Persistent Systems Ltd Directors Report.

Your Directors are pleased to present the Thirty-First Annual Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2021.

Business Update

This financial year was one of your Companys strongest performance over the last decade and one that demonstrates the unquestionable value and dedication that your Company brings to clients every day. With the uncertainty of the pandemic front and centre, your Company came together like no other to ensure the safety and well-being of all employees, to maintain strong business continuity for all clients, and to contribute to global COVID-19 relief in the markets we operate.

Through Persistent Foundation, your Company committed to donate $3.3M ($300 per employee) to COVID-19 relief efforts globally. This funding went to various highly regarded organizations working on the front lines to provide critical medical equipment, PPE kits, food to affected families and more. In addition to the funding, the Foundation logged over 5,000 volunteer hours, with more each day as the second wave bears down hard in India.

Despite the many challenges brought on by the pandemic, your Company ended the year at US $566.08M, representing year on year growth of 12.9%. In addition, improved operational rigour and optimization across all units and enabling functions delivered significant improvements in EBIT, ending 55.2% year on year. This performance and market momentum enabled record-high stock performance, driving our market capitalization beyond $2.0B.

Your Company proudly welcomed over 3,000 new team members to support this growth, bringing the total strength to 13,680 employees globally. This infusion of talent included the acquisition of CAPIOT, bolstering our expertise in the fastgrowing enterprise integration market. In addition, Persistent continues to strengthen our leadership team for the future, including the promotion of Mr. Sandeep Kalra, previously President of TSU to the Chief Executive Officer of your Company on October 23, 2020.

At the same time, your Company executed industry-leading delivery excellence and customer satisfaction. Competing against 4,000 other companies in the IT industry, your Company won the prestigious ISG 2020 Star of Excellence Award™ for core technologies globally, as well as for North America, APAC, BFSI and HCLS. These coveted awards are significant because they result from direct feedback which ISG received from over 100 Persistent clients - more than any provider.

Delivering this strong performance during such uncertain and challenging times was not easy. Reflecting upon the year gone by, the following three key pillars were fundamental to your Companys success:

1Resilience

Despite many pressures and unique challenges each of our employees faced during the pandemic, they remained focused on delivering robust performance and consistent business continuity for the Company, and more importantly, for the clients.

2Relationships

Our teams carefully listened to their clients needs and proactively partnered with them as they charted their path to digital acceleration providing differentiated, higher value and outcome-based engagement models to strengthen our relationships for the long term.

3Reinvention

With 30+ years of digital engineering DNA and deep expertise in the latest cloud technology, your Company worked diligently with its clients to quickly reimagine, develop, integrate, and manage the new software required to run their now fully digital business.

We will continue to put great focus on these dimensions in the coming year, as they will no doubt be the bedrock of Persistents growth in the future. Your Company has the team to make it happen - it is now all about disciplined execution.

A. Financial Section

Financial Results

The highlights of the financial performance on a consolidated basis for the year ended March 31, 2021 are as under:

(Amount in USD million except EPS and Book Value)

(Amount in ^ million except EPS and Book Value)

% Change (based on amounts in ^)
Particulars 2020-21 2019-20 2020-21 2019-20
Revenue from Operations 566.08 501.61 41,878.88 35,658.08 17.45%
Earnings before interest, depreciation, amortization and taxes 92.32 69.34 6,830.15 4,929.54 38.56%
Finance Cost* 0.78 0.89 57.94 63.32 (8.50%)
Depreciation and amortization 23.73 23.35 1,755.50 1,659.62 5.78%
Other income 14.57 18.53 1,077.72 1,316.82 (18.16%)
Tax expense 21.46 15.76 1,587.66 1,120.53 41.69%
Net profit 60.92 47.87 4,506.77 3,402.89 32.44%
Transfer to general reserve 27.31 22.94 2,020.34 1,630.89 23.88%
Net worth** 381.61 314.56 27,899.35 23,799.84 17.22%
Earnings per share (EPS) (Basic) 0.80 0.62 58.97 44.38 32.88%
Earnings per share (EPS) (Diluted) 0.80 0.62 58.97 44.38 32.88%
Book value per equity share 4.99 4.12 365.06 311.41 17.22%
Market value per equity share as on March 31
BSE Limited - - 1,918.75 551.00 248.23
National Stock Exchange of India Limited - - 1,922.05 550.95 248.86

[Conversion Rate USD 1 = Rs.73.98 for Profit and Loss items; USD 1 = Rs.73.11 for Balance Sheet items (Financial Year 2020-21) and USD 1 = Rs.71.09 for Profit and Loss items; USD 1 = Rs.75.66 for Balance Sheet items (Financial Year 2019-20)]

*Includes notional interest on lease liability Rs.57.53 million recognized in accordance with IND AS - 116 on Leases for the year ended March 31, 2021. (Financial Year 2019-20: Rs.61.22 million)

**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, 2021 are as under:

(Amount in USD million except EPS and Book Value)

(Amount in Rs. million except EPS and Book Value)

% Change (based on amounts in Rs.)
Particulars 2020-21 2019-20 2020-21 2019-20
Revenue from Operations 335.17 296.54 24,796.08 21,081.22 17.62%
Earnings before interest, depreciation, amortization and taxes 82.58 60.90 6,109.04 4,329.65 41.10%
Finance Cost* 0.52 0.63 38.21 44.51 (14.15%)
Depreciation and amortization 7.66 7.81 566.79 555.12 2.10%
Other income 15.90 22.49 1,176.16 1,599.04 (26.45%)
Tax expense 22.02 17.61 1,629.34 1,251.83 30.16%
Net profit 68.27 57.35 5,050.86 4,077.23 23.88%
Transfer to general reserve 27.31 22.94 2,020.34 1,630.89 23.88%
Net worth** 378.27 303.80 27,655.24 22,985.38 20.32%
Earnings per share (EPS) (Basic) 0.89 0.75 66.09 53.17 24.30%
Earnings per share (EPS) (Diluted) 0.89 0.75 66.09 53.17 24.30%
Book value per equity share 4.95 3.98 361.86 300.76 20.32%
Market value per equity share as on March 31
BSE Limited - - 1,918.75 551.00 248.23
National Stock Exchange of India Limited - - 1,922.05 550.95 248.86

[Conversion Rate USD 1 = Rs.73.98 for Profit and Loss items; USD 1 = Rs.73.11 for Balance Sheet items (Financial Year 2020-21) and USD 1 = Rs.71.09 for Profit and Loss items; USD 1 = Rs.75.66 for Balance Sheet items (Financial Year 2019-20)]

*Includes notional interest on lease liability Rs.38.09 million recognised in accordance with IND AS - 116 on Leases for the year ended March 31, 2021. (Financial Year 2019-20: Rs.43.86 million)

**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 2020-21 and the date of this report.

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

As per Section 134 of the Companies Act, 2013 (the ‘Act), your Company has provided the Consolidated financial statements as on March 31, 2021. Your Directors believe that the consolidated financial statements present a more comprehensive picture as compared to standalone financial statements. These documents are available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. A statement showing financial highlights of the subsidiary companies is enclosed to the consolidated financial statements.

