MANAGEMENT DISCUSSION AND ANALYSIS REPORT The following discussion is based on the audited consolidated financial statements of Persistent Systems Limited, and its following subsidiaries and step-down subsidiaries: 1. Persistent Systems Inc. 2. Persistent Systems Pte. Ltd. 3. Persistent Systems France SAS 4. Persistent Systems Malaysia Sdn. Bhd. 5. Persistent Telecom Solutions Inc. (step-down subsidiary) 6. CloudSquads Inc. (step-down subsidiary) (wound up during the year) 7. Akshat Corporation (d.b.a. R-Gen Solutions) (step-down subsidiary) 8. Aepona Limited (step-down subsidiary) 9. Valista Limited (step-down subsidiary) 10. Aepona Software (Private) Limited (step-down subsidiary) 11. Aepona Holdings Limited (step-down subsidiary) 12. Aepona Group Limited (step-down subsidiary) 13. Valista Inc. (step-down subsidiary) 14. Persistent Systems Israel Ltd. (step-down subsidiary) 15. Persistent Systems Mexico S.A. de C.V. (step-down subsidiary) In this report, Persistent Systems and its subsidiaries and step-down subsidiaries collectively have been referred to as "the Company", reflecting the financial position in the consolidated financial statements. The financial year 2015-16 has been referred to as "the year" and the financial year 2014-15 has been referred to as "the brvious year"). Market Opportunity Persistent Systems is in the business of software product development. Software product development services are essential for software product companies - those that are in the business of software and now increasingly important for enterprises that are aspiring to become software driven businesses. Technology is a great disruptor. Continuous evolution of the technology roadmap led by advances in connected devices and sensors, the ability to collect, monitor and respond to large volumes of data, mobile internet, advances in artificial intelligence and machine learning, etc. has ensured that the appetite and need for next generation software systems will continue for a number of years. The Company has a diversified set of customers across multiple segments - large software product companies, startups and early stage product companies, large enterprises and government. The Company has significant concentration of business from the US which is the world's largest market. In addition, over the last few years the Company has created lines of business with revenue streams outside the US. Over the last few years the Company has transitioned the business from being purely based on charging for hours worked to having a healthy proportion of the revenue coming from license and services revenue. Diversity of customers, geography, client concentration and business offering provide your Company some resilience from drastic changes in market conditions. Digital Transformation is starting to become main stream and at the forefront and on the agenda of CIOs and CMOs. In order to stay relevant in the digital-first world, enterprises realize that they need to invest in digital technologies more than ever. IT spend is shifting towards changing and growing the business from current spend of running the business. In fact, many enterprises are setting up separate digital organization structure with focused Chief Digital Officer and dedicated digital teams. Enterprises are directing tight cost optimization exercises in other parts of IT spend in order to make funds available for digital spend. In the quest of becoming a software-driven business, the emphasis is on customer experience and engagement. The front end of business that is systems of engagement are getting disrupted first with an emphasis on pervasive and omni-channel experiences that seamlessly blend digital and physical existence. In order to compete with nimble born-digital new age companies, they are increasingly becoming software-driven business. Company expects demand from enterprises becoming the bellwether of our growth trajectory going forward. IoT - Next Big Step for Digital Transformation Devices and sensors connected to the internet are starting to get deployed in large numbers. More than 30 Billion sensors are expected to be deployed by 2020. Connected devices will have the ability to track location, provide context-specific services, and build the context using sensors that are embedded in the surroundings i.e. environment, light, temperature, sound, or such stimuli - is an imperative part of such experiences. The sensors that read and act on such stimuli are becoming software-driven things. These smart "things" are leading innovations in smart factories, smart homes, wearables, augmented reality, and robotics. Thus, the future of software-driven-everything is already here! The real Digital Transformation is about becoming software-driven businesses leveraging