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Directors Report of KPIT Technologies Ltd.

Mar 31, 2016

Dear Members,

The Directors are pleased to present the Twenty Fifth Annual Report together with the Audited Accounts of the Company for the Financial Year ended March 31, 2016.

Performance of the Company

(In million)

Particulars Standalone 2015-16 Consolidated 2015-16

USD Rs. USD Rs.

Revenue from operations 191.89 12,618.56 490.31 32,242.91

Profit before Tax (PBT) 37.45 2,462.76 55.42 3,64467

Profit after Tax (PAT) 30.70 2,019.14 42.81 2,815.00

Result of Operations

During the year under review, the total revenues from operations (consolidated) increased to Rs. 32,242.91 million, a growth of 7.84% over the previous year. Earnings before interest, tax, depreciation and amortization was Rs. 4,240.15 million on consolidated basis. Net profit after tax (consolidated) increased by 18.78% to Rs. 2,815 million.

In US Dollar terms, revenues from operations for the year on consolidated basis was Rs. 490.31 million as against Rs. 489.03 million during the previous year, a growth of 0.26%. Average realization rate was Rs. 65.76 per US Dollar.

Standalone sales for the financial year 2015-16 grew by 1.29% to reach Rs. 12,618.56 million. Net profit after tax increased by 32.80 % to Rs. 2,019.14 million.

Dividend

The Directors are pleased to inform that in FY2015-16 an interim dividend of Rs. 1.10/- per equity share of face value of Rs. 2/- each (55%) was decleared and paid by passing a circular Board resolution dated March 31, 2016.

Futher, the Board recommends a final dividend of Rs. 1.10/- per equity share of face value of Rs. 2/- each (55%) on the paid-up equity share capital of the Company for the year under review. The total pay-out will amount to Rs. 262.66 million including dividend distribution tax.

Transfer to Reserves

Your Directors propose to transfer Rs. 202.00 million to the General Reserve. An amount of Rs. 7,050.81 million is proposed to be retained in the Profit & Loss Account.

Share Capital

The Company issued and allotted 732,629 equity shares of Rs. 2/- each, to the eligible employees on exercise of options under the Employee Stock Option Schemes of the Company and 104,000 shares have been allotted to KPIT Technologies Employees Welfare Trust during the financial year 2015-16.

Consequently, the outstanding issued, subscribed and paid- up capital of the Company as on March 31, 2016, is Rs. 394.99 million, consisting of 197,498,742 equity shares of Rs. 2/- each.

CRISIL Ratings

For the bank loan limits of Rs. 4,445.50 million, CRISIL has assigned the long term credit rating of AA-/ Negative.

Quality, Information Security and Productivity

We continue to strengthen our commitment to quality by sustaining and increasing the scope of the existing certifications. During the year under review, the Company achieved recertification for ISO 9001:2008 (Quality Management Systems), ISO 20000-1:2011 (Information Technology Service Management) by TUV Nord Cert GmbH for providing software development, product engineering, product support and enabling services. We also continue to maintain certifications for ISO 27001:2013 (Information Security Management Systems) and IS022301:2012 (Business Continuity Management). The Company continues to maintain the highest maturity level 5 for CMMI-DEV® v1.3 (Development) and the Automotive SPICE® organization maturity level 5 upgraded from v2.5 to v3.0 during the year under review.

Our Customers and the market place are changing at an unprecedented speed and it is imperative to have robust tools and governance mechanisms which can adapt and facilitate change with ease. Keeping this in mind, we have developed Klarity, a platform for aggregating information and data from various tools within the organization to offer consolidated engineering analytics. The Company also continues to strengthen its Business IT delivery through focus on automation levers across SBUs and Practices. The ERP practice harnesses the power of the tools and accelerators developed in-house via a cloud based solution to utilize these individual tools in the form of an end-to- end tool chain.

Our process improvement drive continues to be strengthened by leveraging on workflow optimization, six sigma and lean principles. The Products and Platforms SBU now leverages on Agile methodology for faster time to market as well as cohesive communication amongst the product development stakeholders. We are committed to support the dynamic business needs of our customers through continuous focus on operational and quality excellence.

Institutional Shareholding

As on March 31, 2016, the total Institutional shareholding in the Company was 51.61% of the total share capital.

Information about the Subsidiary Companies

As on March 31, 2016, the Company had 15 subsidiaries, including step-down subsidiaries.

During the year under review, Integrated Industrial Information, Inc. and CPG Solutions, LLC were merged with KPIT Infosystems Incorporated, USA, with effect from January 01, 2016.

In accordance with Section 129(3) of the Companies Act, 2013, (hereinafter referred to as "the Act") the Company has prepared consolidated financial statements of the Company and all its subsidiary companies, which is forming part of this Annual Report. A statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is annexed to this Report as "Annexure 1".

In accordance with Section 136(1) of the Act, the Annual Report of the Company, containing the standalone and the consolidated financial statements and all other documents required to be attached thereto have been placed on the website of the Company, www.kpit.com. Further, a report on the performance and financial position of each of the subsidiaries has also been placed on the website of the Company. Members interested in obtaining a printed copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company''s Registered Office.

Directors

Pursuant to Section 152 of the Act, Mr. B V R Subbu retires by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

During the year, Mr. Dwayne Allen, Alternate Director to Mr. Anant Talaulicar, Independent Director, resigned from the directorship effective March 12, 2016, owing to his other business commitments and pre-occupations.

The Board places on record its appreciation of the valuable services provided by Mr. Dwayne Allen during his tenure as a Director.

Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 of the Act, read with the Rules framed thereunder:

1. Mr. Kishor Patil- Chief Executive Officer (CEO) and Managing Director;

2. Mr. Anil Patwardhan- Chief Financial Officer (CFO);

3. Ms. Sneha Padve- Company Secretary.

Ms. Sneha Padve has been appointed as the Company Secretary and Compliance Officer of the Company, effective July 22, 2015, consequent upon Mr. R. Swaminathan moving into a new business role within the Company and getting relieved from the role of the Company Secretary and Compliance Officer.

Auditors

Pursuant to the provisions of the Act, read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company in the Annual General Meeting held on July 25, 2014 for a period of five years, subject to ratification by the members in every Annual General Meeting. Based on the recommendation of the Audit Committee, the Board recommends ratification of the appointment of B S R & Co. LLP, as the Statutory Auditors of the Company, at the ensuing Annual General Meeting.

The Notes on financial statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

The Board of Directors of the Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, as the Secretarial Auditor to conduct audit for the year under review. The Secretarial Auditor''s report for the year under review is annexed to this Report as "Annexure 2". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon forms a part of this Report. The Auditors'' Certificate in respect of compliance with the provisions concerning Corporate Governance, forms a part of this Annual Report, as required under the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "the SEBI (LODR) Regulations, 2015").

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Awards & Recognition

- KPIT''s Smart Electric Bus technology wins the "One Globe Award for Excellence in Research & Development";

- KPIT Featured as a "Niche Player" in Gartner''s 2015 "Magic Quadrant for Oracle Application Management Services, Worldwide";

- KPIT Won "Newcomer of the Year" Award at Annual SAP Hybris Summit;

- KPIT''s solution for Consul Neowatt Power Solutions wins SAP ACE Award for Customer Excellence in Service;

KPIT was honored for Successful Digital Transformation with ''Jewels of Digital Maestro Award'';

- KPIT was conferred with the Most Influential Marketing Leaders Awards;

- Ms. Vaishali Vaid, VP & Head - Global HR, was honored with the ''100 Most Talented Global HR Leaders Award'' by CHRO Asia for the second time in a row;

- KPIT was honored with the ''Best CSR Practice Award'' by the World CSR Congress.

Particulars of Employees

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed to this Report as "Annexure 3(a)".

The ratio of the remuneration of each Director to the median employee''s remuneration and other details prescribed in Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are annexed to this Report as "Annexure 3(b)".