The Annual Report of your Company does not contain full financial statements of the subsidiary companies, however, your Company will make available the audited annual accounts and related information of the subsidiary companies in soft copy in line with the Ministry of Corporate Affair (MCA) Circular dated May 5, 2020 and its extentions from time to time upon request by any Member of your Company.

Consolidated financial statements

Consolidated financial statements of your Company and its subsidiaries as at March 31, 2021 are prepared in accordance with the Indian Accounting Standard (Ind AS) 110 on ‘Consolidated Financial Statements notified by the MCA and forms part of this Annual Report.

Auditors

Appointment of Statutory Auditors

The Members of your Company at the 30th Annual General Meeting (AGM) held on July 24, 2020, appointed M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013) as the Statutory Auditors of your Company to hold such office for a period of 5 (Five) years i.e. up to the conclusion of the 35th AGM to be held in the calendar year 2025; on or before September 30, 2025.

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. Walker Chandiok & Co LLP have confirmed that they hold a valid certificate issued by ‘Peer Review Board of ICAI and have provided a copy of the said certificate to your Company for reference and records.

Secretarial Audit Report

Pursuant to Section 204 of the Act, the Board of Directors had appointed M/s. PVS and Associates, Practicing Company Secretary as the Secretarial Auditors of your Company for the financial year 2020-21.

Accordingly, the Secretarial Auditors have given their report, which is annexed hereto as Annexure A. A single observation mentioned therein by the Secretarial Auditors is self explanatory in nature.

Reporting of frauds by auditors

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Boards report.

Adequacy of Internal Financial Controls

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

Your 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 Companys 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

The details of the internal audit team and its functions are given in the Management Discussion and Analysis Report forming part of this Annual Report.

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 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 the 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 MCA.

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. 15. 16. 34 and 43 of the Standalone Financial Statements)

Transfer to reserves

As per the policy of your Company on transfer of surplus profit to reserves, an amount of Rs.2,020.34 million has been transferred to the General Reserve and an amount of Rs.2,026.45 million will be retained in the Statement of Profit and Loss after payment of dividend. The balance in Profit and Loss Account as on March 31, 2021 is Rs.11,888.23 million.

Fixed Deposits

In terms of the provision of Sections 73 and 74 of the Act read with the relevant Rules, your Company has not accepted any fixed deposits during the year under report.

Liquidity

Your Company continues to maintain adequate amount of liquidity to meet the necessary strategic and growth objectives. Your Company aims to balance between earning adequate returns on liquid assets and the need to cover financial and business risks. As at March 31, 2021, your Company, on an unconsolidated basis, had cash and cash equivalents (including investments) amounting to Rs.17,711.05 million as against Rs.12,687.08 million as at March 31, 2020.

The details of cash and cash equivalents (including investments) are as below:

(In Rs.million)
Particulars As on March 31, 2021 As on March 31, 2020
Investment in Mutual Funds at fair value 7,181.94 7,339.28
Fixed Deposits with scheduled banks 7,108.47 2,643.65
Bonds (quoted) 2,557.92 2,171.52
Cash and Bank balances 862.72 532.63
Total 17,711.05 12,687.08

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

(In Rs.million)

Year ended on March 31

Particulars 2021 2020
Capital expenditure - 1.04
Revenue expenditure 196.72 243.05
Total research and development expenditure 196.72 244.09
As a percentage of total income 0.76% 1.08%

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

(In Rs.million)

Year ended on March 31

Particulars 2021 2020
Earnings 21,209.15 19,207.33
Outgo 3,770.79 5,241.20

Update on Fixed Deposits with IL&FS

One of the investments in your Companys 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 view of the uncertainty prevailing with respect to recovery of outstanding balances from IL&FS Group, your Company has fully provided for these deposits along with interest accrued thereon till the date, as the deposits had become doubtful of recovery. Your Company continues to be hopeful of recovery though with a time lag and continues to monitor developments in the matter and is committed to take steps including legal action that may be necessary to ensure full recovery of the said deposits.

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 Companys website at https://www.persistent.com/investors/related-party- transactions-policy/

During the year under report, your Company did not enter 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 confirms that none of the transactions with any of related parties were in conflict with your Companys interest. The list of Related Party Transactions entered into by your Company for FY 2020-21 (on consolidated basis) are available on https://www.persistent.com/investors/related-partv-transactions-policv/

The related party transactions are entered into based on considerations of various business requirements, such as synergy in operations, sectoral specialization and your Companys 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 arms length basis, are in the ordinary course of business and are intended to further your Companys 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 B in Form No. AOC-2 and the same forms an integral part of this report.

B. Board and its Committees

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 2020-21 are given in the Report on Corporate Governance forming part of this Annual Report.

Directors and Key Managerial Personnel

During the year under report, the Members of your Company in 30th AGM confirmed the appointment/re-appointment as follows:

a. Re-appointment of Dr. Anand Deshpande (DIN: 00005721), Chairman and Managing Director of your Company as the Managing Director of the Company liable to retire by rotation, to hold office for a period of 5 (Five) years i.e. up to the conclusion of the 35th Annual General Meeting of the your Company to be held on or before September 30, 2025.

b. Confirmation of appointment of Mr. Praveen Kadle (DIN: 00016814) as an Independent Director of your Company, not liable to retire by rotation, to hold office for 5 (Five) consecutive years i.e. up to April 22, 2025.

Further, Mr. Prakash Telang and Mr. Kiran Umrootkar, Independent Directors of your Company, retired at the conclusion of the 30th AGM of your Company held on July 24, 2020.

During the year under report, Mr. Christopher OConnor, Executive Director and Chief Executive Officer resigned effective from August 9, 2020 due to his personal reasons. He has confirmed that there were no material reasons for his resignation other than the reason mentioned above.

