10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2015

or

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

Commission file number 000-22903

Syntel, Inc.

(Exact name of registrant as specified in its charter)

Michigan	38-2312018
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

525 E. Big Beaver Road, Suite 300, Troy, Michigan	48083
(Address of principal executive offices)	(Zip Code)

248-619-2800

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    ¨  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    x  Yes    ¨  No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ¨  Yes    x  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, no par value: 83,885,622 shares outstanding as of September 30, 2015.

SYNTEL, INC.

INDEX

			Page
Part I Financial Information
	Item 1	Financial Statements
		Condensed Consolidated Statements of Comprehensive Income (unaudited)		3
		Condensed Consolidated Balance Sheets (unaudited)		4
		Condensed Consolidated Statement of Shareholders’ Equity (unaudited)		5
		Condensed Consolidated Statements of Cash Flows (unaudited)		6
		Notes to the Unaudited Condensed Consolidated Financial Statements		7
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		35
	Item 3	Quantitative and Qualitative Disclosures About Market Risk		45
	Item 4	Controls and Procedures		47
Part II Other Information				48
	Item 1.	Legal Proceedings		48
	Item 1A.	Risk Factors		48
	Item 6	Exhibits		49
Signatures				50
Exhibit 31.1 – Certification of Principal Executive Officer
Exhibit 31.2 – Certification of Principal Executive Officer
Exhibit 31.3 – Certification of Principal Financial Officer
Exhibit 32 – Certification of Principal Executive Officers and Principal Financial Officer

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PART I

Item 1. FINANCIAL STATEMENTS

SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	THREE MONTHS ENDED SEPTEMBER 30,						NINE MONTHS ENDED SEPTEMBER 30,
	2015			2014			2015			2014
Net revenues	$	253,636		$	228,332		$	714,032		$	676,105
Cost of revenues		146,061			133,804			436,550			396,006
Gross profit		107,575			94,528			277,482			280,099
Selling, general and administrative expenses		15,121			26,566			72,231			85,108
Income from operations		92,454			67,962			205,251			194,991
Other income, net		10,227			10,657			29,452			34,617
Income before provision for income taxes		102,681			78,619			234,703			229,608
Income tax expense		24,990			17,013			56,412			50,570
Net income		77,691			61,606			178,291			179,038
Other comprehensive income
Foreign currency translation adjustments		(34,012	)		(22,853	)		(39,932	)		(5,010	)
Gains on derivatives:
Gains arising during period on net investment hedges		—			—			—			724
Unrealized gains on securities:
Unrealized holding gains arising during period		1,477			3,684			4,769			8,270
Reclassification adjustment for gains included in net income		(3,341	)		(840	)		(4,360	)		(3,207	)
		(1,864	)		2,844			409			5,063
Defined benefit pension plans:
Net profit (loss) arising during period		—			—			—			—
Amortization of prior service cost included in net periodic pension cost		37			12			96			21
		37			12			96			21
Other comprehensive income (loss), before tax		(35,839	)		(19,997	)		(39,427	)		798
Income tax benefits (expenses) related to other comprehensive income		461			(748	)		(572	)		(674	)
Other comprehensive income (loss), net of tax		(35,378	)		(20,745	)		(39,999	)		124
Comprehensive income	$	42,313		$	40,861		$	138,292		$	179,162
Earnings per share:
Basic		0.92			0.73			2.12			2.14
Diluted		0.92			0.73			2.12			2.13
Weighted average common shares outstanding:
Basic		84,005			83,832			83,950			83,748
Diluted		84,131			83,968			84,131			83,942

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

	(Unaudited) September 30, 2015		(Audited) December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	476,904	$	197,708
Short-term investments		503,587		669,353
Accounts receivable, net of allowance for doubtful accounts of $ 624 and $703 at September 30, 2015 and December 31, 2014, respectively		115,393		111,993
Revenue earned in excess of billings		41,778		27,493
Deferred income taxes and other current assets		58,660		56,930
Total current assets		1,196,322		1,063,477
Property and equipment		216,016		210,206
Less accumulated depreciation and amortization		108,712		101,155
Property and equipment, net		107,304		109,051
Goodwill		906		906
Non-current term deposits with banks		78		105
Deferred income taxes and other non-current assets		66,613		50,476
TOTAL ASSETS	$	1,371,223	$	1,224,015
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Accounts payable		12,171	$	9,323
Accrued payroll and related costs		55,216		60,765
Income taxes payable		32,004		23,781
Accrued liabilities		28,625		24,250
Deferred revenue		2,834		3,266
Loans and borrowings		132,223		8,852
Total current liabilities		263,073		130,237
Other non-current liabilities		16,854		16,198
Non-current loans and borrowings		—		129,750
TOTAL LIABILITIES		279,927		276,185
Commitments and contingencies (See Note 15)
SHAREHOLDERS’ EQUITY
Total shareholders’ equity		1,091,296		947,830
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,371,223	$	1,224,015

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(IN THOUSANDS)

	Common Stock				Restricted Stock					Additional Paid-In Capital		Retained Earnings		Accumulated other Comprehensive Loss			Total Shareholders’ Equity
	Shares		Amount		Shares			Amount
Balance, December 31, 2014		83,742	$	1		564		$	30,935	$	67,422	$	1,035,716	$	(186,244	)	$	947,830
Net income													178,291					178,291
Other comprehensive loss, net of tax															(39,999	)		(39,999	)
Excess tax benefits on stock compensation plan									70									70
Restricted stock activity		144				(150	)		5,104									5,104
Balance, September 30, 2015		83,886	$	1		414		$	36,109	$	67,422	$	1,214,007	$	(226,243	)	$	1,091,296