Employees Stock Option Plans (ESOPs)

Information relating to ESOPs of the Company is annexed to this Report as "Annexure 4". The information is being provided in compliance with Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

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

The Company has in place a policy on prevention of sexual harassment and has put in place a redressal mechanism for resolving complaints received with respect to sexual harassment and discriminatory employment practices. No case of sexual harassment and discriminatory employment was reported during the financial year under review.

Fixed Deposits

The Company has not accepted any deposits and as such, no amount of principal or interest was outstanding as on March 31, 2016.

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014

Conservation of Energy

The Company always endeavors to reduce energy consumption and achieve conservation of resources. Some of the initiatives taken by the Company in this connection have been detailed in the previous years'' Board''s Reports which the Company continues to implement. Apart from those initiatives, the following PAN India measures were undertaken to reduce energy consumption resulting in Pune (30%), Bangalore (15%) and Mumbai (19%) saving over the period of 6 years.

Replaced 300 CFLs (72W) with energy efficient LED lights (36W), resulting in energy saving of 2,750kwh units per month amounting to Rs. 2.00 lacs;

- Replaced UPS with higher energy efficiency thereby reduction in energy consumption by 10%, for which capital invested was Rs. 34 lacs;

- Mild-concentrated Solar Photovoltaic Technology: We have developed a low-cost and light weight concentrator, which can concentrate up to 3-5 times the light that is incident on it.

Green Initiatives

The following initiatives were undertaken at the Company level to create awareness about importance of environmental protection and reducing pollution:

- 50 trees saplings have been planted within the Company premises in the month of June 2015;

247 Computer Assets and 300 CFL lights sent for recycling in the month of October 2015;

- 1,200 acres of agricultural land under irrigation, benefiting 21,000 people from 7 villages;

Covered 2 villages under Government of Maharashtra''s Jalyukta Shivar Abhiyan;

- KPITes spread awareness about the Zero Garbage initiative;

Environment Week Celebration: We have been celebrating the Environment Week on the occasion of the "World Environment Day" for the past six years since 2010;

Conservation of Private Forests in Koyna - Chandoli Corridor in Maharashtra;

Tree Plantation Programs: 1,050 trees planted in Pune & Bangalore.

Occupational Health and Safety Assessment Series (OHSAS)

The following activities were carried out by the Company under OHSAS in 2015-16:

Framework created to move away from a week of health and wellness to annual approach for "Health and Wellness";

Following choice of work out provided considering the popularity and trendy ways of exercise:

- Introduction of Zumba

- Introduction of Yoga

Following health check-ups & diagnostic support to employees and their families:

- Subsidized health check-up package offered for employee family

- Negotiated discounts on expensive tests for employee family

Health awareness vaccination drives to address health hazards such as:

- H1N1 Vaccination drive done for employee family

Initiated hospital tie ups for discounted check-ups for OPD and other tests (addition to diagnostic centers);

- Awareness Communication on "WHO Days";

- Engagement Through Wellness:

- Laughter sessions

- Special Pranayama sessions for International Yoga Day

- Tug of War

- Random blood sugar testing on World Diabetes Day

- Dental check-up camps

- Eye check-up camps on campus for employees

- Meditation activity conducted as a mark of "Healthy Mind"

- Balloon blowing activity on the World Heart Day

Technology Absorption

During the year under review, we have taken Smart Enterprise initiative to digitally transform key business processes creating differentiated experiences for everyone interacting with us and also improve people productivity. We have successfully deployed Pivotal Cloud Foundry a KPIT digital platform hosted on Smart Infrastructure. Various productivity mobile apps are made available to employees using the Company''s store hosted on Microsoft Intune platform.

Smart Infrastructure consists of software defined Data Centre technologies comprising of integrated self-service software defined compute, network and storage improving agility and governance for IT asset provisioning. This year, we also rolled out KPITube.com, a video gallery for our employees to collaborate and share videos and access live sessions using any smart devices. To take the collaboration experience to next level and allowing employees to participate in audio/video conference from any place, any device, we are rolling out ''WebEx'' to global users.

In addition to the above, following are the key initiatives planned in the coming year:

Transforming IT with ''IT as a Service'' focusing on business value than technology;

- Implementing context aware smart business applications with mobile first, cloud first, platform enabled architecture;

Digital Engagement Hub: Global integrated Omni- channel Service Desk for all enabling functions.

Research and Development (R&D) Activity

EV bus project

Hon''ble Prime Minister of India Shri Narendra Modi flagged off the Smart Electric Bus, an indigenous technology developed by our Company, at the Indian Parliament on the December 21, 2015. This project was initiated by Shri Nitin Gadkari, Hon''ble Minister of Road Transport and Highways (MoRTH), Government of India.

The Central Institute of Road Transport (CIRT) supported this project to validate and ensure that the electric bus technology is safe, reliable and well suited for Indian road conditions. This initiative is inspired by Shri Nitin Gadkari''s call to the industry and research organizations to develop indigenous, innovative and pollution free public transport for India. Our Smart Electric Bus enables clean mobility and is aligned with the Indian government''s initiatives of Make in India, Smart Cities and Swachh Bharat.

The indigenously developed electric system, with the intellectual property rights being owned by us, consists of components like motors, lithium ion batteries and a power transmission unit. It is a versatile system and features like range (100 to 200 km), top speed (up to 100 kmph), air conditioning, etc. can be configured as required. This system is being designed to work in all bus formats, i.e. front engine and rear engine, high floor and low floor etc.

Major benefits from this technology would be:

1. Zero emissions

2. Increased passenger comfort

3. Low maintenance

4. Versatile design to meet customer requirement

Replacing one diesel bus with an electric bus can save carbon dioxide emissions up to 48,000 kg a year which is equal to planting 2,400 trees annually. It will also save diesel worth Rs. 10 lacs a year.

Hybrid bus

We received an award from the Indian Automotive Technology and Innovation Awards (IATIA) titled "Technology innovation of the year 2015" for hybrid conversion technology.

Currently, we are running hybrid pilot buses along with some of the transportation undertakings to collect data and results about the performance.

The total amount spent on R&D activities is given below:

R&D expenses for the year ended March 31, 2016

Particulars Amount Key Project Details (Rs. in million)

Expensed in the - CREST Projects

Statement of - its engineering

Profit and Loss

- Revolo Bus

(Refer Note 2) 92.34

- Solar

- Smart traffic monitoring

- Data science and analytics

Capital work-in- 204.76 Autosar, BUS hybrid, progress K-SAR

Assets capitalized 31.53 Linux during the year

Total 328.63

Notes:

1. During the previous year, the Company had set up a 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 recognition of 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 Rs. 92.34 million, eligible R & D revenue expenditure under Section 35(2AB) of the Income Tax Act, 1961, for the Company is Rs. 78.00 million.

A separate section on R&D activities undertaken by the Company has also been included in this Annual Report.

Foreign Exchange Earnings and Outgo

Given the global nature of the business of the Company, exports always form its thrust total foreign exchange earnings during the year have been Rs. 9,900.37 million (previous year Rs. 8,783.50 million) and foreign exchange outgo (including imports) has been Rs. 688.24 million (previous year Rs. 589.13 million).

Board Meetings

Six meetings of the Board of Directors were held during the year. More details about the meetings are available in the Report on Corporate Governance, which forms a part of this Annual Report.

Committees of Board

The details regarding Committees of the Board of Directors of the Company are given in the report on Corporate Governance, which forms a part of this Annual Report.

Independence of the Board

The Board of Directors of the Company comprises of optimum number of Independent Directors. Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Regulation 16(1)(b) of the SEBI (LODR) Regulations, 2015 and Section 149(6) of the Act:

1. Ms. Lila Poonawalla

2. Dr. R. A. Mashelkar

3. Mr. Adi Engineer

4. Prof. Alberto Sangiovanni Vincentelli

5. Mr. Anant Talaulicar

Company''s Policy on Directors'' appointment and remuneration

Pursuant to the provisions of Section 134(3)(e) of the Act, the policy of the Company on the appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Section 178(3), of the Act is annexed to this Report as "Annexure 5".

