte Haskins & Sells LLP ICAI Firm registr "ion b. 117366WIW-100018 Chartocod ./ · . i A<z:c . ,h; Partn'eJ . MeHomtlap ' ership no. 036019

Summary of significant accoun1in9 policies • Refer note 3

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

As per our report of even dale

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For and on behalf or the Board of Dirccton; of
�vs.� Persistent Systems Limited [P][=<�� � ]
Ch�: ::t:"'°' Q;rnc<m �
Sunn s.ipre Execu1ive Director and Company Amit A � [S ] / .,,. tary
Chief Financial Officer / ..
Place Pune
Date · July 25, 2019
Oc.AoaodO"hpaodo
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Place: Pune Date : July 25. 2019

Page 6 of 37

Persistent Systems Limited STATEMENT OF CHANGES IN EQUITY FOR THE QUARTER ENDED JUNE 30, 2019

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 1 OAA(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 1 OAA(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 such transaction occurs/ hedging instruments are cancelled.

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Page 7 of 37

Persistent Systems Limited Notes forming part of condensed financial statements

1. Nature of operations

Persistent Systems Limited (the "Company") is a public Company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (the "Act"). 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.

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 financial statements in confonnity 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. Although these estimates are based on the management's best 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.

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 detennining the transaction price allocated to perfonnance 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 historic·a1 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 derived after determining an estimate of an asset's expected useful life and the expected residual value 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 current best estimates. <s, ¢:./, 'c systel),� Page 8 of 37 '! �-Pll�\;:,/ \,::. �r( \�\,,,,) !')_

Persistent Systems Limited

Notes forming part of condensed financial statements

(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 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

Depreciation on Property, Plant and Equipment is provided using the Straight Line Method ('SLM') over the useful lives of the assets estimated by the management.

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

Assets	Useful lives
Buildings"	25 years
Computers	3 years
Computers - Servers and networks* Ofice equipments	3 years 5 years
Plant and equipment* Plant and equipment (indmill)'	5 years 20 years
Plant and equipment (Solar Energy Systemr	10 years
Furniture and fixtures"	5 years
Vehicles*	5 ears

*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 11 of the Companies Act 2013.

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

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

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Page 9 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

Intangible assets are amortized on a straight line basis over their estimated useful lives commencing from the day the asset is made available for use.

(e) Financial instruments

i) Financial assets

Initial recognWon 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 flows and selling the financial assets and the assets' contractual cash flows represent solely payments 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 - "Financial Instruments" relating 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 I (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 the asset's carrying amount and the sum 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.

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Page 10 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

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 as at fair value through profit or loss if the recognition criteria as per Ind AS 109- "Financial Instruments" 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 If abilities designated as FVTPL are recognized in the statement of profit and loss. The Company has not designated any financial liability as at FVTPL.

Derecognition

The Company derecognises financial liabilities when the Company's 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 any indication of impairment based on internal/external factors. lf any indications exist, the Company estimates the asset's 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 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, 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.

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Page11of37

Persistent Systems Limited Notes forming part of condensed financial statements

(g) Leases 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 stand­ alone 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, 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.

The Company recognises the amount of the re-measurement of lease liability as an adjustment to the right-of-use asset. Where the carrying amount of the right-of-use asset is reduced to zero and there is a further reduction in the measurement of the lease liability, the Company recognises any remaining amount of the re-measurement in statement of profit and loss.

The Company has elected not to apply the requirements of Ind AS 116 to short-temi leases of all assets that have a lease temi 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 accrual 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.

(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 perfomied. 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.

Revenue from licenses where the customer obtains a "right to use" the licenses is recognized at the time the license is made available to the customer. Revenue from licenses where the customer obtains a «right to access" is recognized over the access period.

The company has applied the principles under Ind AS 115 to account for revenues from these performance obligations.

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Page 12 of 37

Persistent Systems Limited Notes forming part of condensed financial statements

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 wm 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 Seivice Tax, value added taxes (VAT) 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 rate. Interest income is included under the head 'Other income' in the statement of profit and loss.

(iii) Dividend

Dividend income is recognized when the Company's right to receive dividend is established. Dividend income is included under the head 'Other income' in the statement of profit and loss.

(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.

(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.

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Page 13 of 37

Persistent Systems Limited Notes forming part of condensed 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 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 I 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 for twelve months after the reporting date.

(v) Long service awards

Long service awards are other long term benefits to all eligible employees, as per Company's policy. 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.

(I) 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 profiU loss at the time of transaction. Deferred tax asse r. �cognized for all deductible .SYS/0 /;; , ,,__q�["'-"'-, l<.0'] Page 14 of 37 iii 1. S. (',.,,. "-;, , )< -k ,,-0 _9 '&\ �

Persistent Systems Limited

Notes forming part of condensed financial statements

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 deterred 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 respect of. temporary differences which reverse during the tax holiday period, to the extent the Company's gross total 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 I 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 foiward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Ava ilable in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of crSdit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing 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 ASw108) "Operating Segments" the Company 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. Further, the weighted average number of equity shares used in computing the basic earnings per share is reduced by the shares held by PSPL ESOP Management Trust at the balance sheet date, which were obtained by subscription to the shares from finance provided by the Company.

For the purpose of calculating diluted earnings per share, the net profit for the period I 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.

(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 required to settle the obligation at the reporting date. If the effect of time value of money is material, provis ions 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 nonwoccurrence 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.

