Moneycontrol
SENSEX NIFTY
Moneycontrol.com India | Notes to Account > Computers - Software > Notes to Account from Persistent Systems - BSE: 533179, NSE: PERSISTENT
YOU ARE HERE > MONEYCONTROL > MARKETS > COMPUTERS - SOFTWARE > NOTES TO ACCOUNTS - Persistent Systems

Persistent Systems

BSE: 533179|NSE: PERSISTENT|ISIN: INE262H01013|SECTOR: Computers - Software
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Aug 21, 15:52
627.90
7.05 (1.14%)
VOLUME 1,567
LIVE
NSE
Aug 21, 15:57
628.15
4.85 (0.78%)
VOLUME 49,171
Array
Mar 16
Notes to Accounts Year End : Mar '17

1. Terms / rights attached to equity shares

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

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.

Financial risk factors and risk management objectives

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

Market risk

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

Foreign currency sensitivity analysis

For the year ended March 31, 2017 and March 31, 2016, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and foreign currencies would affect the Company''s profit before tax margin (PBT) by approximately 0.45% and 0.50% respectively.

Derivative financial instruments

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

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to Rs. 4,781.35 million and Rs. 3,815.07 million as at March 31, 2017 and March 31, 2016, respectively. Trade receivables are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk is managed by the Company by Credit Task Force through credit approvals, establishing credit limits and continuously monitoring the recovery status of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the Company uses expected credit loss model to assess the impairment loss. The Company uses a provisioning policy approved by the Board of Directors to compute the expected credit loss allowance for trade receivables. The policy takes into account available external and internal credit risk factors and the Company’s historical experience for customers.

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

Liquidity risk

The Company''s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The investment of surplus cash is governed by the Company''s investment policy approved by the Board of Directors. The Company believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived. As at March 31, 2017, the Company had a working capital of Rs. 9,312.18 million including cash and cash equivalents and current fixed deposits of Rs. 627.11 million and current investments of Rs. 4,499.66 million. As at March 31, 2016, the Company had a working capital of Rs. 9,101.18 million including cash and cash equivalents of Rs. 528.76 million and current investments of Rs. 4,914.36 million.

2. Operating leases

The Company has taken equipment and office premises on lease under cancellable operating lease arrangements. Further, the Company has also taken certain land and office premises under non-cancellable operating lease agreement for a period of 3 - 15 years. There are no restrictions imposed by the lease agreements. There are no subleases. The Company has an option to renew the lease agreements at the end of the lease period.

Maximum obligation on long-term non-cancellable operating lease payable as per the rentals stated in respective agreement and the lease rentals recognized on cancellable and non-cancellable leases is as follows:

3. Guarantee given on behalf of subsidiary

Persistent Systems Ltd has given a guarantee of 0,000 to a creditor (Sunlife Assurance Company of Canada) on behalf of Persistent Systems Inc.

4. Employees stock option plans (ESOP)

Certain information in this note relating to number of shares, options and per share/option price has been disclosed in full and is not rounded off as stated in note 46.

5. Contingent liabilities

The contingent liabilities as on March 31, 2017 were Rs. 452.15 million (previous year Rs. Nil).

The Company has received a show cause notice from Commissioner of Service Tax on December 19, 2016 for nonpayment of service tax of Rs. 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.

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. The Holding Company has filed a reply to this show cause notice. If this show cause notice results in a demand, there will be no impact on the profitability as the Holding Company will be eligible to claim credit for the amount paid.

As on March 31, 2017, the pending litigations in respect of direct taxes amount to Rs. 156.72 million and in respect of indirect taxes amount to Rs. 33.68 million (excluding the show cause received from Commissioner of Service Tax on December 19, 2016 for non-payment of service tax of Rs. 452.15 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, the Group''s management does not expect any outflow in respect of these litigations.

6. The Company has incurred an expenditure of Rs. 70.03 million during the financial year 2016-17 (Previous year Rs. 62.02 million) on Corporate Social Responsibility in accordance with section 135(5) of the Companies Act, 2013

7. Details of dues to micro and small enterprises as defined under MSMED Act, 2006

There are no defaults and overdue amounts payable to suppliers, who have intimated about their status as Micro and Small Enterprises as per the provisions of Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act, 2006).

8. Net dividend remitted in foreign exchange

9. Loans and advances in the nature of loans given to subsidiaries and associates and firms / companies in which directors are interested

10. Loan to Persistent Systems, Inc.

11- Balance as at March 31, 2017 Rs. 317.76 million (Previous year: Rs. Nil million)

12- Maximum amount outstanding during the year Rs. 329.23 million (Previous year: Rs. 330.65million)

13- Principle and interest is receivable at the end of 3 years @ LIBOR 3.5% p.a. This amount is utilized for meeting business requirements.