Subsequently, the Board of Directors, at its meeting held in October 2020, appointed Mr. Sandeep Kalra, Executive Director and President as the Chief Executive Officer of your Company with effect from October 23, 2020. Accordingly, his designation changed to ‘Executive Director and Chief Executive Officer.

Also, Mr. Sunil Sapre, Executive Director and Chief Financial Officer was appointed as the Executive Director of your Company for a period of 3 (Three) consecutive years for a term up to January 26, 2021. Accordingly, his term of appointment ended on January 26, 2021.

During the year under report, your Board has appointed Mr. Sunil Sapre as an Additional Director (Executive Member) with effect from January 27, 2021 till September 30, 2024 subject to the approval of the Members at the ensuing AGM.

The Board of Directors of your Company at the meeting held on June 10, 2021 recommended Mr. Sapres appointment as an Executive Director for the term up to September 30, 2024. Your Board considered his expertise, wide industry experience and financial acumen for recommending his appointment. Pursuant to the provisions of the Act, he is liable to retire by rotation.

Mr. Sapre 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, Mr. Sapre has requisite qualifications and experience and therefore, your Directors recommend that the proposed resolution relating to the appointment of Mr. Sapre be passed with the requisite majority. Mr. Sapres profile forms part of this Annual Report and has also been provided in the Notice of the 31st AGM.

In terms of Section 152(6) of the Act and Article 137 of the Articles of Association of your Company, Mr. Sandeep Kalra, Executive Director and Chief Executive Officer is liable to retire by rotation at the ensuing AGM as he is the Non-Independent Director who is holding office for the longest period among the Non-Independent Directors on the current Board.

Mr. Kalra 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, Mr. Kalra possess requisite qualifications and experience and therefore, your Directors recommend that the proposed resolution relating to the re-appointment of Mr. Kalra be passed with the requisite majority.

At present, your Company has 6 (Six) 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.

There is no inter-se relationship between the Directors.

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 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(6) of the Act along with Rules framed thereunder and Regulation 16 of the Listing Regulations.

They have been already registered with MCA Databank of Independent Directors.

During the Financial Year 2020-21, a separate meeting, exclusively of the Independent Directors was held on April 25, 2020, in which the Independent Directors have transacted the following businesses along with few other important strategic and policy related matters:

1Reviewed performance of the Executive Directors and Management of the Company

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

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

4Discussed the role of the Executive Management in the recent COVID-19 outbreak and business continuity plan in the organization

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 considered positively by the Board of Directors of your Company from time to time during the year under Report.

Nomination and Remuneration Committee

The details including the composition and terms of reference of the Nomination and Remuneration Committee and the meetings thereof held during the financial year and the Remuneration Policy of the Company and other matters provided in Section 178(3) of the Act 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 depending on dates of retirement of existing Directors and the strategic needs of the Company. The criteria include expertise area, industry experience, professional background, association with other companies and such other important parameters.

Once the criteria is determined, the Board directs the Nomination and Remuneration Committee to compile profiles of suitable candidates through networking, industry associations and business connects. The Nomination and Remuneration 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 this Committee.

Once the Committee is convinced about a candidates competency, his/her business acumen, commitment towards his/her association with your Company, disclosure of his/her interest in other entities 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. Generally, the Board accepts the recommendation by consensus.

Performance Evaluation of the Board, its Committees and Directors

Your Company conducted the annual performance evaluation of the Board, the Chairman, its various Committees and the Directors individually including Independent Directors. The performance evaluation was done by an external management consultant who specialized in Board evaluations. The performance of the Board was evaluated by seeking inputs from all the directors and senior management. The evaluation criteria include aspects such as the board composition and structure, effectiveness of board processes, information and functioning, etc. The evaluation was conducted in March and April 2021 and the findings of the evaluation were presented at the meetings of the Nomination and Remuneration Committee and the Board of Directors held in April 2021.

Extract of the qualitative comments received during the Board evaluation for the year under report were as follows:

1Improvements have been made in focusing Board discussion on strategic issues. This needs further improvement. This may be due to the new management team that has not adequately interacted with the Board and with the fact that meetings have not been held in person and have been only online.

2The risks are changing very fast. More work needs to be done to ensure that we are managing risks adequately.

3The Investment Committee is a welcome new group which could be leveraged more by the Management.

Proposed actions based on current years comments:

1The impact assessment of risks in Risk Repository is a regular activity and is being conducted on quarter to quarter basis. This activity will be conducted more rigorously henceforth.

2The Investment Committee of the Company was reconstituted in July 2020 to focus and particularly assess the investment opportunities through acquisitions, mergers and joint ventures. The Committee also reviews the previous investments made by your Company during its periodic meetings.

Previous years observations (For FY 2019-20) and actions taken are as follows:

For the previous year, the comments received from the external management consultant were generic in nature and hence there were no specific actions required.

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 as Annexure C to 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 as Annexure D to 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.

During the year under report, 187 employees were granted 1,832,500 options under the Employee Stock Option Plan 2017. No new options or shares were granted to the Independent Directors of your Company during the year under report.

Shares held by the Independent Directors and Non-Executive Non-Independent Director as on March 31, 2021 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
Roshini Bakshi NIL NIL NIL NIL
Pradeep Bhargava 12,000* NIL NIL 12,000
Guy Eiferman NIL NIL NIL NIL
Dr. Anant Jhingran NIL NIL NIL NIL
Praveen Kadle NIL NIL NIL NIL
Thomas Kendra NIL NIL NIL NIL
Prof. Deepak Phatak NIL NIL NIL NIL

* Granted before April 1, 2014.

During the year under report, the Nomination and Remuneration Committee have granted RSUs to the following Director and senior executive of your Company:

Name of the RSU Grantee Designation Date of Grant No. of RSUs
Sandeep Kalra Executive Director and Chief Executive Officer November 1, 2020 50,000
Charles Owen Chief Corporate Development Officer February 1, 2021 15,000

During the year under report, pursuant to the resolutions passed by the Nomination 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 year, 391,382 (Three Hundred Ninety-One Thousand Three Hundred and Eighty-Two) i.e. 0.51% Equity Shares of the total Paid-up Capital were transferred by PSPL ESOP Management Trust to the eligible employees including ex-employees at an aggregate value of Rs.66.56 million under various ESOP Schemes of your Company.

Your Company has 13 (Thirteen) ESOP Schemes as on March 31, 2021 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.