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Page 15 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

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 - "Share Based Payments", 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 the extent to which the vesting period has expired and the Company's best estimate of the number of equity instruments 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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Page 16 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

4. Share capital

As at June 30, 2019 In,Million As at June30, 2018 Inf Million As at March 31, 2019 In: Million ----------- Authorized shares (No. in million) 200 (Corresponding period/ Previous year: 200) 2,000.00 2,000.00 2,000.00 equity shares of: 10 each 2,000.00 2 000.00 2,000.00 Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Corresponding period: 80_I_Previous year: 764.25 800.00 791.19 79.12) equity shares of' 1 O each Issued, subscribed and fully paid-up share 764.25 800.00 791.19 capital	As at June 30, 2019 In,Million As at June30, 2018 Inf Million As at March 31, 2019 In: Million ----------- Authorized shares (No. in million) 200 (Corresponding period/ Previous year: 200) 2,000.00 2,000.00 2,000.00 equity shares of: 10 each 2,000.00 2 000.00 2,000.00 Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Corresponding period: 80_I_Previous year: 764.25 800.00 791.19 79.12) equity shares of' 1 O each Issued, subscribed and fully paid-up share 764.25 800.00 791.19 capital	As at June 30, 2019 In,Million As at June30, 2018 Inf Million As at March 31, 2019 In: Million ----------- Authorized shares (No. in million) 200 (Corresponding period/ Previous year: 200) 2,000.00 2,000.00 2,000.00 equity shares of: 10 each 2,000.00 2 000.00 2,000.00 Issued, subscribed and fully paid-up shares (No. in million) 76.43 (Corresponding period: 80_I_Previous year: 764.25 800.00 791.19 79.12) equity shares of' 1 O each Issued, subscribed and fully paid-up share 764.25 800.00 791.19 capital
		2,000.00 2 000.00 2,000.00 764.25 800.00 791.19 764.25 800.00 791.19

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)

	Number of shares at the beginning of the period/year Less: Shares bought back Number of shares at the end of the period/ year As at June 30, 2019 No. of shares Amount 79.12 791.19 2.69 26.94 76.43 764.25 As at June 30, 2018 No. of shares Amount 80.00 800.00 80.00 800.00 As at March 31, 2019 No. of shares Amount 80.00 800.00 0.88 8.81 79.12 791.19 ------·----·-----------------

------·----·------------------

b) Terms I rights attached to equity shares

The Company has only one class of equity shares having a par value of t10 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.

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	For the period of
	five years ended	five years ended	five years ended
	June 30, 2019	June 30, 2018	March 31, 2019
	No in Million	No in Million	No in Million
Equily shares allotled on March 12, 2015	40.00	40.00	40.00
as fully paid bonus shares by capitalization
of securities premium f 400.00 million
Equity shares bought back	3.575		0.88

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Persistent Systems Limited

Notes forming part of condensed financial statements

d) Buyback of Equity Shares of the Company:

The Board of Directors, in its meeting held in January 2019, approved the buyback by the Company of its fully paid�up equity shares having face value of, 10 each. The window for buying the shares opened on February 8, 2019 and the Company has purchased 3,575,000 equity shares between February 2019 and June 2019 and has extinguished these shares after following the due process. The Company has completed the Buyback on June 27, 2019 and the total number of equity shares outstanding as on June 30, 2019 post buyback stands at 76,425,000.

549,887 equity shares purchased in June 2019 have been extinguished on July 3, 2019 after following the due process. Since these shares have been extinguished after June 30, 2019, the same have not been excluded from the shareholding details.

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

Name of the shareholder As at June 30, 2019 As at June 30, 2018 As at March 31, 2019 No. in % Holding No. in % Holding No. in % million million million Holding* Dr. Anand Deshpande 22.95 30.03 22.93 28.66 22.95 29.01 jointly with Mrs. Sonali Anand Deshpande

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• " 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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- �

Notes forming part of condensed financial statements

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-·

5.1 Property, plant and equipment

Gross block {At cost) As at April 1, 2019 Additions Disposals As at June 30, 2019 Depreciation and impairment As at April 1, 2019 Charge for the period Disposals As at June 30, 2019 Net block As at June 30, 2019 As at March 31, 2019

(In? Million) Freehold land Buildings• Computers Office Plant and Leasehold Furiture and Vehicles Total equipments equipment improvements fixtures 206.92 2.387.00 1,684.93 53.22 1,376.04 21.12 515.09 8.44 6.252.76 0.30 57.62 0.32 6.74 64.98 6.57 0.43 7.00 206.92 2,387.30 1,735.98 53.54 1,382.35 21.12 515.09 8.4 6,310.74 964.75 1,460.02 48.77 1.144.38 17.88 482.47 4.23 4,122.50 23.98 37.56 0.63 18.28 0.36 5.21 0.29 86.31 6.57 0.43 7.00 988.73 1,491.01 49.40 1,162.23 18.24 487.68 4.52 4,201.81 206.92 1,398.57 244.97 4.14 220.12 2.88 27.41 3.92 2,108.93 206.92 1,422.25 224.91 4.45 231.66 3.24 32.62 4.21 2,130.26

Freehold land	Buildings* Computers Ofice Plant and leasehold Furiture and equipments equipment improvements fixtures 2.386.97 1,632.30 53.48 1,377.70 21.12 511.29 0.07 32.95 0.54 3.76 0.04 11.34 9.77 0.10 2,387.04 1,653.91 54.02 1,371.69 21.12 511.23 868.36 1,395.62 47.67 1.080.85 15.43 458.28 24.00 44.36 0.27 21.55 0.69 6.00 11.34 9.77 0.10 892.36 1,428.64 47.94 1,092.63 16.12 464.18 1,494.68 225.27 6.08 279.06 5.00 47.05	(In! Million)
		Vehicles Total 4.73 6.194.51 2.33 39.69 21.21 7.06 6,212.99 4.42 3,870.63 0.06 96.93 21.21 4.48 3,946.35 2.58 2.266.64
Gross block (At cost} As at April 1, 2018 206.92 Additions Disposals As at June 30, 2018 206.92 Depreciation and impairment As at April 1, 2018 Charge for the period Disposals As at June 30, 2018 Net block As at June 30, 2018 206.92