14. Advance to Persistent Systems, Inc.

15- Balance as at March 31, 2017 Rs. 43.85 million (Previous year: Rs. 33.20 million).

16- Maximum amount outstanding during the year Rs. 163.07 million (Previous year: Rs. 33.20 million).

17- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

18. Advance to Persistent Systems Pte. Ltd

19- Balance as at March 31, 2017 Rs. Nil million (Previous year: Rs. 0.21 million)

20- Maximum amount outstanding during the year Rs. 0.29 million (Previous year: Rs. 0.27 million)

21- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

22. Advance to Persistent Telecom Solutions Inc.

23- Balance as at March 31, 2017 Rs. Nil (Previous year: Rs. 4.90 million )

24- Maximum amount outstanding during the year Rs. Nil million (Previous year: Rs. 4.90 million )

25- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

26. Advance to Persistent Systems Malaysia Sdn. Bhd.

27- Balance as at March 31, 2017 Rs. 0.17 million (Previous year: Rs. 1.23 million)

28- Maximum amount outstanding during the year Rs. 1.46 million (Previous year: Rs. 1.23 million)

29- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

30. Advance to Persistent Systems France SAS

31- Balance as at March 31, 2017 Rs. 1.70 million (Previous year: Rs. 0.82 million)

32- Maximum amount outstanding during the year Rs. 1.83 million (Previous year: Rs. 0.82 million)

33- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

34 Advance to CloudSquads Inc.

35- Balance as at March 31, 2017 Rs. Nil (Previous year Rs. Nil)

36- Maximum amount outstanding during the year Rs. Nil million (Previous year: Rs. 0.01 million)

37- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

38. Loan to Klisma eServices Private Limited

39- Balance as at March 31, 2017 Rs. 27.43 million (Previous year: Rs. 27.43 million)

40- Maximum amount outstanding during the year Rs. 27.43 million (Previous year: Rs. 27.43 million)

41- Principle is receivable at the end of twelve months and interest is receivable quarterly @ 12 % p.a. This amount is utilized for meeting business requirements. The outstanding balance has been fully provided for.

42. Advance to Klisma eServices Private Limited

43- Balance as at March 31, 2017 Rs. 0.81 million (Previous year: Rs. 0.81 million)

44- Maximum amount outstanding during the year Rs. 0.81 million (Previous year: Rs. 0.81 million)

45- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements. The outstanding balance has been fully provided for.

46. Advance to Aepona Limited

47- Balance as at March 31, 2017 Rs. 0.98 million (Previous year: Rs. 0.38 million)

48- Maximum amount outstanding during the year Rs. 1.01 million (Previous year: Rs. 0.38 million)

49- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

50. Advance to Aepona Software (Private) Limited

- Balance as at March 31, 2017 Rs. 0.64 million (Previous year: Rs. 0.10 million)

51- Maximum amount outstanding during the year Rs. 0.64 million (Previous year: Rs. 0.10 million)

52- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

53. Advance to Persistent Systems Mexico, S.A. de C.V

54- Balance as at March 31, 2017 Rs. 1.92 million (Previous year: Rs. Nil million)

55- Maximum amount outstanding during the year Rs. 6.05 million (Previous year: Rs. Nil million)

56- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

57. Advance to Akshat Corporation (d.b.a. RGen Solutions)

58- Balance as at March 31, 2017 Rs. 0.10 million (Previous year: Rs. Nil million)

59- Maximum amount outstanding during the year Rs. 0.11 million (Previous year: Rs. Nil million)

60- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

61. Advance to Persistent Systems Germany GmbH

62- Balance as at March 31, 2017 Rs. 0.51 million (Previous year: Rs. Nil million)

63- Maximum amount outstanding during the year Rs. 0.51 million (Previous year: Rs. Nil million)

64- There is no repayment schedule in respect of this advance. It is repayable on demand. This amount is utilized for meeting business requirements.

65. First-time adoption of Ind-AS

These financial statements for the year ended March 31, 2017 have been prepared in accordance with Ind-AS. For periods up to and including the year ended March 31, 2016, the Company prepared its financial statements in accordance with statutory reporting requirements in India immediately before adopting Ind AS (‘previous GAAP'').