Corporate Social Responsibility

Your Company formed a Public Charitable Trust — ‘Persistent Foundation in the Financial Year 2008-09 to institutionalize your Companys CSR initiatives and to develop a systematic approach to administer the process of grant of donations.

Last year, Persistent Foundation (the ‘Foundation) celebrated its eleventh year of establishment. During these 12 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.

Your Company acknowledges the contribution made by the Foundation in coordinating and ensuring that the CSR donations made by your Company are being effectively deployed as proposed and have an impact on the society,

During the year under report, the Foundation was able to continue 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, community development and assistance in natural calamities, 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.140 million to the Foundation, your Company made a donation of Rs.10 million to PM CARES Fund directly, Thus, during the year under report, your Company donated Rs.150 million i,e, more than 2% of the Average Net Profits of your Company made during three immediately preceding financial years, The Company has also donated Rs.10 million to Chief Ministers Relief Fund (COVID-19), Maharashtra which is not considered as CSR Activity in terms of Sch, VII of the Act.

In the growing concern of COVID-19 pandemic, your Company has taken a decision to make worldwide donations and has allocated USD 3,30 million towards the same, Details of these donations form an integral part of Report on CSR activities,

Report on CSR activities of your Company under the provisions of the Act during the Financial Year 2020-21 is annexed hereto as Annexure E,

A detailed Report on the activities of the Foundation forms an integral part of this as Report on CSR activities,

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 Companys CSR activities under its CSR scope, The Committee defines the parameters and observes them for effective discharge of the Companys social responsibility,

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

The Companys 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 focus areas:

1Health 2Education

3Community Development 4Assistance in Natural Calamities

The constitution of the CSR Committee is provided in the Report on Corporate Governance section forming part of this Annual Report,

C. Equity and Related Information

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 2020-21 have been paid to both BSE and NSE,

Institutional Holding

As on March 31, 2021, the total institutional holding in your Company stood at 48,85% of the total share capital,

Dividend for the Financial Year 2020-21

The details of the Dividend for the Financial Year 2020-21 and 2019-20 are as follows:

Financial Year 2020-21

Financial Year 2019-20

Type of Dividend Interim Final Interim 1 Interim 2
Month of Declaration/recommendation Jan-21 Apr-21 Jan-20 Mar-20
Amount of Dividend Per Equity Share of Rs.10 each (In f) 14 6 9 3
% of Dividend 140% 60% 90% 30%
Total Dividend (Amt. in Rs.million) 1,069.95 458.55 687.83 229.28
Dividend Distribution Tax (Amt. in Rs.million)* - - 87.47 18.67
Total Outflow (Including Dividend Distribution Tax) 1,069.95 458.55 775.30 247.95
(Amt. in Rs.million)
Total Dividend Outflow for the year (Amt. in ^ million)

1,528.50

1,023.25

*The Finance Act, 2020 in India has repealed Dividend Distribution Tax (DDT). The dividend income is taxable in the hands of shareholders w.e.f. April 1, 2020.

The payment of final dividend of Rs.6 per share is subject to your approval during the 31st AGM of your Company. The Dividend will be paid out of profits of your Company.

Out of the interim dividend declared in January 2021, Rs.0.19 million remained unclaimed as on March 31, 2021.

Your 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. As per the policy, the dividend pay-out ratio shall be maintained up to 40% of the Consolidated Profit After Tax. The above dividend is in compliance with the Dividend Distribution Policy of the Company and the pay-out ration for the Financial Year 2020-21 is 33.92% subject to approval by the shareholders for the proposed final dividend.

Pursuant to the Finance Act 2020, dividend income will be taxable in the hands of shareholders w.e.f. April 1, 2020 and your connect this paragraph for various categories, the shareholders are requested to refer to the Finance Act, 2020 and amendments thereof.

In this regard, your Company has availed the facility for online submission of Tax Exemption forms from M/s. Link Intime India Private Limited (‘Link Intime) wherein the shareholders can submit their tax-exemption forms along with other required documents.

The requisite form for claiming tax exemption can be downloaded from Link Intimes website. The URL for the same is as under: https://www.linkintime.co.in/client-downloads.html — On this page, select the General tab. All the forms are available under the head "Form 15G/15H/10F".

The aforementioned documents (duly completed and signed) are required to be uploaded on the URL mentioned below: https://linkintime.co.in/formsreg/submission-of-form-15g-15h.html — On this page, the user shall be prompted to select/ share the following information to register their request.

1Select the company (Dropdown)

2Folio/DP-Client ID 3PAN

4Financial year (Dropdown)

5Form selection

a. Document attachment - 1 (PAN)

b. Document attachment - 2 (Forms)

c. Document attachment - 3 (Any other supporting document)

Please note that the documents (duly completed and signed) should be uploaded on the website of Link Intime in order to enable the Company to determine and deduct appropriate TDS/Withholding Tax.

Incomplete and/or unsigned forms and declarations will not be considered by the Company.

The Members may note that in case the tax on said interim/final dividend is deducted at a higher rate in absence of receipt of the aforementioned details/documents, option is available to the Members to file the return of income as per the Income Tax Act, 1961 and claim an appropriate refund, if eligible.

Transfer of Unclaimed Dividend and corresponding shares to the IEPF Authority

During the year under report, your Company has transferred the unclaimed and unpaid dividend of Rs.209,720 to the IEPF Authority. Further, 210 corresponding shares on which the dividend was unclaimed for seven consecutive years have been 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 the website: https://www.persistent.com/investors/unclaimed-dividend/

The Board has appointed Mr. Amit Atre, Company Secretary, as the Nodal Officer to ensure compliance with the IEPF rules.

Shares Suspense Account

Your Company operates 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 are held in ‘Unclaimed Securities Suspense Account, to be transferred to allottees as and when they approach your Company. Your Company regularly uploads details of such unpaid/unclaimed shares on your Companys website and on the website of the MCA as well.

The current balance in the above-mentioned Suspense Account as on March 31, 2021 is 140 Equity Shares owned by 7 allottees. The details of equity shares held in an ‘Unclaimed Securities Suspense Account are as follows:

S. No. Particulars Details
1\ Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the beginning of the Financial Year 2020-21 7 allottees
2\ Aggregate number of the outstanding equity shares in the Unclaimed Securities Suspense Account lying at the beginning of the Financial Year 2020-21 140 Equity shares
3\ Number of allottees who approached issuer for transfer of shares from Unclaimed Securities Suspense Account during the Financial Year 2020-21 Nil
4\ Number of shares transferred from Unclaimed Securities Suspense Account during the Financial Year 2020-21 Nil
5\ Aggregate number of allottees in the Unclaimed Securities Suspense Account lying at the end of the Financial Year 2020-21 7 allottees
6\ Aggregate number of outstanding equity shares in the Unclaimed Securities Suspense Account lying at the end of the Financial Year 2020-21 140 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.