Particulars of loans, guarantees or investments under Section 186 of the Act

Particulars of loans, guarantees or investments made during the year under review, pursuant to the provisions of Section 186 of the Act are as below:

Sr. Name of the subsidiary Nature of Duration Rate of No. Transaction Interest (%)

1. KPIT Technologies (UK) Guarantee Till April 30, 2016 NA Limited

2. Impact Automotive Acquisition NA NA SolutionsLimited

3. KPIT (Shanghai) Acquisition NA NA Software Technology Co.,Limited

4. KPIT Technologies Loan NA 7.55% Employees Welfare Trust

5. KPIT Infosystems Guarantee Till July 31, 2020 NA Incorporated

6. KPIT Infosystems ME FZE Guarantee Till December NA 31,2016

7. Mr. Kishor Patil Loan Till December 7.60% 31,2020

Sr. No. Name of the subsidiary Amount Purpose (Rs. in million)

1. KPIT Technologies (UK) Limited 95.09 For setting up the credit facilities

2. Impact Automotive Solutions Limited 181.80 Equity infusion

3. KIPT (Shanghai Software Technology Co., Limited 32.01 Equity infusion

4. KIPT Technologies Employees Welfare Trust 150.00 For operation of Employee Stock Option Plans

5. KPIT Infosystems Incorporated 663.33 For setting up the credit facilities

6. KPIT Infosystems ME FZE 66.33 For setting up the credit facilities

7. Mr.Kishor Patil 30.00 Housing loan under loan policy of the Company

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act

Pursuant to the provisions of Section 134(3)(h) of the Act, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act and prescribed in Form AOC-2 of Companies (Accounts) Rules, 2014, is annexed to this Report as "Annexure 6".

Material changes and commitments affecting the financial position of the Company

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Risk Management Policy

A mechanism to identify, assess, monitor and mitigate various risks to key business objectives of the Company is in place. A write-up on enterprise risk management is included elsewhere in this Annual Report.

Internal Control Systems and Adequacy of Internal Financial Controls

The internal control systems of the Company are adequate considering the nature of its business, size and complexity. The Statutory Auditors as well as the Internal Auditors of the Company review the same on periodical basis. Further, significant observations, if any, and action taken reports on the same are considered by Audit Committee at their meeting.

The Act has made it mandatory for the Directors in their Responsibility Statement in the Board''s Report to state that "the directors, in the case of a listed company, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively." The above statement has to be affirmed to by the Statutory Auditors in their Audit Report.

As per explanation provided to Section 134(5)(e) of the Act, "internal financial controls" means "the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to the Company''s policies, the safeguarding of its 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".

Components of internal control define internal control over financial reporting as "a process designed by, or under the supervision of the CEO and CFO" office and effected and approved by the Board of Directors and management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Indian GAAP (IGAAP) and includes those policies and procedures that:

- Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets and liabilities of the Company;

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IGAAP and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and Directors of the Company; and

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company''s assets that could have a material effect on the financial statements.

Audit Committee Recommendations

During the year, all the recommendations of the Audit Committee were accepted by the Board. The composition of the Audit Committee is as mentioned in the Report on Corporate Governance, which forms a part of this Annual Report.

Corporate Social Responsibility (CSR)

The Policy on Corporate Social Responsibility of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been annexed to this Report as "Annexure 7".

Formal Annual Evaluation by the Board

A separate meeting of the Independent Directors of the Company was held on March 16, 2016, in which a formal evaluation of performance of the Board, Committees and the individual Directors was carried out. The performance evaluation was conducted based on the criteria specified in the Act and Regulation 17 of the SEBI (LODR) Regulations, 2015.

The feedback based on evaluation was discussed with the Chairman of the Board and given to the Directors.

Vigil mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. The details of the same are explained in the Report on Corporate Governance. The Policy on Vigil Mechanism may be accessed on the Company''s website at the link: http:// www.kpit.com/company/investors/corporate-governance.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed to this Report as "Annexure 8".

Responsibility Statement of the Board of Directors

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors state that:

i) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) they 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 the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;

iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual financial statements have been prepared on a going concern basis;

v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CEO & CFO Certification

Certificate by Mr. Kishor Patil, CEO & Managing Director and Mr. Anil Patwardhan, Chief Financial Officer, pursuant to the provisions of Regulation 17(8) of the SEBI (LODR) Regulations, 2015, for the year under review was placed before the Board of Directors of the Company at its meeting held on April 27, 2016.

A copy of such certificate forms a part of the Report on Corporate Governance.

Acknowledgments

We take this opportunity to thank all the shareholders of the Company for their continued support.

We thank customers, vendors, investors and bankers of the Company for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. Our consistent growth was made possible by their hard work, solidarity, co-operation and support.

We further thank the governments of various countries where we have our operations. We also thank the Government of India, particularly the Ministry of Communication and Information Technology, the Ministry of Commerce, the Ministry of Finance, the Ministry of Corporate 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 other government agencies for their support and look forward for their continued support in future.

For and on behalf of the Board of Directors

Pune S. B. (Ravi) Pandit

April 27, 2016 Chairman & Group CEO


Mar 31, 2015

Dear Shareholders,

The Directors are pleased to present the Twenty Fourth Annual Report together with the Audited Accounts of the Company for the Financial Year that ended on March 31, 2015.

Performance of the Company (In Million) Particulars Standalone 2014-15 USD Rs

Revenue from operations 203.75 12,457.47

Profit before Tax (PBT) 28.03 1,714.02

Profit after Tax (PAT) 24.87 1,520.44

Consolidated 2014-15 USD Rs. Rs

Revenue from operations 489.03 29,899.17

Profit before Tax (PBT) 40.64 2,484.67

Profit after Tax (PAT) 38.76 2,369.87

Result of Operations

During the year under review, the total revenues from operations (consolidated) increased to Rs. 29,899.17 Million, a growth of 10.98% over the previous year. Earnings before interest, tax, depreciation and amortization was Rs. 3,244.07 Million on consolidated basis. Net profit aftertax (consolidated) decreased by 4.81% to Rs. 2,369.87 Million.

In US Dollar terms, revenues from operations for the year on consolidated basis was 489.03 Million as against 444.32 Million during the previous year, a growth of 10.03%. Average realization rate was Rs. 61.14 per US Dollar.

Standalone sales for the fiscal year 2014-15 grew by 33.92% to reach Rs. 12,457.47 Million. Net profit after tax increased by 1.94 % to Rs. 1,520.44 Million.

Dividend

The Directors are pleased to recommend a dividend of Rs. 1.10/- per equity share of face value of Rs. 2/- each (55%) for the year under review. The total pay-out will amount to Rs. 259.58 Million including dividend distribution tax.

Transfer to Reserves

Your Directors propose to transfer Rs. 152.00 Million to the General Reserve. An amount of Rs. 5,873.56 Million is

proposed to be retained in the Profit & Loss Account.

Share Capital

The Company issued and allotted 2,589,906 equity shares of Rs. 2/- each, to the eligible employees on exercise of options under the employee stock option schemes during the financial year 2014-15.

Consequently, the outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2015 is Rs.393.32 Million, consisting of 196,662,113 equity shares of Rs. 2/- each.

CRISIL Ratings

For the bank loan limits of Rs. 3,350 Million, CRISIL has assigned the long term credit rating of AA-/Stable and short term rating of A1 .

Quality, Information Security and Productivity

Our focus on quality, productivity and innovations has helped us deliver increased value to our customers. During the year, the Company achieved recertification for ISO 9001:2008 (Quality Management System). Further, our Systems Integration Facility was recommended for certification to ISO/TS-16949:2009 and ISO 20000-1:2011 (Information Technology Service Management System) by TUV Nord Cert GmbH for providing software development, product engineering, product support and enabling services. The Company continues to maintain the highest maturity level 5 for CMMI-DEV® V1.3 (Development) as well as Automotive SPICE®. The Company is also certified for ISO 27001:2005 (Information Security Management Systems) and ISO 22301:2012 (Business Continuity Management System).

