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Persistent Systems Ltd.

BSE: 533179 | NSE: PERSISTENT |

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Series: EQ | ISIN: INE262H01013 | SECTOR: Computers - Software

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Report of the Directors

The Directors are pleased to present the Twenty-Ninth Annual Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2019.

This financial year has been a year of transition for your Company. The growth this year was challenging, and your Company ended the year with revenues of US$ 480.97 Million which was 2.2% growth over the previous year.

Despite the growth challenges, your Directors believe that your Company is in a strong position to capitalize on the opportunities that are available in the market. Some of the new programs that were initiated during the year took longer to stabilize and they are expected to provide results in subsequent years.

New Leadership Team

During the year under report, Mr. Christopher O’Connor joined the Persistent Group as the Chief Executive Officer (‘CEO’) with effect from February 25, 2019. Mr. O’Connor has worked in different leadership roles for IBM for more than 30 years. He was the General Manager of the IBM IOT business and has been a Persistent customer for nearly 10 years. Mr. O’Connor is based in the United States and his joining your Company is an important step helping your Company become more global and multi-national. United States is your Company’s largest market and having a CEO in closer proximity to the customers, should help your Company to strengthen the relationship with customers.

Mr. Mark Simpson took over as the President of the IBM Alliance Unit from April 1, 2019. Mr. Simpson joined the Persistent Group three years back after a long career at IBM. Col. Jitendra Gokhale (Veteran) took over as the Head of the Accelerite Unit in April 2019.

Mr. Sandeep Kalra joined as the President of the Technology Services Unit with effect from May 1, 2019. Mr. Kalra joins your Company from Harman Connected, a Samsung Company where he was running a similar services business.

Growth and Solutions

During the year under report, your Company set up a team to focus on next generation growth of the Company. The charter of the Growth and Solutions team is to track and invest to ensure that your Company is seen as a thought leader in the market. With an aspiration to build domain based and business centric capabilities, growth and solutions teams were set up for 3 (three) industry segments: (i) banking, insurance and financial services; (ii) life sciences and healthcare; and (iii) industrial and engineering. Technology continues to be the strength for your Company and 4 (four) technology centric growth and solutions teams were set up to focus on (i) cloud technologies (ii) data and machine learning (iii) security and (iv) internet of things. 2 (two) process-centric teams were established with a focus on product engineering services and partnerships with an emphasis on Salesforce which is your Company’s largest partner

The growth and solutions team have started to demonstrate thought leadership in their areas and the work done by these teams will help your Company differentiate and establish leadership in the market.

Sales Velocity

Your Company has been helping customers in their journey of digital transformation by integrating data from different data sources and using machine learning to help customers with actionable insights. Your Company decided to apply these principles to the sales process and established the sales velocity team. The charter of the sales velocity team is to provide salespersons of your Company acurated and enriched list of potential leads that can help them engage with our existing customers and new prospects. The sales velocity team has built a software machine to bring together customer data from the various sources such as news feeds, activities on LinkedIn and interactions that individuals in the Company have with the potential prospects. This data is combined with data that is present in the customer relationship management system which your Company has deployed on Salesforce. The software machine can provide salespersons curated leads that can help the salesperson be “smart” about chasing new customers.

Reseller Business

During the year under report, your Company decided to build a reseller team to be a direct reseller of select IBM products. Your Company believes that by selling products directly to customers is a first step to becoming a value-added reseller and have better control of the sales channels for our products. To get this started, a new team was set up in Europe. Your Company plans to expand the scope of this team to sell other products beyond IBM and geographically extend beyond Europe to the US and to India.

Partnerships

Your Company believes in establishing partnerships with leaders in the market. Your Company has had a strong relationship with Salesforce over the years. The acquisition of Parx in the previous year has helped your Company establish a good Salesforce presence in the European region. IBM continues to be a strong partner and the reseller relationship will further strengthen this.

During the year under report, your Company established new partnerships with Snowflake and with Ping Identity and continued to strengthen partnerships with Appian, Blue Prism and Out Systems.

With the strong trend to cloud computing, your Company encouraged employees to get certifications and established a strong partnership with Amazon AWS and Microsoft Azure.

Partnership with Partners Healthcare

Your Company believes that the healthcare, especially in the US, is set for disruption and your Company could play an important role in this disruption. To establish credibility in the market, your Company decided to partner with the team at Partners Healthcare which comprises of medical experts from Massachusetts General Hospital, Brigham and Women’s Hospital, Dana Farber Cancer Center and Harvard Medical School.

During the year under report, at the 10th annual Connected Health Conference, Partners HealthCare announced in partnership with your Company the formation of a new center of excellence viz., ‘Partners HealthCare Pivot Labs’ that aims to disrupt the delivery of healthcare to enhance the patient experience, improve clinical outcomes and control costs.

Together, Partners HealthCare and your Company are challenging conventional thinking to shift the focus to making healthcare to fit the patient, as opposed to the current model of fitting the patient into the healthcare system. With digital tools and a unique understanding of the healthcare consumer, Partners Pivot Labs will make care delivery more convenient, accessible and consumer-centric by thinking about the patient holistically. Partners Pivot Labs will openly collaborate with others in the healthcare industry like pharmaceutical companies, medical device manufacturers, medical technology companies, payers and providers to accelerate ideas through the entire development lifecycle, from ideation, prototyping and validation to enterprise-wide deployment in a clinical environment

Acquisitions and Investments

During the year under report, your Company invested in Cazena, Inc. Cazena is founded by ex-Netezza executives and provide fully managed data lake services. Your Company also acquired Herald Technologies Inc. which has a product that was created to transform the data overload swamping healthcare professionals into clear and actionable insights.

Certifications

During the year under report, Pune and Nagpur centers of your Company were successfully assessed for CMMI (Dev - V1.3) at Maturity Level 5 covering “Technology Service Unit for Software Development, Maintenance and Testing projects”. This certification will help your Company qualify for the Government projects.

Life At Persistent - FY 2018-19

Life At Persistent has become a central theme for your Company’s employee engagement and development related work. One Persistent, Careers At Persistent and My Life At Persistent are the three specific focus areas for Life At Persistent.

One Persistent: Establishing Harmony Within Diversity

Your Company’s Core Values are important and continue to guide all employees in their day-to-day work and help them make decisions when under pressure. To help employees get a better perspective of core values at Persistent, your Company shared a video series with messages and practical tips from the Board of Directors and the Management team. To keep core values at the top of the mind, your Company presented table-top artefacts themed around core values to the leaders located at all our global centers.

During the year under report, the leadership team of your Company conducted nearly 4,800 Connect Meetings with employees in small groups to share core values, corporate messages and to get a pulse of the needs of the employees.

These activities have had a positive impact as ‘Frank - the Employee Engagement Survey’ reflected an increase in participation as well as an improved overall positive perception towards employees’ work experience at your Company.

Oneness through sharing and caring continued during the year under report. Celebrations and acknowledging good contributions of the employees has a positive impact. Your Company saw an increase in celebrations across all centers and organized special celebrations to mark the 15-years’ completion of many employees at Persistent Group.

Your Company conducted quarterly chats for the employees after quarterly results to discuss your Company’s performance for the quarter and plans for the next quarter. Dr. Anand Deshpande, Chairman and Managing Director, Presidents and other senior employees interacted with employees through this forum.

Careers At Persistent: From A We-Enterprise To A Me-Enterprise

Your Company believes that individuals are responsible for their own careers and also believes in doing all what it takes to help individuals meet their career aspirations and goals. Your Company believes that diversity is important, and every individual is unique, and this individual uniqueness must be encouraged and preserved. To provide every individual a choice and options, your Company offered many different programs tailored for specific groups and their requirements.

To help employees with their career development, your Company has established the SARA (Self-Assessment, Reflection and Achievement) framework. This framework helps employees to plan their individual career and manage their aspirations.

Employees were encouraged to participate in various existing and new initiatives such as Career Development Tools (Online assessments), Career Guidance Council (by leaders @ Persistent), Career Coaching Service (by certified career coaches), Design Your Career Program (based on Design Thinking approach), CaPro Program (for Career Progression @ Persistent), Persistent Toastmasters Club (in association with Toastmasters International) and Gotten Program (for building the culture of ownership) which were organized throughout the year

As many as 114 project / team-specific Experiential Programs were organized and more than 2,500 employees participated throughout the year. Business-relevant and people-centric takeaways, which would catalyze employee development while helping them align to the business goals was the focus of these experiential programs. Your Company’s Experiential Program 2.0 (2-hour model of in-house experiential programs) was adjudged as the First Runner up at the CII National HR Circle Competition 2018.

Your Company launched a leadership development program “Navigate to Value” to enable sales leaders in the US acquire deeper understanding of client buying approach, framing client value, solution selling and strengthening client facing presence. Financial Acumen for Sustainable Growth was introduced by your Company to enhance the ability of non-finance leaders to make financially intelligent decisions.

Your Company continued to organize its flagship program - Leadership Enablement at Persistent (LE@P). This six-months’ program has helped mid-level high potential managers to develop a well-rounded understanding of Persistent, customers, positioning and offerings. This year, your Company also launched an exclusive LE@P batch for your global employees.

After a successful implementation of the Aspire Program last year - A program focused on developing Women Leaders - your Company’s Women Forum (Prerana) in association with the women leaders of Aspire launched another unique Program named DISHA. The pilot program was conducted across various Pune locations. The goal was to create a women’s network to provide women mentorship for career Development in addition to Inspiration, Support, Happiness and Appreciation.

Along with such initiatives, many technical events and sessions such as Agile Day, My Career Story series were organized during the year under report.

Semicolons, the annual global hackathon for charity was organized in February 2019. This year more than 600 employees in 47 teams participated across all global locations. 11 employees who made significant technical contribution during FY 2018-19 were recognized by the CTO office during the semicolons event.

In order to encourage employees to explore internal job opportunities, your Company conducted an extensive campaign to promote Persistent’s internal jobs portal (iJobs).

Employees received feedback about their work through improved Performance and Health Management System (PHMS).

My Life At Persistent: Not Just Products; Helping People Build Their Lives

Work Life @ Persistent is not just about doing serious things. We work hard and we play hard! During the year under report, more than 250 Beyond Work Initiatives (BWIs) were organized at your Company’s Centers. Every quarter, more than 3,000 employees participated in BWIs. With an intent to cater to varied interest areas of employees, the initiatives were of different types such as art, fun, family connect, children-special initiatives, festival celebrations, knowledge-sharing etc. An initiative named ‘Bring Your Kids to Office’ was especially popular among employees and their kids, as kids got a chance to spend an entire day in their parent’s office. Where feasible, beyond work initiatives were open to family members of the employees.

