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KPIT Technologies LimitedAnnual Report 2015-16Management Discussion and AnalysisA detailed review of the operations, performance and futureoutlook of the Company and its business is given in theManagement Discussion and Analysis Report, which formsa part of this Report.Awards & Recognitionzz KPIT’s Smart Electric Bus technology wins the“One Globe Award for Excellence in Research &Development”;zz KPIT Featured as a "Niche Player" in Gartner's 2015"Magic Quadrant for Oracle Application ManagementServices, Worldwide";zz KPIT Won “Newcomer of the Year” Award at AnnualSAP Hybris Summit;zz KPIT's solution for Consul Neowatt Power Solutionswins SAP ACE Award for Customer Excellence inService;zz KPIT was honored for Successful Digital Transformationwith ‘Jewels of Digital Maestro Award’;zz KPIT was conferred with the Most Influential MarketingLeaders Awards;zz Ms. Vaishali Vaid, VP & Head - Global HR, was honoredwith the ‘100 Most Talented Global HR Leaders Award’by CHRO Asia for the second time in a row;zz KPIT was honored with the 'Best CSR Practice Award'by the World CSR Congress.Particulars of EmployeesA statement containing the names of every employeeemployed throughout the financial year and in receipt ofremuneration of 60 lakh or more, or employed for partof the year and in receipt of 5 lakh or more a month,under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules, 2014, isannexed to this Report as “Annexure 3(a)”.The ratio of the remuneration of each Director to the medianemployee’s remuneration and other details prescribedin Section 197(12) of the Act, read with Rule 5(1) of theCompanies (Appointment and Remuneration of ManagerialPersonnel) Rules, 2014, are annexed to this Report as“Annexure 3(b)”.Employees Stock Option Plans (ESOPs)Information relating to ESOPs of the Company is annexedto this Report as “Annexure 4”. The information is beingprovided in compliance with Regulation 14 of Securities andExchange Board of India (Share Based Employee Benefits)Regulations, 2014.Disclosure under the SexualHarassment of Women at Workplace(Prevention, Prohibition and Redressal)Act, 2013The Company has in place a policy on prevention of sexualharassment and has put in place a redressal mechanismfor resolving complaints received with respect to sexualharassment and discriminatory employment practices. Nocase of sexual harassment and discriminatory employmentwas reported during the financial year under review.Fixed DepositsThe Company has not accepted any deposits and as such,no amount of principal or interest was outstanding as onMarch 31, 2016.Information on conser vation ofenergy, technology absorption andforeign exchange earnings and outgostipulated under Section 134(3)(m)of the Act, read with Rule 8 of theCompanies (Accounts) Rules, 2014Conservation of EnergyThe Company always endeavors to reduce energyconsumption and achieve conservation of resources. Someof the initiatives taken by the Company in this connectionhave been detailed in the previous years’ Board’s Reportswhich the Company continues to implement. Apart fromthose initiatives, the following PAN India measures wereundertaken to reduce energy consumption resulting inPune (30%), Bangalore (15%) and Mumbai (19%) savingover the period of 6 years.zz Replaced 300 CFLs (72W) with energy efficient LEDlights (36W), resulting in energy saving of 2,750kwhunits per month amounting to 2.00 lacs;zz Replaced UPS with higher energy efficiency therebyreduction in energy consumption by 10%, for whichcapital invested was 34 lacs;zz Mild-concentrated Solar Photovoltaic Technology:We have developed a low-cost and light weightconcentrator, which can concentrate up to 3-5 timesthe light that is incident on it.Green InitiativesThe following initiatives were undertaken at the Companylevel to create awareness about importance of environmentalprotection and reducing pollution:zz 50 trees saplings have been planted within theCompany premises in the month of June 2015;15 184

zz 247 Computer Assets and 300 CFL lights sent forrecycling in the month of October 2015;oMeditation activity conducted as a mark of“Healthy Mind”zz 1,200 acres of agricultural land under irrigation,benefiting 21,000 people from 7 villages;oBalloon blowing activity on the World Heart Dayzz Covered 2 villages under Government of Maharashtra’sJalyukta Shivar Abhiyan;zz KPITes spread awareness about the Zero Garbageinitiative;zz Environment Week Celebration: We have beencelebrating the Environment Week on the occasionof the "World Environment Day" for the past six yearssince 2010;zz Conservation of Private Forests in Koyna - ChandoliCorridor in Maharashtra;zz Tree Plantation Programs: 1,050 trees planted in Pune& Bangalore.Occupational Health and Safety AssessmentSeries (OHSAS)The following activities were carried out by the Companyunder OHSAS in 2015-16:zz Framework created to move away from a week ofhealth and wellness to annual approach for “Healthand Wellness”;zz Following choice of work out provided consideringthe popularity and trendy ways of exercise:oIntroduction of ZumbaoIntroduction of Yogazz Following health check-ups & diagnostic support toemployees and their families:Technology