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Persistent Systems
BSE: 533179|NSE: PERSISTENT|ISIN: INE262H01013|SECTOR: Computers - Software
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« Mar 12
Notes to Accounts Year End : Mar '13
1.  Nature of operations
 
 Persistent Systems Limited (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 in
 accordance with generally accepted accounting principles in India
 (Indian GAAP). The Company has prepared these financial statements to
 comply in all material respects with the Accounting Standard notified
 under the Companies (Accounting Standards) Rules, 2006, (as amended)
 and the relevant provisions of the Companies Act, 1956. These financial
 statements have been prepared on an accrual basis and under the
 historical cost convention except derivative financial instruments
 which have been measured at fair value. The accounting policies have
 been consistently applied by the Company during the period and are
 consistent with those used in previous year.
 
 3.  Segment Information
 
 The Company''s operations predominantly relate to providing software
 products, services and technology innovation covering full life cycle
 of product to its customers. The primary reporting segments are
 identified based on review of market and business dynamics based on
 risk and returns affected by the type or class of customers for the
 services provided which are as follows:
 
 a.  Telecom and Wireless
 
 b.  Life science and Healthcare
 
 c.  Infrastructure and Systems
 
 4.  Gratuity plan:
 
 The Company has a defined benefit gratuity plan. Each employee is
 eligible for gratuity on completion of minimum five years of service at
 15 days basic salary (last drawn basic salary) for each completed year
 of service. The scheme is funded with an insurance Company in the form
 of a qualifying insurance policy.
 
 The following tables summarize the components of net benefit expense
 recognized in the statement of profit and loss and the funded status
 and amounts recognised in the Balance Sheet for the respective plans.
 
 5. Operating leases
 
 The Company has taken equipment and office premises on lease under
 cancellable operating lease arrangements. Further, the Company has also
 taken certain office premises under non-cancellable operating lease
 agreement for a period of 3 - 15 years. The escalations during
 non-cancellable lease period have been accounted for on a straight line
 basis. 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.
 
 6.  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 43.
 
 a) Details of Employee stock option plans
 
 The Group has provided various share-based payment schemes to its
 employees. The details of various equity-settled employee stock option
 plan (''ESOP'') schemes adopted by the Board of Directors are as follows:
 
 d) Effect of the employee share-based payment plans on the statement of
 profit and loss and on its financial position Compensation expense
 arising from equity-settled employee share based payment plans for the
 year ended March 31, 2013 amounted to Rs. 0.94 million (Previous year
 Rs. 8.36 million). The liability for employee stock options outstanding
 as at March 31, 2013 is Rs. 30.48 million (Previous year Rs. 33.51
 million).
 
 e) Details of stock options granted during the year
 
 The weighted average fair value of the stock options granted during the
 current year is Rs. 159.92 (Previous year Rs. 104.44). The Binomial
 tree valuation model has been used for computing the weighted average
 fair value considering the following inputs:
 
 The expected volatility was determined based on historical volatility
 data. The historical volatility is calculated as the standard deviation
 of daily log-normal returns from the stock of the Company/comparable
 Companies. To allow the effect of early exercise of the options the
 exercise period has been considered as one year after the vesting date
 where the share price is expected to be 2.50 times the exercise price.
 
 f) Adjustment to general reserve on account of ESOP issued through
 trust
 
 The Company has adjusted Rs. 19.01 million (Previous year Rs. 32.36
 million) to General Reserve as the difference between the cost incurred
 by the Trust for the purpose of shares and the exercise price of those
 shares which have been exercised by the employee during the year, in
 accordance with Guidance Note on accounting for Employee share-based
 payment, issued by the Institute of Chartered Accountants of India and
 SEBI Guidelines.
 
 g) Impact on the reported net profit and earnings per share by applying
 the fair value based method
 
 Since the Company uses intrinsic value method as required by the
 Guidance Note on Accounting for Employee Share- based Payments issued
 by Institute of Chartered Accountants of India, the impact on reported
 net profit and Earnings Per Share by applying the fair value method is
 set out as follows:
 
 7.  Contingent liabilities
 
                                               (In Rs. Million) 
 
                                           As at           As at
                                        March 31, 2013  March 31, 2012
 
 Claims against the Company not 
 acknowledged as debts
 
 - Income tax [Note (i)]                        -             115.83
 
                                                -             115.83
 
 (i) This represented disputed income tax demands against which the
 Company had filed appeals with relevant authorities.  During the year,
 all the cases in connection with the contingent liability were decided
 in favour of the Company.  Consequently, no provision and contingent
 liability has been shown in the books of accounts in respect of such
 disputed income tax demands.
 
 8.  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).
 