Pulse, your Company’s annual event was very popular and was celebrated at all centers. Various wellness events were organized during Pulse.

Many Beyond Work Initiatives were organized in collaboration with Persistent Foundation, your Company’s CSR Arm and the support from employees and community was excellent. During the year under report, as many as 26 Green Persistent Initiatives were organized at various offices of Persistent. These initiatives were organized under 4 (four) broad-level themes of Environment Conservation: Pollution control, Conservation of energy, Conservation of Trees and Waste Management. Overall, 750 employees participated in these initiatives and contributed their bit to the environment.

As part of the Wellness Program in your Company, various initiatives such as Wellness Wednesday (a series of wellness tips shared every Wednesday), Annual Health Check-up (more than 75% employees participated), Wellness Workshops (Yoga, Zumba, Functional Training), etc. were organized.

Persistent Run, your Company’s flagship event had more than 4,500 enthusiastic runners participating. Your Company’s Wellness Experts helped employees overcome their stress and ailments, whereas the Trekking Community continued the monthly treks and organized 3 (Three) Himalayan treks. Your Company takes pride in mentioning that Persistent employees were successful in scaling the summit.

On International Yoga Day, employees across various Centers did 15,000 Sun Salutations.

Anand vs Anand Chess Event

Your Company had the honour of hosting Grand Master and former World Chess Champion Mr. Viswanathan Anand (Vishy) in a fire side chat event with Dr. Anand Deshpande, Chairman and Managing Director of your Company. In an hour-long conversation, Dr. Deshpande and Vishy had a highly engaging conversation discussing similarities between chess and business. How preparation is the key to success and how that preparation helps in better decision making. The interview is available on YouTube at https://youtu.be/uSIHi7APakA

Life At Persistent in financial year 2019-20

Looking ahead to financial year 2019-20, your Company will continue to strengthen the program. This year, Life at Persistent has a theme of ‘Sustainability and Vibrancy’ and will focus on ‘Developing a Culture of Ownership.’

Talent Additions during the Year

Your Company continues to attract high caliber quality talent in the industry. During the financial year 2018-19, your Company recruited 3,596 employees on a consolidated basis consisting of regular employees, trainees/interns, consultants, business consultants, contract consultants consisting of technical and non-technical professionals.

As on March 31, 2019, your Company employed 9,962 professionals (including trainees and associates) on a consolidated basis spread across 18 countries. Your Company employed 8,691 in main-stream technical positions. Of these 5,242 were graduates, 1,896 post-graduates and 28 Ph.D.s. The distribution of overseas employees now constitutes 14.93% of the total work force.

Team Persistent is 10,000

In April 2019, your Company achieved an important landmark when the overall headcount of your Company crossed 10,000 for the first time. This number includes all full-time employees and temporary staff across all global locations which is spread across the regions as follows: India - 8,490; America (incl. Canada, USA and Mexico) - 1,100; Europe - 250; other APAC region - 160.

Your Company recruits fresh talent from various engineering colleges in India. During the year under report, your Company added a batch of 1,001 new graduates through campus recruitment. Your Company strongly believes in nurturing ‘Industry -Academia’ partnerships and has many programs such as BE project mentoring, Persistent Day, Internship for college students. Persistent Computing Institute (PCI) conducted programs in cutting edge technology for students that were very popular.

The attrition rate during the year under report was 16.70% which was more than the attrition rate of 14.70% for the previous year.

Continuous Learning and Skill Enablement

In line with a focus on continuous learning and self-development, Persistent University is driving ongoing skills development, thus ensuring that employees are ready for the future. The University serves as a one-stop learning destination with offerings to enhance technical skills, business communication, management and behavioral skills. Multiple learning methodologies are offered such as in-class trainings, remote trainings, blended trainings, Massive Online Courses, self-learning and assessments for internal certification. Employees can choose from a variety of courses along with combination of learning methodologies as per their Individual Learning Plan (ILP). Every employee’s ILP is in line with the Company, project and individual aspirations.

Training details

Your Company covered 70% of employees through at least one training this year, and 43% employees underwent digital technology trainings. Your Company trained about 284 campus hires in the Entry Level Training Program (ELTP).

The total investment for In-Class training was around 1,500 person months and totaling to 9,886 enrollments. Self-learning investment on In-house knowledge center course enrollments was around 2,000 person months.

Total enrollments for internal certifications, either after In-Class training or self-learning were 27,810.

Your Company encourages learning and knowledge enhancements via various means. During the year under report, your Company launched the following initiatives focusing on Digital Technologies:

- Designed and launched ORBIT digital technology program exclusively for the senior managers and leaders in the organization, around 200 attended this program.

- Continued with the Digital Technothon initiative, where employees work on digital technologies (IoT, Machine learning, Block Chain, Dev Ops, AWS, MEAN Stack, full stack). They build and exhibit end-to-end mini projects. 11 such projects were displayed after the campus hires.

- Launched ‘Pledge to Learn’ initiative where employees pledge proactively to learn digital technologies for future readiness. More than 1,600 employees pledged and underwent digital technology trainings.

Technology Predictions for 2019

The CTO group in your Company publishes a Technology Predictions Guide at the beginning of the calendar year 2019. The excerpts from this year’s guide are as follows:

In 2019, one thing is certain - there will be no slow-down in the software transformation journey for organizations across the world, nor in the pace of technology disruptions. To navigate through these rough waters, business leaders will need to have one eye firmly fixed on the horizon, in order to exploit future trends before they can upturn the organization. In this article, we explore the 6 (six) technologies that will turn the tide for organizations this year, while outlining broad guidelines on how to leverage them and sail into the new age, full steam ahead.

1. Data & Analytics

From “must have” to “must deliver value”

Decision-making platforms built on data lakes are no longer enough to generate business value. Enterprises will have to embrace data value governance that covers the entire analytics value chain, from data and insights, to people and processes. Moreover, data governance will have to be integrated with overall business strategy and aligned to a data-driven business model. In the near future, we foresee Machine Learning (e.g. self-service data preparation platforms) and Natural Language Processing (conversational analytics) accelerating the data-driven decision-making process.

2. Artificial Intelligence & Machine Learning ML is all set to excel in 2019

Machine Learning is already an intrinsic part of enterprise automation roadmaps. AI democratization is on the horizon, spurred by an increase in ML solutions, rising demand for data science talent, and increasing complexity of algorithms. Large platform players (think Amazon, Google) will prove instrumental in the explosion of ML models. 2019 will train its spotlight on NLP and text analytics, along with deeper explorations into deep learning. Enterprises should look past chatbots and incorporate NLP in every aspect of customer experience, while evaluating explainable aspects of algorithms for better adoption of black box models. Also, remember to keep a sharp eye on regulatory frameworks.

3. Human-Machine Interaction

AR will soon become ER - Everyday Reality

While Human Machine Interaction technologies - including augmented reality (AR), virtual reality (VR), and chatbots - are yet to find mainstream adoption, they are slowly gaining traction in the enterprise. Adoption barriers will further dissolve with advancements in software engines, AR/VR devices, and democratization of content creation. So how can enterprises leverage HMI? Smartphones are a smart conduit for AR applications - consider using them to create a customer outreach strategy. Secondly, ramp up productivity with AR/VR applications that assist human resources employed in diagnostics and repairs. Also, using safe, cost-effective AR/VR applications to simulate dangerous physical world scenarios can give you an edge over competitors, especially during training programs and demonstrations.

4. Internet of Things (IOT)

Security is still top priority

Security remains the dominant success factor in IoT deployments, and architectural shifts are in the air, along with an increasing number of IoT devices. Edge Computing will be the new center of focus, while blockchain and newer network connectivity standards will impact IoT over the long term. Security will improve as the industry learns from more complex deployments, with remote upgradation of IoT devices becoming indispensable, and compliance with GDPR becoming non-negotiable. To succeed, adopt an edge-first approach and ensure clarity of expected business outcomes and technology roadmaps before embarking on IoT projects.

5. Identity, Access & Security Zero trust is still the hero in 2019

In today’s age of highly fluid enterprise network boundaries, good sense dictates to ‘never trust, always verify’. In the near future, automation and managed security services will gain wide traction, while self-sovereign decentralized identities will set the stage for a collaborative ecosystem.

To move towards a zero-trust enterprise, focus on omni-channel security, backed by machine-intelligence- driven monitoring tools and an automated framework. Want to leverage users’ data in business analysis and transactions? Ensure user consent first. To further tighten security measures, create a cohesive data security and privacy plan to comply with global data privacy regulations.

6. Blockchain

Hype-time over, prime-time begins

In 2019, multiple enterprise blockchain pilots will move into production, egged on by the launch of robust production grade platforms. Expect blockchain to mature into a viable self-sovereign identity solution and public blockchains like Bitcoin and Ethereum to rise stronger from the ashes, with layer-2 network solutions. Blockstack - a new global blockchain platform for decentralized apps (dApps) - will also usher in exciting new changes. Our recommendation for enterprises? Blockchain value creation demands a business strategy shift and alliance formation - hold a boardroom conversation first before jumping the gun to a technology conversation.

Publications during the financial year 2018-19

- ”ATD’s Foundations of Talent Development: Launching, Leveraging and Leading your Organization’s TD Effort” book by Elaine Biech: Persistent University Success Story by Shubhangi Kelkar

- https://www.amazon.com/ATDs-Foundations-Talent-Development-Organizations-ebook/dp/B07H5MHNYS/ref=reader_auth_ dp

- Real Face Detection and Recognition: The Live Experiment , Mar 2018, International Journal of Computer Applications(IJCA), Authors: Shailesh Wadhankar, Priya Singh, Soumyakant Sahoo

- Smart Fleet Management System Using IoT, Computer Vision, Cloud Computing and Machine Learning Technologies, Presented in 5th I2C IEEE international Conference March 2019, accepted in IEEE Xplore for publication, Authors: Priya Singh, Milind Suryawanshi, Darshana Tak

- Performance Characterization of Hyperledger Fabric, Arati Baliga, Nitesh Solanki, Shubham Verekar, Amol Pednekar, Pandurang Kamat and Siddhartha Chatterjee, in the First Crypto Valley Conference on Blockchain Technology (CVCBT) June 2018, Zug, Switzerland. (pdf).

