5. We have determined the matters described below to be the key audit matters to be communicated in our report.
1. We have audited the accompanying standalone financial statements of Persistent Systems Limited (‘the Company’),which comprise the Standalone Balance Sheet as at 31 March 2025, the Standalone Statement of Profit and Loss(including Other Comprehensive Income), the Standalone Statement of Cash Flow and the Standalone Statementof Changes in Equity for the year then ended, and notes to the standalone financial statements, including materialaccounting policy information and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalonefinancial statements give the information required by the Companies Act, 2013 (‘the Act’) in the manner so requiredand give a true and fair view in conformity with the Indian Accounting Standards (‘Ind AS’) specified under section
133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and other accounting principlesgenerally accepted in India, of the state of affairs of the Company as at 31 March 2025, and its profit (including othercomprehensive income), its cash flows and the changes in equity for the year ended on that date.
3. We conducted our audit in accordance with the Standards on Auditing specified under section 143(10) of the Act.
Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Company in accordance with the Codeof Ethics issued by the Institute of Chartered Accountants of India (‘ICAI’) together with the ethical requirements that
are relevant to our audit of the standalone financial statements under the provisions of the Act and the rules thereunder,and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of thestandalone financial statements of the current period. These matters were addressed in the context of our audit of thestandalone financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinionon these matters.
No.
Key audit matter
How our audit addressed the key audit matter
1.
Accuracy of revenues and onerous obligations in
Our audit procedures relating to accuracy of revenues and
respect of fixed-price contracts
Refer Note 3.2(a) to notes forming part of the
onerous obligations in respect of fixed-price contractsincluded but were not limited to the following:
standalone financial statements.
• Obtained an understanding of the systems, processesand controls implemented by management for
The Company has entered into various fixed-price
calculating and recording revenue, and the associated
software development contracts, for which revenue
unbilled revenue, unearned and deferred revenue
is recognized by the Company using the percentageof completion computed as per the Input method
balances, and onerous contract obligations;
prescribed under Ind AS 115 ‘Revenue from Contracts
• Evaluated the design and tested operating effectiveness
with Customers’ (‘Ind AS 115’). Revenue recognition
of related internal financial manual controls and involved
in such contracts involves exercise of significant
auditor’s experts to:
judgement by the management and the following
• Test key IT controls over IT environment in which the
factors requiring significant auditor attention:
business systems operate, including access controls,
• High inherent risk around accuracy of revenue,
segregation of duties, program change controls,
given the customized and complex nature of these
program development controls and IT operation
contracts and significant involvement of information
controls;
technology (IT) systems.
• Test the IT controls over the completeness and
• High estimation uncertainty relating to
accuracy of cost / efforts and revenue reports
determination of the progress of each contract,
generated by the system; and
costs incurred till date and additional costs required
• Test the access and application controls pertaining
to complete the remaining contract.
to allocation of resources and budgeting systems
• Identification and determination of onerous
which prevents the unauthorized changes to
contracts and related obligations.
recording of efforts incurred and controls relatingto the estimation of contract efforts required to
• Determination of unbilled revenue receivables andunearned revenue related to these contracts as at
complete the project;
end of reporting period.
• Selected a sample of contracts and performed a
retrospective review of efforts incurred with estimated
Considering the materiality of the amounts involved,
efforts to identify significant variations and verify
and significant degree of judgement and subjectivity
whether those variations have been considered in
involved in the estimates as mentioned above, we have
estimating the remaining efforts to complete the
identified revenue recognition for fixed price contractsand determination of onerous contracts and related
contract;
provisions, as a key audit matter for the current year
• Reviewed a sample of contracts with unbilled revenues
audit.
to identify possible delays in achieving milestones,which require change in estimated efforts to completethe remaining performance obligations;
• Performed analytical procedures for reasonableness ofincurred and estimated efforts;
• Evaluated management’s identification of onerouscontracts based on estimates tested as above; and
• Evaluated the appropriateness of disclosures madein the standalone financial statements with respectto revenue recognized during the year as required byapplicable Indian Accounting Standards.