D. ESG

Conservation of energy and technology absorption

Your Company believes that conservation of energy is essential and as a responsible corporate citizen, your Company must encourage all employees, vendors and other stakeholders to act on ensuring reduced usage of 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.

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.

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. Thanks to the reduced travel, both because of local commuting and air travel, the carbon footprint this year is lower. Your Company continues to take various measures on energy saving and sustainability as follows:

Energy Efficiency Activities

1Upgradation of ACs: Existing ACs based on R-22 gas replaced with energy efficient Inverter based ACs based on environment friendly gases R-32/R-410 /R 407 C

2Regulated & optimized the schedules of lifts, vending machines, ventilation system, HVAC system etc. as per occupancy 3Great emphasis on Energy Conservation with an in-house team of experts:

a. LEDs in place of CFLs

b. Ozonators in ACs (which also disinfects the air and makes the air healthier)

c. Setting optimum temp settings for ACs as a SOP

d. Upgradation of ACs to better VRV technology on an ongoing basis

e. Culture of ‘switching off when not in use, actually practiced

4Thermal Solar water heaters for our cafeterias and Gym saved 44,352 kWh per annum

5Energy saving measures are taken right from design stage like double wall construction, low-e glass for facades and windows with DGUs, maximum use of natural light and ventilation, underdeck insulation, etc.

6Updated EHS (Environment Health and Safety) Policy

7Usage of Renewable energy for self-use, 54% Units Generated of total requirement through Rooftop Solar powerplants and owned two Windmills

8Your Company is an ISO 14064: 2018 [Green House Gases (GHGs) Monitoring and Reduction] certified company, for India operations and facilities, but including global travel

a. Only IT Company in India to be certified to this standard (latest version)

b. Yearly Target is 3% reduction, which we have been surpassing each year

c. We have reduced over 27% of our carbon footprint in last 5 FYs

9All the facilities of your Company in India are ISO certified by DNVGL for Environment Management Systems ISO

14001:2015 and Occupational Health and Safety Management System Standard by ISO 45001:2018 certifications, after surveillance audit (January 2021)

Renewable Energy Initiatives, Water Management and Waste Management Initiatives of the Company for the FY 2020-21 are given in the Business Responsibility Report forming part of this Annual Report.

Customer experience, operational excellence on Green activities

1Employees feel proud of belonging to a green company and volunteer more for green initiatives like tree plantation, tree maintenance & society awareness related to sustainability. Employees contributing regularly for Tree Plantation

2LED lighting has improved the ambience and freshness of workplace

3Customers appreciate our initiatives and sense of Social Responsibility during their visits, including our ISO 14001 and ISO 14064 certification

4Ozonates improved indoor air quality and higher oxygen levels, clearly felt by inmates as well as visitors.

We are the very few IT companies to have this feature installed in our AC systems

5We are the very few IT companies to have solar panels on almost all our rooftops and to own two 2.1 MW windmills

6In addition, also installed Solar panels on Pune and Hyderabad Railway Stations and at Tarachand Hospital, Pune under CSR activity

7Appreciation from NASSCOM for Green IT Initiatives in Pune city

8Insistence on ecofriendly & high efficiency products, is promoting vendors with such products 9Impact caused by the implementation of Green initiatives on ‘employee/end user satisfaction

10Better, healthy and working environment with freshness, greenery, and brighter workspaces

11Greater bonding with local community and environmental groups 12Zero Accidents till date in our entire Organization

13Best 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

14It is your Companys constant endeavor to conserve and save the Environment and hence your Company has launched the ‘Green Persistent Movement to support the same. This is aimed at encouraging employees to save energy at their homes. Though power cost constitutes an insignificant part of the total expenses, the financial impact of these measures may not be material, but it brings in considerable awareness in the employees and their families

15Lower insurance premiums as risks and liabilities are reduced

16Building corporate image of organization globally

17Reducing Operation and maintenance costs

18Star Rating Scheme by BEE for two commercial buildings of your Company

ESG Journey at Persistent

Our vision goes beyond business and compliance. We acknowledge that success is not a stand-alone concept, rather it is an intricate combination of many factors including environmental and social responsibility, and corporate governance (ESG).

We recognize that a strong ESG proposition can create long lasting value for all our direct and indirect stakeholders. Our core values- Ingenious, Responsible, Persistent and Confident are all about ‘transforming new ideas while optimizing our resource utilization, ‘Be responsible and communicate with clarity, and our global practice demands ‘Respect and openness towards each other, the communities around us and global society at large, ‘Stay determined in our activities to help our customers and people around the world to succeed. We are constantly on a journey of finding innovative ways to improvise our business conduct.

For this, we understand that it is crucial to identify and assess how we mitigate our non-financial risks, and take steps in the right direction accordingly.

Our Environmental commitment

‘Ingenious - one of our core values is all about doing more with less. In doing so, we believe in being versatile in action and agile in thought. Our Environment, Health and Safety (EHS) Policy provides guidelines on conserving environment and continually improving our EHS performance. It has been our constant endeavor to ensure that we reduce the carbon footprint of our business activities. We continue to monitor and work towards reducing our carbon footprint by sourcing energy from renewable sources like solar and wind energy, and improving energy efficiency. Similarly, as part of our efforts to safeguard the environment, we have undertaken watershed and rainwater harvesting projects in rural Maharasthra, regular tree plantation drives, and plastic free campuses. During FY 2020-21, we planted 10,000+ saplings to celebrate increase in the headcount beyond 10,000 mark. Our efforts were recognized with the "Excellence in Sustainability" award by iNFHRA for the year 2020-21.

All the facilities of your Company in India are certified to the international environment, health and safety standards namely ISO 14001:2015 and ISO 45001:2018. Also, all the facilities of your Company in India are certified by AGS for ISO 14064-1:2006 is upgraded to ISO 14064-1:2018 for greenhouse gas inventory.