- Performance Evaluation of the Quorum Platform, Arati Baliga, I Subhod, Pandurang Kamat and Siddhartha Chatterjee, July 2018, published on Arxiv.org (pdf).

S.No. Title and Authors

Focus Areas

Journal

1. Maniyadath B, Chattopadhyay T, Verma S, Kumari S, Kulkarni P, Banerjee K, Lazarus A, Kokane SS, Shetty T, Anamika K, Kolthur-Seetharam U (2019). Loss of Hepatic Oscillatory Fed microRNAs Abrogates Refed Transition and Causes Liver Dysfunctions.

Life Sciences

Cell Reports

2. Kumar P, Panigrahi P, Johnson J, Weber WJ, Mehta S, Sajulga R, Easterly C, Crooker BA, Heydarian M, Anamika K, Griffin TJ, Jagtap PD (2019). QuanTP: A Software Resource for Quantitative Proteo-Transcriptomic Comparative Data Analysis and Informatics.

Life Sciences

J Proteome Res.

Conferences

- Co-organizer for a workshop with PCCM and IISER Pune on “Multi-Omics Studies in Cancer Learnings from The Cancer Genome Atlas (TCGA)” in September 2019

- Attended and presented “Multi-omics Data Integration Reveals miRNA-mediated Gene Regulation in Triple-Negative Breast Cancer” at Cell Symposium:TCGA Legacy, Washington DC, Sep 27-29, 2018

Smart India Hackathon

Your Company continued to play an active leadership role in organizing the third edition of Smart India Hackathon. This year’s event was larger and in addition to the 18 Government ministries, problems were shared by 96 industry collaborators. This year, more than 32,000 teams submitted ideas for the software edition and more than 20,000 teams submitted ideas for the hardware edition.

A 36-hour hackathon for the software edition was held on March 2 and 3, 2019 with more than 8,000 students participating in 48 centers across India. The software edition was a grand success and the Hon’ble Prime Minister, Mr. Narendra Modi inspired participants during a live interaction via video conferencing. The hardware edition will be held in July 2019.

Project Manav

Your Company was instrumental for setting up the Manav project which was recently funded for three years by the Department of Biotechnology (DBT) and co-funded by your Company. The project is in partnership with the two leading biological science institutes in Pune - National Centre for Cell Science (NCCS) and Indian Institutes of Science Education and Research (IISER).

The Manav project aims to create a structured, comprehensive and integrated knowledge base of the human body by collecting in one place macro-level and micro-level information about the human body from scientific literature and public databases.

The project will work with thousands of students in colleges and young professionals and provide a common gamified platform to encourage participants to read, review, collaborate and annotate published scientific articles. The students contributing to this initiative will get exposure to diverse research articles in biological and medical sciences. Your Company will be providing its expertise in life sciences, big data management, platform development for capturing data, data analytics and visualization for successful execution of Manav.

Pradeep Bhargava, Independent Director was elected as the President of MCCIA

Mr. Pradeep Bhargava who is an Independent Director of your Company was elected as the President of the Mahratta Chamber of Commerce, Industries and Agriculture (MCCIA) for a two-year term from October 2018 to September 2020. MCCIA is the local chamber of commerce in the Pune region. Various reputed companies are members of the chamber and it is a matter of pride that Mr. Bhargava who is representing your Company at the Chamber is the elected President of this prestigious organization.

ACM India Corporate Sponsorship

Your Company has signed up as the platinum sponsor for ACM India. This sponsorship will help your Company to get visibility and branding in the technology community which is essential for attracting the best of talent to your Company.

The Association for Computing Machinery (ACM) is an international learned society for computing. It was founded in 1947 and is the world’s largest scientific and educational computing society. Your Company has been a supporter of the ACM and has helped establish ACM in India. The ACM India headquarters works out of the offices of your Company. Dr. Hemant Pande who is a former employee of your Company joined the ACM as the Executive Director and has set up this Corporate Sponsorship program.

Financial Results

The highlights of the financial performance on a consolidated basis for the year ended March 31, 2019 are as under:

Particulars

Amount in USD Million except EPS and Book Value

Amount in Rs. Million except EPS and Book Value

% Change (based on the amounts in Rs.)

2018-19

2017-18

2018-19

2017-18

Revenue from Operations

480.97

470.55

33,659.41

30,337.03

10.95 %

Earnings before interest, depreciation, amortization and taxes

79.49

72.70

5,562.40

4,687.26

18.67 %

Finance Cost

0.04

0.01

3.05

0.79

286.08 %

Depreciation and amortization

22.47

24.58

1,572.51

1,584.87

(0.78) %

Other income

12.53

18.47

876.55

1,191.01

(26.40) %

Tax expense

19.24

16.47

1,346.60

1,061.73

26.83 %

Net profit

50.25

50.11

3,516.79

3,230.88

8.85 %

Transfer to general reserve

18.01

21.23

1,260.03

1,368.47

(7.92) %

Net worth*

338.51

326.00

23,394.09

21,245.60

10.11 %

Earnings per share (EPS) (Basic)

0.63

0.63

43.99

40.39

8.91 %

Earnings per share (EPS) (Diluted)

0.63

0.63

43.99

40.39

8.91 %

Book value per equity share

4.28

4.08

295.68

265.90

11.20 %

[Conversion Rate USD 1 = Rs. 69.98 for Profit and Loss items; USD 1 = Rs. 69.11 for Balance Sheet items (financial year 2018-19) and USD 1= Rs. 64.47 for Profit and Loss items; USD 1 = Rs. 65.17 for Balance Sheet items (financial year 2017-18)].

*Net worth = Equity Share Capital Reserves and Surplus (excluding Gain on bargain purchase) Other Comprehensive Income

The highlights of the financial performance on an unconsolidated basis for the year ended March 31, 2019 are as under:

Particulars

Amount in USD Million except EPS and Book Value

Amount in Rs. Million except EPS and Book Value

% Change (based on the amounts in Rs. )

2018-19

2017-18

2018-19

2017-18

Revenue from Operations

280.06

268.77

19,598.67

17,327.49

13.11 %

Earnings before interest, depreciation, amortization and taxes

54.38

59.16

3,805.21

3,813.77

(0.22) %

Finance Cost

0.01

0.01

0.51

0.62

(17.74)%

Depreciation and amortization

6.56

8.34

458.84

537.81

(14.68)%

Other income

14.83

19.80

1,037.90

1,276.82

(18.71)%

Tax expense

17.63

17.54

1,233.68

1,130.99

9.08 %

Net profit

45.01

53.07

3,150.08

3,421.17

(7.92) %

Transfer to general reserve

18.01

21.23

1,260.03

1,368.47

(7.92) %

Net worth*

321.40

315.05

22,211.90

20,532.04

8.18 %

Earnings per share (EPS) (Basic)

0.56

0.66

39.40

42.76

(7.86) %

Earnings per share (EPS) (Diluted)

0.56

0.66

39.40

42.76

(7.86) %

Book value per equity share

4.06

3.94

280.74

256.65

9.39 %

[Conversion Rate USD 1 = Rs. 69.98 for Profit and Loss items; USD 1 = Rs. 69.11 for Balance Sheet items (financial year 2018-19) and USD 1= Rs. 64.47 for Profit and Loss items; USD 1 = Rs. 65.17 for Balance Sheet items (financial year 2017-18)].

*Net worth = Equity Share Capital Reserves and Surplus Other Comprehensive Income

Material Events Occurring after Balance Sheet Date

There were no material changes and commitments affecting the financial position of your Company between the end of the financial year and the date of this report.

Buyback of Equity Share of your Company

The Board of Directors of your Company, at its meeting held in January 2019, approved the buyback of the Company’s fully paid-up equity shares of the face value of Rs. 10 each from its shareholders (excluding promoters, promoter group and persons who are in control of the Company), via the “open market” route through the stock exchanges, for a total amount not exceeding Rs. 2,250 Million, and at a price not exceeding Rs. 750 per Equity Share.

The indicative maximum number of Equity Shares bought back at the above maximum price would be 3,000,000. If the Equity Shares are bought back at a price below the Maximum Buyback Price of Rs. 750, the actual number of equity shares bought back could exceed the above indicative Maximum Buyback quantity but will always be subject to the Maximum Buyback Size.

Status of the Buyback as on the report date

The buyback commenced on February 8, 2019. The details regarding the number of shares bought back on a monthly basis are as follows:

Sr.

No.

Month

No. of Equity Shares bought back

Consideration Paid (In Rs.)

% of Maximum Buyback Size

Avg. Price (In Rs.)

1.

February 2019

368,851

234,137,303.25

10.41

634.77

2.

March 2019

512,247

337,264,931.01

14.99

658.40

3.

April 2019

1,449,015

913,981,595.74

40.62

630.76

4.

May 2019

695,000

423,177,301.10

18.81

608.89

5.

Up to June 11, 2019

240,000

144,489,590.50

6.42

602.04

Total

3,265,113

2,053,050,721.60

91.25

628.70

In terms of the SEBI Buyback Regulations, the Equity Shares bought back during the month are required to be extinguished within 15 days of the succeeding month. Accordingly, the shares purchased up to May 31, 2019 i.e. 3,025,113 were extinguished on June 7, 2019.

Consequently, the paid-up capital of the Company as at June 11, 2019 has been reduced from Rs. 800,000,000 (Pre-Buyback) to Rs. 769,748,870 comprising of 76,974,887 Equity Shares of Rs. 10 each.

The Buyback will be open till August 7, 2019 or reaching maximum buyback size, whichever is earlier.

Liquidity

Your Company continues to maintain adequate amount of liquidity to meet its strategic and growth objectives. Your Company aims to maintain a balance between earning adequate returns on liquid assets and the need to cover financial and business risks. As at March 31, 2019, your Company, on an unconsolidated basis, had cash and cash equivalents (including investments) amounting to Rs. 13,109.31 Million as against Rs. 10,768.92 Million as at March 31, 2018. The details of cash and cash equivalents (including investments) are as below:

(In Rs. Million)

Particulars

As at As at March 31, 2019 March 31, 2018

Investment in Mutual Funds at fair value

5,270.44 7,573.80

Fixed Deposits with scheduled banks

4,687.90 747.03

Deposit with Financial Institutions (Net)

497.50 1,030.35

Bonds (quoted)

2,088.35 1,112.47

Cash and Bank balances

565.12 305.27

Total

13,109.31 10,768.92

Update on Fixed Deposits with IL&FS

One of the investments in your Company’s treasury portfolio, is in the form of fixed deposits with Infrastructure Leasing and Financial Services Limited (IL&FS) and IL&FS Financial Services Limited (IL&FS Group) to the extent of Rs. 430 Million. These were due for maturity from January 2019 to June 2019. In August 2018, credit rating agency significantly downgraded IL&FS group’s rating. In view of the uncertainty about the liquidity crisis at IL&FS, it is likely to take considerable time to ascertain the value of the assets held by various entities in IL&FS Group as against the total outstanding debts of the group. In the above circumstances, the management of your Company was of the view that the provision for impairment of the deposits needs to be made in the books of accounts. Hence, a provision of INR 182.50 Million i.e. 42.4% of the total investment in IL&FS has been made as on March 31, 2019. Your Company continues to monitor developments in this matter and is committed to take steps including legal action that may be necessary to ensure full recovery of the said deposit.