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	NINE MONTHS ENDED SEPTEMBER 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		178,291			179,038
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		11,620			12,365
Provision for doubtful debts / advances		(83	)		—
Realized gains on sales of short term investments		(10,437	)		(6,359	)
Deferred income taxes		(1,183	)		(3,926	)
Compensation expense related to restricted stock		5,104			4,619
Unrealized foreign exchange loss		308			—
Changes in assets and liabilities:
Accounts receivable and revenue earned in excess of billings		(29,667	)		(30,064	)
Other current assets		(21,426	)		(16,403	)
Accounts payable, accrued payroll and other liabilities		23,461			11,701
Deferred revenue		(71	)		(326	)
Net cash provided by operating activities		155,917			150,645
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures		(13,852	)		(13,261	)
Proceeds from sale of property and equipment		172			64
Purchase of mutual funds		(74,859	)		(249,780	)
Purchase of term deposits with banks		(288,559	)		(212,035	)
Proceeds from sales of mutual funds		188,557			189,860
Maturities of term deposits with banks		334,118			186,135
Net cash (used in)/provided by investing activities		145,577			(99,017	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Excess tax benefits on stock-based compensation plans		70			1,028
Repayment of loans and borrowings		(6,375	)		(5,250	)
Net cash (used in) financing activities		(6,305	)		(4,222	)
Effect of foreign currency exchange rate changes on cash		(15,993	)		(4,665	)
Change in cash and cash equivalents		279,196			42,741
Cash and cash equivalents, beginning of period		197,708			178,757
Cash and cash equivalents, end of period		476,904			221,498
Supplemental disclosures of cash flow information:
Cash paid for income taxes		51,826			50,876
Cash paid for interest		1,658			1,730

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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Syntel, Inc. and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

1. BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements of Syntel, Inc. (the “Company” or “Syntel”) have been prepared by management, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of Syntel and its subsidiaries as of September 30, 2015, the results of their operations for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The year-end condensed consolidated balance sheet as of December 31, 2014 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

In September 2014, the Company’s Board of Directors authorized a two-for-one stock split of its outstanding common shares. On November 3, 2014, an additional common share was issued for each existing common share held by shareholders of record on October 20, 2014. Accordingly, all share and per share amounts for all periods presented in these condensed consolidated financial statements and notes thereto, have been adjusted retroactively, where applicable, to reflect this stock split.

Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

The condensed consolidated financial statements include the accounts of Syntel, Inc., a Michigan corporation (“Syntel”), its wholly owned subsidiaries, and a joint venture and its subsidiary. All significant inter-company balances and transactions have been eliminated.

The wholly owned subsidiaries of Syntel, Inc. are:

• Syntel Private Limited, an Indian limited liability company, formerly known as Syntel Limited up to March 17, 2015 (“Syntel India”);

• Syntel Europe Limited, a United Kingdom limited liability company;

• Syntel Canada Inc., an Ontario limited liability company;

• Syntel Deutschland GmbH, a German limited liability company;

• Syntel (Hong Kong) Limited, a Hong Kong limited liability company;

• Syntel Delaware, LLC, a Delaware limited liability company (“Syntel Delaware”);

• SkillBay LLC, a Michigan limited liability company (“SkillBay”);

• Syntel (Mauritius) Limited, a Mauritius limited liability company;

• Syntel Consulting Inc., a Michigan corporation (“Syntel Consulting”);

• Syntel Holding (Mauritius) Limited, a Mauritius limited liability company (“SHML”);

• Syntel Worldwide (Mauritius) Limited, a Mauritius limited liability company (“SWML”);

• Syntel (Australia) Pty. Ltd., an Australian limited liability company; and

• Syntel Solutions Mexico, S. DE R. L. DE C. V., a Mexican limited liability company.

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The wholly owned subsidiaries of Syntel Europe Limited are:

• Intellisourcing, SARL, a French limited liability company;

• Syntel Solutions BV, a Netherlands limited liability company; and

• Syntel Switzerland GmbH, a Switzerland limited liability company

The partially owned joint venture of Syntel Delaware is:

• State Street Syntel Services (Mauritius) Limited, a Mauritius limited liability company (“SSSSML”).

The wholly owned subsidiary of SSSSML is:

• State Street Syntel Services Private Limited, an Indian limited liability company.

The wholly owned subsidiaries of Syntel (Mauritius) Limited are:

• Syntel International Private Limited, an Indian limited liability company; and

• Syntel Global Private Limited, an Indian limited liability company.

The wholly owned subsidiaries of SHML are:

• Syntel Services Private Limited, an Indian limited liability company; and

• Syntel Solutions (Mauritius) Limited, a Mauritius limited liability company (“SSML”).

The wholly owned subsidiary of SSML is:

• Syntel Solutions (India) Private Limited, an Indian limited liability company.

The wholly owned subsidiary of SWML is:

• Syntel (Singapore) PTE Limited, a Singapore limited liability company.