� Note: Building includes those constructed on leasehold land:

a) Gross block as on June 30, 2019 t 1,454,30 million (Corresponding period t 1,454.10 million/ Previous year t 1,454.06 million}

b) Depreciation charge for the period t 14.70 million (Corresponding period 14.70 million/ Previous year t 58.95 million}

c) Accumulated depreciation as on June 30, 2019 t 454.66 million (Corresponding period t 395.75mi!lion I Previous year t 439.96 million)

d) Net book value as on June 30, 2019 t 999.64 million {Corresponding period t 1,058.35 million I Previous year t 1,014.10 million)

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Persistent Systems Limited

Notes forming part of condensed financial statements

5.1 Property, plant and equipment

5.1 Propery, plant and equipment
	Freehold land Buildings Computer Ofice equipments Plant and Leasehold Furiture and equipment improvements fixtures Vehicles (Int Million) Total
Gross block (At cost) As at April 1, 2018 Additions Disposals As at March 31, 2019 Depreciation and impairment AsatAprit1,2018 Chargeforthe year Disposals As at March 31, 2019 Net block As at March 31, 2019 As at March 31, 2018 5.2 Right of use assets Ofice premises Gross block (At cost) As at April 1, 2019 Additions (Transitional impac on adoption of Ind AS 116) As at June 30, 2019 Depreciation and impairment As at April 1, 2019 Charge for the period As at June 30 2019 206.92 206.92 206.92 206.92	206.92 206.92	2,386.97 1,632.30 53.48 0.07 147.45 1.76 0.04 94.82 2.02 2,387.00 1,684.93 53.22 1,377.70 21.15 22.81 1,376.04	21.12 511.29 4.40 0.60 21.12 515.09	4.73 4.66 0.95 8.4 6,194.51 179.49 121.24 6,252.76
		868.36 1,395.62 47.67 96.42 159.20 3.11 0.03 94.80 2.01 1,080.85 86.33 22.80	15.43 458.28 2.45 24.79 0.60	4.42 0.76 0.95 3,870.63 373.06 121.19
		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
		1,518.61 236.68 5.81 296.85	5.69 53.01	0.31 2,323.88 (Int Million) Total 358.91 358.91 31.45 31.45

Depreciation and impairment As at April 1, 2019 Charge for the period As at June 30, 2019

Net block As at June 30, 2019

327.46

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Persistent Systems Limited

Notes forming part of condensed financial statements

5.3 Other Intangible assets

Gross block As at April 1, 2019 Additions As at June 30, 2019 Amorization As at April 1, 2019 Charge for the period As at June 30, 2019 Net block As at June 30, 2019 As at March 31, 2019	Software 713.08 14.11 727.19 629.22 19.55 648.77 Acquired contractual rights 261.74 261.74 261.74 261.74 (Int Million) Total 974.82 14.11 988.93 890.96 19.55 910.51
	78.42 83.86 Software 660.92 13.21 674.13 543.44 20.26 563.70 110.43 Acquired contractual rights 261.74 261.74 261.74 261.74 78.42 83.86 {Inf Million) Total 922.66 13.21 935.87 805.18 20.26 825.44 110.43 (In! Million)
Gross block As at April 1, 2018 Additions As at June 30, 2018 Amortization As at April 1, 2018 Charge for the period As at June 30, 2018 Net block As at June 30, 2018
	Software Acquired contractual rights Total
Gross block As at April1, 2018 Additions As at March31, 2019 Amortization AsatApril1, 2018 Charge fr the year As at March31, 2019 Net block As at March31, 2019 As at March31, 2018	660.92 52.16 261.74 922.66 52.16
	713.08 261.74 974,82
	543.44 85.78 629.22 261.74 261.74 805.18 85.78 890.96
	83.86 83.86
	117.48 117.48

5.4 Depreciation and amortization

	(In! Million)
	For the quarter ended June30, 2019 June30, 2018 For the year ended March31,2018
Oil Propery, Plant and Equipment On other intangible assets OnRightofuse assets	86.31 96.93 19.55 31.45 20.26 373.06 85.78
	137.31 117.19 458.84

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Page21 of37

Persistent Systems Limited

Notes forming part of condensed financial statem&nts

6. Non-current financial assets : Investments (refer not& 30)

Investments carried at cost Unquoted Investments lnv&stments In &qulty !nstrum&nts - fn wholly owned subsidiary companies Persistent Sys1ems, Inc. {Refer note 31) 402 million (Corresponding I Previous year : 402 million) shares of USO 0.10 each, fully paid up Persistent Sys1ems Pte Ltd. 0.50 million (Corresponding I Previous year: 0.50 million) shares of SGD 1 each. fully paid up Persistent Sys!ems France SAS 1.50 mllion {Corresponding/ Previous year 1.50 million) shares of EUR 1 each, fully paid up Persistent Systems Malaysia Sdn. 8hd. 5.45 mllion (Corresponding I Previous year: 5.45 millmn) s11ares of MYR 1 each. fully paid up Persistent Systems Germany GmbH 9.525 million {Correspondin, period 0.025 million /Previous year· 8.525 million) shares of EUR 1 each, fully paid up -In associates Klisma e·Services Private Limited {Holding 50% (Corresponding period/Previous year. 50% )l 0,005 million (Previous year : 0.005 million} shares oft 10 each. fully paid up Less : Impairmnt Total investments carried at cost {A) Investments cared at amorised cost Quoted Investments In bonds [Maret value , 2,165.51 million (Corresponding period , 1,626.26 million/ Previous year: t 2.120.86 million)) Add: Interest accrued on bonds Total investm&nts carried at amortised cost(Bl Designated as fair value through profit and loss Quoted Investments - Investments In mutual funds Fair value of long term mutual funds (Refer Note 6a) Unquoted Investments -Others' Altil:on Systems Priva1e Limted 3,766 equ;ty shares (Crresponding period I Previous year: 3,766 equity shares) of f 10 each, fully paidup Total investments carried at fair value (C) Total investments (A)+ (BJ+ (C) Aggregate provision fr diminution in value of investments Aggregate amount of quoted investments Aggregate amount of unquoted investments