Dividend for the financial year 2018-19

The details of the Dividend for the financial year 2017-18 and 2018-19 are as follows:

Financial Year 2018-19

Financial Year 2017-18

Type of Dividend

Interim

Final (Recommended)

Interim

Final

Month of Declaration

January 2019

July 2019

January 2018

July 2018

Amount of Dividend Per Equity Share of Rs. 10 each (In Rs.)

8

3

7

3

% of Dividend

80%

30%

70%

30%

Total Dividend (Amt. in Rs. Million)

640.00

230.921

560.00

240.00

Dividend Distribution Tax) (Amt. in Rs. Million)

117.23

47.47*

101.37

20.18

Total Outflow (Including Dividend Distribution Tax) (Amount in Rs. Million)

757.23

278.39*

661.37

260.07

Total Dividend Outflow for the year(Amt. in ‘ Million)

1,035.62*

921.53

* The outflow is being considered based on the outstanding capital (Rs. 769,748,870 comprising of 76,974,887 Equity Shares of Rs. 10 each) after considering the shares bought back till May 31, 2019 and which were extinguished till the date of this report.

The payment of final dividend of Rs. 3 per share is subject to your approval during the 29th Annual General Meeting (AGM) of your Company. The Dividend will be paid out of profits of your Company.

Out of the interim dividend declared in January 2019, Rs. 0.17 Million remained unclaimed as on March 31, 2019.

The Company has Dividend Distribution Policy and the same has been uploaded on the website at ‘https://www.persistent.com/ wp-content/uploads/2016/09/Dividend-Distribution-Policy.pdf’

The above dividend is in compliance with the Dividend Distribution Policy of the Company.

Transfer to reserves

As per the policy of the Company on transfer of surplus profit to reserves, an amount of Rs. 1,260.03 Million has been transferred to the General Reserve and an amount of Rs. 744.00 Million will be retained in the Statement of Profit and Loss after payment of dividend and tax thereon. The balance in Profit and Loss Account as on March 31, 2019 is Rs. 9,735.72 Million.

Fixed Deposits

In terms of Sections 73 and 74 of the Companies Act, 2013 (the ‘Act’) read with the relevant Rules, your Company has not accepted any fixed deposits during the year under report.

Infrastructure

During the financial year 2018-19, the total built-up capacity owned by your Company in India and abroad was 115,478 m2 which is adequate for 8,800 employees.

The details of owned facilities of your Company are as follows:

Location

Year of Acquisition /Completion

Total Built-up Area (m2)

Total Seating Capacity

Pune

Kapilvastu

1994

202

35

Panini

1998

929

80

Bhageerath

2002

12,170

586

Aryabhata - Pingala

2007

31,680

2,618

Hinjawadi

2012

41,446

3,173

Goa

Charak

1997*

3,280

309

Bhaskar

2014

3,762

411

Nagpur

IT Tower

2003

3,708

352

Gargi and Maitreyi

2011

17,279

1,263

Grenoble, France

20002

1,022

50

Total

115,478

8,877

* Company started to occupy this premises from October 2005 onwards.

** Company acquired this premises in August 2011 as part of acquisition of the Grenoble team.

Along with the Company owned premises, your Company also operates from leased facilities at Canada, India, Israel, Ireland, Malaysia, Mexico, Scotland, Sri Lanka, USA and UK.

Awards and recognitions during the financial year 2018-19

During the financial year 2018-19, your Company continued its tradition of winning various awards and getting new recognitions. Your Company was a proud recipient of the following awards during the year under report:

Awards

1. First Runner up in National HR Circle Competition, 2018 amongst 16 organizations under Employee Engagement and Relations category (Large services companies)

2. Recognized for having used marketing communications effectively in attracting talent, retaining talent, developing talent and in retention policy

3. First prize for the Wellness and Wellbeing Award category at the Future of HR Summit and Awards, 2018

4. Nagpur Best Employer Brand Awards for using effective marketing communications in talent management

5. ’India’s Coding Power HouseRs. 3 consecutive year 2014 - 16 Among top 5 in 2018

6. ’Best Corporate University’ Award from TISS - LEAPVAULT 2018

7. ’Best Virtual Learning Program’Award from TISS - LEAPVAULT 2018

8. ’Training Top 125 (T125) 2018 Award (International) from Training magazine

9. ’Golden Peacock National Training Award 2019’ from the Institute of Directors, New Delhi

10. Dr. Anand Deshpande, Founder, Chairman and Managing Director received Life Time Achievement Award from the Pune Chapter of the TiE, The Indus Entrepreneur is a global organization of entrepreneurs

11. The Infrastructure, Facility, Human Resources & Realty Association (iNFHRA) has awarded Xcellence award for Ecological Sustainability to Mr. Sanjay Chaudhari, Senior Manager - Administration

Recognition

1. Tilak Maharashtra University conferred Honarary D. Litt. to Dr. Anand Deshpande, Founder, Chairman and Managing Director.

2. Your Company congratulates Mr. Pradeep Bhargava, Independent Director who is representing your Company at Mahratta Chamber of Commerce Industries and Agriculture, Pune (MCCIA) and has been elected as the President for a two-years term. He assumed charge during the 84th Annual General Meeting on September 25, 2018.

3. Your Company has seconded Dr. Abhay Jere, Head - Persistent Labs to the Ministry of Human Resource Development, Government of India for a period of three years. Dr. Jere has been appointed as the Chief Innovation Officer (CIO) to systematically foster the culture of Innovation amongst all Higher Education Institutions (HEIs). Dr. Jere’s primary mandate is to create national policy frameworks and programs for nurturing innovation ecosystem and to help the Ministry design various initiatives to encourage, inspire and nurture young students by exposing them to new ideas and processes resulting in innovative activities in their formative years.

Auditors

Appointment of statutory auditors

The Members of your Company at the 24th AGM held on July 26, 2014, appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) and M/s. Joshi Apte & Co., Chartered Accountants (Firm Registration No. 104370W) as the Joint Statutory Auditors of your Company to hold such office till the conclusion of the AGM in the calendar year 2019 and 2017, respectively.

Pursuant to such appointment, M/s. Joshi Apte & Co., Chartered Accountants retired at the conclusion of the 27th AGM held on July 20, 2017. Thereafter, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants have been the sole Statutory Auditors of your Company.

The Audit Committee of the Board has taken a conservative view and recommended appointment of M/s. Deloitte Haskins & Sells LLP in their second term for a period of 2 (two) years i.e. from the ensuing 29th AGM up to the conclusion of the AGM to be held on or before September 30, 2021, which will be subject to the approval of the Members of the Company.

Accordingly, your Directors at its meeting held on June 11, 2019, considered recommendation of the Audit Committee favourably and have further recommended to the Members for an appointment of M/s. Deloitte Haskins & Sells LLP as the Statutory Auditors of your Company for a period of 2 (two) years i.e. from the ensuing 29th AGM up to the conclusion of the AGM to be held on or before September 30, 2021.

Further, in terms of the Regulation 33(1)(d) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Listing Regulations’), the Statutory Auditors of your Company are subjected to the Peer Review Process of the Institute of Chartered Accountants of India (ICAI). M/s. Deloitte Haskins & Sells LLP has confirmed that they hold a valid certificate issued by ‘Peer Review Board’ of ICAI. They have also conveyed their eligibility and willingness to act as the Statutory Auditors of the Company.

Secretarial Audit Report

Pursuant to Section 204 of the Act, the Board of Directors had appointed M/s. SKO & Associates, Practicing Company Secretaries as the Secretarial Auditors of your Company for the financial year 2018-19.

Accordingly, the Secretarial Auditors have given their report, which is annexed hereto as Annexure A. The comments of the Board on the observations of the Secretarial Auditors are as follows:

Sr.

No.

Observations by the Secretarial Auditors

Comments by the Board

1.

There was a delay of one day in intimating to the Stock Exchanges about loss of share certificate.

The Company received the e-mail intimation after business hours. Post receipt, the Company verified the details with the Registrar and Transfer Agent before intimating the same to the Stock Exchanges. In this process, the evaluation delayed by 1 (one) day, and the Company could not meet the compliance within prescribed time. The Company has taken sufficient precautions not to repeat such instances in future.

2.

Pursuant to Regulation 47(2) of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Company has not provided link of the website where further details are available in certain newspaper advertisements.

Though, the Company mentioned the website address along with its name and address details in all its newspaper advertisements, a specific mention of the Company’s website address was missing in one of the public advertisements for declaring quarterly results.

The Company took cognizance of the same and started providing the link separately in its newspaper advertisements at prescribed place in the quarterly advertisements.

3.

The Company filed form for appointment of Whole Time Director with the Registrar of Companies, beyond prescribed time. The said form has been approved by Registrar of Companies.

The delay was due to inadvertence. The Company has taken sufficient precautions not to repeat such instances in future.

4. The Company filed Form IEPF 1 and IEPF 4 with the Registrar of Companies, beyond prescribed time.

The Company has been prompt in filing Form IEPF 1 and IEPF 4 with the Ministry of Corporate Affairs (MCA), within prescribed time.

In FY 2010-11, to ensure the security of dividend amount and to transfer it to the rightful owners, the Company opened a separate Bank Account to credit the unclaimed dividend amount out of Final Dividend of FY 2009-10 with respect to unclaimed 600 Equity Shares from its IPO in 2010.

Due to oversight, the Company did not transfer Rs. 300 from the above Bank Account at the time of transferring the unpaid amount from the Final Dividend of FY 2009-10.

After recognizing, the Company took steps in this regard to transfer the abovementioned Rs. 300 to the IEPF Bank Account and has completed the transfer of funds on October 17, 2018. As per Section 124(3) of Companies Act, 2013, the Company has paid an interest of Rs. 42 @ 12% p.a. on Rs. 300 and has transferred an aggregate amount of Rs. 342 (Rupees Three Hundred and Forty-Two only) to the IEPF Account.