The wholly owned subsidiary of Syntel (Singapore) PTE Limited is:

• Syntel Infotech, Inc., a Philippines corporation.

3. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, the allowance for doubtful accounts, impairment of long-lived assets and goodwill, contingencies and litigation, the recognition of revenues and profits based on the proportional performance method, potential tax liabilities and bonus accrual. Actual results could differ from those estimates and assumptions used in the preparation of the accompanying financial statements.

4. REVENUE RECOGNITION

The Company recognizes revenues from time and materials contracts as the services are performed.

Revenue from fixed-price applications management, maintenance and support engagements is recognized as earned which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagement.

Revenue on fixed-price, applications development and integration projects are measured using the proportional performance method of accounting. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts to the completion of the contract. The Company monitors estimates of total contract revenues and costs on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the changes become known. In

8

the event that a loss is anticipated on a particular contract, provision is made for the estimated loss. The Company issues invoices related to fixed price contracts based on either the achievement of milestones during a project or other contractual terms. Differences between the timing of billings and the recognition of revenue based upon the proportional performance method of accounting are recorded as revenue earned in excess of billings or deferred revenue in the accompanying consolidated balance sheets.

Revenues are reported net of sales incentives to customers.

Reimbursements of out-of-pocket expenses are included in revenue in accordance with revenue guidance in the FASB Codification.

5. STOCK-BASED EMPLOYEE COMPENSATION PLANS

The Company recognizes stock-based compensation expense in the consolidated financial statements for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards on a straight-line basis over the requisite service period of the award, which is generally the vesting term. The benefits of tax deductions in excess of recognized compensation expense is reported as a financing cash flow.

6. DERIVATIVE INSTRUMENTS

The Company periodically enters into foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange rates, specifically changes between the Indian Rupee currency and U.S. dollar currency. The contracts are adjusted to fair value at each reporting period. Gains and losses on forward contracts are generally recorded in ‘other income, net’ unless they are designated as an effective hedge. Although the Company cannot predict fluctuations in foreign currency rates, the Company currently anticipates that foreign currency risk may have a significant impact on the financial statements. In order to limit the exposure to fluctuations in foreign currency rates, when the Company enters into foreign exchange forward contracts, where the counter party is a bank, these contracts may have a material impact on the financial statements. The Company considers the risks of non-performance by the counter party as not material. The Company utilizes standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations. The Company also mitigates the credit risk of these derivatives by transacting with highly rated counterparties in India which are major banks. The Company evaluates the credit and non-performance risks associated with its derivative counterparties, and believe that the impact of the credit risk associated with the outstanding derivatives was insignificant.

The Company’s Indian subsidiaries, whose functional currency is the Indian Rupee, periodically enter into foreign exchange forward contracts to buy Indian rupees and sell U.S. dollars to mitigate the risk of changes in foreign exchange rates on U.S. dollar denominated assets, primarily comprising of receivables from the parent (Syntel Inc.), other direct customers and liabilities recorded on the books of the Indian subsidiaries. These forward contracts are denominated in U.S. dollars.

These forward contracts do not qualify for hedge accounting under ASC 815, ‘Derivative and Hedging’. Accordingly, these contracts are carried at a fair value with the resulting gains or losses included in the statement of comprehensive income under ‘other income’. The related cash flow impacts of all of our derivative activities are recorded in cash flows from operating activities.

During the nine months ended September 30, 2015, the Company did not enter into new foreign exchange forward contracts. At September 30, 2015 and December 31, 2014, no foreign exchange forward contracts were outstanding.

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The following table presents the net gains recorded in ‘other income, net’ relating to the foreign exchange contracts not designated as hedges for the periods ending September 30, 2015 and 2014.

Gains Recognized in Other Income:

	THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Gains recognized in other income, net		—	$	43		—	$	3,499

The following table presents the net gains recorded in accumulated other comprehensive income relating to the foreign exchange contracts designated as net investment hedges for the periods ending September 30, 2015 and 2014.

Gains on Derivatives:

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Gains recognized in other comprehensive income (loss)		—	$	—		—	$	724	*

* For and up to three months ended March 31, 2014

7. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

The change in balances of accumulated other comprehensive income (loss) for the three months ended September 30, 2015 is as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(195,523	)	$	6,046		$	(1,388	)	$	(190,865	)
Other comprehensive income (loss) before reclassifications		(34,181	)		966			—			(33,215	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(2,187	)		24			(2,163	)
Net current-period other comprehensive income (loss)		(34,181	)		(1,221	)		24			(35,378	)
Ending Balance	$	(229,704	)	$	4,825		$	(1,364	)	$	(226,243	)

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Reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2015 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(3,341	)	$	1,154		$	(2,187	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	37		$	(13	)	$	24

The change in balances of accumulated other comprehensive income (loss) for the three months ended September 30, 2014 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(138,864	)	$	6,119		$	(689	)	$	(133,434	)
Other comprehensive income (loss) before reclassifications		(22,978	)		2,852			12			(20,114	)
Amounts reclassified from accumulated other comprehensive income		—			(627	)		(4	)		(631	)
Out-of-period adjustment					—			—
Net current-period other comprehensive income (loss)	$	(22,978	)	$	2,225		$	8		$	(20,745	)
Ending Balance	$	(161,842	)	$	8,344		$	(681	)	$	(154,179	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2014 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(840	)	$	213		$	(627	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	—		$	(4	)	$	(4	)