AbsorptionDuring the year under review, we have taken Smart Enterpriseinitiative to digitally transform key business processescreating differentiated experiences for everyone interactingwith us and also improve people productivity. We havesuccessfully deployed Pivotal Cloud Foundry a KPIT digitalplatform hosted on Smart Infrastructure. Various productivitymobile apps are made available to employees using theCompany’s store hosted on Microsoft Intune platform.Smart Infrastructure consists of software defined DataCentre technologies comprising of integrated self-servicesoftware defined compute, network and storage improvingagility and governance for IT asset provisioning. This year,we also rolled out KPITube.com, a video gallery for ouremployees to collaborate and share videos and access livesessions using any smart devices. To take the collaborationexperience to next level and allowing employees toparticipate in audio/video conference from any place, anydevice, we are rolling out ‘WebEx’ to global users.In addition to the above, following are the key initiativesplanned in the coming year:zz Transforming IT with ‘IT as a Service’ focusing onbusiness value than technology;zz Implementing context aware smar t businessapplications with mobile first, cloud first, platformenabled architecture;zz Digital Engagement Hub: Global integrated Omnichannel Service Desk for all enabling functions.oSubsidized health check-up package offered foremployee familyResearch and Development (R&D) ActivityoNegotiated discounts on expensive tests foremployee familyEV bus projectzz Health awareness vaccination drives to address healthhazards such as:oH1N1 Vaccination drive done for employee familyzz Initiated hospital tie ups for discounted check-ups forOPD and other tests (addition to diagnostic centers);zz Awareness Communication on “WHO Days”;zz Engagement Through Wellness:oLaughter sessionsoSpecial Pranayama sessions for International YogaDayoTug of WaroRandom blood sugar testing on World DiabetesDayoDental check-up campsoEye check-up camps on campus for employeesHon'ble Prime Minister of India Shri Narendra Modi flaggedoff the Smart Electric Bus, an indigenous technologydeveloped by our Company, at the Indian Parliament on theDecember 21, 2015. This project was initiated by Shri NitinGadkari, Hon'ble Minister of Road Transport and Highways(MoRTH), Government of India.The Central Institute of Road Transport (CIRT) supportedthis project to validate and ensure that the electric bustechnology is safe, reliable and well suited for Indianroad conditions. This initiative is inspired by Shri NitinGadkari’s call to the industry and research organizationsto develop indigenous, innovative and pollution freepublic transport for India. Our Smart Electric Bus enablesclean mobility and is aligned with the Indian government’sinitiatives of Make in India, Smart Cities and Swachh Bharat.The indigenously developed electric system, with theintellectual property rights being owned by us, consists ofcomponents like motors, lithium ion batteries and a powertransmission unit. It is a versatile system and features likerange (100 to 200 km), top speed (up to 100 kmph), air

KPIT Technologies LimitedAnnual Report 2015-16conditioning, etc. can be configured as required. This systemis being designed to work in all bus formats, i.e. front engineand rear engine, high floor and low floor etc.Major benefits from this technology would be:1.2.3.4.Zero emissionsIncreased passenger comfortLow maintenanceVersatile design to meet customer requirementReplacing one diesel bus with an electric bus can savecarbon dioxide emissions up to 48,000 kg a year which isequal to planting 2,400 trees annually. It will also save dieselworth 10 lacs a year.Hybrid busWe received an award from the Indian AutomotiveTechnology and Innovation Awards (IATIA) titled“Technology innovation of the year 2015” for hybridconversion technology.Currently, we are running hybrid pilot buses along withsome of the transportation undertakings to collect dataand results about the performance.The total amount spent on R&D activities is given below:R&D expenses for the year ended March 31, 2016ParticularsAmountKey Project Details( in million)Expensed in the- CREST ProjectsStatement of- ITS engineeringProfit and Loss- Revolo Bus(Refer Note 2)92.34 - SolarCapital work-inprogressAssets capitalizedduring the yearTotalForeign Exchange Earnings and OutgoGiven the global nature of the business of the Company,exports always form its thrust total foreign exchangeearnings during the year have been 9,900.37 million(previous year 8,783.50 million) and foreign exchangeoutgo (including imports) has been 688.24 million(previous year 589.13 million).Board MeetingsSix meetings of the Board of Directors were held duringthe year. More details about the meetings are available inthe Report on Corporate Governance, which forms a partof this Annual Report.Committees of BoardThe details regarding Committees of the Board of Directorsof the Company are given in the report on CorporateGovernance, which forms a part of this Annual Report.Independence of the BoardThe Board of Directors of the Company comprises ofoptimum number of Independent Directors. Based on theconfirmation/disclosures