 9.  Amalgamation of Persistent Systems Limited (PSL), Persistent
 eBusiness Solutions Limited (PeBS) and Persistent Systems and Solutions
 Limited (PSSL)
 
 a) Pursuant to the scheme of amalgamation (the Scheme) sanctioned by
 the Honourable High Court of Bombay vide Order dated February 3, 2012,
 PeBS and PSSL, subsidiaries of the Company, have been merged with the
 Company with effect from April 1, 2011, the Appointed Date. The Company
 completed the process of Amalgamation on March 16, 2012 by filing of
 above Court Orders with the Registrar of Companies.
 
 PeBS was engaged in software development, consultancy and system
 integration services.
 
 PSSL was set up to inter alia, mainly provide software development
 services from Special Economic Zone.
 
 b) Pursuant to the Scheme:
 
 (i) The authorized share capital of the Company has been enhanced
 without any liability for payment of any additional fee or stamp duty.
 Accordingly, authorized share capital of the Company of Rs. 1,000
 million (100 million equity shares of Rs. 10 each) has been enhanced to
 Rs. 1,120 million (112 million equity shares of Rs. 10 each).
 
 (ii) The assets and liabilities, rights and obligation of erstwhile
 PeBS and PSSL have been vested with the Company effective April 1,
 2011. The Scheme has, accordingly, been given effect to in these
 accounts. The amalgamation has been accounted for under the Pooling of
 Interests as prescribed under notified Accounting Standard (''AS'') 14
 Accounting for Amalgamations as per Scheme of Amalgamation.
 Accordingly, the assets and liabilities of erstwhile PeBS and PSSL as
 at April 1, 2011 have been taken over at book value.
 
 (iii) Further pursuant to the scheme, the balance appearing as
 Investments in PeBS and Investments in PSSL in the books of the
 Company, as on the appointed date, has been cancelled against the
 Equity Share Capital appearing in the books of the subsidiary
 companies. The excess of net assets taken from PeBS and PSSL over the
 Investments in PeBS and Investments in PSSL of Rs. 10.50 million
 has been adjusted against the general reserve.
 
 10.  Loans and advances in the nature of loans given to subsidiaries
 and associates and firms/companies in which directors are interested
 
 a) Advance to Persistent Systems Inc.
 
 - Balance as at March 31,2013 Rs. 3.71 million (Previous year: Rs.
 10.52 million).
 
 - Maximum amount outstanding during the year Rs. 52.47 million
 (Previous year: Rs. 62.92 million).
 
 - There is no repayment schedule in respect of this loan. It is
 repayable on demand.
 
 b) Advance to Persistent Systems Pte. Ltd
 
 - Balance as at March 31,2013 Rs. 0.18 million (Previous year: Rs.
 1.91 million).
 
 - Maximum amount outstanding during the year Rs. 1.98 million
 (Previous year: Rs. 1.93 million).
 
 - There is no repayment schedule in respect of this loan. It is
 repayable on demand.
 
 c) Advance to Persistent Systems France SAS
 
 - Balance as at March 31, 2013Rs. 0.15 million (Previous year: Rs.
 1.48 million).
 
 - Maximum amount outstanding during the year Rs. 1.91 million
 (Previous year: Rs. 1.51 million).
 
 - There is no repayment schedule in respect of this loan. It is
 repayable on demand.
 
 d) Advance to Persistent Telecom Solutions Inc.
 
 - Balance as at March 31,2013 Rs. 0.11 million (Previous year: NIL).
 
 - Maximum amount outstanding during the yearRs. 1.77 million
 (Previous year: NIL).
 
 - There is no repayment schedule in respect of this loan. It is
 repayable on demand.
 
 e) Loan to Persistent Systems Inc.
 
 - Balance as at March 31, 2013 Rs. 354.74 million (Previous year: Rs.
 78.60 million).
 
 - Maximum amount outstanding during the yearRs. 354.77 million
 (Previous year: Rs. 82.19 million).
 
 - Principle and interest is payable at the end of 3 years @ LIBOR  
 3.5% p.a.
 
 f) Loan to Persistent Systems France SAS.
 
 - Balance as at March 31, 2013Rs. 29.91 million (Previous year: Rs.
 8.83 million).
 
 - Maximum amount outstanding during the yearRs. 31.20 million
 (Previous year: Rs. 9.09 million).
 
 - Principal and interest is payable at the end of 3 years @ 3.43%
 p.a.
 
 11.  The financial statements are presented in Rs. million and decimal
 thereof except for per share information or as otherwise stated.
 
 12.  Previous year''s figures have been regrouped where necessary to
 conform to current period''s classification.
Source : Dion Global Solutions Limited
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