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The change in balances of accumulated comprehensive income (loss) for the nine months ended September 30, 2015 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(189,410	)	$	4,600		$	(1,434	)	$	(186,244	)
Other comprehensive income before reclassifications		(40,294	)		3,087			—			(37,207	)
Amounts reclassified from accumulated other comprehensive income		—			(2,862	)		70			(2,792	)
Net current-period other comprehensive income	$	(40,294	)	$	225		$	70		$	(39,999	)
Ending Balance	$	(229,704	)	$	4,825		$	(1,364	)	$	(226,243	)

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2015 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(4,360	)	$	1,498		$	(2,862	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	96		$	(26	)	$	70

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The change in balances of accumulated comprehensive income (loss) for the nine months ended September 30, 2014 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(157,416	)	$	3,808		$	(695	)	$	(154,303	)
Other comprehensive income before reclassifications		(1,426	)		6,807			—			5,381
Amounts reclassified from accumulated other comprehensive income		—			(2,271	)		14			(2,257	)
Out-of-period adjustment		(3,000	)		—			—			(3,000	)
Net current-period other comprehensive income	$	(4,426	)	$	4,536		$	14		$	124
Ending Balance	$	(161,842	))	$	8,344		$	(681	)	$	(154,179	)

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(3,207	)	$	936		$	(2,271	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	21		$	(7	)	$	14

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8. TAX ON OTHER COMPREHENSIVE INCOME

Total tax expense on other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(In thousands)						(In thousands)
Foreign currency translation adjustments	$	(169	)	$	(125	)	$	(362	)	$	(140	)
Tax benefit (expense) on unrealized gains (losses) on securities		643			(619	)		(184	)		(527	)
Tax benefit (expense) on defined benefit pension plans		(13	)		(4	)		(26	)		(7	)
Total tax benefit (expense) on other comprehensive income (loss)	$	461		$	(748	)	$	(572	)	$	(674	)

9. CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

Cash and Cash Equivalents

For the purpose of reporting cash and cash equivalents, the Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents.

As of September 30, 2015, the total cash and cash equivalents and short term investments balance was $980.5 million of that amount, $923.7 million was held by Indian subsidiaries consisting of $542 million held in U.S. dollars and $381.7 million held in Indian rupees. The Company believes that the amount of cash and cash equivalents outside the U.S. will not have a material impact on liquidity.

At September 30, 2015 and December 31, 2014, approximately $Nil and $30.3 million, respectively, were held in JPMorgan Chase Bank NA through a sweep account. At September 30, 2015 approximately $30.2 million was held in Bank of America. At September 30, 2015, $108 million in term deposits with an original maturity of three months or less were held with the Bank of India and Punjab National Bank. At year end, December 31, 2014, $13.0 million in term deposits with an original maturity of three months or less were held with the Bank of India and Punjab National Bank. The remaining amounts of cash and cash equivalents of $368.9 million were held in bank and fixed deposits with various banking and financial institutions.

Short-term Investments

The Company’s short-term investments consist of short-term mutual funds, which have been classified as available-for-sale and are carried at estimated fair value. Fair value is determined based on quoted market prices. Unrealized gains and losses, net of taxes, on available-for-sale securities are reported as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Net realized gains or losses resulting from the sale of these investments, and losses resulting from decline in fair values of these investments that are other than temporary declines, are included in other income. The cost of securities sold is determined using the weighted-average method.

Short-term investments include term deposits with an original maturity exceeding three months and whose maturity date is within one year from the date of the balance sheet. Term deposits were $409.1 million and $466.6 million at September 30, 2015 and December 31, 2014, respectively.

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Short-term investments also include Fixed Maturity Plans (FMPs) of mutual funds, which are classified as held to maturity securities and are reported at cost. As at September 30, 2015, the Company’s Indian subsidiaries had no investments in FMPs of mutual funds and as at December 31, 2014, the Company’s Indian subsidiaries invested $15.9 million in FMPs of mutual funds.

The following table summarizes short-term investments as at September 30, 2015 and December 31, 2014:

	2015 September 30		2014 December 31
	(In thousands)
Investments in mutual funds at fair value	$	94,503	$	186,842
Term deposits with banks		409,084		466,625
Fixed Maturity Plans (FMPs) of mutual funds, at cost		—		15,886
Total	$	503,587	$	669,353

Non-current Term Deposits with Banks

Non-current term deposits with banks include deposits with maturity exceeding one year from the date of the balance sheet. As at September 30, 2015 and December 31, 2014 non-current term deposits with banks were $0.08 and $0.11 million, respectively. Term deposits with banks include restricted deposits of $1.25 million and $0.53 million as at September 30, 2015 and December 31, 2014 respectively, placed as security towards performance guarantees issued by the Company’s bankers on the Company’s behalf.

Held to Maturity Securities

Investments in held-to-maturity securities (“HTM”) of the Company consist of investments in the units of FMPs of mutual funds in Indian subsidiaries.