A number of initiatives were introduced during the year in line with the focus on quality and productivity improvement. In an effort to ensure that our delivery teams are well informed of the automation trends and are ahead of the technology curve, the Company launched the

Tools Symposium event. As part of this event, our vendor partners and internal practice teams showcased the latest technology trends, tools and accelerators through an exhibition as well as through detailed technical tutorials for the delivery teams.

We continue to strengthen our software delivery through Strategic Business Unit (SBU) specific quality and productivity improvement strategies defined in line with the technology advancements, customer expectations and business direction. As part of its ERP strategy, the Company further reduced the ERP implementation time by creating industry vertical specific accelerators which come fully equipped with industry best practices. The Product Engineering Services (PES) SBU continues to leverage the Continuous Build Automation platform to further strengthen the quality of software delivery. The Products and Platforms SBU further strengthened its production processes during the year under review.

Our process improvement drive continues to be strengthened by Six Sigma and lean process improvement projects being completed successfully, benefiting both KPIT and its customers. During the year, the Company has also helped its customers in implementing data analytics and Six Sigma based process improvements with more opportunities in the pipeline. As a result, 92% of our strategic customers have endorsed their satisfaction with our services and products.

Institutional Shareholding

As on March 31, 2015, the total Institutional shareholding in the Company was 59.17% of the total share capital.

Information about the Subsidiary Companies

As on March 31, 2015, the Company had 17 subsidiaries, including step-down subsidiaries.

During the year, under review, KPIT Global Solutions Limited was merged with the Company with effect from September 26, 2014.

Impact Automotive Solutions Limited, previously an associate company, became a 100% subsidiary of the Company with effect from July 01, 2014, consequent to the acquisition of its entire share capital by the Company.

Integrated Industrial Information, Inc., a US based company specializing in Product Lifecycle Management (PLM) software business, was acquired through KPIT Infosystems Inc., USA, effective from May 09, 2014. HD Solutions GmbH, a German Company specializing in PLM space, was acquired through KPIT Technologies GmbH with effect November 01, 2014 and was subsequently rechristened as KPIT Solutions GmbH.

During the year under review, the names of various overseas subsidiaries were changed as a part of the branding strategy of KPIT Technologies Limited.

In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statements along with its subsidiary companies, which is forming a part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is also included in the Annual Report as "Annexure 1".

In accordance with Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing the standalone and the consolidated financial statements and all other documents required to be attached thereto has been placed on the website of the Company, www.kpit.com. Further, a report on the performance and financial position of each of the subsidiaries has also been placed on the website of the Company. Shareholders interested in obtaining a printed copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Company's registered office.

Directors

Pursuant to Section 152 of the Companies Act, 2013, Mr. Sachin Tikekar retires by rotation at the forthcoming annual general meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment.

During the year, Mr. Anant Talaulicar and Ms. Elizabeth Carey resigned as Cummins nominee directors consequent upon Cummins Inc. divesting its investment in the Company. Further, upon their resignations, their alternate directors, Mr. Dwayne Allen and Mr. Cariappa Chenanda respectively also ceased to be alternate directors w.e.f. October 20, 2014.

Subsequently, Mr. Anant Talaulicar was appointed as an additional director w.e.f. October 21, 2014, to hold office up to the forthcoming annual general meeting. Further, Mr. Dwayne Allen was appointed as an alternate director of Mr. Anant Talaulicar w.e.f. October 21, 2014. A proposal is being put up for the approval of the shareholders at the forthcoming annual general meeting for the appointment of Mr. Anant Talaulicar as an independent director of the Company.

Owing to his other business commitments and preoccupations, Mr. Amit Kalyani resigned from the directorship of the Company w.e.f. February 20, 2015.

The Board places on record its appreciation of the valuable services provided by Ms. Elizabeth Carey, Mr. Amit Kalyani and Mr. Cariappa Chenanda during their tenure.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013 and Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board at its meeting held on April 28, 2014, had noted the Whole-time Key Managerial Personnel (KMP) of the Company as below:

1. Mr. Kishor Patil - Chief Executive Officer (CEO) and Managing Director;

2. Mr. Anil Patwardhan - Chief Financial Officer (CFO);

3. Mr. R. Swaminathan - Company Secretary.

Auditors

Pursuant to the provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s. B S R & Co. LLP, Chartered Accountants, were appointed as statutory auditors of the Company in the last Annual General Meeting held on July 25, 2014, for a period of five years, subject to ratification by the members in every Annual General Meeting. Based on the recommendation of the audit committee, the Board recommends ratification of the appointment of B S R & Co. LLP, as the statutory auditors of the Company, at the forthcoming annual general meeting.

The Notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark.

The Board of Directors of the Company appointed Dr. K. R. Chandratre, Practicing Company Secretary, as the Secretarial Auditor to conduct Audit for the year under review. The Secretarial Auditor's report for the year under review is appended to this Report as "Annexure 2". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon forms a part of this Report. The Auditors' Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement is also attached.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Awards & Recognition

- KPIT won 2015 Oracle JD Edwards Partner Excellence Award for Outstanding Year-Round Success Story Nominations;

- Ms. Vaishali Vaid, VP & Head, Global HR, KPIT honored with the Rs.100 Most Talented Global HR Leaders Award' by CHRO Asia;

- KPIT won FY15 Oracle Excellence Award in Growth Partner of the Year Category - India;

- KPIT honored by Volvo Buses India with Project Development Excellence Award 2014;

- Mr. Kishor Patil, CEO & MD, KPIT honored with CA Business Leader Award - Corporate at the 8th ICAI Awards, 2014 by the Institute of Chartered Accountants of India (ICAI);

- Infor India recently awarded KPIT with the Promising Partner of the Year 2014 award for the Indian Subcontinent for implementing Infor solutions that create value for customers and generate new business opportunities;

- KPIT Chairman & Group CEO Mr. Ravi Pandit and CEO & MD, Mr. Kishor Patil, honored with Maharashtra Corporate Excellence (MAXELL) Awards 2014 for Excellence in Entrepreneurship.

Particulars of Employees

A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 60 lakh or more, or employed for part of the year and in receipt of Rs. 5 lakh or more a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is enclosed as "Annexure 3(a)" to the Board's report.

The ratio of the remuneration of each director to the median employee's remuneration and other details prescribed in sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are attached to this report as "Annexure 3(b)".

Employees Stock Option Plan (ESOP)

Information relating to stock option plans of the Company is provided in "Annexure 4" of this report. The information is being provided in compliance with Clause 12 of Securities and Exchange Board of India (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 and Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014.

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

The Company has in place, a policy on prevention of sexual harassment and has put in place a redressal mechanism for resolving complaints received with respect to sexual harassment and discriminatory employment practices. No case of sexual harassment and discriminatory employment was reported during the financial year under review.

Fixed Deposits

The Company has not accepted any deposits and as such, no amount of principal or interest was outstanding on the date of the Balance Sheet.

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated

under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014

Conservation of Energy

The Company always endeavors to reduce energy consumption and achieve conservation of resources. Some of the initiatives taken by the Company in this connection have been detailed in the previous years' Directors' Reports which the Company continues to implement. Apart from those initiatives, the following measures were undertaken to reduce energy consumption resulting in saving of 27% for Pune facility, 12% for Bangalore facility and 19% for Mumbai facility over the period of last 5 years:

- Revamping of AC chillers at Mumbai;

- Regulation of timings for AC operations and setting of standard temperatures at all locations in India;

- Installation of AC remote controls at all meeting rooms and cabins;

- Replacing T5 lights (56W) with LED lights (14W);

- Regulation of UPS and Capacitors as per load requirement.

Green Initiatives

The following initiatives were undertaken at company level to create awareness about importance of environmental protection and reducing Traffic/Pollution:

- "Greenathon" awareness run for zero garbage organized on June 14, 2014.

- Company's initiative for launch of HIA MIDC Joint Transport Initiative (Metro-zip) on September 01, 2014 to reduce traffic congestion.

- Tree plantation drive conducted on August 09, 2014 during which 1,000 trees were planted.

