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Persistent Systems
BSE: 533179|NSE: PERSISTENT|ISIN: INE262H01013|SECTOR: Computers - Software
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« Mar 13
Notes to Accounts Year End : Mar '14
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 for the year ended March 31,
 2014 have been prepared in accordance with generally accepted
 accounting principles in India (Indian GAAP) 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 read with general circular
 15/2013 dated September 13, 2013, issued by the Ministry of Corporate
 Affairs, in respect of Section 133 of the Companies Act, 2013. These
 financial statements are 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 are
 consistently applied by the Company during the year 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
 
 Geographical Segments
 
 The following table shows the distribution of the Company''s sales by
 geographical market regardless of from where the services were
 rendered.
 
 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 recognized 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
 agreements 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.  Related party disclosures
 
 (i) Names of related parties and related party relationship
 
 Related parties where control exists Subsidiaries
 
 i.  Persistent Systems, Inc.
 
 ii.  Persistent Systems Pte Ltd.
 
 iii.  Persistent Systems France SAS
 
 i v.  Persistent Systems Malaysia Sdn. Bhd.
 
 v.  Persistent Telecom Solutions Inc.
 
 (wholly owned subsidiary of Persistent Systems, Inc.) vi.  CloudSquads
 Inc.
 
 (wholly owned subsidiary of Persistent Systems, Inc.)
 
 Related parties with whom transactions have taken place during the year
 
 Key management personnel
 
 i.  Dr. Anand Deshpande, Chairman and Managing Director ii.  Mr. Nitin
 Kulkarni, Executive Director
 
 Relatives of Key management personnel
 
 i.  Mr. Suresh Deshpande
 
 (Father of the Chairman and Managing Director) ii.  Mrs. Sulabha
 Deshpande
 
 (Mother of the Chairman and Managing Director) iii.  Mrs. Sonali Anand
 Deshpande
 
 (Wife of the Chairman and Managing Director) i v.  Dr. Mukund Deshpande
 
 (Brother of the Chairman and Managing Director) v.  Mrs. Chitra Buzruk
 
 (Sister of the Chairman and Managing Director)
 
 (iv) Gurantee given on behalf of subsidiary
 
 Persistent Systems Limited has given a guarantee of USD 170,000 to
 Sunlife Assurance Company of Canada on behalf of Persistent Systems,
 Inc.
 
 7.  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.
 
 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, 2014 amounted to Rs. NIL
 (Previous year Rs. 0.94 Million). The liability for employee stock
 options outstanding as at March 31, 2014 is Rs. 26.96 Million (Previous
 year Rs. 30.48 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. NIL (Previous year Rs. 159.92).  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 lognormal 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) 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 the 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:
 
 8.  Contingent liabilities
 
 The Company does not have any contingent liability as on March 31, 2014
 (Previous year Rs. Nil)
 
 9.  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).
 
 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, 2014 Rs. 7.62 Million (Previous year: Rs. 3.71
 Million).
 
 - Maximum amount outstanding during the year Rs. 14.39 Million (Previous
 year: Rs. 52.47 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, 2014 Rs. 0.18 Million (Previous year: Rs. 0.18
 Million)
 
 - Maximum amount outstanding during the year Rs. 0.76 Million (Previous
 year: Rs. 1.98 Million)
 
 - There is no repayment schedule in respect of this loan. It is
 repayable on demand.
 
 c) Advance to Persistent Telecom Solutions Inc.
 
 - Balance as at March 31, 2014 Rs. 0.02 Million (Previous year: Rs. 0.11
 Million )
 
 - Maximum amount outstanding during the year Rs. 2.06 Million (Previous
 year: Rs. 1.77 Million )
 
 - There is no repayment schedule in respect of this loan. It is
 repayable on demand.
 
 d) Advance to Persistent Systems Malaysia Sdn. Bhd.
 
 - Balance as at March 31, 2014 Rs. 19.28 Million (Previous year: Rs. Nil)
 
 - Maximum amount outstanding during the year Rs. 44.66 Million (Previous
 year: Rs. 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, 2014 Rs. 389.61 Million (Previous year: Rs.
 352.79 Million)
 
 - Maximum amount outstanding during the year Rs. 389.61 Million (Previous
 year: Rs. 352.79 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, 2014 Rs. Nil (Previous year: Rs. 29.91 Million)
 
 - Maximum amount outstanding during the year Rs. 29.91 Million (Previous
 year: Rs. 31.20 Million)
 
 - Principal and interest is payable at the end of 3 years @ 3.43% p.a.
 
 11.  a) The ESOP schemes of Persistent Systems Limited (the Company)
 are administered through the ESOP Trust. As per the provisions of the
 Trust Deed, the Trust is constituted as an irrevocable trust and in no
 event the funds of the Trust shall revert to the Company. The Company
 has obtained a legal opinion which states that the Company has no right
 to the assets of the Trust. In view of this position, the Company has
 not consolidated the financial statements of the ESOP Trust in the
 standalone financial statements of the Company.
 
 b) The Company had adjusted the difference between the cost incurred by
 the Trust for the purpose of purchase of shares and the exercise price
 of those shares which have been exercised by the employees during the
 earlier periods/years to General Reserve, in accordance with Guidance
 Note on accounting for Employee share based payments, issued by the
 Institute of Chartered Accountants of India. However in view of the
 legal opinion referred to in a) above, the Company has reversed the
 amount of Rs. 92.85 Million, initially transferred to General Reserve.
 
 12.  The financial statements are presented in Rs. Million and decimal
 thereof except for per share information or as otherwise stated.
 
 13.  Previous year''s figures have been regrouped where necessary to
 conform to current year''s classification.
Source : Dion Global Solutions Limited
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