Asat June 30, 2019 In, MH on 2,476.01 2,478.01 15.50 15.50 97.47 97.47 102.25 102.25 791.91 791.91 0.05 (0.05) 3,485.14 2,142.37 88.22 2,230.59 Asat June 30, 2018 In, Million 2,478.01 2,478.01 15.50 15.50 97.47 97.47 102.25 102.25 2.02 2.02 0.05 (0.05) 2,695.25 1,589.62 64.36 1,653.98 As at March 31, 2019 In, Million 2,476.01 2,478.01 15.50 15.50 97.47 97.47 102.25 102.25 713.19 713.19 0.05 (0.05) 3,406.42 2,088.35 68.33 2,156.68

1,642.90 1,642.90 6.00 6.00 1,648.90 7,364.63 0.05 3,873.49 3,41 .19 1,228.29 1,228.29 6.00 6.00 1,234.29 5,583.52 0.05 2,882.27 2,701.30 1,974.91 1,974.91 6.00 6.00 1,980.91 7,544.01 0.05 4,131.59 3,412.47

• Investments, v.,t1ere 1he Company does not have joint·control or significant influence including silualions v.,here such joinl·con!rol or significant influence is mlended to be !emporary, are classified as "inves!ments in others"

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Page 22 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

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

	As at	As at	As at
	June30, 2019	June30, 2018	March 31, 2019
	In'Million	Inf Million	Inf Million
Axis Mutual Fund	309.97		304.96
Kotak Mutual Fund	300.31	214.88	294.32
HDFC Mutual Fund	209.93	192.40	205.96
Aditya Bira Sun Life Mutual Fund	195.06	158.45	191.44
ICICI Prudential Mutual Fund	191.30	458.21	550.21
UTI Mutual Fund	163.45	89.70	160.32
SBI Mutual Fund	66.46	60.64	65.18
Reliance Mutual Fund	59.20	54.01	58.05
IDFC Mutual Fund	51.07		50.13
DHFL Pramerica Mutual Fund	32.75		32.10
DSP Mutual Fund	32.71		32.09
Sundaram Mutual Fund	30.69		30.15
	1,642.90	1,228.29	1,974.91

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Page 23 of 37

Persistent Systems Limited Notes for ming part of condensed financial statements

7. Non-current financial assets : loans (refer not!! 30)

7. Non-current financial assets : loans (rfer not! 30)
Carried at amorised cost Loan to related parties Unsecured, considered good • Persistent Systems Germany GmbH Add: ln1eres! accrued bu1 not due on loan Security deposit Unsecured, considered good Unsecured, credit impaired Less: Impairment Other loans and advances Inter corporate deposits Unsecured, considered good Unsecured, credit impaired Less: !mpairen1	June 3 In,	Asat 0, 2019 MilUon As at As at June 30, 2018 March 31, 2019 In, Million ln, Million 678.32 19.71 698,03
	1 1 1	16.29 16.29 16.29 0.58 0.58 (0.58) 16.29 115.28 116.01 2.19 117.47 116.01 2.19 115.28 116.01 0.58 0.58 0.58 0.58 (0.58) (0.58) 813.31 116.0t
	1

8. Other non--current financlal assets (refer note 301

8. Other non-urrnt financlal assets (refer note 301
Non·current bank balances (Refer no1e 14) Add: Interest accrued bu! no1 due on non·current bank deposits Non-current deposi1S w1h banks (Carried a1 arr1ised cost) Deposi1S wilh financal institutions (Refer no1e 33) Add: Interest accrued on deposit wth fna11cal i11stilut1011s Less· Credit impaired Jnvestme!ll n Persistenl Systems Gennany GmbH (Shares pending allotment}	As at June 30, 2019 In, Million 25.32 1.46 26.78 430.00 5.94 282.50 153.44 474.00 654.22 Asal Juno JO, 2018 In, Mifllon '" 2.81 2.81	Asat March 31, 2019 In, Million 94.39 1.46 95.85 430.00 5.94 � 253.44
		78.72 428.01

9. Deferred tax assets (net)

D!ferod tu: llabili,Ues Differences in book values and tax base values of block of Property, plant and equipment and other in1angible assets Capital gains {ne1) Others Deferd tax assets Provision for leave encashment Provision for long service awrds Provision for doubtful debts Tax credit ROU asset and lease liability Others Deferd tax {liabilities) I assets (net)	Asal June 30, 2019 In, Million 33.85 69.90 86.95 190.70 61.68 63.32 35.26 45.73 49.33 110.95 366.27 175.57 As at Asat Jun& 30, 2018 March 31, 2019 ln, Million In, Million 54.15 40.92 63.33 99.83 99.40 117.48 240.15 61.74 65.51 57.50 62.02 24.19 25.74 73.17 45.73 76.55 96.71 293.15 295.71 175.67 55.56

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Page 24 of 37

Persistent Systems limited Notes forming part or comlemied financial statements

10. Other non-urrellt assets Capital advam:es (Unsecured, considered good) Advances recoverable in cash 01 kind or fr value to be received 11. Current financial assets : Investments {refer note 30)		As at June 30, 2019 In, MIiiion 59.96 59.96 As at Asat June 30, 2018 March 31, 2019 lll,M!Hlon In,Mllllon 2.06 64.50 66.29 64.50 68.35
Designated as fair value through profit and loss - Quoted lnvestm(mts Investments ln mutual funds Fair value ol currellt mutual fullds (Refer Nole 11a) Total carryillg an10�nl of i�vest'ment1 Aggregate a"'Ount of quoted investments		As at June 30, 2019 In, MIiiion 1,165.93 1,165.93 1,165.93 1,165.93 Asal Asat June 30, 2018 March 31, 2019 In, M!lllon In, Million 6.759.15 3,295.53 6,759.15 3,295.53 6,759.15 3,295.53 6,759.15 3,295.53