After completing the above additional transfer to the IEPF Authorities, the Company immediately filed Form IEPF 1 and IEPF 4 and complied with the requirements.

5. Under the Foreign Exchange Management Act, 1999, there was delay in two cases for submission of Forms ODI relating to reporting of certain events in case of step-down subsidiaries.

The Company was following practice of reporting events in case of stepdown subsidiaries through Annual Performance Reports (APRs) every year. The said APRs include financial and structural updates regarding the step-down subsidiaries; and the same is taken on record by the Reserve Bank of India from time to time.

However, during the year, the Company received a guidance from the subject matter expert to submit Form ODI separately for the events (equity/loan/guarantee) in case of stepdown subsidiaries.

Accordingly, the Company filed Forms ODI relating to reporting of certain events (equity/guarantee) in case of stepdown subsidiaries which was beyond prescribed time.

Henceforth, the Company will follow the above process to submit Form ODI separately for the events (equity/loan/ guarantee) in case of stepdown subsidiaries.

Board and Corporate Governance

Board Meetings

The details pertaining to the composition, terms of reference and other details of the Board of Directors of your Company and the meetings thereof held during the financial year 2018-19 are given in the Report on Corporate Governance section forming part of this Annual Report.

Directors and Key Managerial Personnel

During the period from April 1, 2019 till the date of this report, the Board has appointed the following Directors:

a. Mr. Christopher O’Connor as an Additional Director (Executive Director) with effect from April 27, 2019 for a term of 3 years i.e. up to April 26, 2022. He has also been also appointed as the Chief Executive Officer of your Company.

b. Mr. Sandeep Kalra as an Additional Director (Executive Director) with effect from June 11, 2019 for a term of 3 years i.e. up to June 10, 2022. He has also been appointed as the President-Technology Services Unit of your Company.

In terms of Clause (e) of the Schedule V to the Act, a person who wishes to be appointed as the Executive Director of a company needs to be a Resident of India.

Further, a person being a non-resident in India and getting appointed as the Executive Director may travel to India only after obtaining an Employment Visa from the concerned Indian Embassy/Commission abroad.

Since Mr. O’Connor and Mr. Kalra are non-residents and the Board of Directors has considered the same while recommending their appointment as the Executive Director of the Company, the Company will seek an approval from the Central Government for claiming an exemption from the above requirement as per the Schedule V to the Act subject to the approval of the Members at the ensuing AGM.

The appointment of 5 (Five) Independent Directors (Ms. Roshini Bakshi, Mr. Pradeep Bhargava, Mr. Sanjay Bhattacharyya, Mr. Prakash Telang and Mr. Kiran Umrootkar) was made at the 24th AGM held on July 24, 2014 for a period of 5 (Five) consecutive years for a term up to conclusion of the ensuing 29th AGM.

The Board of Directors of your Company at its meeting held on June 11, 2019 considered total tenure of the Independent Directors in the Company for their reappointment. They also considered their contribution in the first term, expertise, wide industry experience and business connects for recommending them for the re-appointment for the next term. Pursuant to the provisions of the Act, they are not liable to retire by rotation.

Accordingly, the Board recommended reappointment of the following Independent Directors at the ensuing AGM as follows:

Sr. No.

Name of the Independent Director

Recommended term of appointment

1.

Ms. Roshini Bakshi

5 Years

2.

Mr. Pradeep Bhargava

3 Years

3.

Mr. Prakash Telang

1 Year

4.

Mr. Kiran Umrootkar

1 Year

The above 4 (Four) directors have confirmed their eligibility and willingness to accept the office of the Director of your Company, if confirmed by the Members at the ensuing AGM. In the opinion of your Directors, the above 4 (four) Directors have requisite qualifications and experience and therefore, your Directors recommend that the proposed resolutions relating to the re-appointment of above 4 (Four) directors be passed with the requisite majority.

Mr. Sanjay Bhattacharyya, Independent Director expressed his unwillingness for re-appointment for the next term due to personal reasons. The Board of Directors of your Company respected his decision and accordingly, has not recommended his appointment for the next term. The Board sincerely appreciates the contribution by Mr. Bhattacharyya during his tenure with your Company and wishes him all the best for his future endeavours.

In terms of Section 152(6) of the Act and Article 116 of the Articles of Association of your Company, Dr. Anand Deshpande, Chairman and Managing Director is liable to retire by rotation at the 29th AGM as he is Executive and Non Independent Director who is holding office for the longest period among the Non-Independent Directors on the board.

Dr. Deshpande has confirmed his eligibility and willingness to accept the office of the Director of your Company, if confirmed by the Members at the ensuing AGM. In the opinion of your Directors, Dr. Deshpande has requisite qualifications and experience and therefore, your Directors recommend that the proposed resolution relating to the reappointment of Dr. Deshpande be passed with the requisite majority.

At present, your Company has 13 (Thirteen) Directors out of which 8 (Eight) are Non-Executive Directors who are Independent Directors. Pursuant to the Regulation 17(1)(b) of the Listing Regulations, every listed company shall have at least half of its total strength of the Board of Directors as Independent Directors where Chairman is an Executive Director. Your Company complies with this requirement.

In terms of the Listing Regulations, your Company conducts the Familiarization Program for Independent Directors about their roles, rights, and responsibilities in your Company, nature of the industry in which your Company operates, business model of your Company, applicable laws, amendments and the effects there of etc., through various initiatives. The details of the same can be found at: https://www.persistent.com/investors/familiarisation-programme/

Declaration of Independence by Independent Directors

The Board confirms that all Independent Directors of your Company have given a declaration to the Board that they meet the criteria of independence as prescribed under Section 149 of the Act and Reg. 16(1)(b) of the Listing Regulations.

Separate meeting of the Independent Directors has been held during the financial year 2018-19 in which the Independent Directors have transacted the following business:

1. Reviewed performance of the Management of the Company;

2. Discussed the quality, quantity and timeliness of the flow of information between the Directors and the Management of the Company;

3. Discussed the strategic matters of the Company and current state of the global IT industry; and

4. Reviewed performance of Non-Independent Directors

Committees of the Board

The details of the powers, functions, composition and meetings of all the Committees of the Board held during the year under report are given in the Report on Corporate Governance forming part of this Annual Report.

Audit Committee

The details pertaining to the composition, terms of reference and other details of the Audit Committee of the Board of Directors of your Company and the meetings thereof held during the financial year are given in the Report on Corporate Governance forming part of this Annual Report. The recommendations of the Audit Committee in terms of its Charter were accepted by the Board of Directors of your Company from time to time during the year under Report.

Compensation and Remuneration Committee

The Compensation and Remuneration Committee of the Board was constituted on April 23, 2004. In terms of the erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (‘SEBI ESOP Guidelines’), your Company re-constituted the Compensation and Remuneration Committee for the administration and superintendence of the employee stock options schemes on October 4, 2007.

The Board of Directors at its meeting held in April 2014 named this Committee as the Nomination and Remuneration Committee for the purpose of provisions under the Act. As regards the terms of the Compensation and Remuneration Committee of your Company, the same are in line with the statutory terms of the Nomination and Remuneration Committee.

The details including the composition and terms of reference of the Compensation and Remuneration Committee and the meetings thereof held during the financial year and the Remuneration Policy of the Company are given in the Report on Corporate Governance section forming part of this Annual Report.

Nomination and Governance Committee

The Board of Directors at its meeting held in April 2014 named this Committee as the Nomination and Remuneration Committee for the purpose of provisions under the Act. As regards the terms of the Nomination and Governance Committee of your Company, the same are in line with the statutory terms of the Nomination and Remuneration Committee.

The details including the composition and terms of reference of the Nomination and Governance Committee of the Board of Directors of your Company and the meetings thereof held during the financial year are given in the Report on Corporate Governance section forming part of this Annual Report.

The policy for appointment of a new director on the Board is as follows:

The Board of Directors decides the criteria for the appointment of a new director on the Board from time to time. The criteria may include candidate’s expertise area, age, industry experience, professional background, association with other companies and such other things.

Once the criteria are determined, the Board directs the Nomination and Governance Committee to compile profiles of suitable candidates through networking, industry associations and business connects. The Nomination and Governance Committee considers each and every profile on the decided parameters and shortlists the candidates. Shortlisted candidates are then interviewed personally or through tele-conference by the Members of the Committee.

Once the Committee is convinced about a candidate’s competency, his/her business acumen, commitment towards his/ her association with your Company and his/her availability for your Company on various matters as and when they arise, it recommends the candidate to the Board of Directors for its further consideration.

Employees’ remuneration

In terms of the provisions of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annexure B of the Report.

Employee stock option plans

Your Company has various stock option plans for its employees. Details of the stock options granted under various employee stock option schemes are provided in the Annexure C of the Report.

During the year under report, no employee has been granted stock options, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of your Company at the time of grant.

In line with the Ind AS 102 - “Share Based Payments”, your Company has computed the cost of equity-settled transactions by using the fair value of the options at the date of the grant and recognized as employee compensation cost over the vesting period.

No employee stock options were granted during FY 2017-18 and FY 2018-19.

No new options were granted to the Independent Directors of your Company during the year under report. Shares held by Independent Directors and Non-Executive Non-Independent Directors as on March 31, 2019 are as under:

Name of the Director

Shares held (through exercise of vested stock options)

Shares held (through allotment under a pre IPO scheme)

Shares held (through market purchase / IPO)

Total Shares held

Ms. Roshini Bakshi

NIL

NIL

NIL

NIL

Mr. Pradeep Bhargava

13,600

NIL

NIL

13,600

Mr. Sanjay Bhattacharyya

14,000

NIL

NIL

14,000

Mr. Guy Eiferman

NIL

NIL

NIL

NIL

Dr. Anant Jhingran

NIL

NIL

NIL

NIL

Mr. Thomas Kendra

NIL

NIL

NIL

NIL

Prof. Deepak Phatak

NIL

NIL

NIL

NIL

Mr. Prakash Telang

14,000

NIL

4,000

18,000

Mr. Kiran Umrootkar

6,000

NIL

NIL

6,000

The Compensation and Remuneration Committee at its meetings held in January 2019 and April 2019, has approved RSUs to the Executive Directors of your Company which will be granted to them over the next 4 (four) years in a phased manner.