Accordingly, the Company has prepared financial statements which comply with Ind-AS applicable for year ending on March 31, 2017, together with the comparative period data as at and for the year ended March 31, 2016. In preparing these financial statements, the Company''s opening balance sheet was prepared as at April 1, 2015, the Company''s date of transition to Ind-AS. This note explains the principal adjustments made by the Company in restating its Indian GAAP financial statements, including the balance sheet as at April 1, 2015 and the financial statements as at and for the year ended March 31, 2016.

Ind AS 101 allows first-time adopters certain optional exemptions from the retrospective application of certain requirements under Ind AS.

The Company has applied the following optional exemptions:

66. Share based payment transactions

The Company has not applied Ind AS 102, “Share based payment to equity instruments that vested before the date of transition to Ind AS i.e. April 1, 2015. Accordingly, equity instruments that have vested prior to April 1, 2015 have not been fair valued.

Explanation of transition to Ind AS

The below mentioned reconciliations provide a quantification of the effect of significant differences arising from the transition from Indian GAAP to Ind AS in accordance with Ind AS 101 for the following:

67- equity as at April 1, 2015

68- equity as at March 31, 2016

69- Profit for the year ended March 31, 2016

There are no material adjustments to the cash flow statements.

In the reconciliations mentioned above, certain reclassifications are made to Indian GAAP financial information to align with the Ind AS presentation.

Under Indian GAAP, the expenditure and corresponding liability for escalation of lease rent during non-cancellable lease period is required to be considered and total lease rent payable during non-cancellable lease period is recognized on straight line basis over the non-cancellable lease period. Under Ind AS, this additional expenses and corresponding liability on lease escalation is not required to be recognized if such escalation represents normal inflation in the economy. Accordingly, the excess expenses and corresponding lease escalation liability is reversed. The impact arising on this change is summarized as follows:

70. Under Indian GAAP, a liability is recognized in respect of proposed dividend on Company''s equity shares, even though the dividend is expected to be approved by the shareholders subsequent to reporting date. Under Ind AS, the liability for dividend is recognized only when it is approved by the shareholders. The impact arising on this change is summarized as follows:

Financial liabilities of Rs. 156.52 million as at April 1, 2015 and Rs. 113.39 million as at March 31, 2016 have been reclassified from other current liabilities to other current financial liabilities in accordance with Ind AS compliant Schedule III.

71. Under Indian GAAP, the long-term investments (investments in equity shares and mutual funds) are stated at cost as reduced by the permanent diminution in value of investment, if any. The short-term investments (current portion of mutual funds) are stated at lower of cost and market value. Under Ind As, the investments in mutual funds and equity shares are stated at their fair values. The impact arising on this change is summarized as follows:

72. Under Indian GAAP, the long-term security deposits are recognized at the transaction value. Under Ind AS, the long-term security deposits (financial assets) are recognized at the fair value under amortized cost method. The difference between the fair value and the transaction value is considered as prepaid rent and amortized over the period of lease. The finance income is recognized on the amortized cost of security deposits for the reported period. The impact arising on this change is summarized as follows:

73. Under Indian GAAP, the actuarial gain / loss on defined benefit obligations and plan assets is recognized as employee benefit expenses in the statement of profit and loss. Under Ind AS, such actuarial gain / loss is recognized under other comprehensive income and classified as equity. The impact arising on this change is summarized as follows:

Under Indian GAAP, the Employee stock compensation expenses are recognized at the intrinsic value as on the date of grant. Further, the Employee stock compensation expenses related to employees of subsidiaries are recognized in the books of holding company only. Under Ind AS, the Employee stock compensation expenses are recognized at the fair value as on the date of grant and the Employee stock compensation expenses related to employees of subsidiaries are recognized in the books of respective subsidiary companies. The fair valuation is made for the shares not vested as on March 31, 2015. The net impact arising on these adjustments is summarized below:

74. Under Indian GAAP, the long-term investments (investments in equity shares and mutual funds) are stated at cost as reduced by the permanent diminution in value of investment, if any. The short-term investments (current portion of mutual funds) are stated at lower of cost and market value. Under Ind As, the investments in mutual funds and equity shares are stated at their fair values. Further, deferred tax in respect of cash flow hedges is recognized under other comprehensive income. The impact arising on this change on deferred tax is summarized as follows:

Under Indian GAAP, the amount of upfront premium paid for the leasehold land is classified under tangible assets if the lease is for the significantly longer period. However, such upfront premium on leasehold land is classified as prepaid expenses under Ind AS. Further, amortization of upfront lease premium is reclassified from depreciation and amortization expenses to rent. The net impact arising on these adjustments is summarized below:

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

76. Previous year''s figures have been regrouped where necessary to conform to current year''s classification.

Source :
Quick Links for persistentsystems
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.