Occupational Health and Safety Assessment Series (OHSAS)

The following activities were carried out by the Company under OHSAS during the year:

- Free Dental and Eye checkup conducted on May 28, 2014.

- Awareness Session on Tobacco Cessation was organized on June 25, 2014.

- Propel 2014 (Health week) in November-2014 which included:

- Yoga Sessions

- Complete Body Checkup (Total approx. 400 employees participated)

- Laughter session

- Health Sessions (Hair & Skin, Healthy Heart, Diabetes,

Ergonomics, Hormonal Imbalances in women)

- Zumba Health Related Games like running, Brisk walk, step climbing

- First Aid training and certification session for employees on December 16, 2014

- Road Safety awareness rally organized on February 5, 2015.

Technology Absorption

In the financial year 2014-15, we have successfully rolled out Microsoft Dynamics CRM across all SBUs and Industry Business Units (IBUs) globally. This has helped us in bringing uniformity and better visibility on opportunity to order processes. We have also launched Analytics platform using SAP, giving users self-service capabilities for analyzing data enabling data driven decision making culture. SAP reimplementation project is underway in the Company which will help in simplifying the business processes. We have seamlessly integrated IT infrastructure of all KPIT global offices helping to give ONE KPIT experience to customers and improving collaboration across the organization. Other Key initiatives planned in the coming year are rollout of Enterprise Digital Transformation called SMART Enterprise, where we are building digital platform for transforming business processes using SMACS technologies, implementation of Software defined data center including automation and self service provisioning of network, security & storage infra in addition to computing infrastructure.

Research and Development (R&D) Activity

Innovation forms the core of the Company. We are working on breakthrough & disruptive technologies, where the focus is to develop practice-based frugal innovation across all the SBUs. Our research activities in Engineering & Business Information Technology space strive towards co-innovation, where we work with our customers to jointly develop solutions and create value for the end consumer, who would be our customers' customer. The Company has been continuously investing in research and development with these goals in mind. These investments are made not just at the corporate level, but also in each Strategic Business Unit (SBU). These Research & Development expenses are being incurred under respective SBUs by setting up various cost projects. The Company has constructed a new R&D center in its Hinjewadi campus, and the building is home to the Center for Research in Engineering, Science and Technology (CREST) as well as other teams working on R&D projects. We have been re-certified by the Department of Scientific and Industrial Research as a recognized R&D center.

During the year, the Company successfully conducted research assignments for its customers which included technical consultations on electronics optimization in vehicles for a vehicle maker. We also conducted joint R&D with an automotive customer to deploy our technology for automatically converting software code to behavioral models. We have also been successful in getting customer projects based on the R&D work we have conducted in the area of Driver Status Monitoring for Advanced Driver

Assistance Systems. Discussions are on with a customer for yet another project related to an around view system based on our previous R&D work.

The Company has been investing into an affordable & Innovative Plug-in Hybrid Electric Vehicle Technology and the same is branded as "Revolo" to take it to the market place. Revolo is a technology that can be incorporated in existing vehicle to convert it to a plug-in hybrid electric vehicle and also as an original equipment fitment. The technology increases fuel efficiency by around 35% and reduces CO2 emission by around 30%. These performance parameters are tested at Automotive Research Association of India (ARAI). The solution is applicable from a small car of 800 cc to commercial vehicle up to 3000 cc. The benefit arising out of performance improvement, results in net energy saving of over 25%.

The R&D employed for the development of Revolo was based on the school of thought of frugal innovation.

Such an innovation would serve to be more affordable for the consumers at large. Revolo would go a long way in promoting clean energy technology that would protect the environment from harmful Green House Gases. Revolo employs electric power with an objective to improve the efficiency of existing powertrain. Currently 15 patents have been hied globally for the technology developed for Revolo.

The technology investment has been done by the Company with focus on building engineering solution for the automotive engines having capacity from 800 cc to 3000 cc applicable on both diesel as well as petrol driven vehicles. The homologation certification of Revolo aftermarket solution for one of the vehicle models has been completed and launch preparation is in process. KPIT continues to focus on building this technology and Impact Automotive Solutions Limited (wholly owned subsidiary of KPIT), will drive commercial use of this technology.

The total amount spent on R&D activities is given below:

Notes:

1. During the year, the Company has set up a state of the art facility for its R&D Activities, construction of which is complete as of March 31, 2015. The Company has incurred a capital expenditure of Rs. 94.27 million during the year for this facility. The company has been granted recognition of this of facility with the Department of Science & Industrial Research which is valid up to March 31, 2018. The eligible capital expenditure for 200 % weighed deduction is Rs. 37.55 million.

2. Out of balance R&D spend of Rs. 197.33 million , eligible R&D revenue expenditure under Section 35(2AB) of the Income Tax Act, 1961 for KPIT Technologies Limited is Rs. 78.21 Million. The weighted deduction is equal to 200% of such expenditure incurred. A separate section on R&D activities undertaken by the Company has also been included in the annual report.

Foreign Exchange Earnings and Outgo

Given the global nature of the business of the Company, exports always form its thrust. Total foreign exchange earnings during the year were Rs. 8,783.50 Million (previous year Rs. 5,955.68 Million) and foreign exchange outgo (including imports) was Rs. 564.07 Million (previous year Rs. 492.92 Million).

Board Meetings

Six meetings of the Board of Directors were held during the year. More details about the meetings are available in the report on Corporate Governance, which forms a part of this Report.

Committees of Board

The details regarding Committees of the Board of Directors of the Company are given in the Report on Corporate Governance, which forms a part of this Report.

Independence of the Board

The Board of Directors of the Company comprises of optimum number of Independent Directors. Based on the confirmation/disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013.

1. Dr. R. A. Mashelkar

2. Ms. Lila Poonawalla

3. Prof. Alberto Sangiovanni Vincentelli

4. Mr. Adi Engineer

5. Mr. Anant Talaulicar

6. Mr. Dwayne Allen

(Alternate Director to Mr. Anant Talaulicar)

Company's Policy on Directors' appointment and remuneration

Pursuant to the provisions of Section 134 (3) (e) of the Companies Act, 2013, the policy of the Company on the appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section 178 (3), is appended as "Annexure 5" to this report.

Particulars of loans, guarantees or investments under Section 186

Particulars of loans, guarantees or investments made during the year under review, pursuant to the provisions of Section 186 of the Companies Act, 2013 are as below:

Name of the subsidiary Nature of Duration Rate of Amount transaction Interest (Rs in Million (%)

KPIT Infosystems Inc. Investment - - 727.32

Impact Automotive Solutions Investment - - 107.84 Limited

KPIT (Shanghai) Software Investment - - 27.74 Technology Co. Limited

KPIT Technologies (UK) Limited Investment - - 195.38

KPIT Technologies (UK) Limited Loan 36 7.752 74.00 Months

KPIT Infosystems ME FZE Guarantee Valid - 62.59 till December 31,2015

Name of the subsidiary Purpose

KPIT Infosystems Inc. For funding the acquisition of Integrated Industrial Information Inc. Impact Automotive Solutions Limited Payment to Bharat Forge Limited for acquisition of 50% of the outstanding shares of Impact Automotive Solutions Limited

KPIT (Shanghai) Software Technology Co. Limited For funding working capital requirements of KPIT (Shanghai) Software Technology Co. Limited

KPIT Technologies (UK) Limited For funding the acquisition of HD Solutions GmBH

KPIT Technologies (UK) Limited For funding working capital requirements of KPIT Technologies (UK) Limited

KPIT Infosystems ME FZE For setting up credit facilities for KPIT Infosystems ME FZE

Particulars of contracts or arrangements with related parties referred to in Section 188(1)

Pursuant to the provisions of Section 134 (3) (h) of the Companies Act, 2013, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, and prescribed in Form AOC - 2 of Companies (Accounts) Rules, 2014, are appended as "Annexure 6" to this report.

Material changes and commitments affecting the financial position of the Company

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

Risk Management Policy

A mechanism to identify, assess, monitor and mitigate various risks to key business objectives of the Company is in place. A write-up on enterprise risk management is included elsewhere in this annual report.