Description	As of September 30, 2015		As of December 31, 2014
(In thousands)
Aggregate fair value of the investment	$	—	$	16,612
Less: Gross unrecognized holding gain	$	—		726
Net carrying amount	$	—	$	15,886

10. LINE OF CREDIT AND TERM LOAN

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three year revolving credit facility of $90 million. The maturity date of both the three year term loan facility and the three year revolving credit facility is May 23, 2016. The Credit Agreement is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the credit facilities, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to loans incurred under the Credit Agreement are (a) with respect to Revolving Loans, (i) the Eurodollar Rate plus 1.25% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.25% with respect to Base Rate Loans, and (b) with respect to the Term Loan, (i) the Eurodollar Rate plus 1.50% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.50% with respect to Base Rate Loans (each as defined in the Credit Agreement).

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As of September 30, 2015, the interest rate was 1.58% for the three year revolving credit facility and was 1.83% for the three year term loan facility.

With the interest rate charged on the credit facilities being variable, the fair value of the credit facilities approximates their reported value as of September 30, 2015, as it reflects the current market value.

Principal payments on the term loan are due every quarter. During the three months ended September 30, 2015, a principal payment of $2.25 million was made. The related Credit Agreement requires compliance with certain financial ratios and covenants. As of September 30, 2015, the Company was in compliance with all debt covenants.

As of September 30, 2015 the outstanding balances of the term loan and line of credit, including interest, were $42.08 million and $90.14 million, respectively.

Future scheduled payments on the three-year revolving credit facility and term loan, at September 30, 2015 are as follows:

	Term Loan		Revolving Credit Facility
	(In thousands)
2015	$	2,250	$	—
2016	$	39,750	$	90,000

11. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the applicable period. If the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of basic and diluted earnings per share are adjusted retroactively for all periods presented to reflect that change in capital structure. If such changes occur after the close of the reporting period but before issuance of the financial statements, the per-share computations for that period and any prior-period financial statements presented are based on the new number of shares.

During 2014, The Company’s Board of Directors authorized a two-for-one stock split of its outstanding common shares. On November 3, 2014, an additional common share was issued for each existing common share held by shareholders of record on October 20, 2014. Accordingly, all share and per share amounts for all periods presented in these condensed consolidated financial statements and notes thereto, have been adjusted retroactively, where applicable, to reflect this stock split.

The Company has issued stock options and restricted stock units, which are considered to be potentially dilutive to its basic earnings per share. Diluted earnings per share is calculated using the treasury stock method for the dilutive effect of options and restricted stock units granted pursuant to the stock option and incentive plan, by dividing the net income by the weighted average number of shares outstanding during the period adjusted for these potentially dilutive options, except when the results would be anti-dilutive. The potential tax benefit on exercise of stock options is considered as additional proceeds while computing dilutive earnings per share using the treasury stock method.

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The following tables set forth the computation of earnings per share:

	Three Months Ended September 30,
	2015				2014
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
	(in thousands, except per share earnings)
Basic earnings per share		84,005	$	0.92		83,832	$	0.73
Potential dilutive effect of restricted stock options outstanding		126		0		136		0
Diluted earnings per share		84,131	$	0.92		83,968	$	0.73
	Nine Months Ended September 30,
	2015				2014
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
	(in thousands, except per share earnings)
Basic earnings per share		83,950		2.12		83,748	$	2.14
Potential dilutive effect of restricted stock options outstanding		181		0		194		(0.01	)
Diluted earnings per share		84,131	$	2.12		83,942	$	2.13

The number of shares and per share amounts for the prior period presented have been retroactively restated to reflect the 2014 stock split.

12. SEGMENT REPORTING

The Company’s reportable business segments are as follows:

• Banking and Financial Services

• Healthcare and Life Sciences

• Insurance

• Manufacturing

• Retail, Logistics and Telecom

Syntel’s leadership evaluates the Company’s performance and allocates resources based on segment revenues and segment cost of revenues. Segment gross profit is defined as gross profit before Corporate Direct Costs.

The Company’s cost of revenues consists of costs directly associated with billable professionals in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Generally, the cost of revenues for each operating segment has similar characteristics and is subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating groups may affect revenue and cost of revenues to differing degrees.

In each of our business segments, we help our customers adapt to market change by providing a broad array of technology-based, industry-specific solutions, which leverage the strong understanding we have of underlying trends in each industry segment that we focus on. These solutions are complemented by strong capabilities in application services, testing, Business Intelligence (BI), IT Infrastructure Management Services (IMS), Knowledge Process Outsourcing (KPO), Social, Mobile, Analytics and Cloud (SMAC) technologies, Enterprise Resource Planning (ERP), and business and technology consulting.

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Banking and Financial Services

Our Banking and Financial Services segment serves financial institutions throughout the world. Our clients include companies providing banking, capital markets, cards and payments, investments and transaction processing services to third parties. Our clients engage us to help make their operations as effective, productive and cost-efficient as possible, and to support new capabilities. We assist these clients in such areas as: cards and payments, retail banking, wholesale banking, consumer lending, risk management, investment banking, reconciliations, fraud analysis, mobile banking, and compliance and securities services. The demand for our services in the banking and financial services sector is being driven by rising global regulatory requirements, an ongoing focus on cost reduction and operational efficiencies and interest in newer technology areas and related services.

Healthcare and Life Sciences

Our Healthcare and Life Sciences segment serves many companies, including healthcare payers, providers and pharmaceutical and medical device providers, among others. The healthcare industry is constantly seeking to improve the quality of care while lowering the cost of care and making healthcare affordable to a larger population. Our healthcare practice focuses on providing a broad range of services and solutions to the industry to address regulatory requirements and emerging industry trends such as: integrated care, wider use of Electronic Health Records, the increasing prevalence of healthcare banking among others. We also partner with clients to enable their systems and processes to deal with the increasing retail orientation of healthcare, such as support for individual mandates and the adoption of mobile and analytics solutions to improve access to health information and decision making by end consumers.