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Page 25 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

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

	As at June30, 2019 Inf Million	Asat June30, 2018 Inf Million As at March 31, 2019 Inf Million
Axis Mutual Fund Tata Mutual Fund Adita Birla Sun Life Mutual Fund L&T Mutual Fund !DFC Mutual Fund DSP mutual fund UTI Mutual Fund lCICI Prudential Mutual Fund DHFL Pramerica Mutual Fund Kotak Mutual Fund HDFC Mutual Fund Sundaram Mutual Fund SBI Mutual Fund	334.62 245.97 153.39 116.51 108.22 105.15 102.07	588.82 702.94 846.28 748.74 711.76 253.37 956.48 597.82 493.47 281.05 225.50 204.84 148.08 426.87 115.97 386.73 407.39 106.40 103.35 625.92 399.98 493.59 67.19 162.14
	1165.93	6,759.15 3,295.53

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Page 26 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

1. Trade receivables (refer note 30)

Unsecured, considered good' Unsecured, credit impaired Less : Allowance for credit loss 'includes dues from related parties 13. Cash and cash equivalents (refer note 30)	As at June 30, 2019 Inf MIHlon 2,070.75 100.89 2,171.64 (100.89) 2,070.75 2,070.75 As at As at June 30, 2018 March 31, 2019 Inf MIiiion Inf MUon 2,658.03 2'.429.85 69.22 73.66 2,727.25 2,503.51 (69.22) (73.6) 2,658.03 2,429.85 2,658.03 2,429.85

	As at	As at	Asat
	June 30, 2019	June 30, 2018	March 31, 2019
	Inf Mi11lon	Inf Mllllon	Inf MIiiion
Cash and cash equivalents as presented In cash flow statement
Cash on hand	0.18	0.15	0.11
Balances with banks
On current accounts·	338.61	159.47	126.71
On saving accounts	4.98	10.55	0.91
On Exchange Earner"s Foreign Currency accounts	196.20	114.14	114.91
On deposit accounts wi1h original maturity less than three months			229.54
On Escrow account"	60.05		92.94
Cheques on hand	64.90	41.42
	664.92	325.73	565.12

' Out of the cash and cash equivalent balance as at June 30, 2019, the Company can utilise f 2, 15 Million (Corresponding period : � 4.60 Million/ Previous year: , 2.15 Million) only towards research and development activities specified in the agreement

" The Company completed buyback with effect from June 27, 2019 and minimum balance maintained in Escrow account will be retased on completion of formalities

14. Ot11er bank balances (refer note 30)

14. Ot11er bank balances(refer note 30)
Short term bank deposits' Add: Interest accrued but not due on deposits with banks Deposits with banks (carried at amortised cost) Less: Deposit with maturity more than twelve months from !he balance slleet dale disclosed under non-current financial assets (Rerer note 8) Less: Interest accrued but not due on non.current deposits with banks {Refer note 8) Balances with banks on unpaid dividend accounts"	As at June 30, 2019 Inf Mllllon 5.418.45 117.54 5,535.99 (25.32) (1.46) 5,509,21 As at As at June 30, 2018 March 31, 2019 Inf MlU!on Inf MIilion 360.53 4,687.90 5.31 59.90 365.84 4,747.80 (281) (94.39) (1.46) 363.03 4,651.95
	2.42 5 511.63 1.59 2.27 364.62 4 654.22

'Out of the balance, fixed deposits oft 1,838.33 million (Corresponding period· t 64 45 million f Previous year. , 87.99 million) have been earmarked against bank guarantees/ overdraft facilities availed by the Company.

•• The Company can utilize these balances only towards settlement of tile respective unpaid dividend.

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Page 27 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

15. Current financial assets: Loans (refer note 30)

15.Curent financial assets: Loans (refer note30)
Cared at amorised cost Loan to related parties Unsecured. credit impaired - Klisma e-,Services Private Limited Less: lmpainnent Security deposits Unseured. considered good 16.Other current flnanclal assets (rfer note30) Fair value of dervatives designated and effective as hedging Instruments Fo1Ward contracts receivable Advances to related paries (Unsecured, considerd good) Persistent Systems, !nc. Persistent Systems Pie Ltd Persistent Systems France SAS Persistent Te!ecom Solutions Inc Persistent Systems Malaysia Sdn Bhd Persistent Systems Lanka {Private) Limited Persistent Systems Israel Ltd. Persistent Systems MeKico. SA de C.V Akshat Corporation Persistent Systems Gem1any GmbH Advances to rlated paries (Unsecured, credit Impaired ) Klisma e-Services Private Limited Less: Impairment of current financial assets Deposits wilh financial insmutions Add: Interest accrued but not due on deposits with fnancial institutions Current deposits with financial institutions (Carried at amrtised cst) Unbilled revenue 17.other current assets		As at JuneJO, 2019 Inf MIiiion 27.43 27.43 {27. 43) 56.61 56.61 56.61 Asat June30, 2019 Inf MIiiion 282.46 57.12 0.23 4.31 4.57 0.08 2.50 0.65 0.90 0.58 70.94	As at June30, 2018 In, MIiiion 27.43 27.43 (27.43) 5.07 5.07 As at March31, 2 019 In, Mllllon 27.43 27.43 (27.43) 6.63 6.63
			5.07 As at June30, 2018 Inf MHUon 49.67 0.25 3.88 0.35 2.04 0.14 0.46 O.Q9 56.88 6.63 As at March31, 2019 Inf MHllon 281.27 63.19 0.11 414 4.56 0.08 2.41 0.36 0.59 0.57 76.03
		0.61 (0.61)	0.61 (0.81 0.81 (0.81)
			1,190.0 28.20 1,218.20 250.00 10.97 260.97
		1.79.99	2,039.66 1,577.47
		2150.39	3 314.74 **2,195.74 **
Advances to supplier (Unsecured, considered good) Advances recoverable in cash or kind or for value to be received other advances (Unsecured, considered good) VAT receivable (net) Service tax and GST receivable (net) {refer note32)		As at June30, 2019 Inf MIiiion 445.64 24.69 907.23 931.92 1 377.56	As at June30, 2018 Inf Mllllon 510.24 46.42 1,016.70 1,063.12 As at March31, 2019 In r MHHon 286.27 35.07 922.10 957.17
			1 573.36 1,24344