Internal Control Systems and Adequacy of Internal Financial Controls

The internal control systems of the Company are adequate considering the nature of its business, size and complexity. The Statutory Auditors as well as Internal Auditors of the Company review the same on periodical basis. Further, significant observations, if any, and action taken reports on the same are considered by Audit Committee at their meeting.

Audit Committee Recommendations

During the year, all the recommendations of the Audit Committee were accepted by the Board. The Composition of the Audit Committee is as described in the Corporate Governance Report.

Corporate Social Responsibility

The Policy on Corporate Social Responsibility (CSR) of the Company and the details about the development of CSR Policy and initiatives taken by the Company on CSR during

the year as per Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as "Annexure 7" to this Report.

Formal Annual Evaluation by the Board

A separate meeting of the Independent Directors of the Company was held for formal evaluation of performance of the Board, Committees and the individual Directors. The performance evaluation was conducted based on the criteria specified in the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The feedback based on evaluation was given to the directors.

Vigil mechanism

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns. The details of the same are explained in the Corporate Governance Report. The Policy on Vigil Mechanism may be accessed on the Company's website at the link: http://www.kpit.com/company/investors/corporate- governance.

Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as "Annexure 8" to this Report.

Responsibility Statement of the Board of Directors

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors state:

i) that in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) that they 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 the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

iii) that they 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 the Company and for preventing and detecting fraud and other irregularities;

iv) that the annual financial statements have been prepared on a going concern basis;

v) that they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively and

vi) that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CEO & CFO Certification

Certificate by Mr. Kishor Patil, CEO & Managing Director and Mr. Anil Patwardhan, Chief Financial Officer, pursuant to the provisions of Clause 49 (IX) of the Listing Agreement, for the year under review was placed before the Board of Directors of the Company at its meeting held on April 28, 2015.

A copy of such certificate is annexed to this report.

Acknowledgments

Your Directors take this opportunity to thank all the shareholders of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, HDFC Bank Ltd., The Hongkong and Shanghai Banking Corporation Ltd., Citibank N.A., Axis Bank Ltd., BNP Paribas, Standard Chartered Bank, ICICI Bank Ltd., DBS Bank Ltd. and Kotak Mahindra Bank Ltd and the Registrars and Share Transfer Agent viz. Link Intime India Pvt. Ltd. We also thank all the employees of KPIT group for their valuable contribution to the Company.

We further place on record our gratitude to the Governments of United States of America, United Kingdom, Germany, France, Netherlands, Japan, Singapore, South Korea, China, UAE, South Africa, Canada and Brazil. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bengaluru, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges, Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.

For and on behalf of the Board of Directors

Sd/- Pune, S. B. (Ravi) Pandit April 28, 2015 Chairman & Group CEO


Mar 31, 2013

Dear Shareholders,

The Directors are pleased to present the Twenty Second Annual Report together with the Audited Accounts of the Company for the Financial Year ended on March 31, 2013.

Performance of the Company

Particulars Standalone Consolidated 2012-13 2012-13 USD Rs. USD Rs. Million Million Million Million

Revenue from operations 131.14 7,152.41 410.45 22,386.28

Expenses 107.68 5,872.60 360.16 19,643.38

Profit before exceptional items and Tax 24.96 1,361.39 52.44 2,860.28

Profit before Tax (PBT) 24.62 1,342.91 52.20 2,847.23

Profit after Tax (PAT), but before Minority Interest and share of profit in Associate 18.89 1,030.51 38.17 2,081.63

Profit for the period 18.89 1,030.51 36.49 1,990.05

Result of Operations

During the year under review, your Company continued to post industry- leading growth rate to clock total sales (consolidated) of Rs. 22,386.28 Million, a growth of 49.24%. Earnings before interest, tax, depreciation and amortization (EBITDA) was Rs. 3,639.86 Million on consolidated basis. Net profit after tax grew by 36.91% to Rs. 1,990.05 Million.

In USD terms, the sales for the year on a consolidated basis was 410.45 Million as against 309.28 Million during the previous year, a growth of 33%. Average realization rate was Rs. 54.54 per US Dollar.

Standalone sales for the fiscal year 2012-13 grew by 16.70% to reach Rs. 7,152.41 Million. Net profit after tax increased by 38% to Rs. 1,030.51 Million.

Dividend

The Directors are pleased to recommend a dividend @ 45% (Rs. 0.90 per equity share of face value of Rs. 2/- each) on the paid-up equity share capital of the Company. The total pay-out will amount to Rs. 201.69 Million-including dividend distribution tax.

Transfer to Reserves

Your Directors propose to transfer an amount of Rs. 10 Million towards KPIT Cummins Infosystems Limited Community Foundation Reserve. This Reserve would be utilized for various community benefit schemes as may be approved by the Management.

Your Directors also propose to transfer an amount of Rs. 100 Million towards KPIT Cummins Technology Fund. This fund would be utilized to drive high end innovative technology initiatives for promoting green growth and energy conservation, objectives that are dearer to the Company''s heart and which will benefit the Company''s ecosystem at large.

An amount of Rs. 100 Million is proposed to be transferred to KPIT Employees'' Welfare Fund. This Fund would be utilized to promote the welfare of the employees of KPIT group in various forms.

Your Directors propose to transfer Rs. 103.05 Million to the General Reserve. An amount of Rs. 515.47 Million is proposed to be added to the balance in the Profit & Loss Account.

Share Capital

Van Dyck (an affiliate of ChrysCapital), CX Partners Fund 1 Limited and AAJV Investment Trust (both affiliates of CX Partners) were allotted 12,960,000 equity shares on preferential basis for a total amount of Rs. 1,620 Million during the financial year under review. The proceeds of the issue will be utilized for funding the growth and operations of the Company and/or its subsidiaries, including the working capital and capital expenditure requirements of the Company and/or its subsidiaries, acquisition,investments in joint ventures and general corporate purposes. Pending their deployment for the aforesaid purposes, these funds have been invested in liquid plans of mutual funds.

The Company also allotted 1,912,323 equity shares of Rs. 2/- each, to employees under the ESOP schemes in the financial year 2012-13.

The outstanding issued, subscribed and paid-up capital of the Company as on March 31, 2013 is Rs. 385.63 Million, consisting of 192,815,199 equity shares of Rs. 2/- each.

People

The Company, together with its subsidiaries, had 8,321 employees as on March 31, 2013.

CRISIL Ratings

For the revised bank loan limits of Rs. 3,350 million, CRISIL has assigned the long term credit rating of AA-/Stable and short term rating of A1 .

Quality, Information Security and Productivity

Quality is an integral part of our business and is woven into every aspect of our operations. Our constant quest for quality is evidenced by the certification/re-certification for ISO 9001:2008 (Quality Management Systems) and ISO 20000:2011 (Information Technology Service Management) by TUV Nord Cert GmbH for providing software development, product engineering, product support and enabling services. We continue to hold our CMMI Level 5 certification for Development Ver. 1.2 and Auto Spice Level 5 certification. The Company is also certified for ISO 27001:2005 (Information Security Management Systems) and ISO22301:2012 (Business Continuity Management). Most of our customers have endorsed their satisfaction with our services and products by giving us an average customer satisfaction score of 87%. During the year, the Company also initiated the deployment of a productivity improvement tool which helps employees and their managers analyse the time utilization and productivity of employees and the results have been encouraging.

Institutional Holding

As on March 31, 2013, the Institutional Holding in the Company was 49.70% of the listed capital including the shares held by Warhol Limited, Van Dyck and CX Partners Fund 1 Limited to whom shares were issued through preferential allotment.

Change of Name

Over the years, the Company has emerged as a major technology service provider, catering to customers in the automotive, manufacturing, energy & utilities sectors. With its technology focus, the Company has attained technology leadership position in the industry. Therefore, the Board believes that the name of the Company should also reflect the Company''s technology focus & leadership position. Hence, the Directors propose to change the name of the Company as ''KPIT Technologies Limited''. Special resolutions have been put up for shareholders'' approval of the name change and the consequential amendments in the Company''s memorandum and articles of association.