In the life sciences category, we partner with leading pharmaceutical, biotech, and medical device companies, as well as providers of generics, animal health and consumer health products. Our life sciences solutions help transform many of the business processes in the life sciences value chain (research, clinical development, manufacturing and supply chain, sales and marketing) as well as regulatory and administrative functions.

Insurance

We serve the needs of global property and casualty insurers, insurance brokers, personal, commercial, life and retirement insurance service providers. These customers turn to us for assistance in improving the efficiency and effectiveness of their operations and in achieving business transformation. We focus on aspects of our clients’ operations, such as: policy administration, claims processing and compliance reporting. We also serve the growing trend among insurers to improve their sales and marketing processes by deepening direct retail customer relationships and strengthening interactions with networks of independent and captive insurance agents, often through the use of social media and mobile technologies. Additionally, many insurers seek to improve business effectiveness by reducing expense ratios and exiting non-core lines of business and operations.

Manufacturing

Our Manufacturing segment provides business consulting and technology services in a range of sub-sectors, including industrial product and aerospace and automotive manufacturing, as well as processors of natural resources and chemicals, and the supply chain of raw materials. Some of our manufacturing solutions for industrial and automotive clients include warranty management, dealer system integration, Product Lifecycle Management (PLM), Supply Chain Management (SCM), sales and operations planning, and mobility.

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Industry trends that influence the demand for our services in this segment include the increasing globalization of sourcing and the desire of clients to further penetrate emerging markets, leading to longer and more complex supply chains.

Retail, Logistics and Telecom

In Retail, we serve a wide spectrum of retailers and distributors, including supermarkets, specialty premium retailers, department stores and large mass-merchandise discounters, who seek our assistance in becoming more efficient and cost-effective and in helping to drive business transformation. We also serve the entire travel and hospitality industry including airlines, hotels and restaurants, as well as online and retail travel, global distribution systems, and intermediaries and real estate companies.

In Logistics, our clients look to Syntel to implement business-relevant changes that will make them more productive, competitive and cost effective. To that end, we help organizations improve operational efficiencies, enhance responsiveness and collaborate with trading partners to better serve their markets and end customers. We leverage a comprehensive understanding of the business and technology drivers of the industry. Our solutions for retail and logistics clients include SCM, sales and operations planning mobility, Point of Sale testing, and Multi-Channel, customer and retail store analytics, among others.

In Telecom, we help our clients address important changes in the telecom industry, such as the transition to new network technologies, designing, developing, testing and introducing new products and channels, improving customer service and increasing customer satisfaction.

Corporate Direct Costs

Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group, Research and Development, Cloud Computing, and Application Management, are not allocated to specific industry segments because management believes it is not practical to allocate such expenses to individual segments as they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against Total Gross Profit.

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In accordance with ASC 280 “Disclosures about Segments of an Enterprise and Related Information,” segment disclosures presented below. Revenues from external customers and gross profit for the Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom segments for the three and nine months ended September 30, 2015 and September 30, 2014 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Net Revenues:
Banking and Financial Services	$	125,779		$	115,454		$	346,952		$	336,495
Healthcare and Life Sciences		42,595			35,834			116,341			113,091
Insurance		32,692			35,002			102,058			101,219
Manufacturing		11,239			6,989			29,760			19,890
Retail, Logistics and Telecom		41,331			35,053			118,921			105,410
	$	253,636		$	228,332		$	714,032		$	676,105
Gross Profit:
Banking and Financial Services		52,177			48,509			134,933			141,810
Healthcare and Life Sciences		20,312			16,405			49,573			52,935
Insurance		13,151			13,088			37,150			37,252
Manufacturing		3,979			2,232			9,250			5,991
Retail, Logistics and Telecom		19,161			15,499			50,486			46,066
Total Segment Gross Profit		108,780			95,733			281,392			284,054
Corporate Direct cost		(1,205	)		(1,205	)		(3,910	)		(3,955	)
Gross Profit	$	107,575		$	94,528		$	277,482		$	280,099
Selling, general and administrative expenses		15,121			26,566			72,231			85,108
Income from operations	$	92,454		$	67,962		$	205,251		$	194,991