Of them, the details of grants already made to them between April 1, 2019 and the date of this report are as follows:

Name of the

No. of RSUs

Dates of

Criteria for vesting

Executive Director

Already granted

vesting

Time based

Performance based

Basis of vesting (For Performance based RSUs)

Mr. Christopher O’Connor

250,000

1-May-2019 to 30-Jun-2022

80%

20%

Based on Company Revenue Growth and EPS Growth

Mr. Sandeep Kalra

200,000

1-May-2020 to 31-May-2021

75%

25%

Based on TSU Revenue Growth and EPS Growth

Mr. Sunil Sapre

50,000

1-May-2020 to 31-May-2021

75%

25%

Based on Company Revenue Growth and EPS Growth

During the financial year 2018-19, pursuant to the resolutions passed by the Compensation and Remuneration Committee of the Board of Directors by way of circulation, employees including ex-employees exercised their stock options for shares which were already vested in their name. During this exercise, 560,732 (Five Hundred Sixty Thousand Seven Hundred and Thirty Two) i.e. 0.68% Equity shares of the total paid-up capital were transferred from PSPL ESOP Management Trust to these ESOP grantees at an aggregate value of Rs. 68.92 Million under various ESOP Schemes of your Company.

Your Company has 12 (Twelve) ESOP Schemes as on March 31, 2019 under which options were granted to various Independent Directors, employees of the Company and its subsidiaries, details of which are given elsewhere in this Annual Report.

Shares Suspense Account

Your Company had opened an ‘Unclaimed Securities Suspense Account’ on behalf of the allottees who were entitled to the Equity Shares under the initial public offering. Some of the Equity Shares could not be transferred to the respective allottees due to technical reasons. Such shares were held in ‘Unclaimed Securities Suspense Account’, to be transferred to allottees as and when they approach your Company. Your Company has been regularly uploading details of such unpaid/unclaimed shares on its website and on the website of the Ministry of Corporate Affairs as well.

During the year under report, out of 280, 140 unclaimed Equity Shares in the Suspense Account were transfered to the IEPF Suspense Account after following the due process. The other 140 Equity Shares are the bonus shares issued and alloted on March 12, 2015. This shares will be transferred to the IEPF Suspense Account as and when they become due for transfer.

The current balance in the above-mentioned Suspense Account as on March 31, 2019 is 140 Equity Shares owned by 7 allottees. The details of equity shares held in an ‘Unclaimed Securities Suspense Account’ are as follows:

Sr.

No.

Particulars

Details

1.

Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the beginning of the financial year 2018-19

7 allottees

2.

Aggregate number of the outstanding Equity Shares in the Unclaimed Securities Suspense Account lying at the beginning of the financial year 2018-19

280 Equity Shares

3.

Number of allottees who approached issuer for transfer of shares from Unclaimed Securities Suspense Account during the financial year 2018-19

NIL

4.

Number of shares transferred from Unclaimed Securities Suspense Account during the financial year 2018-19 to the allottees

NIL

5.

Number of shares transferred from Unclaimed Securities Suspense Account during the financial year 2018-19 to the IEPF Suspense Account

140 Equity Shares

6.

Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the end of the financial year 2018-19

7 allottees

7.

Aggregate number of outstanding equity shares in the Unclaimed Securities Suspense Account lying at the end of the financial year 2018-19

140 Equity Shares

Note - Voting rights on the above-mentioned equity shares are kept frozen till the rightful owner of such equity shares claim these shares. Once the rightful owner claims these shares, the shares along with accumulated dividend will be transferred to the rightful owner.

Transfer of Unclaimed Dividend and corresponding shares to the IEPF Authority

During the year under report, the Company has transferred the unclaimed and unpaid dividend of Rs. 97,407 to the IEPF Authority. Further, 69 corresponding shares on which the dividend was unclaimed for seven consecutive years were transferred as per the requirement of the IEPF Rules. The details are provided in the shareholder information section of this Annual Report and also available on our website: https://www.persistent.com/investors/unclaimed-dividend/

Institutional Holding

As on March 31, 2019, the total institutional holding in your Company stood at 42.80% of the total share capital.

Particulars required as per Section 134 of the Companies Act, 2013

As per Section 134 of the Act, your Company has provided the Consolidated Financial Statements as on March 31, 2019. Your Directors believe that the consolidated financial statements present a more comprehensive picture as compared to standalone financial statements. A statement showing financial highlights of the subsidiary companies is enclosed to the consolidated financial statements.

The Annual Report of your Company, though does not contain full financial statements of the subsidiary companies, your Company will make available the audited annual accounts and related information of the subsidiary companies, upon request by any Member of your Company.

Consolidated financial statements

Consolidated financial statements of your Company and its subsidiaries as at March 31, 2019 are prepared in accordance with the Indian Accounting Standard (Ind AS) 110 on ‘Consolidated Financial Statements’ notified by the Ministry of Corporate Affairs (MCA), and forms part of this Annual Report.

Subsidiary Companies, Associate Companies and Joint Ventures

The details of the subsidiaries and associate of your Company as on March 31, 2019 are as under:

(In Rs. Million)

Name of the Entity and Country of incorporation

Period of Establishment/ Acquisition

Total Income

Net Profit/(Loss)

Status

For the year ended March 31, 2019

For the year ended March 31, 2018

For the year ended March 31, 2019

For the year ended March 31, 2018

Persistent Systems Inc., USA (PSI)

Wholly Owned Subsidiary

October 2001

19,754.37

17,329.58

(174.76)

(251.56)

Persistent Systems Pte. Ltd., Singapore (Co. Reg. No. 200706736G)

Wholly Owned Subsidiary

April 2007

145.87

307.00

11.80

15.17

Persistent Systems France S.A.S., France

Wholly Owned Subsidiary

April 2011

979.73

404.18

43.37

52.88

Persistent Systems Malaysia Sdn. Bhd., Malaysia

Wholly Owned Subsidiary

September 2013

473.35

408.90

123.41

71.59

Persistent Systems Germany GmbH, Germany

Wholly Owned Subsidiary

December 2016

54.51

1.45

(15.19)

(37.33)

Persistent Telecom Solutions Inc., USA

Step-down subsidiary (Wholly Owned Subsidiary of PSI)

January 2012

1,284.13

1,192.85

24.60

(78.96)

Akshat Corporation (dba R-Gen Solutions), USA (dissolved on December 21, 2018)

Step-down subsidiary (Wholly Owned Subsidiary of PSI)

July 2015*

13.36

112.50

(0.92)

8.56

Persistent Systems Israel Ltd., Israel

Step-down subsidiary (Wholly Owned Subsidiary of PSI)

February 2016

525.42

548.56

28.11

41.00

Persistent Systems Mexico S.A. de C.V., Mexico

Step-down subsidiary (Wholly Owned Subsidiary of PSI)

March 2016

215.62

176.75

(22.29)

0.62

Name of the Entity and Country of incorporation

Period of Establishment/ Acquisition

Total Income

Net Profit/(Loss)

Status

For the year ended March 31, 2019

For the year ended March 31, 2018

For the year ended March 31, 2019

For the year ended March 31, 2018

Herald Technologies Inc., USA

Step-down subsidiary (Wholly Owned Subsidiary of PSI)

August 20183

0.07

NA

(10.29)

NA

Aepona Group Limited, Ireland

Step-down subsidiary (Wholly Owned Subsidiary of Aepona Holdings Limited)

October 20154

5.84

-

(1,360.89)#

-

Valista Limited, Ireland

(Under liquidation)

Step-down subsidiary (Wholly Owned Subsidiary of Aepona Group Limited)

October 2015*

16.50

6.21

14.95

(7.84)

Aepona Limited, United Kingdom

Step-down subsidiary (Wholly Owned Subsidiary of Aepona Group Limited)

October 2015*

397.34

524.56

(96.85)

(224.58)

Persistent Systems Lanka (Private) Limited, Sri LankaA

Step-down subsidiary (Wholly Owned Subsidiary of Valista Limited)

October 2015*

212.16

209.66

34.62

25.06

PARX Werk AG, Switzerland

Step-down subsidiary (Wholly Owned Subsidiary of Persistent Systems Germany GmbH)

August 2017*

518.74

334.80

15.00

(31.39)

PARX Consulting GmbH, Germany

Step-down subsidiary (Wholly Owned Subsidiary of PARX Werk AG)

August 2017*

473.52

315.82

(59.88)

0.12

KIisma e-Services Private Limited, India

Associate Company

March 2012

* Period of Establishment/ Acquisition mentioned above is the period in which the entities are acquired by your Company directly or through its subsidiaries.

** Acquired during FY 2018-19

# Includes provision for investment and inter corporate deposits given to its wholly owned subsidiary in the UK prior to its acquisition by Persistent group. Since the net worth of the subsidiary had eroded, the same is provided for. Being the inter company transaction, it is eliminated in the consolidated financial statments.

A The Name of Aepona Software (Private) Limited has been changed to ‘Persistent Systems Lanka (Private) Limited’ with effect from May 19, 2017.

The Policy for determining material subsidiaries of your Company is available on your Company’s website at https://www.persistent.com/investors/policy-on-material-subsidiary/

Till the date of this report, your Company has established new branch offices at Santa Clara and North Carolina, USA. These branch offices will help your Company with respect in taxation, transfer pricing and business negotiations with direct customers of your Company.

Particulars of Loans and Guarantees given and Investments made

Loans, guarantees and investments covered under Section 186 of the Act form part of the notes to the financial statements provided in this Annual Report. (Refer notes 6, 7, 15, 16, 34 and 43 of the standalone financial statements)

Related Party Transactions

The Policy to determine materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors is available on your Company’s website at https://www.persistent.com/investors/related-party-transactions-policy/

During the year under report, your Company had not entered into any material transaction with any party who is related to it as per the Act. There were certain transactions entered into by your Company with its foreign subsidiaries and other parties who are related within the meaning of Indian Accounting Standard (Ind AS) 24. Attention of Members is drawn to the disclosure of transactions with such related parties set out in Note No. 34 of the Standalone Financial Statements, forming part of this Annual Report. The Board of Directors confirm that none of the transactions with any of related parties were in conflict with your Company’s interest. The list of Related Party Transactions entered by your Company for FY 2018-19 (on consolidated basis) are available on https://www.persistent.com/wp-content/uploads/2019/05/persistent-systems-rpt-march-31-2019.pdf

The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, sectoral specialization and your Company’s long-term strategy for sectoral investments, optimization of market share, profitability, legal requirements, liquidity and capital resources of subsidiaries.