software-driven things. This confluence of digital and physical systems enabled via IoT or "internet of things" is being referred to as "Industry 4.0" or fourth industrial revolution. In this highly connected world of Industry 4.0, disruptive forces are coming from all directions and incumbents must expect competition not just from known peers but also from next generation smart companies that are not encumbered by legacy constraints. They will apply disruptive ways at lightning speed and become dominant in no time. Such companies exhibit differentiating characteristics like innovation at speed, continuous delivery, ability to integrate and leverage data and rapid response on actionable insights and disruptive business models. Financial position and results of operations Persistent Systems Limited was listed on National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE) on April 6, 2010. The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP) to comply in all material respects with the Accounting Standards specified under section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013. The Company follows Schedule III as notified by the Ministry of Corporate Affairs (MCA) with effect from April 1, 2014. Share Capital The authorized share capital of the Company as at March 31, 2016 was Rs. 2,000.00 Million divided into 200.00 Million equity shares of Rs. 10 each. During the year, the authorized capital was increased pursuant to the shareholders' resolution passed in the Annual General Meeting held on July 24, 2015. The paid up share capital as at March 31, 2016 was Rs. 800.00 Million divided into 80 Million equity shares of Rs. 10 each. There was no change in the paid up share capital during the year Securities Premium Account There was no change in the Securities Premium Account during the year as compared to the brvious year. Stock Options Outstanding The amount of stock options outstanding relates to differences between fair value and grant price of shares arising out of employee stock options. These differences are amortized over the vesting period of options following the graded vesting method brscribed by the Guidance Note No. 18 issued by the Institute of Chartered Accountants of India on Accounting of Employee share based payments. The amount of stock options outstanding as at March 31, 2016 was Rs. 71.34 Million for 3.64 Million options outstanding as on that date. The increase in the liability rebrsents the increase in number of options vested in the employees. The corresponding amount in stock options outstanding account as on March 31, 2015 was Rs. 55.65 Million for 4.59 Million options outstanding on that date. Please refer Note 6 of the consolidated financials for details. General Reserve The Company transferred Rs. 1,061.84 Million out of the profits of the year to General Reserve in accordance with the Company's Policy of Transfer of Profits to General Reserve. The balance in General Reserve stood at Rs. 6,626.57 Million as at March 31, 2016 as against Rs. 5,562.61 Million as at March 31, 2015. Please refer Note 6 of the consolidated financials for details. Foreign Currency Translation Reserve While consolidating the financial statements of subsidiaries (including step down subsidiaries) with the financial statements of the holding company, the assets and liabilities are stated at the closing currency exchange rate and income and expenditure are stated at the average currency exchange rate. This creates exchange gain / loss on consolidation which is accumulated under foreign currency translation reserve. The balance in the foreign currency translation reserve was Rs. 184.11 Million as at March 31, 2016 as against Rs. 125.93 Million as at March 31, 2015, due to a translation gain of Rs. 58.18 Million on account of volatility in exchange rates of currencies in the financial year 2015-16. Please refer Note 6 of the consolidated financials for details. Hedge Reserve The Company derives a substantial part of its revenues in foreign currency while a major part of its expenses are incurred in Indian Rupees. This exposes the company to the risk of fluctuations in foreign currency rates. The following chart shows movement of monthly closing rates of the Rupee against the USD in Financial year 2015-16, indicating the volatility that the currency faced throughout the year: The Company follows a Foreign Exchange Risk Management Policy as approved by its Board of Directors to mitigate the currency fluctuation risk. The Company hedges a defined range of its net projected export earnings on 12 months rolling basis through Plain vanilla forward contracts with banks. With effect from April 1, 2009, for hedge accounting, the Company adopted the principles of Accounting Standard 30 (AS 30) -- Financial Instruments