During the three and nine months ended September 30, 2015, American Express Corp., State Street Bank and Federal Express Corp. each contributed revenues in excess of 10% of total consolidated revenues. Revenues from American Express Corp., State Street Bank and Federal Express Corp. were $53.7 million, $38.1 million and $30.4 million, respectively, during the three months ended September 30, 2015, contributing approximately 21.2%, 15.0% and 12.0%, respectively of total consolidated revenues. The revenues from American Express Corp. and State Street Bank were generated in the Banking and Financial Services segment. The revenue from Federal Express Corp. was generated in the Retail, Logistics and Telecom segment. The corresponding revenues for the three months ended September 30, 2014 from American Express Corp., State Street Bank and Federal Express Corp. were $51.3 million, $31.2 million and $25.4 million, respectively, contributing approximately 22.5%, 13.7% and 11.1%, respectively, of total consolidated revenues. During the nine months ended September 30, 2015, revenue from American Express Corp., State Street Bank and Federal Express Corp. were $147.7 million, $102.9 million and $89.2 million, respectively, contributing approximately 20.7%, 14.4% and 12.5%, respectively, of total consolidated revenues. The revenues from American Express Corp. and State Street Bank were generated in the Banking and Financial Services segment. The revenue from Federal Express Corp. was generated in the Retail, Logistics and Telecom segment. The corresponding revenues for the nine months ended September 30, 2014 from American Express Corp., State Street Bank and Federal Express Corp. were $147.5 million, $94.9 million and $76.4 million, respectively, contributing approximately 21.8%, 14.0% and 11.3%, respectively, of total consolidated revenues. At September 30, 2015 and December 31, 2014, accounts receivable from American Express Corp. were $21.7 million and $19.0 million, respectively. Accounts receivable from State Street Bank were $17.1 million and $11.3 million, respectively, at September 30, 2015 and December 31, 2014. Accounts receivable from Federal Express Corp. were $12.8 million and $14.3 million, respectively, at September 30, 2015 and December 31, 2014.

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13. GEOGRAPHIC INFORMATION

The Company’s net revenues and long-lived assets, by geographic area, are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Net Revenues (1)
North America (2)	$	229,312	$	207,541	$	645,121	$	614,921
India		1,156		589		2,624		1,505
Europe (3)		22,672		19,146		64,225		56,635
Rest of the World		496		1,056		2,062		3,044
Total revenue	$	253,636	$	228,332	$	714,032	$	676,105

	As of September 30		As of December, 31
	2015		2014
	(in thousands)
Long-Lived Assets (4)
North America (2)	$	3,477	$	2,645
India		103,556		105,949
Europe (3)		60		71
Rest of the world		1,117		1,292
Total	$	108,210	$	109,957

Notes for the Geographic Information Disclosure:

1. Net revenues are attributed to regions based upon customer location.

2. Primarily relates to operations in the United States.

3. Primarily relates to operations in the United Kingdom.

4. Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and goodwill.

14. INCOME TAXES

The following table accounts for the differences between the federal statutory tax rate of 35% and the Company’s overall effective tax rate:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Statutory provision		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		0.6	%		0.8	%		0.6	%		0.4	%
City taxes		—			0.1	%		—			0.1	%
Foreign effective tax rates different from US statutory rate		(11.3	)%		(15.3	)%		(12.0	)%		(14.0	)%
Tax reserve		—			—			0.1	%		(0.5	)%
Valuation Allowance		—			1.0	%		0.3	%		1.0	%
Effective Income Tax Rate		24.3	%		21.6	%		24.0	%		22.0	%

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The effective tax rate for the three months ended September 30, 2015, was affected by an increase in the mix of services being performed on-shore within the U.S. where tax rates are higher, changes in the offshore/onshore, taxable/nontaxable units profit mix of the Company and by a SEZ unit entering a 50% tax holiday effective April 1, 2015 for a 100% tax holiday of five years.

The Company records provisions for income taxes based on enacted tax laws and rates in the various tax jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly, are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

Syntel, Inc. and its subsidiaries file income tax returns in various tax jurisdictions. The Company is no longer subject to U.S. Federal tax examinations by tax authorities for years before 2011 and for State tax examinations for years before 2010. During 2014, the Internal Revenue Service (IRS) commenced an examination of the 2012 U.S. Federal Income Tax Return filed by Syntel Inc. and subsidiaries, which was closed without any material adjustments.

Syntel India, the Company’s India subsidiary, has disputed tax matters for the financial years 1996-97 to 2010-11 pending at various levels of the Indian tax authorities. Financial year 2011-12 and onwards are open for regular tax scrutiny by the Indian tax authorities. However, the tax authorities in India are authorized to reopen the already concluded tax assessments and may re-open the case of Syntel India for financial years 2008-09 and onwards. The Indian tax authority served a notice for re-opening the tax assessment of financial year 2008-09 for Syntel Global Private Limited (“SGPL”) on April 12, 2014. During the three months ended June 30, 2015, SGPL defended its tax position for the aforesaid year and the Indian Tax authority dropped the re-opening of the tax assessment for financial year 2008-09.

The Company has reversed a provision for tax of $ 0.23 million for the quarter ended March 31, 2015 due to the expiration of the time limit with respect to a particular tax provision and made a provision for tax of $0.07 million with respect to a separate particular tax provision.

For the three months ended March 31, 2015, the Company has provided a tax charge of $0.79 million on account of valuation allowance against deferred tax assets recognized on minimum alternative tax. For the three months ended September 30, 2015, the Company has evaluated deferred tax assets and no provision is made on account of valuation allowance against deferred tax assets recognized on minimum alternative tax.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. During the three months ended September 30, 2015, the Company has accrued interest of approximately $0.04 million. The Company has accrued approximately $1.28 million and $1.32 million for interest and penalties as of September 30, 2015 and December 31, 2014, respectively.

The liability for unrecognized tax benefits was $48.54 million and $40.47 million as of September 30, 2015 and December 31, 2014, respectively. The Company has paid income taxes of $40.48 million and $35.86 million against the liabilities for unrecognized tax benefits of $48.54 million and $40.47 million, as of September 30, 2015 and December 31, 2014, respectively. The Company has paid the taxes in order to reduce the possible interest and penalties related to these unrecognized tax benefits.