No. Key audit matter
2. Valuation of Employee Stock Option Plan (‘ESOP’)
Refer note 3.3(q) and note 34 to the standalone
Our audit procedures relating to valuation of ESOPincluded but were not limited to the following:
financial statements.
The Company has framed various ESOP schemes
• Obtained an understanding of the terms andarrangements of Employee Stock Option Plans;
for its employees under which the Company pays
remuneration to its employees for services received
of internal financial controls over the methodology,
in the form of equity-settled share based payment
models and assumptions used by the management
transactions.
In accordance with the principles of Ind AS 102
to determine the fair value of options granted duringthe year;
‘Share Based Payments’ (‘Ind AS 102’), the fair value
• Evaluated competency and objectivity of valuation
of aforesaid employee stock options determined as
specialist hired by the management;
at the date of their grant is recognised as employee
• Reviewed the report from management’s valuation
compensation cost by the Company over the vesting
specialist considered for valuation of options granted
period of such options.
during the year;
The fair valuation of options granted to employees
• Assessed the reasonableness of the management
for the services rendered is performed by external
assumptions and estimates and verified the accuracy of
valuation specialists using Black-Scholes valuation
inputs used for the valuation purpose on a sample basis;
model which requires the management to make
• Involved auditor’s valuation expert to assist in validating
certain key estimates and assumptions including
the valuation assumptions, methodology and approach
expected volatility, dividend yield, risk-free interest rate,
considered by the management’s expert; and
performance factor, attrition rate and non-acceptance
ascertained arithmetical accuracy of computation of
factors.
share-based payment expense; and
Considering significant management judgment and
• Evaluated the appropriateness of disclosures made in
materiality of amounts involved, valuation of ESOP
the Standalone financial statements with respect to
reserve and expense is considered as a key audit matter
share based payments as required by applicable Indian
for the current year audit.
Accounting Standards.
6. The Company’s Board of Directors are responsible for the other information. The other information comprises theinformation included in the Annual Report, but does not include the standalone financial statements and our auditor’sreport thereon. The Annual Report is expected to be made available to us after the date of this auditor’s report.
Our opinion on the standalone financial statements does not cover the other information and we will not express any formof assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other informationidentified above when it becomes available and, in doing so, consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required tocommunicate the matter to those charged with governance.
7. The accompanying standalone financial statements have been approved by the Company’s Board of Directors. TheCompany’s Board of Directors are responsible for the matters stated in section 134(5) of the Act with respect to thepreparation and presentation of these standalone financial statements that give a true and fair view of the financialposition, financial performance including other comprehensive income, changes in equity and cash flows of the Companyin accordance with the Ind AS specified under section 133 of the Act and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments and estimates that are reasonableand prudent; and design, implementation and maintenance of adequate internal financial controls, that were operatingeffectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free from material misstatement, whetherdue to fraud or error.
8. In preparing the standalone financial statements, the Board of Directors is responsible for assessing the Company’s abilityto continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concernbasis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or hasno realistic alternative but to do so.
9. The Board of Directors is also responsible for overseeing the Company’s financial reporting process.
10. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance withStandards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
11. As part of an audit in accordance with Standards on Auditing, specified under section 143(10) of the Act we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error,design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriateto provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than forone resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the overrideof internal control;
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriatein the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls with reference to financial statements in place and the operatingeffectiveness of such controls;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by management;
• Conclude on the appropriateness of Board of Directors’ use of the going concern basis of accounting and, based on theaudit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significantdoubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we arerequired to draw attention in our auditor’s report to the related disclosures in the standalone financial statements or, if suchdisclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a goingconcern; and
• Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures,and whether the standalone financial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
12. We communicate with those charged with governance regarding, among other matters, the planned scope and timing ofthe audit and significant audit findings, including any significant deficiencies in internal control that we identify duringour audit.
13. We also provide those charged with governance with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence, and where applicable, related safeguards.
14. From the matters communicated with those charged with governance, we determine those matters that were of mostsignificance in the audit of the standalone financial statements of the current period and are therefore the key auditmatters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about thematter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our reportbecause the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits ofsuch communication.
15. As required by section 197(16) of the Act based on our audit, we report that the Company has paid remuneration to itsdirectors during the year in accordance with the provisions of and limits laid down under section 197 read with Schedule Vto the Act.