Our Social Commitment

As a responsible organization, it is central to our values to give back to the community and the environment in which we operate. Our CSR Policy guides us for our CSR activities. Through Persistent Foundation, we continue to support CSR initiatives focusing on the three pillars viz. Education, Health and Community Development. In the Financial Year 2020-21, we supported 14 centers for facial cleft and cleft palate. Out of 14 centers, 12 centers have served COVID-19 patients.

Your Company equally pays attention on the social hygiene among the employees.

Corporate Governance

We believe in exceeding the highest standards of corporate governance as it enhances the long-term value of the company for its stakeholders. The Management at Persistent is fully committed to implementing best practices in corporate governance to ensure transparency, accountability and integrity. All the regulatory compliances applicable to your Companys operations globally are monitored and tracked through a web-based Compliance Management Tool. We have established policies and committees to deal with different corporate governance issues. The Companys Ethics Policy, Code of Conduct for Director and Employees, Vendor Code of Conduct, Code of Conduct for prevention of insider trading Anti-Corruption, Fraud Risk Management Policy, Anti-human trafficking policy and Whistle Blower Policy provide guidance for the highest standards of business ethics and corporate governance.

ESG — Way Forward

Year 2021 marks a milestone year for us as we undertake a review of the progress we have made so far in our sustainability journey, and chart our future path and ambitions.

As the demand and expectations from the larger society, Governments, regulators and various other stakeholders for transparent and responsible business conduct keep rising, we see integration of ESG in our business as a business imperative. ESG analysis and transparent reporting can provide valuable insights and help create long-term value for our stakeholders.

We are also aware that ESG is linked directly to facilitating top-line growth, reducing costs. This will also relate to minimizing regulatory and legal interventions, increasing employee productivity, optimizing investment and capital expenditures.

We will engage more with our stakeholders

We look forward to understanding our stakeholders better by identifying them and engaging with them more comprehensively. Our objective would be to identify priority areas for our stakeholders under the broad domains of environment, social and governance. This will help us to broaden our ESG focus and rank our priorities in consultation with our stakeholders. Through stakeholder consultations, we would identify the topics material to out stakeholders. The material topics will be shortlisted and prioritized based on their impact on our stakeholder and business and initiating actions.

We will establish an ESG strategy and roadmap

The materiality assessment would form the first step towards developing a long term ESG strategy and goals for Persistent.

We intend to establish clear ESG targets as our "ESG Ambition - 2030" by focusing on the right issues where we want to create the most impact over long term. A detailed road map to achieve these strategic ESG goals will be charted with clear milestones, action plans and responsibilities. The status of our commitment to the ESG Ambition - 2030 will be communicated in the annual Sustainability Reporting.

We will communicate more comprehensively

Your Company has been communicating its performance on the various ESG aspects through its Annual Report and the Business Responsibility Report (BRR). We are looking forward to strengthening our communication on ESG by aligning it with global sustainability goals and ESG reporting frameworks such as the UN sustainable development goals and the GRI sustainability reporting standards. The report will set out a structured process for reviewing and updating our priorities, focus areas and goals, measuring, reporting and accountability, and will also help us and our stakeholders to benchmark our ESG performance and practices. We are working towards coming out with our first stand-alone ESG report based on the GRI standards by early next year.

E. Other Disclosures

Corporate Governance

A separate Report 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 laws for the time being in force based on audited consolidated financial statements for the Financial Year 2020-21 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.

Risk Management Policy

Report on Risk Management based on the risk management policy developed and implemented at your Company for the Financial Year 2020-21 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-svstems/whistle-blower-policv/

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 for this section). 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 India locations. The Ethics Committee at the global locations acts in the capacity of Internal Complaints Committee where the local laws over there do not enforce constitution of such committee.

During the year under report, your Company has received one complaint of harassment of non-sexual nature which was immediately disposed by following the due process. As on March 31, 2021, there were no pending cases of sexual harassment in your Company.

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).

The Company complies with Secretarial Standards and guidelines issued by the Institute of Company Secretaries of India (ICSI).

Other Certifications

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

Information Security

Your Company maintains a matured Information Security Management System with Policies, Processes and Controls to minimize the Cyber Security Risks. The governance and management of security compliance and risk is reviewed periodically.

Amid the pandemic and complete lockdown across cities where your Companys offices are located, most employees are required to work from their respective homes. This unprecedented situation has increased the security risks due to the expansion of the security perimeter from office premises to individual homes.

Your Companys internal team has taken a holistic and comprehensive approach to address the need of securing the employees laptops, their smartphones, the corporate network and the confidential data against inadvertent and malicious attacks, including the customer specific security requirements. Specific steps include allocation of laptops to every employee, installation of disk encryption and next generation antivirus solution, enhanced data leakage prevention solutions covering laptops and cloud assets and security controls on personal smartphones. The team has also provisioned critical data backup, improved incoming email scanning and enhanced the security and network monitoring solutions. Periodic external security assessments and proactive security drills help us stay vigilant to security threats. Mandatory annual employee awareness training to reinforce the security imperatives is key to keeping your Company safe.

Subsidiary Companies, Associate Companies and Joint Ventures

During the year under Report, Valista Limited, Ireland, step down subsidiary of your Company was dissolved w.e.f. June 24, 2020 as a part of your Companys corporate restructuring.

Further, your Company acquired 100% shares of Capiot Software Private Limited, India (‘Capiot India) in October 2020. Consequently, Capiot India has become wholly owned subsidiary of your Company. Additionally, Persistent Systems Inc.,

USA (PSI), wholly owned subsidiary of your Company acquired 100% shares of Capiot Software Inc., USA ("Capiot US") in November 2020. Consequent to the above, Capiot US has become a wholly owned subsidiary of PSI and Capiot Software Pte Ltd, Singapore and Capiot Software Pty Ltd, Australia which are the subsidiary companies of Capiot US have become step- down subsidiary companies of PSI.

On March 23, 2021, Persistent Systems Inc., USA, wholly owned subsidiary of your Company incorporated Persistent Systems S.R.L, Italy.