Information about the Subsidiaries

As on March 31, 2013, the Company had 15 subsidiaries, including step-down subsidiaries.

During the year under review, the Company increased its shareholding in Systime Global Solutions Private Limited to 76%. Systime ME FZCO, a wholly owned subsidiary of SYSTIME Global Solutions Pvt. Ltd., was rechristened as KPIT Infosystems ME FZE during the year.

It is proposed to amalgamate Sparta Infotech India Private Limited with the Company and in this connection, the Board of Directors of the Company and that of Sparta Infotech India Private Limited have already approved the scheme of amalgamation. The Company has filed the applications with Bombay Stock Exchange and National Stock Exchange for in-principle approval to the said scheme of amalgamation. The merger application is expected to be filed with the High Court shortly.

SolvCentral.com Inc, a direct wholly-owned subsidiary of KPIT Infosystems Inc, and In2Soft GmbH, a direct wholly-owned subsidiary of KPIT Infosystems GmbH, were merged with their respective parent companies during the year.

The details of individual financial performance of the subsidiaries have been reported in the statement pursuant to Section 212 of the Companies Act, 1956, which is given elsewhere in the Annual Report.

Particulars required as per Section 212 of the Companies Act, 1956

As per Section 212 of the Companies Act, 1956, a holding Company is required to attach the Directors'' Report, Auditors'' Report, Balance Sheet and Profit and Loss Account of all the subsidiaries. However the Government of India vide General Circular No: 2/2011 has given a general exemption to the companies from attaching the annual reports of subsidiaries provided certain conditions are fulfilled. Accordingly, this annual report contains the consolidated financial statements of the Company and does not contain the financial statements of the individual subsidiaries. The Statement pursuant to Section 212 of the Companies Act, 1956, is given elsewhere in this annual report. The Company will make available the audited annual accounts and related detailed information of the subsidiary companies, where applicable, upon request by any member of the Company. The Company will also upload the accounts of the individual subsidiaries on its official website. These documents will also be available for inspection during business hours at our registered office.

Directors

Pursuant to Article 72 of the Articles of Association of the Company read with Section 256 of the Companies Act, 1956, Mr. Anant Talaulicar and Mr. Amit Kalyani retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr. Sanjay Kukreja was appointed as an additional director during the year. Mr. Kukreja holds a MBA from Indian Institute of Management, Bangalore. He has been associated with ChrysCapital, a leading fund management house for more than a decade. A proposal is being put up for the approval of the shareholders at the forthcoming annual general meeting for the appointment of Mr. Kukreja as a director of the Company.

Mr. BVR Subbu was appointed as an additional director on April 29, 2013. Mr. Subbu holds a Post Graduate Diploma from Indian Institute of Foreign Trade, Delhi. He was President of Hyundai India and was also associated with the Tata group for over two decades, holding various responsibilities, including its commercial vehicles business. A proposal is being put up for the approval of the shareholders at the forthcoming annual general meeting for the appointment of Mr. Subbu as a director of the Company.

Mr. Dwayne Allen has joined the board recently as alternate director to Mr. Anant Talaulicar. Mr. Allen is Executive Director of Cummins Inc responsible for Global IT for Cummins'' components business and Functional Excellence leader for PLM (Product Lifecycle Management).

Ms. Manisha Girotra was appointed as an additional director during the year and holds office till the date of the ensuing Annual General Meeting. Due to her professional pre-occupations, Ms. Girotra does not intend to seek appointment as a director at the ensuing Annual General Meeting.

Mr. Bruce Carver, director and Mr. Mark Gerstle, alternate director, resigned from the board with effect from April 29, 2013. During the period of their directorship, Mr. Carver and Mr. Gerstle made significant contributions to the Company. The Board places on record its sincere appreciation of the valuable services and guidance provided by Mr. Bruce Carver and Mr. Mark Gerstle during their tenure as Directors of the Company.

Auditors

M/s. Deloitte, Haskins & Sells, have been the statutory auditors of the Company for the past 10 years. The Board believes that periodic rotation of statutory auditors is a good corporate governance practice the Company should adopt. The proposed Companies Bill also includes provisions for rotation of audit firms after two consecutive terms of five years each.

The Audit Committee, at its meeting held on April 29, 2013, recommended the appointment of M/s. B S R & Co, Chartered Accountants, 703, 7th floor, Godrej Castlemaine, Bund Garden Road, Pune 411 001 as the Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting of the Company. Pursuant to the Audit Committee''s recommendation, the Board of Directors has, at its meeting held on April 29, 2013, approved the appointment of M/s. B S R & Co, Chartered Accountants as the Statutory Auditors of the Company at the forthcoming Annual General Meeting for the financial year 2013-14. This is subject to shareholders passing the necessary resolution for appointment of M/s. B S R & Co, Chartered Accountants at the forthcoming Annual General Meeting.

In this connection, the Company has received a special notice pursuant to the provisions of Sections 190 and 225 of the Companies Act, 1956 proposing the appointment of M/s. B S R & Co, Chartered Accountants, as the Statutory Auditors of the Company in place of M/s. Deloitte, Haskins & Sells for the year 2013-14. The resolution for appointment of M/s. B S R & Co, Chartered Accountants, as the Statutory Auditors of the Company is being included in the notice of the Annual General Meeting. The requisite certificate pursuant to Section 224(1B) of the Companies Act, 1956, has been received from M/s. B S R & Co, Chartered Accountants.

M/s. Deloitte, Haskins & Sells, retire at the conclusion of the ensuing Annual General Meeting and do not intend to seek re-appointment.

The Board of Directors records its deepest sense of appreciation of the valuable services provided by M/s. Deloitte, Haskins & Sells as the Statutory Auditors of the Company during their tenure with the Company.

Corporate Governance

A separate section on Corporate Governance with a detailed compliance report thereon is annexed to this Annual Report. The Auditors'' Certificate in respect of compliance with the provisions concerning Corporate Governance, as required by Clause 49 of the Listing Agreement, is also annexed.

Management Discussion and Analysis

A detailed review of the operations, performance and future outlook of the Company and its business is given in the Management Discussion and Analysis Report, which forms a part of this Report.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time, a statement showing the names and other particulars of employees forms a part of this report. However, having regard to the provisions of Section 219(1 )(b)(iv) of the said Act, the Annual Report excluding the aforesaid statement is being sent to all the members of the Company. Any member interested in obtaining a copy of this statement may write to the Company Secretary at the registered office of the Company.

Responsibility Statement of the Board of Directors

Pursuant to Section 217(2AA) of the Companies Act, 1956, your Directors confirm that:

i) in the preparation of the accounts for the financial year ended March 31, 2013, the applicable accounting standards have been followed and there has been no material departure;

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the said financial year and of the profit of the Company for the said financial year;

iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the Directors have prepared the accounts for the year ended March 31, 2013 on a ''going concern'' basis.

Employees Stock Option Plan (ESOP)

Information relating to stock option programme of the Company is provided in the Annexure I of this report. The information is being provided in compliance with Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999.

Fixed Deposits

The Company has not accepted any deposits and, as such, no amount of principal or interest was outstanding on the date of the Balance Sheet.

Information under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988

Conservation of Energy - Our Company''s primary business being Software services, our operations are conducted with energy conservation as a focus area. The Company always endeavors to reduce energy consumption and achieve conservation of resources. Some of the initiatives taken by the Company in this connection are as follows:

1. Energy Conservation measures:

The facility at Hinjawadi Pune reflects KPIT''s commitment to energy efficiency and "green growth". The green features incorporated in the building design have been detailed in the directors'' report of the previous year. As a result of various initiaties taken by the Company for reducing energy consumption, NASSCOM has declared KPIT Hinjawadi campus as "Energy Champion", one of the only three companies in IT / ITES sector to be so declared.