All related party transactions are entered into on an arm’s length basis, are in the ordinary course of business and are intended to further your Company’s interests.

The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure D in Form No. AOC-2 and the same forms an integral part of this report.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report as stipulated under the Listing Regulations and any other applicable law for the time being in force, forms an integral part of this Report.

Compliance Certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated in the Listing Regulations forms an integral part of this Annual Report.

Management Discussion and Analysis

Report on Management Discussion and Analysis as stipulated under the Listing Regulations and any other applicable law for the time being in force based on audited, consolidated financial statements for the financial year 2018-19, forms an integral part of this Annual Report.

Business Responsibility Report

Report on Business Responsibility as stipulated under the Listing Regulations and any other applicable law for the time being in force describing the initiatives taken by the Management from an environmental, social and governance perspective, forms an integral part of this Annual Report.

Conservation of energy, technology absorption, research and development, foreign exchange earnings and outgo

Your Company has made the necessary disclosures in this Report in terms of Section 134(3) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. Your Company strives to conserve energy on a perpetual basis. Your Company has procured various energy saving devices and systems, which help in conserving energy and has resulted into a significant savings in the energy cost.

Carbon management and sustainable development provide business with some of the greatest opportunities towards sustainability. Your Company reduced carbon footprints by taking energy conservation measures. Your Company continues to take various measures on energy saving.

Your Company has reduced excessive illumination levels to standard levels in all common areas by using switching or delamping and aggressively controlled lighting with new sensor technologies. Like in the previous year, your Company has continued to maximize the use of energy efficient flat monitors, VRV air-conditioning systems, solar energy for usage of hot water, LED logo on buildings, LED lighting in all areas, installation of power management software for desktops, Watt Miser system in AHUs, Enpower Computer Management system and VFD Installation for Fresh Air AHU systems for conservation of energy.

Your Company has replaced all/ partly CFL fitting by efficient LED light fittings at its Bhageerath, Aryabhata- Pingala, Hinjawadi, SEZ-Hinjawadi, Goa (Bhaskar) and Nagpur facilities and have proposed to use the same in other facilities. Your Company has regulated working of lifts, coffee vending machines, ventilation systems and water coolers in its premises.

Your Company undertakes various initiatives to save energy - one of them is usage of solar energy

1. A 250 KW rooftop solar power plant was commissioned on the terrace of Aryabhata - Pingala facility on April 30, 2015 and it generated 174,751 units in the financial year 2018-19. Since commissioning of the plant, 701,641 units have been generated till March 31, 2019.

2. A 276 KW rooftop solar power plant was commissioned on the terrace of Hinjawadi facility in February 2018 and inaugurated on Gudipadwa, March 18, 2018 and it generated 429,795 units in the financial year 2018-19. Solar Plant is designed to generate 4.15 lakhs units/annum.

3. A 207 KW rooftop solar rooftop plant execution work has been started on the terrace of Gargi-Maitreyi in Nagpur. Expected completion date of this plant is June 30, 2019. Solar plant is designed to generate 2.70 Lakh unit/annum.

4. Installed the following solar power plants through CSR activity under community development and the MWH unit generated in financial year 2018-19:

- Pune Railway Station - 160 KW - 234,731 units p.a.

- Hyderabad Railway station - 229 KW - 305,550 units p.a.

- Tarachand Hospital, Pune - 64.5 KW - 72,853 units p.a.

Your Company has made efforts to ensure that there is no cool air leakage from its premises and has adopted measures to ensure optimum usage of air conditioners throughout its premises. A building automation system has been implemented to control working of air conditioners and to make them more power efficient. The power consumption of air conditioning has been reduced by 18% since the cold aisle containment work has been completed in Data Center, Hinjawadi. VFD system has been installed for fresh air AHUs in air conditioning systems.

As a part of your Company’s Green Movement, two 2.1 MW windmills are operational at Dhule and Sangali District in Maharashtra, India. During the financial year 2018-19, Dhule windmill generated 4,839,123 units while Sangali windmill generated 2,898,593 units.

Your Company has installed Ozone based air conditioning systems at a few locations. Modifications have been made in Data Centre arrangement to reduce power consumption. Ground water is used for landscaping to reduce consumption of treated water. A Sewage Treatment Plant was installed at the Gargi-Maitreyi in Nagpur, Aryabhata-Pingala in Pune and Goa facilities of your Company and recycled water through these plants is used for gardening.

Your Company celebrated ‘No Plastic Days’ to promote awareness of using plastic and encourage employees to carry cloth or paper bags whenever possible. ‘Zero Plate Wastage Week’ was another event celebrated in all the Company facilities. All the waste papers are shredded and disposed to scrap at all facilities. E-waste and hazardous waste are to be handed over to authorized agency approved by the State Pollution Control Board. Your Company also encouraged all employees to bring their household e-waste in your Company to dispose it appropriately.

The Conservation of Trees campaign aims to spread awareness about tree conservation.

Employees are encouraged to

- Plant at least one sapling in their vicinity

- To date, Persistent has distributed more than 1,600 saplings.

- Reduce paper wastage and make prints only when necessary; Persistent organizes ‘No Printer Days’ to promote awareness.

‘Tree Plantation Drive’ including tree maintenance program for making Mother Earth greener was organized during the year under review.

National Commercial Energy Benchmarking Initiative was taken up with a goal to establish a framework to standardize energy data collection, baseline setting for ‘typical’ commercial buildings, energy performance target setting and monitoring, and use the information to improve energy efficiency in buildings. With reference to the data collected by the BEE to judge Energy Performance Index (EPI) and total energy consumption, your Company earned star ratings for its following facilities:

- Bhageerath, Pune: EPI 171 - Received 2-Star Rating.

- Aryabhata-Pingala, Pune: EPI 190 - Received 1-Star Rating.

All the facilities of your Company in India are certified by DNVGL for ISO 14001:2015 and are upgraded to Occupational Health and Safety Management System Standard by ISO 45001:2018 certifications after rectification audit (January 2019) and are now initiated. Best practices to preserve the environment/health and safety are undertaken by your Company even during constructing its various premises by using crush sand, fly ash bricks and double glass unit, use of gypsum and recycled wood to protect the environment.

Also, all the facilities of your Company in India are certified by AGS for ISO 14064-1:2006 Greenhouse gas inventory and achieved reduction of 6.87% against target of 3%.

It is your Company’s constant endeavor to conserve and save the environment and hence your Company has launched the Green Persistent Movement to support the same. As power cost constitutes an insignificant part of the total expenses, the financial impact of these measures is not material.

Other ISO Certifications

The details about the other ISO certifications for technical processes and systems are provided in the Annexure F to this Report and which forms an integral part of this report.

The particulars of expenditure on Research and Development on an accrual basis are as follows:

(In Rs. Million)

Particulars

Year ended on March 31

2019

2018

Capital expenditure

0.46

-

Revenue expenditure

182.35

281.99

Total research and development expenditure

182.81

281.99

As a percentage of total income

0.89%

1.52%

The particulars of foreign exchange earnings and outgo based on actual inflows and outflows are as follows:

(In Rs. Million)

Particulars

Year ended on March 31

2019

2018

Earnings

20,488.65

17,722.02

Outgo

6,281.03

4,858.47

Adequacy of Internal Financial Controls

The Board is responsible for establishing and maintaining adequate internal financial control as per Section 134 of the Act.

The Board has laid down policies and processes in respect of internal financial controls and such internal financial controls were adequate and were operating effectively. The internal financial controls covered the policies and procedures adopted by your Company for ensuring orderly and efficient conduct of business including adherence to your Company’s policies, safeguarding of the assets of your Company, prevention and detection of fraud and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

Internal Audit

Your Company has an in-house internal audit team since 2005 and comprises of personnel with professional qualifications and certifications in audit and is rich on diversity. The audit team hones its skills through a robust knowledge management program to continuously assimilate the latest trends and skills in the domain and to retain the knowledge gained for future reference and dissemination.

The Head of Internal Audit team reports to the Chairman of the Audit Committee and is a permanent invitee to the quarterly meetings of the Audit Committee and the Risk Management Committee. Findings of the audits are presented to the Audit Committee at its quarterly meetings.

The function provides an independent, objective assurance and consulting services to value-add and improve Operations of Business Units. The audits carried out through-out the year, are based on an internal audit plan, which is reviewed and approved by the Audit Committee every quarter. In line with the industry practice and regulatory requirements, the internal audit function covers the areas such as review of Internal Financial Controls, Business and Financial operations including regulatory Compliances.

Reporting of frauds by Auditors

Durng the year under report, neither the Statutory Auditors nor the Secretarial Auditors as reported to the Audit Committee, under Section 143(12) of the Act, any instance of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the report of the Directors.

Directors’ responsibility statement

The Directors state that:

1. In the preparation of the annual accounts, the applicable Accounting Standards have been followed and there is no material departure;

2. Your Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company as at March 31, 2019 and of the profit of your Company for that year;

3. Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities, if any;

4. The annual accounts have been prepared on a going concern basis;

5. Your Directors, had laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and were operating effectively;

6. Your Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Extract of Annual Return

Pursuant to the provisions of the Section 92(3) of the Act read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return of your Company for the financial year ended on March 31, 2019 is provided as Annexure E to the Directors Report and forms an integral part of this Annual Report.

Vigil Mechanism (Whistle Blower Policy)

The details of the vigil mechanism (whistle blower policy) are given in the Report on Corporate Governance forming part of this Annual Report. Your Company has uploaded the policy on its website at https://www.persistent.com/ethical-practices-at-persistent-systems/whistle-blower-policy/

Risk Management Policy

Report on Risk Management based on the risk management policy developed and implemented at your Company for the Financial Year 2018-19 forms an integral part of this Annual Report.

Project Fusion - New ERP System

During the year under report, your Company has implemented a New ERP System named as Fusion at all locations of your Company. This system is a complete transformation of ERP HCM and has key features such as full SaaS deployment, Integration with external systems, available on all endpoints, Industry best practices and Embedded Business Intelligence.

This system mainly covers functions viz., financials (Including Procurement, Travel, Asset Management), Project Portfolio Management (Services and Products), Enterprise Performance Management (including Cost and Revenue Budgeting), Human Capital Management. This modernized cloud platform provides additional opportunities to business, actionable in sights for business agility, cost efficiencies, improved user and customer experience, management of data and privacy risks.

This system implementation has been started in June 2018 and is proposed to be completed by June 2019.

The estimated life of the system is approx. 10 years from its implementation.