Recognition and Measurement. The Company designates its hedging instruments as cash flow hedges upon completion of formal designation and documentation of hedging relationship. The effectiveness of the hedge is tested periodically. All such hedging instruments are measured at fair value, at the reporting date. If the designated hedge pertaining to future cash flows is effective then the changes in the fair value of the hedging instrument between the reporting date and the date of inception is recognized in hedge reserve (i.e. reflected in the Balance Sheet under the head Reserves & Surplus) and if the hedge is ineffective, then the ineffective portion is recognized in the Statement of Profit and Loss as foreign exchange gains or losses. On sale or termination of effective/ineffective hedge instruments on or before maturity, the resultant gains or losses are taken to foreign exchange gain/loss. Accordingly, such derivative instruments which qualify for hedge accounting and where the Company has met all the conditions of hedge accounting, are fair-valued at the Balance Sheet date and the resultant gain (or loss) is credited (or debited) to the Hedge Reserve. Accordingly, the Hedge Reserve as at March 31, 2016 stood at a credit balance of Rs. 139.91 Million as against a credit balance of Rs. 81.54 Million as at March 31, 2015. Refer Note 6 of the consolidated financials for details. Surplus in the Statement of Profit and Loss The balance retained in the Statement of Profit and Loss as at March 31, 2016 is Rs. 1,141.47 Million, after appropriation towards interim dividend of Rs. 640.00 Million, dividend distribution tax of Rs. 130.30 Million on total dividend paid during the year and transfer to General Reserve Rs. 1,061.84 Million. Total profit appropriated to dividend in the year was Rs. 770.30 Million as against Rs. 961.41 Million in the brvious year. Balance in Profit and Loss account stood at Rs. 7,234.33 Million as at March 31, 2016 against Rs. 6,092.86 Million as at March 31, 2015. Please refer Note 6 of the consolidated financials for details. Long Term Borrowings Under the scheme of Biotechnology Industry Partnership Program of Department of Biotechnology (DBT), Ministry of Science and Technology, Government of India, financial aid is given to all the partners involved in the research project undertaken by the Ministry of Science and Technology in the field of biotechnology. The Company being an industrial partner, the aid is in the form of a long term loan at a nominal rate of interest of 2% p.a. Based on the project costs, an amount of Rs. 21.80 Million has been sanctioned as a long term loan. Loan amount outstanding under this scheme amounted to Rs. 13.64 Million as on March 31, 2016 as against Rs. 15.06 Million as on March 31, 2015. The loan amount is repayable in ten equal half-yearly installments over a period of five years starting from March 2016. Under the scheme of NMITLI (New Millennium India Technology Leadership Initiative), the Company has undertaken a project on the 'System based Computational Model of Skin'. As a part of this scheme, Council for Scientific and Industrial Research (CSIR) has granted a financial help in the form of a loan at a nominal rate of interest of 3% p.a. Based on the project costs, an amount of Rs. 40.71 Million has been sanctioned as a long term loan. The loan is repayable in ten equal annual installments commencing from September 2015. Loan amount outstanding under this scheme amounted to Rs. 16.64 Million as on March 31, 2016 as against Rs. 29.83 Million as on March 31, 2015. Please refer Note 7 of the consolidated financials for details. Other Long Term Liabilities The long term liabilities comprise liabilities which are not payable within twelve months from the date of the Balance Sheet. The total long term liability of Rs. 1.21 Million as at March 31, 2016 is towards non-current maturity of interest accrued but not due on the loans from DBT and NMITLI mentioned above as against Rs. 1.47 Million outstanding as at March 31, 2015. Long Term Provisions The long term provisions are those provisions which are not expected to be settled within twelve months from the date of the Balance Sheet. The Company provides for long term awards to be given to employees on the completion of specified number of years of service with the Company, on actuarial basis. This provision stood at Rs. 117.82 Million as at March 31, 2016 as against Rs. 115.98 Million as at March 31, 2015. The increase in the liability is on account of increase in headcount and tenure of service compared to the brvious year. Long term portion of Gratuity liability stood at Rs. 6.59 Million as at March 31, 2016. Trade Payables and other Current Liabilities Total trade payables and other current liabilities increased