received from the Directors andon evaluation of the relationships disclosed, the followingNon-Executive Directors are Independent in terms ofRegulation 16(1)(b) of the SEBI (LODR) Regulations, 2015and Section 149(6) of the Act:1.Ms. Lila Poonawalla2.Dr. R. A. Mashelkar- S m a r t t r a f f i cmonitoring3.Mr. Adi Engineer4.Prof. Alberto Sangiovanni Vincentelli- Data science andanalytics204.76 Autosar, BUS hybrid,K-SAR31.53 Linux5.Mr. Anant Talaulicar328.63Notes:1. During the previous year, the Company had set upa state-of-the-art facility for its R & D activities,construction of which is completed as of March 31,2015. The Company has been granted recognitionof this of facility with the Department of Science &Industrial Research which is valid up to March 31, 2018.2. Out of total R & D expenditure of 92.34 million,eligible R & D revenue expenditure under Section35(2AB) of the Income Tax Act, 1961, for the Companyis 78.00 million.A separate section on R&D activities undertaken by theCompany has also been included in this Annual Report.Company’s Policy on Directors’appointment and remunerationPursuant to the provisions of Section 134(3)(e) of theAct, the policy of the Company on the appointment andremuneration of Directors including criteria for determiningqualifications, positive attributes, independence of adirector and other matters provided under Section 178(3),of the Act is annexed to this Report as “Annexure 5”.Particulars of loans, guarantees orinvestments under Section 186 of theActParticulars of loans, guarantees or investments made duringthe year under review, pursuant to the provisions of Section186 of the Act are as below:17 184

Sr. Name of the subsidiaryNo.1. KPIT Technologies (UK)Limited2. Impact AutomotiveSolutions Limited3. KPIT (Shanghai)Software Technology Co., Limited4. KPIT TechnologiesEmployees Welfare Trust5. KPIT InfosystemsIncorporated6. KPIT Infosystems ME FZENature ofDurationRate ofAmount PurposeTransactionInterest (%) ( in million)Guarantee Till April 30, 2016NA95.09 For setting up the creditfacilitiesAcquisitionNANA181.80 Equity infusionAcquisitionNANALoanNA7.55%GuaranteeTill July 31, 2020NAGuaranteeTill December31, 2016Till December31, 2020NA7. Mr. Kishor PatilLoanParticulars of contracts or arrangementswith related parties referred to inSection 188(1) of the ActPursuant to the provisions of Section 134(3)(h) of theAct, the particulars of contracts or arrangements withrelated parties referred to in Section 188(1) of the Act andprescribed in Form AOC-2 of Companies (Accounts) Rules,2014, is annexed to this Report as “Annexure 6”.Material changes and commitmentsaffecting the financial position of theCompanyThere are no material changes and commitments affectingthe financial position of the Company which have occurredbetween the end of the financial year of the Company towhich the financial statements relate and the date of thisReport.7.60%32.01 Equity infusion150.00 For operation of EmployeeStock Option Plans663.33 For setting up the creditfacilities66.33 For setting up the creditfacilities30.00 Housing loan under loanpolicy of the Companysignificant observations, if any, and action taken reportson the same are considered by Audit Committee at theirmeeting.The Act has made it mandatory for the Directors in theirResponsibility Statement in the Board’s Report to statethat “the directors, in the case of a listed company, hadlaid down internal financial controls to be followed bythe Company and that such internal financial controlsare adequate and were operating effectively.” The abovestatement has to be affirmed to by the Statutory Auditorsin their Audit Report.As per explanation provided to Section 134(5)(e) of theAct, “internal financial controls” means “the policies andprocedures adopted by the Company for ensuring theorderly and efficient conduct of its business, includingadherence to the Company’s policies, the safeguarding ofits assets, the prevention and detection of frauds and errors,the accuracy and completeness of the accounting records,and the timely preparation of reliable financial information”.Risk Management PolicyComponents of internal control define internal controlover financial reporting as “a process designed by, orunder the supervision of the CEO and CFO” office andeffected and approved by the Board of Directors andmanagement to provide reasonable assurance regardingthe reliability of financial reporting and the preparation offinancial statements for external purposes in accordancewith Indian GAAP (IGAAP) and includes those policies andprocedures that:A mechanism to identify, assess, monitor and mitigatevarious risks to key business objectives of the Companyis in place. A write-up on enterprise risk management isincluded elsewhere in this Annual Report.zz Pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets andliabilities of the Company;Significant and material ordersThere are no significant and material orders passed bythe regulators or courts or tribunals impacting the goingconcern status and Company's operations in future.Internal Control Systems and Adequacyof Internal Financial ControlsThe internal control systems of the Company are adequateconsidering the nature of its business, size and complexity.The Statutory Auditors as well as the Internal Auditors ofthe Company review the same on periodical basis. Further,zz Provide reasonable assurance that transactions arerecorded as necessary to permit preparation offinancial statements in accordance with IGAAP andthat receipts and expenditures of the Company arebeing made only in accordance with authorizationsof management and Directors of the Company; andzz Provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use or