16. As required by the Companies (Auditor’s Report) Order, 2020 (‘the Order’) issued by the Central Government of India interms of section 143(11) of the Act we give in the Annexure A, a statement on the matters specified in paragraphs 3 and 4of the Order, to the extent applicable.
17. Further to our comments in Annexure A, as required by section 143(3) of the Act based on our audit, we report, to theextent applicable, that:
a. We have sought and obtained all the information and explanations which to the best of our knowledge and beliefwere necessary for the purpose of our audit of the accompanying standalone financial statements;
b. In our opinion, proper books of account as required by law have been kept by the Company so far as it appears fromour examination of those books;
c. The standalone financial statements dealt with by this report are in agreement with the books of account;
d. In our opinion, the aforesaid standalone financial statements comply with Ind AS specified under section 133of the Act;
e. On the basis of the written representations received from the directors and taken on record by the Board of Directors,none of the directors is disqualified as on 31 March 2025 from being appointed as a director in terms of section 164(2)of the Act;
f. With respect to the adequacy of the internal financial controls with reference to financial statements of the Companyas on 31 March 2025 and the operating effectiveness of such controls, refer to our separate report in Annexure Bwherein we have expressed an unmodified opinion; and
g. With respect to the other matters to be included in the Auditor’s Report in accordance with rule 11 of the Companies(Audit and Auditors) Rules, 2014 (as amended), in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company, as detailed in note 35 to the standalone financial statements, has disclosed the impact of pendinglitigations on its financial position as at 31 March 2025;
ii. The Company did not have any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses as at 31 March 2025;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education andProtection Fund by the Company during the year ended 31 March 2025;
iv. a. The management has represented that, to the best of its knowledge and belief, as disclosed in note 47
to the standalone financial statements, no funds have been advanced or loaned or invested (either fromborrowed funds or securities premium or any other sources or kind of funds) by the Company to or inany persons or entities, including foreign entities (‘the intermediaries’), with the understanding, whetherrecorded in writing or otherwise, that the intermediary shall, whether, directly or indirectly lend or investin other persons or entities identified in any manner whatsoever by or on behalf of the Company (‘the
Ultimate Beneficiaries’) or provide any guarantee, security or the like on behalf the Ultimate Beneficiaries;
b. The management has represented that, to the best of its knowledge and belief, as disclosed in note 48to the standalone financial statements, no funds have been received by the Company from any personsor entities, including foreign entities (‘the Funding Parties’), with the understanding, whether recordedin writing or otherwise, that the Company shall, whether directly or indirectly, lend or invest in otherpersons or entities identified in any manner whatsoever by or on behalf of the Funding Party (‘UltimateBeneficiaries’) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
c. Based on such audit procedures performed as considered reasonable and appropriate in thecircumstances, nothing has come to our notice that has caused us to believe that the managementrepresentations under sub-clauses (a) and (b) above contain any material misstatement.
v. The interim dividend declared and paid by the Company during the year ended 31 March 2025 and until the dateof this audit report is in compliance with section 123 of the Act.
The final dividend paid by the Company during the year ended 31 March 2025 in respect of such dividenddeclared for the previous year is in accordance with section 123 of the Act to the extent it applies to paymentof dividend.
As stated in note 16(a) to the accompanying standalone financial statements, the Board of Directors of theCompany have proposed final dividend for the year ended 31 March 2025 which is subject to the approval of themembers at the ensuing Annual General Meeting. The dividend declared is in accordance with section 123 of theAct to the extent it applies to declaration of dividend.
vi. As stated in in note 57 to the standalone financial statements and based on our examination which included testchecks, the Company, in respect of financial year commencing on 01 April 2024, has used an accounting softwarefor maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same
has been operated throughout the year for all relevant transactions recorded in the software. Further, during thecourse of our audit we did not come across any instance of audit trail feature being tampered with. Furthermore,the audit trail has been preserved by the Company as per the statutory requirements for record retention.
Chartered Accountants
Firm’s Registration No. 001076N/N500013
Partner
Membership No. 101797
UDIN: 25101797BMMAKE2017
Place: USA
Date: 23 April, 2025