from Rs. 1,793.44 Million as at March 31, 2015 to Rs. 3,293.18 Million as at March 31, 2016 mainly due to increase in trade payables, unearned revenue and accrued employee liabilities. Trade payables have increased mainly due to increase in creditors related to acquisitions made by the Company. These creditors are due for payment in the subsequent year. The increase in unearned revenue rebrsents invoicing in respect of annual maintenance contracts, the revenue recognition for which is deferred as per the period of the contracts. Accrued employee liabilities have gone up because of increase in headcount and salary increment during the year. There is reduction in the capital creditors at as March 31, 2016 as compared to March 31, 2015 since liabilities with respect to one of the product acquired by the Company were fully paid during the year as per the terms of acquisition agreement. The changes in the major components of current liabilities are shown below: Short Term Provisions The short term provisions denote the employee liabilities and other provisions due for payment within a period of twelve months from the date of the Balance Sheet. The short term provisions were Rs. 1,223.63 Million as at March 31, 2016 as against Rs. 1,755.23 Million as at March 31, 2015. The details of the major components of short term provisions are given below The gratuity provision in the brvious year was much higher due to significant reduction in discount rate used in actuarial valuation. The provision for this year is lower partly on account of change in the actuarial assumptions with respect to salary escalation in line with long term inflation in the economy. The increase in provision for employee benefits other than gratuity was mainly attributable to increase in employee headcount and salary escalation during the year. The Board has recommended Nil final dividend for the financial year 2015-16. The two interim dividends paid during the year aggregate to Rs. 8 per share as compared to normal dividend of Rs. 7.50 per share and special Silver Jubilee dividend of Rs. 2.50 per share paid in the brvious year. Goodwill on consolidation The excess of the cost of investment in a subsidiary over the Company's portion of equity of the subsidiary on the date at which investment in the subsidiary was made, is recognized as goodwill on consolidation. Goodwill on consolidation was Rs. 174.88 Million as at March 31, 2016 as against Rs. 23.91 Million as at March 31, 2015. The increase is due to acquisition of Akshat Corporation (d.b.a. RGen Solutions) and Aepona Group made through Persistent Systems, Inc., a wholly owned subsidiary of Persistent Systems Limited. Fixed Assets The gross block of tangible fixed assets amounted to Rs. 6,857.11 Million as at March 31, 2016 as against Rs. 6,166.40 Million as at March 31, 2015. The increase of Rs. 690.71 Million is mainly on account of additional computers / hardware procured for the growing business needs, furniture for new offices and capitalization of equipments including Solar Power System. Further, the acquisition of Aepona Group as mentioned above has also resulted in increase in the asset base of the Company as the assets of Aepona Group were taken over by the Company as a part the acquisition. Please refer Note 12.1 of the consolidated financials for details. The gross block of intangible fixed assets amounted to Rs. 3,919.34 Million as at March 31, 2016 as against Rs. 3,217.28 Million as at March 31, 2015. The increase of Rs. 702.06 Million is mainly on account of acquisition of a software platform, software licenses and certain contractual rights in respect of one of the product purchased during the year. Please refer Note 12.2 of the consolidated financials for details. Capital work-in-progress (Capital WIP) stood at Rs. 23.64 Million as against Rs. 40.04 Million as at March 31, 2015. The reduction is on account of capitalization of buildings at Goa and Nagpur during the financial year 2015-16. The Company has deployed a team of software developers for development of Intellectual Property Rights during the current year. The developments were in progress on the Balance Sheet date and accordingly, the expenses of Rs. 241.63 Million related to such team of software developers has been considered as "Intangible assets under development." During the year, the Company disposed off and retired assets having an original cost of Rs. 199.34 Million and written down value of Rs. 2.65 Million. Non-Current Investments The total non-current investments as on March 31, 2016 stood at Rs. 1,347.92 Million as against Rs. 2,115.54 Million in the brvious year. The investments in mutual funds that are intended to be held for more than 12 months from the date of investment were classified as long-term investments. The