The details of the subsidiaries and associates of your Company as on March 31, 2021 are as under:

Total Income

Net Profit/(Loss)

Name of the Entity and Country of incorporation Status Period of Establishment/ Acquisition* For the period/year ended March 31, 2021 (Amount in ^ million) For the period/year ended March 31, 2020 (Amount in ^ million) For the period/year ended March 31, 2021 (Amount in ^ million) For the period/year ended March 31, 2020 (Amount in ^ million)
Persistent Systems Inc., USA (PSI) Wholly Owned Subsidiary October 2001 24,243.90 21,359.80 (167.87) (320.62)
Persistent Systems Pte. Ltd., Singapore (Co. Reg. No. 200706736G) Wholly Owned Subsidiary April 2007 9.96 24.66 (8.59) 8.55
Persistent Systems France S.A.S., France Wholly Owned Subsidiary April 2011 911.80 950.48 11.51 (11.02)
Persistent Systems Malaysia Sdn. Bhd., Malaysia Wholly Owned Subsidiary September 2013 376.16 419.34 40.80 56.29
Persistent Systems Germany GmbH, Germany Wholly Owned Subsidiary December 2016 185.45 85.63 (5.02) (55.87)
Persistent Telecom Solutions Inc., USA Step-down Subsidiary (Wholly Owned Subsidiary of PSI) January 2012 758.90 1,001.84 59.96 167.32
Persistent Systems Mexico S.A. de C.V., Mexico Step-down Subsidiary (Wholly Owned Subsidiary of PSI) March 2016 286.43 251.29 (10.35) 23.05
Persistent Systems Israel Ltd, Israel Step-down Subsidiary (Wholly Owned Subsidiary of PSI) February 2016 257.64 504.06 29.29 (3.09)
Aepona Group Limited, Ireland Step-down Subsidiary (Wholly Owned Subsidiary of PSI) October 2015 44.84 8.3 33.73 (122.16)
Valista Limited, Ireland (Dissolved with effect from June 24, 2020) Step-down Subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) October 2015 0.10 0.89 (1.08) 0.23
Aepona Limited, United Kingdom Step-down Subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) October 2015 364.20 332.74 115.93 71.99
Persistent Systems Lanka (Private) Limited, Sri Lanka Step-down Subsidiary (Wholly Owned Subsidiary of Aepona Group Limited) October 2015 221.01 215.66 32.46 33.04
PARX Werk AG, Switzerland Step-down Subsidiary (Wholly Owned Subsidiary of Persistent Systems Germany GmbH) August 2017 655.85 527.33 11.50 (2.72)
PARX Consulting GmbH, Germany Step-down Subsidiary (Wholly Owned Subsidiary of PARX Werk AG) August 2017 495.38 551.02 17.62 (48.85)
Youperience GmbH, Germany Step-down Subsidiary (Wholly Owned Subsidiary of Persistent Systems Germany GmbH) July 2019 539.36 223.01 (44.45) (83.36)

 

Total Income

Net Profit/(Loss)

Name of the Entity and Country of incorporation Status Period of Establishment/ Acquisition* For the period/year ended March 31, 2021 (Amount in ^ million) For the period/year ended March 31, 2020 (Amount in ^ million) For the period/year ended March 31, 2021 (Amount in ^ million) For the period/year ended March 31, 2020 (Amount in ^ million)
Youperience Limited, United Kingdom Step-down Subsidiary (Wholly Owned Subsidiary of Youperience GmbH) July 2019 93.84 101.11 (9.29) 2.33
Capiot Software Private Limited, India** Wholly Owned Subsidiary October 2020 136.47 NA 2.30 NA
Capiot Software Inc., USA** Step-down Subsidiary (wholly owned subsidiary of PSI) November 2020 17.81 NA (1.54) NA
Capiot Software Pty Limited, Australia** Step-down Subsidiary (Wholly Owned Subsidiary of Capiot Software Inc.) November 2020 8.53 NA 2.92 NA
Capiot Software Pte Limited, Singapore** Step-down Subsidiary (Wholly Owned Subsidiary of Capiot Software Inc.) November 2020 NA 1.97 NA
Persistent Systems S.R.L., Italy** Step-down Subsidiary (Wholly Owned Subsidiary of PSI) March 2021 NA (0.05) NA
Klisma e-Services Private Limited, IndiaA 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/incorporated during FY 2020-21. a Under Corporate Insolvency Resolution Process for liquidation.

The Policy for determining material subsidiaries of your Company is available on your Companys website at https://www.persistent.com/investors/policv-on-material-subsidiarv/. According to the said Policy, Persistent Systems Inc., USA is the material subsidiary of your Company.

Infrastructure

During the Financial Year 2020-21, 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 (Nos)
Pune
1Kapilvastu 1994 202 35
2Panini 1998 929 80
3Bhageerath 2002 12,170 596
4Aryabhata - Pingala 2007 31,680 2,644
5Hinjawadi 2012 41,446 3,197
Goa
1Charak 1997* 3,280 313
2Bhaskar 2014 3,762 411

 

Location Year of Acquisition/Completion Total Built-up Area (m2) Total Seating Capacity (Nos)
Nagpur
1IT Tower 2003 3,708 352
2Gargi and Maitreyi 2011 17,279 1,183
Grenoble, France 2000** 1,022 50
Total 115,478 8,861

* Company occupied this premises in October 2005 as a part of local entity acquisition.

** Company occupied 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, France, Germany, India, Israel, Ireland, Malaysia, Mexico, Scotland, Sri Lanka, Switzerland, USA and UK.

During the financial year 2020-21, due to the pandemic, the majority of employees were given an option to work from home and only the employees working in essential category such as Administration and Information Technology attended the office in person.

Annual Return

In accordance with the Companies Act, 2013, the annual return in the prescribed format (MGT-7) for the Financial Year 2020-21 is available at https://www.persistent.com/wp-content/uploads/2021/06/annual-return-2021.pdf

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:

1Dr. Anand Deshpande, Chairman and Managing Director and Mr. Sunil Sapre, Executive Director and Chief Financial Officer of your Company have not received any remuneration or commission from any of its subsidiaries. However,

Mr. Christopher OConnor, Executive Director and Chief Executive Director (resigned w.e.f. August 9, 2020) and Mr. Sandeep Kalra, Executive Director and Chief Executive Officer have received remuneration from Persistent Systems Inc., USA in addition to remuneration received from your Company.

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

Awards and recognitions during the Financial Year 2020-21

1‘Recognition Award among 200+ companies in India for "Excellence in Sustainability" by iNFHRA for the year 2020-21.

iNFHRA is an industry body & member-based organization representing Infrastructure, Facility Management, Human Resource & Realty industry. This an annual award and is awarded after rigorous scrutiny by a Juries from the Industry from all over India.