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Page 28 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

1. Non-current financial liabilities : Borrowings (refer note 30)

Unsecured Borrowings carried at amorised cost Term loans Indian rupee loan from others Interest accred but not due on term loans Less: Current maturity of long-term borrowings transfered to other current financial liabilities (Refer note 22) less: Current maturity of interest accrued but not due on ter roan !ransferred to other current financial liabilities (Refer note 22)	As at June 30, 2019 In, Million 16.55 0.28 As at As at June 30, 2018 March 31, 2019 _In,_Million In, Million 21.13 16.55 0.89 0.17
	16.83 (4.58) (0.28) (4.86) 11.97 22.02 16.72 (4.58) (4.58) (0.89) {0.17) (5.47) (4.75) 16.55 11.97

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

Loan I - amounting to { 5.46 million {Corresponding Period: { 8.19 million / Previous year: { 5.46 million) with interest payable @ 2% per annum guaranteed by a bank guarantee by the Company and repayable in ten equal semi annual installments over a period of five years commencing from March 2016.

Loan II - amounting to { 11.09 million (Corresponding Period: , 12.94 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 September 2015.

1. Non currentliabilities: Provisions

Provision for employee benefits - long service awards	As at June 30, 2019 In, Million 161.94 As at June 30, 2018 In, MIiiion 140.68 As at March 31, 2019 In, Million 158.46
	161.94 140.68 158.46

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Page 29 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

1. Other long term financial llabllities

20. Other long term financial llabllities
Rent depsits accepted Lease liabilities Less: Current maturity of !ease liabilities (refer note 22) Movement of lease liabilities Opening balance Add: ,Interest recognised during the penod Less: Payments made Closing balance 21. Tradepayables(refernote29)	As at Asal June30, 2019 June30, 2018 Inf Million Inf Million 7.9 1.83 478.48 185.81 300.63 1.63 For the quarter ended June30, 2019 June30, 2018 In f MIH!on In " Million 501.15 12.27 34.94 As at March31, 2019 Inf Million 183 1.63 For the year ended March31, 2019 Inf Million
	478.48
Trade payables for goods and services (refer note31t •includes dues payable to related parties	Asat June30, 2019 Inf MIiiion 849.76 849.76 Asat June30, 2016 Inf Million 759.24 759.24 Asat March31, 2019 In "Million 1,019.07 1,019.07

1. Other current financial llabllltles (refer note 30)

Capital creditors Current maturity of long term--borrowings {refer note18) Current maturity of interest on long-term borrowings (refer note18) Current maturity of lease liabilities {refer note20) Accrued employee liabilries Unpaid di�idend • Other liabilities Fair value of derivatives designated and effective as hedging Instrumen Forward contracts payable Advance from related parties (Unsecured, considered good) Persistent Systems Germany Gmbh Aepna Limited Persistent Telecom Solutions !nc	ts Asat June30, 2019 In" Million 67.53 4.58 0.28 185.81 72.75 2.42 0.54 0.05 Asat Juno30,2018 In" Million 25.77 '8 0.89 81.77 1.59 0.58 257.57 0.03 0.29 189.0 Asal March31,2019 In" Million 55.16 4.58 0.17 75.79 2.27 0.04 0.16
	0.05 189.38 0.16
	333.96 562.13 138.17

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

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Page 30 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

23. Other current liabilities

	Asal June30, 2019 Inf Million 122.78 271.87 199.85 3.05 597.55 Asal Asat June30, 2018 March31, 2019 Inf Million Inf Million 178.83 130.80 274.42 347.05 210.35 145.46 7 6 6.97 671.26 630.28
Uneared revenu Advance from customers Other payables - Statutory liabilities - Other liabilllies

24. Current Habllitios : Provisions

	Asal	As at	Asat
	June30, 2019	June30, 2018	March31, 2019
	Inf MIIHon	Inf Million	Inf MIiiion
Provisionforemployee bnefi1s
-Gratuity	62.43	{6.48)	94.34
- leave enshment	176.52	176.69	187.46
- Lon service awards	19.27	23.87	19.02
- Otheremployee benefits	61.44	201.52	363.29
	319.66	395.60	664.11

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Page 31 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

25. Revenue from operations (net} (refer note 31)

	For the quarer	ended	For the year ended
	June 30, 2019	June 30, 2018	March 31, 2019
	InfMillion	InfMillion	Inf Million
Software services	4,853.02	4,542.68	19,163.68
Software licenses	100.93	77.23	434.99
	4,953.95	4,619.91	19,598.67

26. Other income

Interest income On financial assets carried at amorised cost On others Foreign exchange gain (net) Profit on sale of fixed assets (net) Dividend income from investments Profit on sale of investments (net) Net gain/(loss) arsing on financial assets designated as at FVPL Miscellaneous income	For the quarer ended June 30, 2019 June 30, 2018 Inf Million Inf Million 87.40 13.50 44.20 61.40 94.26 2.07 0.17 0.47 10.54 81.95 128.81 151.84 (70.38) (130.37) 12.05 13.96 307.05 194.82 For the year ended March 31, 2019 Inf Million 97.06 191.76 3.77 392.26 366.09 (76.95) 63.91 1,037.90