decrease in Non-Current Investments as compared to the brvious year is mainly due to redemption of certain long term mutual funds and disposal of certain government securities. Please refer Note 13 of the consolidated financials for details. Deferred Tax Assets (Net) The deferred tax assets (net of deferred tax liabilities) created against items such as debrciation/amortization, provision for doubtful debts, and provision for employee benefits and brought forward losses as on March 31, 2016 amounted to Rs. 232.75 Million as against Rs. 312.93 Million as on March 31, 2015 after netting-off deferred tax liability of Rs. 2.51 Million as at March 31, 2015 in a subsidiary belonging to a separate tax jurisdiction. Some of the doubtful debts provided in earlier years were written off during the year. This coupled with reduction in brought forward losses resulted in reduction in deferred tax assets. Note 14 of the consolidated financials gives component-wise details of deferred tax balance where the net value results into an asset. Long Term Loans and Advances The capital advances, inter corporate and other deposits, advances recoverable in cash or kind which are not due within twelve months from the Balance Sheet date and advance income tax (net of provision) are shown as long term loans and advances. These amounted to Rs. 851.05 Million as at March 31, 2016 as against Rs. 123.21 Million as at March 31, 2015. The increase is mainly on account of increase in capital advance related to one of the product acquisition by the Company. Further, there has been an increase in advance income tax (net of provision for income tax) paid by the Company as compared to the brvious year. Please refer Note 15 of the consolidated financials for details. Other Non-Current Assets The fixed deposits with banks and other deposits with maturity of more than twelve months from the date of Balance Sheet and interest accrued but not due on such deposits are termed as non-current assets in the financial statements. The total of such deposits amounted to Rs. 832.22 Million as at March 31, 2016 as against Rs. 12.27 Million as at March 31, 2015. Interest accrued but not due amounted to Rs. 37.88 Million as at March 31, 2016 as against Rs. 1.12 Million as on March 31, 2015. The increase in both non-current fixed deposit with bank/financial institution and interest accrued but not due is mainly because of one of the deposit which was due for maturity in the current year was classified under current portion of fixed deposit as at March 31, 2015; which is now classified under non-current portion as at March 31, 2016 on account of its renewal. Please refer Note 16 of the consolidated financials for details. Current Investments As per the Investment Policy approved by the Board of Directors, the Company invests its surplus funds in liquid and debt schemes and fixed maturity plans of some reputed mutual funds with a focus on capital brservation, liquidity and optimization of returns. Investment in mutual funds classified under current investments stood at Rs. 4,827.55 Million as at March 31, 2016 as compared to Rs. 4,606.75 Million as at March 31, 2015. The total investment in mutual funds (including long-term investments) reduced by Rs. 455.31 Million during the year. Further, the investment in equity shares of Sprint Telecom India Private Limited amounting to Rs. 13 Million has been disposed-off during the year. Please refer Note 17 of the consolidated financials for details. Trade Receivables Trade receivables (net of provision for doubtful debts) amounted to Rs. 4,275.49 Million as at March 31, 2016 as against Rs. 3,585.76 Million as at March 31, 2015. The Company follows a policy of providing for all customer invoices outstanding for a period of 180 days or more and for those invoices which are otherwise considered doubtful, based on the management's perception of risk of collection. Provision for doubtful debts decreased to Rs. 270.62 Million as at March 31, 2016 from Rs. 437.76 Million as at March 31, 2015. Please refer Note 18 of the consolidated financials for details. Cash and Bank balances Cash and bank balances including bank deposits with a maturity of below twelve months from the Balance Sheet date amounted to Rs. 1,432.38 Million as at March 31, 2016 as compared to Rs. 1,416.24 Million as at March 31, 2015. There has been an increase in balance on current accounts with banks and decrease in balance on Exchange Earner's Foreign Currency accounts. Further, the increase in deposits with banks due after 12 months from March 31, 2016 which have been classified under Other Non-Current Assets has resulted into reduction in Current Deposits with Banks. Please refer Note 19 of the consolidated financials for details. Short Term Loans and Advances