2. Various steps have been undertaken to utilize the energy in an optimum manner some of which are given below:

a. Introduced innovative solution to extract energy from kitchen exhaust air. Wind turbine, installed on kitchen exhaust stystem, which is called as waste air co-generation system along with solar energy panels generates energy.

b. Replacement of normal TFT monitor based computers with energy efficient thin clients.

c. Consolidation of desktop servers.

3. Continuation of PC Shut Down Drive undertaken to switch off PCs during non working hours resulting into considerable reduction in energy consumption.

Computer hardware:

a. Significant reduction in e-waste generation achieved due to increased IT Hardware Refreshment Cycle for desktops, laptops & workstations.

b. Reduction in the asset ratio to 1.10:1 due to deployment of the Vblock platform with VDI, thereby thereby reducing the consumption of computer hardware.

Water Conservation measures:

The Company''s conservation measures also focus on reduction of consumption of water. 70% of water gets treated through sewage treatement plant and is recycled & used for gardening purposes. Following initiatives were carried out for reducing water consumption which has resulted into 25% savings in water usage:

a. Revamping of Sprinkler system.

b. Adjusting water pressures at taps.

c. Controlling fresh water usage for gardening.

Environment Improvement initiatives:

a. Tree plantation within KPIT Campus during environment week.

b. Vermi Compost Plant: A vermicompost plant has been set up for treating the organic waste, which generates 3,500 kg vermin compost manure every year.

c. Recycling or disposal of E-waste through authorized vendors.

d. Signification savings in consumption of paper and reduction in generation of municipal waste and recyclable waste by around 23%.

e. Arranged lectures from environmentalists for employees to create awareness.

Occupational Health and Safety Assessment Series (OHSAS):

The Company''s Hinjawadi site was successfully certified for ISO 14001:2004 (Environmental Management System) & OHSAS 18001:2007 standards in January 2013. We are proud to mention that these certifications were won on the basis of in-house efforts and without any external consultancy. During the year, the following activities were carried out by the Company under OHSAS:

- Music & meditation session

- Propel (Health week)

- Health risk assessment survey

- Drum Circle

- Health talk on Dengue and its precautions

- Health talk on homeopathy

- Health talk on Cervical Cancer

- Bone Mineral Density Camp

- Lectures by RANJAI on Occupational health & Environment protection as part of International Safety Week.

Research and Development (R & D) Activities:

Innovation forms the core of the Company and the Company has been continuously investing in research and development. Innovation being key focus area, the Company has been making significant investments in the Research & Development activities, not just at the corporate level but for each respective Strategic Business Units (SBU). These Research & Development expenses are being incurred under respective SBUs by setting up various cost projects. We are working on breakthrough & disruptive technologies, where the focus is to develop practice based frugal innovation across all the SBUs. Our research activities in Engineering & Business Information technology space will strive towards co-innovation, where we would work with our customers to jointly develop solutions and create value for the end consumer, who would be our customers'' customer.

During the year, the Company continued its research in software engineering. These efforts have resulted in innovative products in software engineering to support both maintenance and development projects. Research and Development costs are expensed as incurred under SBU budget as cost project and Development costs of the marketable software are capitalized when its commercial feasibility is established, future economic benefits of the project are probable and its costs can be measured reliably. The total spend on these activities across all group entities is given below.

Amt in INR Mn.

KPIT R&D - Expenses for the year ended March 31, 2013

SBU A&E SBU Details IES SBU

Expensed 33.76 A&E Crest Projects 21.47

Capital Work in Progress 26.13 Revolo *** -

Capital Work in Progress 43.93 Infotainment *** -

103.821 21.47

SBU Details SAP SBU Details Total

Expensed IES Crest Projects - - 55.23 ***

Capital Work in Progress 31.15 SAP Projects 57.28

Capital Work in Progress - 43.93

31.15 156.43

*** Please refer Note no. 45 (3) under Standalone Financial Statements of KPIT Cummins Infosystems Limited.

The Company has set up its own research and development center called ''Center for Research in Engineering Sciences and Technology'' or CREST. A separate section on R&D activities undertaken by the Company, forms a part of this report.

Technology Absorption - In its pursuit of growth, the Company constantly and actively seeks and absorbs new technology in its operations. During the year, the Company successfully conducted research for its customers. It includes automatic parallelization of sequential code for multicore, automated software code validation checks, parallelization of advanced driver safety system to run it at real time speeds, developing traffic density estimation and raindrop removal from windshield. The Company has implemented global MPLS connectivity across all Indian and international offices and deployed Telepresence solution (High Definition Video Conferencing). This has helped company to demonstrate global capabilities to customers seamlessly. Further, the Company has developed the technology for secure interaction of apps between a mobile device and infotainment system of a car. With this, customers can use KPIT infotainment platform to enable smartphone interaction with a car in a unique manner. The Company continues to focus on using these technologies for its own use as well as creating value for customers.

Foreign Exchange Earnings and Outgo - Given the global nature of the business of the Company, exports always form its thrust The Company''s growth at rates above the industry rates bears testimony to its export competitiveness. Total foreign exchange earnings during the year have been Rs. 5,885.51 Million (previous year Rs. 5158.17 Million) and foreign exchange outgo has been Rs. 275.23 Million (previous year Rs. 434.56 Million).

Awards/Recognition

- Mr. Kishor Patil, Chief Executive Officer and Managing Director was selected among 16 finalists for the Ernst & Young Entrepreneur of the Year Award 2012.

- KPIT Cummins was awarded with EMC Transformers Award 2012 for successful implementation of innovative solutions that helped in transforming internal IT functions.

- KPIT Cummins received EDGE 2012 award (Enterprise Driving Growth and Excellence through IT) in the category of "Data Centre and Networking" at ITEROP 2012, Mumbai for effective implementation of Unified computing infrastructure.

- KPIT Cummins was awarded with the prestigious Mahesh Modi Environment Excellence award for 2013. Revolo - the plug-in hybrid solution was honoured for its impact on environmental improvement.

- KPIT Cummins was awarded with the 2012 Oracle Excellence Award for Specialized Partner of the Year - North America for demonstrating an outstanding and innovative solution based on Oracle products.

- KPIT unveiled Rapid App Deployment Framework to Develop & Deploy Apps Anywhere - Apps-to-Go is a safe, secure and seamless solution for car makers to deploy vehicle centric custom branded apps on head units and mobile devices.

- KPIT Cummins partnered with Livio to bring new applications to cars. The partnership aims to integrate Livio Connect with GENIVI compliant KIVI software framework allowing cars to seamlessly and securely communicate with mobile devices.

- Two patents awarded - KPIT was granted two US patents by USPTO which were filed in the area of hybrid technology.

Acknowledgments

Your Directors take this opportunity to thank all the shareholders of the Company for their continued support.

Your Directors hereby place on record their appreciation for the co-operation and support received from all the customers, vendors, financial institutions including State Bank of India, HDFC Bank Ltd, The Hongkong and Shanghai Banking Corporation Ltd, Citibank N.A., Axis Bank Ltd., BNP Paribas, Standard Chartered Bank, ICICI Bank Ltd., DBS Bank Ltd. and Kotak Mahindra Bank Ltd and the Registrars and Share Transfer Agent viz. Link Intime India Pvt. Ltd. We also thank all the employees of the KPIT group for their valuable contribution in the growth of the Company.

We also thank the Governments of United States of America, United Kingdom, Germany, France, Netherlands, Japan, Singapore, South Korea, China, UAE, South Africa, Canada and Brazil. We further thank all the constituents of the Government of India, particularly Ministry of Communication and Information Technology, the Software Technology Parks of India, Pune and Bangalore, the Department of Central Excise & Customs, Maharashtra Industrial Development Corporation, National Association of Software and Service Companies, Stock Exchanges, Securities and Exchange Board of India, Registrar of Companies, Pune, Ministry of Corporate Affairs, Reserve Bank of India, the State Governments, and other government agencies, and the Media and Press for their support during the year and look forward to their continued support in the future.

For and on behalf of the Board of Directors

Pune, S. B. (Ravi) Pandit

April 29, 2013 Chairman & Group CEO

 
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