KPIT Technologies LimitedAnnual Report 2015-16disposition of the Company’s assets that could have amaterial effect on the financial statements.give a true and fair view of the state of affairs of theCompany as at March 31, 2016 and of the profit ofthe Company for the year ended on that date;Audit Committee Recommendationsiii)During the year, all the recommendations of the AuditCommittee were accepted by the Board. The compositionof the Audit Committee is as mentioned in the Report onCorporate Governance, which forms a part of this AnnualReport.they have taken proper and sufficient care forthe maintenance of adequate accounting recordsin accordance with the provisions of the Act, forsafeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;iv)the annual financial statements have been preparedon a going concern basis;Corporate Social Responsibility (CSR)v)The Policy on Corporate Social Responsibility of theCompany and the details about the development ofCSR Policy and initiatives taken by the Company on CSRduring the year as per the Companies (Corporate SocialResponsibility Policy) Rules, 2014 has been annexed to thisReport as “Annexure 7”.they have laid down internal financial controls tobe followed by the Company and that such internalfinancial controls are adequate and are operatingeffectively andvi)they have devised proper systems to ensure compliancewith the provisions of all applicable laws and that suchsystems are adequate and operating effectively.Formal Annual Evaluation by the BoardCEO & CFO CertificationA separate meeting of the Independent Directors of theCompany was held on March 16, 2016, in which a formalevaluation of performance of the Board, Committees andthe individual Directors was carried out. The performanceevaluation was conducted based on the criteria specified inthe Act and Regulation 17 of the SEBI (LODR) Regulations,2015.Certificate by Mr. Kishor Patil, CEO & Managing Directorand Mr. Anil Patwardhan, Chief Financial Officer, pursuantto the provisions of Regulation 17(8) of the SEBI (LODR)Regulations, 2015, for the year under review was placedbefore the Board of Directors of the Company at its meetingheld on April 27, 2016.The feedback based on evaluation was discussed with theChairman of the Board and given to the Directors.Vigil mechanismThe Company has established a vigil mechanism forDirectors and employees to report their genuine concerns.The details of the same are explained in the Report onCorporate Governance. The Policy on Vigil Mechanism maybe accessed on the Company’s website at the link: vernance.Extract of Annual ReturnThe details forming part of the extract of the AnnualReturn in Form MGT-9 is annexed to this Report as“Annexure 8”.Responsibility Statement of the Board of DirectorsTo the best of their knowledge and belief and according tothe information and explanations obtained by them, yourDirectors state that:i)in the preparation of the annual accounts for the yearended March 31, 2016, the applicable accountingstandards have been followed along with properexplanation relating to material departures, if any;ii)they have selected such accounting policies andapplied them consistently and made judgments andestimates that are reasonable and prudent so as toA copy of such certificate forms a part of the Report onCorporate Governance.AcknowledgmentsWe take this opportunity to thank all the shareholders ofthe Company for their continued support.We thank customers, vendors, investors and bankers of theCompany for their continued support during the year. Weplace on record our appreciation of the contribution madeby our employees at all levels. Our consistent growth wasmade possible by their hard work, solidarity, co-operationand support.We further thank the governments of various countrieswhere we have our operations. We also thank theGovernment of India, particularly the Ministr y ofCommunication and Information Technology, the Ministryof Commerce, the Ministry of Finance, the Ministry ofCorporate Affairs, the Customs and Excise Departments,the Income Tax Department, the Reserve Bank of India,the State Governments, the Software Development Centers(SDCs)/Special Economic Zones (SEZs) – Navi Mumbai,Chennai, Bengaluru, Hyderabad, Noida, Pune and all othergovernment agencies for their support and look forwardfor their continued support in future.For and on behalf of the Board of DirectorsPuneApril 27, 2016S. B. (Ravi) PanditChairman & Group CEO19 184

"Magic Quadrant for Oracle Application Management Services, Worldwide"; zz KPIT Won "Newcomer of the Year" Award at Annual SAP Hybris Summit; zz KPIT's solution for Consul Neowatt Power Solutions wins SAP ACE Award for Customer Excellence in Service; zz KPIT was honored for Successful Digital Transformation