The inter-corporate and other deposits, service tax/VAT receivables and advances recoverable in cash or kind within a period of twelve months from the date of Balance Sheet are included in the Short term Loans and Advances. Short term loans and advances amounted to Rs. 812.44 Million as at March 31, 2016 as against Rs. 407.42 Million as at March 31, 2015. There has been an increase in Short Term Loans and Advances on account of increase in brpaid expenses classified under advances recoverable in cash or kind and service tax receivable as at March 31, 2016 as compared to March 31, 2015. Please refer Note 20 of the consolidated financials for details. Other Current assets Total other current assets as at March 31, 2016 stood at Rs. 1,787.77 Million as against Rs. 1,035.40 Million as at March 31, 2015. The increase is mainly due to increase in unbilled revenue. Unbilled revenue rebrsents revenue recognized in relation to work done on time and material projects and fixed price projects until the Balance Sheet date for which billing has not taken place. The increase in unbilled revenue is mainly on account of newly acquired IP Led business where the invoicing schedule is on a quarterly basis as per the terms of the contract. There is reduction in interest accrued but not due as a substantial portion of accrued interest was received on maturity of Bank Deposits during the year. The details of the major components included under other current assets are given below: Revenue from Operations The Company provides product engineering services, platform based solutions and IP-based software products to its global customers. The Company derives a significant portion of its revenues from export of software services and products. The revenue for the year in USD terms was up by 14.0% at USD 351.65 Million against USD 308.54 Million in the brvious year. In Rupee terms the revenue was Rs. 23,123.31 Million against Rs. 18,912.52 Million rebrsenting a growth of 22.3% over the brvious year. The rupee debrciated by 7.3% during the year against US Dollar The revenue from Infrastructure and Systems segment has gone up by 20% and the revenue from Telecom and Wireless segment has gone up by 5% as compared to the brvious year. The revenue from Life Sciences and Healthcare segment has gone up by 22% and the revenue from Financial Services segment has gone up by 53% as compared to the brvious year. In terms of geographical mix of revenue, North American region continued to dominate by contributing 85.5% of the total revenue. Contribution from Rest of the World was 8.0% and Europe contributed 6.5% of total revenue. Revenue in INR terms grew by 22.3% from North America, 18.8% from Europe and 24.3% from Rest of the World as compared to the brvious year. Other Income As explained in Note 23 of the consolidated financials, Other Income consists of income from investment of surplus funds in the form of dividend from mutual funds and profit on sale, interest on deposits and bonds, foreign exchange gain, miscellaneous income which includes profit on sale of fixed assets and investment in subsidiary, excess provision written back. Other income has reduced to Rs. 784.49 Million for the year ended March 31, 2016 from Rs. 938.15 Million for the year ended March 31, 2015. The other income has primarily reduced on account of reduction in foreign exchange gain by Rs. 322.66 Million for the year ended March 31, 2016 as compared to the year ended March 31, 2015. The foreign exchange gain this year was lower due to USD apbrciating sharply and the spot rate coming close to the hedged rate. There has been increase in profit on sale of investments (net) by Rs. 139.69 Million for the year ended March 31, 2016 as compared to the year ended March 31, 2015. Personnel Expenses Personnel Expenses for the year amounted to Rs. 15,414.89 Million against Rs. 12,203.34 Million for the brvious year, showing an increase of 26.3%. However, as a percentage of revenue, these expenses increased to 66.7% during the year as compared to 64.5% in the brvious year, as shown in the following table The main reasons for increase in Personnel Expenses are as below: • Increase in personnel expenses in India by 10.4% • Increase in personnel expenses in regions other than India by 44.0% • Pay-hike for Sales and Marketing workforce effective from April 1, 2015 and for others effective from July 1, 2015 • The gratuity expense in brvious year was much higher due to significant reduction in discount rate used in actuarial valuation and the expense for this year is lower partly on account of change in the actuarial assumptions with respect to salary escalation in line with long term inflation in the economy. • Employee stock compensation expenses pertain to a new performance based stock option