The award categories include:

i. Excellence in Best Project — Architecture & Corporate

ii. Excellence in BCP for Corporates, Excellence in Corporate Social Responsibility

iii. Excellence in Sustainability

iv. Excellence in Employee Wellness & Health program for remote workers

v. Excellence in Logistics movement

vi. Excellence in CRE (negotiations, rental, space and consolidation)

vii. Excellence in Return to work strategy/new normal

viii. Excellence in Technology/Transport Management

ix. Excellence in Use of Space Planning & Facility Reservation Systems during & post COVID-19 crisis

2Named among the top service providers in two Zinnov Zones categories — consumer and enterprise software engineering — and recognized as a leader across digital engineering, AI engineering, cybersecurity and platform engineering

3Golden Peacock Award by Institute of Directors (IOD) for Excellence in Corporate Governance 2020 in a national category of IT Sector

4Technology Wizards 2020 award — Persistent IT team won the prestigious Technology Wizards Award 2020

5Training Top 125 (T125) 2018 Award (International) from Training magazine

6Named a Top 15 Sourcing Standout for Managed Services in the Q1 2021 ISG Global Index™ "Booming 15" category for the 5th consecutive quarter

7Recognized as a Star Performer in Everest Group Software Product Engineering Services PEAK Matrix Assessment 2021

8Persistent cited as ‘Leader in ISGs Salesforce Ecosystem Partners 2021 Report for Salesforce Services in U.S. & Germany

9ISG names Persistent a "Rising Star" for Digital Transformation in its 2020 ISG Provider Lens™ — Healthcare Digital Services U.S. report

10Training Top 100 has honored Persistent for the 4th year for demonstrating successful & creative learning and development program

11Won the third annual ISG Star of Excellence™ Award 2020, for the quality of its core technology services, based on direct feedback from more than 100 enterprise customers. In addition, ISG also named Persistent as a winner in BFSI and Healthcare and Life Sciences industries, and in North America and APAC region

12Named to ISGs Booming 15 list (service providers with under US $1 billion in revenue) globally, as well as in the Americas and EMEA regions, as part of the second-quarter ISG Index™. This is the first time the company has been recognized for its success in the EMEA region

13Winner of the 2020 Workato Partner Awards in the category of Innovation across OutSystems, Banking and Snowflake. The award was announced at Workatos recent 2020 Partner Summit, held virtually on June 10th and attended by over 600 registered partners

14Cyber Sentinel Award 2020 was presented to Mr. Avinash Dharmadhikari, CISO Persistent Systems in December 2020

15Resilient CISO Award was presented to Mr. Avinash Dharmadhikari, CISO Persistent Systems as part of the 7th Annual Dynamic CISO Excellence Awards 2021

Directors Responsibility Statement

Your Directors state that:

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

2Your 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, 2021 and of the profit of your Company for that year;

3Your 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;

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

5Your 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;

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

Future Outlook

While brighter days are ahead thanks to the rollout of vaccinations, the pandemic has caused a permanent and long-lasting impact on each of us as individuals and society. Whats more, every single industry sector was disrupted - forcing a reset for many businesses in terms of the fundamentals of their operations, business model, and value chain. While certainly this last year was one of the most challenging in recent times, we will hopefully all be better prepared for similar events and circumstances in the future. Thanks to substantial technology innovation and adoption and greater confidence in our resilience as a society for this preparedness.

Organizations that survived and thrived during this challenging period were those that quickly understood the power of cloud and data, as well as the role both would need to play in enabling rapid digital acceleration. If organizations did not fully comprehend that software was the foundation of the business before the pandemic, they most certainly realize it today. This realization puts Persistent in an advantageous position in the market as we look ahead. Fundamentally, our clients most pressing needs have come into a greater phase with our core strengths in digital engineering, CX transformation, cloud and many other domains.

Today, your Company creates value along a continuum of client needs, pervasive across industries.

Imagine — We design and deliver new digital experiences, revenue streams and business models to meet rising customer expectations and accelerate growth.

Engineer — We streamline software engineering to drive greater innovation, efficiency, and resiliency across your products and platforms.

Modernize — We reinvent applications, infrastructure, and processes for greater agility by taking full advantage of automation, intelligence and cloud.

Manage — We transform and optimize operations, systems, and product development to reduce costs and facilitate growth.

Your Company will continue to work aggressively to bolster capabilities in these areas, both organically and inorganically -extending the value we bring to existing clients and supporting the development of new client relationships. In addition, we will continue to enhance our partner ecosystem to complement our expertise, open up new channels and deliver innovation.

During this period of rapid change, we bring to our clients the depth of expertise delivered with speed, flexibility, accountability and a sense of urgency unmatched in the market - truly boutique with scale. As a result, we see our growth momentum continuing as our clients entrust us with more and more critical aspects of their digital transformation.

As we continue our path to becoming a $1B Company by FY25, we have established several key initiatives designed to accelerate our pace, with a focus on enhancing our value propositions, partner ecosystem, operations, account excellence as well as talent acquisition and development.

In summary, we are optimistic about your Companys future - as the alignment between client need and our capabilities are fully aligned, and our ability to execute on this demand has dramatically enhanced.

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 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 and Mumbai, Visakhapatnam Special Economic Zone - Andhra Pradesh, SEEPZ Special Economic Zone - Mumbai, Cochin Special Economic Zone, Central Tax and Customs Department, Department of Revenue, Income Tax Department, Department of Electronics, Director General of Foreign Trade, Industry Ministry of GoM, Director of Industries, Maharashtra Pollution Control Board, 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 and Gram Panchayats 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 Internet Service Providers, District Administration and State Police departments, Export Promotion Councils, Maharashtra Airport Development Corporation, MIHAN Authority, Hinjawadi Industries Association (HIA).

Your Board also extends its sincere thanks to M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors, M/s. Joshi Apte & Co., Chartered Accountants, Tax Auditors, M/s. PVS and Associates, Company Secretaries, Secretarial Auditors, Trustees of Persistent Foundation, wing of Ernst & Young LLP, providers of Compliance Manager Tool and investor relations services and related advisory 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., BNP Paribas, Bank of Tokyo-Mitsubishi, Citibank NA, CommonWealth Bank, DBS Bank, HDFC Bank Limited, Hongkong and Shanghai Banking Corporation, ICICI Bank Limited, Kotak Mahindra Bank Limited, Silicon Valley Bank, State Bank of India, Standard Chartered Bank, Syndicate Bank, Union Bank of India, VR-Bank Ismaning Hallbergmoos Neufahrn eG, 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 the 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 10, 2021 DIN:00005721