27. Personnel expenses

27. Personnel expenses
	For the quarter ended June30, 2019 June30, 2018 In i Million In i Million For the year ended March31, 2019 Inf Million
27.1Employee benefits expense Salaries, wages and bonus Contribution to provident ahd other funds Gratuity expenses Defined contribution to other funds Staf welfare and benefits Employee stock compensation expenses 27.2 Cost of professionals - Related parties (refer note 31) - Others	2,245.32 92.91 44.09 10.60 103.39 3.04 2,499.35 2,035.80 75.81 40.80 10.13 98.25 2,260.79 8,576.55 328.33 150.91 41.31 394.13 9,491.23
	436.47 53.55 426.31 79.87 1,885.21 310.00
	490.02 2,989.37 506.18 2,766.97 2,195.21 11,686.44

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Page 32 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

28. Other expenses

	For the quarer ended	For the quarer ended	For the year ended
	June 30, 2019	June 30, 2018	March 31, 2019
	Inf Million	Inf Million	Inf Million
Travelling and conveyance	88.78	89.80	338.77
Electricity expenses (net)	27.47	25.55	89.96
Internet link expenses	12.86	14.22	44.44
Communication expenses	18.47	19.01	69.13
Recruitment expenses	16.60	12.34	58.51
Training and seminars	3.08	2.15	13.66
Purchase of software licenses and suppor expenses	173.65	134.06	687.86
Bad debts		19.52	23.55
Provision for doubtful debts/ (provision for doubtful debts	9.87	(11.62)	(6.99)
written back) (net)
Rent	25.94	60.88	245.51
Insurance	5.38	4.10	18.00
Rates and taxes	18.41	6.53	55.14
Legal and professional fees	59.42	55.32	206.96
Repairs and maintenance
- Plant and Machinery	23.95	28.48	101.41
- Buildings	7.07	9.75	28.09
- Others	4.82	6.35	19.31
Selling and marketing expenses	173.00	179.57	754.73
Fees for sales enablement services	164.05		642.92
Adverisement, confrence and sponsorship fees Computer con.sDmables	3.42 1.17	4.36 2.01	21.29 6.19
Auditor's remuneration	2.41	1.76	13.73
Donations	18.80	17.98	80.43
Books, memberships, subscriptions	5.03	4.26	23.06
Provision for doubtful deposits (refer note 33)	100.00		182.50
Foreign exchange loss (net)			206.61
Directors' sitting fees	2.40	1.58	5.32
Directors' commission	4.05	3.40	14.21
Miscellaneous expenses	37.04	33.70	162.72
	1,007.14	725.06	4,107.02

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Page 33 of 37

Persistent Systems Limited

Notes forming part of condensed financial statements

29. Earnings per share

		For the quarter	ended	For the year ended
		June30, 2019	June30, 2018	March 31, 2019
Numerator for Basic and Diluted EPS
Net Proft afer tax (In , Million)	(A)	834.39	923.25	3,150.08
Denominator for Basic EPS
Weighted average number of equity shares	(B)	77,469,396	80,000,000	79,943,943
Denominator for Diluted EPS
Number of equity shares	(C)	77,469,396	80,000,000	79,943,943
Basic Earnings per share of face valueoff10 each (In i)	(AB)	10.77	11.54	39.40
Diluted Earnings per share of face value off 10 each (Inf)	(AC)	10.77	11.54	39.40
		For the quarter	ended	For the year ended
		June30, 2019	June30, 2018	March 31, 2019
Number of shares considered as basic weighted average shares
outstanding for calculating Basic EPS		77,469,396	80,000,000	79,943,943
Number of shares considered as weighted average shares and
potential shares outstanding for calculating Diluted EPS		77,469,396	80,000,000	79,943,943

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Persistent Systems Limited

Notes forming part of condensed financial statements

30. Financial assets and liabilities

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

										(Infmillion)	(Infmillion)
·- -Financial assets( financial liabilities Basis of measurement Asset: Investments in subsidiaries and associates{net)Cost Investments in equit instruments Fair value Investments in bonds• Amorised cost Investments in mutual funds Fair value Loans Amortised cost Deposit with banks and financial institutions Amorised cost Cash and cash equivalents (including Amorsed cost unpaid dividend) Trade receivables (net) Amorsed cost Forard contracts receivable Fair value Unbilled revenue Amorised cost Other current financial assets Amorsed cost Other non current financial assets Cost (Share application money paid) Total		As at June 30, 2019 Carring value Fair value 3,485.14 3,485.14 6.00 6.00 2,230.59 2.165.51 2,808.83 2,808.83 172.90 172.90 5,689.43 5,689.43 667,34 667.34 2,070.75 2.070.75 282.46 282.46 1.796.99 1,796.99 70.94 70.94 474.00 474.00 19,755.37 19,690.29			As at June 30, 2018 Carring value Fair value 2,695.25 2,695.25 6.00 6.00 1,653.98 1,628.26 7,987.44 7,987.44 818.38 818.38 1,584.04 1,584.04 327.32 327.32 I 2.658.03 2,658.03 . . 2,039.66 2.039.66 56.88 56,88 . . 19,826.98 19,801.26			As at M	arc	h 31, 2019	Fair value hierarchy
								Carring value 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 21,235.12		Fair value
										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 21,199.30	Level 3 Level 1 Level 2
Liabilities: Borrowings (including accrued interest) Trade payables and deferred payment liabilities Other financial liabilities (excluding borrwings) Other long8ter financial liabilities Forward contracts payable	Amorised cost Amorised cost Amorised cost Amortised cost Fair value		16.83 849.76 329.10 300.63 .	16.83 849.76 329.10 300.63 .	22.02 759.24 299.09 1.83 257.57	22.02 759.24 299.09 1.83 257.57		16.72 1,019.07 133.42 1.83 .		16.72 1,019.07 133.42 1.83 .	level 2
Total			1,496.32	1,496.32	1,339.75	1,339.75		1,171.04		1,171.04