scheme framed during the brvious year. Operating and other Expenses Operating and other expenses for the year amounted to Rs. 3,570.56 Million against Rs. 2,805.71 Million in the brvious year. As a percentage of revenue, the expenses increased to 15.4% from 14.8%. The main reasons for increase in Operating and other expenses are as below: a. Travelling and conveyance expenditure increased by Rs. 200.52 Million during the year mainly due to rise in project related travel and visa expenses to meet the growing business needs. b. Cost of purchased software licenses and support expenses have increased by Rs. 226.06 Million primarily on account of increase in sales of traded licenses as compared to the brvious year leading to increase in the cost of purchases of such licenses. c. Legal and Professional fees increased by Rs. 55.11 Million because of increase in consultancy fees incurred in relation to the new acquisitions made by the Company during the year. d. Rent increased by Rs. 109.37 Million due to opening of new offices/ expansion of existing offices In India and abroad. e. Advertisement and sponsorship fees have gone up by Rs. 49.31 Million because of increased participation in various marketing events and brand building initiatives. Profit Before Interest, Tax, Debrciation and Amortization During the year, the Company reported Profit before interest, tax, debrciation and amortization of Rs. 4,922.35 Million rebrsenting a 1.7% increase over Profit before interest, tax, debrciation and amortization of Rs. 4,841.62 Million during the brvious year. The margin of profit before interest, tax, debrciation and amortization decreased to 21.3% during the year from 25.6% in the brvious year mainly due to increase in personnel costs and other expenses. Debrciation and Amortization The debrciation and amortization for the year amounted to Rs. 965.16 Million as against Rs. 938.53 Million in the brvious year showing an increase of 2.8%. This increase is mainly attributable to increase in debrciation on computers and plant and equipment. However, there has been reduction in amortization of intangible assets due to some of the intangible assets moving out of amortization period during the year. Debrciation and amortization as a percentage of revenue was 4.2% in the year against 5.0% during the brvious year. The Company follows the straight-line-method (SLM) of debrciation. Debrciation rates followed by the Company are based on the useful lives of the assets based on the internal assessment and independent technical evaluation carried out by the external valuer. Provision for Taxation Tax expense consists of current tax and deferred tax. The Group is exposed to income tax in multiple geographies where it is doing business through its branches and subsidiaries. Persistent Systems Ltd, the parent company is mainly liable to income tax in India. The provision for tax for the year amounted to Rs. 890.89 Million (net of tax credit in respect of earlier years of Rs. 25.70 Million) against Rs. 1,039.45 Million (net of tax credit in respect of earlier years of Rs. 17.86 Million) in the brvious year. The deferred tax expense for the year was Rs. 91.77 Million against deferred tax credit of Rs. 46.04 Million in the brvious year. The total tax expense for the year amounted to Rs. 982.66 Million against Rs. 993.41 Million for the brvious year. The Effective Tax Rate (ETR) for the year amounted to 24.8% as compared to 25.5% in the brvious year. The decrease in ETR is because of lower taxation in some of the overseas subsidiaries. Net Profit after Tax The Net Profit for the year amounted to Rs. 2,973.61 Million against Rs. 2,906.31 Million for the brvious year, recording an increase of 2.3%. The Net Profit margin for the year was 12.9% as compared to 15.4% in the brvious year. Dividend The total dividend per share for the year was Rs. 8 per share paid as interim dividend as compared to total dividend of Rs. 7.50 per share (after considering the effect of bonus issue) for the brvious year. Additionally, the Company had declared one-time special dividend of Rs. 2.50 per share in the brvious year towards silver jubilee celebration. The total payout towards dividend for the year, was Rs. 640 Million as against Rs. 800 Million for the brvious year. The total dividend tax for the year was Rs. 130.30 Million against Rs. 161.41 Million for the brvious year. The dividend payout ratio for the year was 25.9% as compared to 33.1% for the brvious year. Earnings Per Share (EPS) Basic earnings per share went up to Rs. 37.26 per share, compared to Rs. 36.84 per share in the brvious year, recording an increase of 1.1%. Diluted earnings per share went up to Rs. 37.17 per share, compared to Rs. 36.33 per share in the brvious year, recording an increase of 2.3%. |