Performance Evaluation of the Board, its Committees and Directors

Your Company conducted the annual performance evaluation of the Board, its various committees, the Chairman of the Board and other directors individually. The performance of the Board was evaluated by the Board after seeking inputs from all the directors and senior management on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. This was conducted in March and April 2019 by an external management consultant and the findings of the evaluation were presented at the meeting of the Nomination and Governance Committee and the Board of Directors held in April 2019.

Qualitative comments received during the Board evaluation were as follows:

- The Board was very active in planning process. Also, in CEO selection and transition process, their suggestions were very valuable and appropriate.

- Board meetings were conducted in a very transparent and open environment, concerns conveyed without reservation and the Board has been forthright.

- The Board has evolved to become more diverse and complementary, coverage is excellent.

Previous year’s observations (For FY 2017-18) and actions taken are as follows:

Sr.

No.

Observations

Actions taken

1.

Going forward, during evaluation process, the focus

It has been decided that henceforth the ranking or rating system

may be given more on qualitative comments.

on evaluation questions be changed to qualitative comments and the same was implemented immediately thereafter.

2.

The Board members may share the best practices

An appeal was made to the Board members to share the best

observed by them in other companies during the

practices observed by them in other companies during the

relevant discussions.

relevant discussions. Accordingly, the Directors have started sharing the best practices observed by them in other companies.

Proposed actions based on current year’s observations:

Sr.

No.

Observations

Actions proposed

1.

The Board may consider setting aside time in every meeting to discuss certain themes in depth - thinking

big, developing the next generation of leaders, M&A, etc. This could be decided in advance or based on the issues at the time of the meeting.

The observations have been communicated to the Board and

accordingly, necessary steps will be taken in due course.

2.

A program of Directors mentoring specific leaders may be introduced again.

Disclosure of Cost Audit

Your Company had filed Form 23C for appointment of Cost Auditor relating to its activities of generation of electricity from windmill turbine under the Companies (Cost Audit Report) Rules, 2011. However, based on another Circular dated November 30, 2011 issued by the Ministry of Corporate Affairs (MCA), your Company claimed exemptions from the requirement of the Cost Auditor for the said purposes and accordingly, had written a letter dated December 19, 2012 to MCA, Cost Audit Branch, for withdrawal of the appointment of the said Cost Auditor as well as cancellation of the Form 23C so filed. Reply to the said letter is awaited from the concerned office of the MCA.

Listing with the stock exchanges

The Equity Shares of your Company are listed on BSE Limited (BSE) and the National Stock Exchange of India Limited (NSE) since April 6, 2010. Listing fees for the financial year 2018-19 have been paid to both BSE and NSE.

Secretarial Standards

The Ministry of Corporate Affairs notified the Secretarial Standard on Meetings of the Board of Directors (SS-1), Secretarial Standard on General Meetings (SS-2), Secretarial Standard on Dividend (SS-3) and Secretarial Standard on ‘Report of the Board of Directors’ (SS-4). Your Company complies with the same.

Your Company will comply with the other Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) as and when they are made effective.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has an Anti-Harassment Policy in place which is in line with requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (the ‘Act’). All employees (permanent, contractual, temporary and trainees) are covered under this policy.

Your Company has constituted an Internal Complaints Committee(s) (ICC) across all Company locations in India and abroad to consider and resolve all sexual harassment complaints reported to this Committee. The constitution of the ICC is as per the Act and the Committee includes an external member from NGOs with relevant experience at the India locations and half of the total members of the ICC are women. The Ethics Committee at the global locations, acts in the capacity of Internal Complaints Committee where the local law over there does not enforce constitution of such committee.

Investigation is conducted and the decisions made by the ICC at the respective location, and the senior women employee is the presiding officer over every case.

During the year under report, your Company has received one complaint of sexual harassment which was disposed during the year under the report. As on March 31, 2019, there were no pending cases of sexual harassment in your Company.

Corporate Social Responsibility

Your Company voluntarily started contributing to the CSR initiatives since 1995-96 i.e. much before the legislations made it compulsory for the corporates. Your Company used to donate 1% of its consolidated net profits till FY 2011-12 and 1.25% of its consolidated net profits till FY 2013-14. Thereafter, the Company is contributing 2% of the average net profit on unconsolidated basis of preceding three financial years.

To institutionalize the Company’s CSR initiatives and to develop a systematic approach to administer the process of grant of donations, your Company formed a Public Charitable Trust - ‘Persistent Foundation’ in the financial year 2008-09.

This year, Persistent Foundation is celebrating 10th year of its establishment. During these 10 years, the Foundation has contributed to many projects spread across different geographies in association with well-known NGOs to reach out to large number of beneficiaries. The recently conducted impact assessment study has conferred effectiveness of projects being carried out by the Foundation for a society at large.

Your Company acknowledges the contribution given by the Foundation to the society and assures its support to the Foundation for its next journey.

During the year under report, Persistent Foundation (the ‘Foundation’) was able to create excitement among employees to participate in socially relevant causes. With cooperation of the employees of your Company, the Foundation has set up several well-defined programs and activities for the promotion of education, health and community development. These activities are carried out through projects undertaken by the Foundation with the support of the employees and through the Government authorities, reputed social organizations and institutions.

In addition to contributing Rs. 70.51 Million to the Foundation, your Company made donations to various charitable institutions directly and incurred a cost of the technical contribution towards Stri Shakti Abhiyaan Project, an initiative of the NITI Aayog and coordinated by McKinsey, India. Thus, during the year under report, your Company donated Rs. 80.36 Million i.e. more than 2% of the Average Net Profits of your Company made during three immediately preceding financial years.

Report on CSR activities of your Company under the provisions of the Act during the financial year 2018-19 is annexed hereto as Annexure G and forms an integral part of this Annual Report.

Based on the profits of three financial years ending on March 31, 2019, the Committee recommended to the Board of Directors, the amount of Rs. 85.21 Million which is to be spent towards CSR activities as per Section 135 of the Act for the financial year 2019-20.

CSR Committee and CSR Policy

The Board of Directors of your Company has constituted the CSR Committee to help your Company frame, monitor and execute the Company’s CSR activities under its CSR scope. The Committee defines the parameters and observes them for effective discharge of the Company’s social responsibility.

The Board of Directors of your Company has further approved the CSR Policy of your Company to provide a guideline for the Company’s CSR activities. The CSR Policy is also uploaded on your Company’s website at https://www.persistent.com/investors/csr-at-persistent/

The Company’s CSR Policy highlights that the need for contributing to the society is very large and your Company can make a more significant contribution by staying focused on few areas through its social initiatives. The CSR policy recommends that your Company should encourage Persistent Foundation to contribute in the following areas:

- Health

- Education

- Community Development

- Assistance in Natural Calamities

The constitution of the CSR Committee is provided elsewhere in the Annual Report.

Other matters

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under report:

1. Neither the Managing Director nor the Executive Director of your Company receive any remuneration or commission from any of its subsidiaries.

2. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and your Company’s operations in future.

Future Outlook

Even though the year under report has been challenging and a year of transition for your Company, the Directors are very optimistic about the progress made and the results that were observed towards the end of the year. The fundamentals of the Company are strong and stable.

Your Company has an impressive list of customers who are well-established in their fields. Customers are satisfied with the work done by the employees of your Company and are keen to extend the work they do with your Company. Your Company has established an excellent set of partnerships with the leading Companies and these partnerships have helped your Company establish credibility and leadership as customers are starting to transform their business by becoming software driven business.

The investments made by your Company in technology areas are spot on and your Company is working with and has added specialists who understand the business domain and they helped your Company to elevate the conversation to business value.

With a new team in place, the Directors expect that your Company will be on an improved growth trajectory and will be able to post industry leading growth rates in the next few years.

Acknowledgments and appreciation

Your Board places on record the support and wise counsel received from the Government of India, particularly the Department of Electronics and Information Technology, the Ministry of Corporate Affairs, the Ministry of Finance, the Ministry of Commerce and Industry, the Reserve Bank of India and the Securities and Exchange Board of India (SEBI) throughout the financial year.

Your Board extends its sincere thanks to the officers and staff of the Software Technology Parks of India - Pune, Nagpur, Goa, Hyderabad, Bengaluru, Visakhapatnam Special Economic Zone - Andhra Pradesh, SEEPZ Special Economic Zone - Mumbai, Cochin Special Economic Zone, Central Excise and Customs Department, Department of Revenue, Income Tax Department, Department of Electronics, Director General of Foreign Trade, Director of Industries, Department of Shops and Establishments, Department of Telecommunication, Department of Commerce (SEZ Section), Regional Director of Western Region, Registrar of Companies, Maharashtra, Pune, Goods and Service Tax Department, Infotech Corporation of Goa Limited, Goa Industrial Development Corporation, National Stock Exchange of India Limited, BSE Limited, Central Depository Services (India) Limited, National Securities Depository Limited, local Municipal Corporations where Company operates, Maharashtra State Electricity Distribution Company Limited, Telangana (erstwhile Andhra Pradesh) State Electricity Board, Telangana State Industrial Infrastructure Corporation, Maharashtra Industrial Development Corporation, Bengaluru Municipal Corporation, Karnataka Industrial Development Corporation, BSNL and Mobile / Internet Service providers.

Your Board also extends its sincere thanks to M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Statutory Auditors, M/s. Joshi Apte & Co., Chartered Accountants, Tax Auditors and M/s. SKO and Associates, Company Secretaries, Secretarial Auditors for their services to your Company.

Your Board also extends its thanks to ABSA Capital Bank, Axis Bank, Bank of Baroda, Bank of India, Barclays Bank, Banco Nacional de Mexico S.A., Bank of Tokyo Mitsubishi, BNP Paribas, Chase Bank, Citibank NA, Deutsche Bank, HDFC Bank, Hongkong and Shanghai Banking Corporation, Silicon Valley Bank, State Bank of India, Standard Charted Bank, Syndicate Bank, Union Bank of India, Wells Fargo Bank and their officials for extending excellent support in all banking related activities.

Your Board places on record its deep sense of appreciation for the committed services of the associates of your Company at all levels.

Your Board thanks the investors and shareholders for placing immense faith in them.

Your Board takes this opportunity to express its sincere appreciation for the contribution made by employees at all levels in your Company. The consistent growth was made possible by their hard work, solidarity, cooperation and support.

For and on behalf of the Board of Directors

Dr. Anand Deshpande

Chairman and Managing Director

Pune, June 11, 2019 DIN: 00005721

Director’s Report