• 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: Leve! 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

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 (Le. 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

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Persistent Systems Limited

Notes forming part of condensed financial statements

31. (i) Significant related party transactions

31.(i)Significant related pary transactions
Sale of software services Cost of professionals (eKcluding reimbursement of eKpenses) Purchase of Software Selling and marketing eKpenses Fees tor sates enablement serices Conversion of loan to equity Commission received on corporate guarantee Travelling and conveyance	Name of the related pary and nature of relationship For the quarer June30, 2019 Subsidiaries Persistent Systems, Inc. 1,581.04 Total 1,581.04 Subsidiaries Persistent Svstems, Inc. 323.40 Total 323.40 Subsidiaries Persistent Svstems, Inc. 4.79 Total 4.79 Subsidiaries Persistent Svstems, Inc. 157.54 Total 157.54 Subsidiaries Persistent Systems,Inc. 164.05 Total 164.05 Subsidiaries PersistentSvstems Germanv GmbH Total Subsidiaries Persistent Svstems.Inc. 0.50 Total 0.50 Subsidiaries Persistent Systems, Inc Total				ended	fin f Million For the year ended
					June30, March31, 2018 2019 1,244.52 5,521.01 1,244.52 5,521.01 343.02 1,408.15 343.02 1,408.15 1.86 13.75 1.86 13.75 166. 12 662.36 166.12 662.36 642.92 642.92 711.17 711.17 0.53 1.67	March31, 2019
						5,521.01
	Subsidiaries Persistent Svstems, Inc. Total Subsidiaries Persistent Svstems, Inc. Total Subsidiaries Persistent Svstems, Inc. Total Subsidiaries Persistent Systems,Inc.
						662.36 662.36 642.92 642.92
			164.05 164.05
	Total Subsidiaries PersistentSvstems Germanv GmbH
						711.17 711.17 1.67
	Total Subsidiaries Persistent Svstems.Inc. Total Subsidiaries Persistent Systems, Inc Total
		s.Inc.	0.50		0.53
			0.50		0.53	1.67
					1.29	5.57
					1.29	5.57
Interest income	Subsidiaries Persistent Systems, Inc.				1.07	1.07 1.07
	Total Subsidiares Persistent Systems,Inc. Total				1.07
Repayment of intercorporate deposits#					133.64 132.74 133.64 132.74

These transactions are d1sciosed at the exchange rates prevailmg on the date of transaction.

{Ii) Significant outstanding balances

Trade receivables Trade payables Advances given (excluding interest accrued) Investments	tinfMillion	tinfMillion	tinfMillion	tinfMillion	tinfMillion	tinfMillion
	Name ofthe related pary and nature of relationship Subsidiaries Persistent Systems, lnc. Total Subsidiares Persistent Systems,Inc. Total Subsidiary Persistent Svstems,Inc. Total			As at June30, June30, March31, 2019 2018 2019 41.76 285.30
				41.76 ~~-~~ 285.30 371.45 260.67 409.23 371.45 260.67 409.23 57.12 49.67 63.19 57.12 49,67 63.19
				371.45 260.67
				57.12 49.67 57.12 49,67
						63.19
	Subsidiaries Persistent Systems, Inc. Persistent Systems Germany GmbH (Shares pending allotment) Total		2,478.01 474.00		2.478.01 2,478.01	2,478.01 78.72 2,556.73
			2,952.01

(iii) Guarantee given on behalf of subsidiary

Persistent Systems Ltd has given a guarantee of$ 15,170,000 on behalf of Persistent Systems lnc. (corresponding period f previous year:$ 15,170,000)

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Page 36 of 37

Persistent Systems Limited Notes fonning part of condensed financial statements

1. Persistent Systems Limited ("the Company") had received a show cause notice from the Commissioner of Service Tax on December 19, 2016 for non-payment of service tax off 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 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 show-cause notice and issued an order on May 29, 2017, reducing the demand to �165.51 million based on the period of limitation and as a result of that, the said demand now covers financial year 2014w15. The Company has filed an appeal against the order passed by Learned Principal Commissioner of Service Tax, Pune with the Hon'ble 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[w] 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, an amount off 647.36 million towards service tax in respect of the above matter, for the period from April 01, 2014 to June 30, 2017, under protest.

As on June 30, 2019, the pending litigations in respect of direct taxes amount to f 234.92 million and in respect of indirect taxes amount tot 36.56 million (excluding the show cause received from Commissioner of Service Tax on May 29, 2017 of� 173.78 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. In respect of export incentives, pertaining to previous years amounting to � 255.23 million, the Company is in the process of representing before the relevant authorities including the representations through the industry associations to ensure continued applicability of the said incentives to the eligible ER&D companies.

Persistent Systems ltd has given a guarantee of $ 15.17 million on behalf of Persistent Systems Inc. (Previous year:$ 15.17 million).

1. As reported in the previous quarters, the Company has deposits of f 430 million with the financial institutions viz. Infrastructure Leasing & Financial Services Ltd. (IL&FS) and IL&FS Financial Services Ltd. (referred to as "IL&FS Group") as on the balance sheet date. The Company has not accrued any interest on these deposits since April 1, 2018. The amount due including interest have not been received as on date. In view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, Management of the Company has provided an additional amount of� 100.00 million during the quarter ended June 30, 2019, thereby making the total provision to� 282.50 million for impairment in value of deposits as of June 30, 2019. The provision currently reflects the exposure that may arise given the uncertainty. With the resolution plan in progress, 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.

2. Effective April 1, 2019, the company has adopted Ind AS 116 Leases; and has recognized interest on lease liability off 12.27 million under finance costs.

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

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