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The Company’s net amount of unrecognized tax benefits for the tax disputes of $1.51 million and potential tax disputes of $3.07 million could change in the next twelve months as the court cases and global tax audits progress. At this time, due to the uncertain nature of this process, it is not reasonably possible to estimate an overall range of possible change.

Syntel’s software development centers/units are located in Mumbai, Chennai, Pune and Gurgaon, India and registered in Special Economic Zones (SEZ), as Export Oriented Units (EOU) and as units located in Software Technologies Parks of India (STPI). Software development centers/units enjoy favorable tax provisions due to their registration in SEZ.

Certain units located in SEZ were eligible for 100% exemption from payment of corporate taxes for the first five years of operation, 50% exemption for the next two years and for a further 50% exemption for another three years, subject to fulfillment of certain criteria. New units in SEZ that were operational after April 1, 2005 are eligible for 100% exemption from payment of corporate taxes for the first five years of operation, 50% exemption for the next five years and a further 50% exemption for another five years, subject to fulfillment of certain criteria.

Most units located at SEEPZ Mumbai and the STPI/EOU units ceased to enjoy the tax exemption on March 31, 2011, except that one SEZ unit located at Mumbai and three more SEZ units located at Mumbai completed the tax holiday period on March 31, 2012 and March 31, 2013 respectively. The Company started an IT SEZ unit in the Syntel Chennai SEZ during the year ended December 31, 2010. The Company has started operation in a KPO SEZ unit and IT SEZ unit in Airoli, Navi Mumbai in the quarter ended June 30, 2011 and September 30, 2011 respectively. One SEZ unit located at Chennai has completed its first five years of 100% exemption as of March 31, 2012 and another SEZ unit located at Chennai has completed its first five years of 100% exemption as of March 31, 2015. Two IT SEZ units and one KPO SEZ unit located at Syntel Pune SEZ have completed their first five years of 100% exemption as of March 31, 2013. The Company started operation in a new IT SEZ unit and a new KPO SEZ unit in the Syntel Pune SEZ in the quarter ended June 30, 2013. The Company started operation in a new SEZ unit in the Syntel Chennai SEZ and Syntel Pune SEZ in the quarter ended June 30, 2014 and December 31, 2014 respectively. The Company has started operation in a KPO SEZ unit in Airoli, Navi Mumbai in the quarter ended June 30, 2015.

Syntel’s SEZ in Pune set up under the SEZ Act 2005, commenced operations in 2008. The SEZ for Chennai commenced operations in 2010. Income from operation of the SEZ, as a developer, is exempt from payment of corporate income taxes for ten out of 15 years from the date of SEZ notification.

Provision for Indian Income Tax is made only in respect of business profits generated from these software development units to the extent they are not covered by the above exemptions and also for income from treasury operations and other income.

Syntel India has not provided for disputed Indian income tax liabilities amounting to $1.58 million for the financial years 1996-97, 1997-98 and 2001-02, which is after recognizing certain tax liabilities aggregating $0.79 million.

Syntel India received orders for appeals filed with the Commissioner of Income Tax Appeals (“CIT (A)”) against the demands raised by the Income Tax Officer in respect of certain matters relating to the financial years 1996-97, 1997-98, and 2000-01. Syntel India’s contention was partially upheld by the CIT (A). Syntel India further appealed with the Income Tax Appellate Tribunal (“ITAT”) for the amounts not allowed by the CIT (A). Syntel India received favorable orders from the ITAT. The Income Tax Department filed further appeals before the Bombay High Court. The Bombay High Court dismissed the Income Tax Department appeals and upheld the ITAT orders on December 15, 2009. The Income Tax Department filed a review petition before the Bombay High Court that was rejected due to filing defects. The Income Tax Department may rectify the defects and re-submit the review petition.

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Syntel India has also not provided for disputed Indian income tax liabilities aggregating $4.78 million for the financial years 2002-03 to 2004-05, which is after recognizing tax on certain tax liabilities aggregating $0.72 million provided for uncertain income tax positions, against which Syntel India filed appeals with the CIT(A). Syntel India received the order for appeal filed with the CIT (A) relating to financial year 2002-03 and financial year 2003-04, wherein the contention of Syntel India was partially upheld. Syntel India has further appealed to the ITAT for the amounts not allowed by the CIT (A). The Income Tax Department has also filed a further appeal against the relief granted to Syntel India by the CIT (A). Syntel India has obtained opinions from independent legal counsels that support Syntel India’s stand in this matter. During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT. The Income Tax Department may file further appeals before the Bombay High Court.

For the financial year 2004-05, the appeal of Syntel India was fully allowed by the CIT (A). The Income Tax Department filed a further appeal with the ITAT against the amounts allowed by the CIT (A) except with regard to one item. The Income Tax department’s appeal was rejected by the ITAT. The Income Tax Department filed a further appeal before the Bombay High Court for the amounts allowed by the ITAT, except an item on which the CIT (A) granted relief to Syntel India and the Income Tax department did not appeal. Accordingly, Syntel India reversed a tax provision of $0.33 million during the year ended December 31, 2010 with regard to that one item. The Bombay High Court dismissed the Income Tax Department appeal. The Income Tax Department filed a Special Leave Petition with the Supreme Court of India on January 24, 2013, challenging the order passed by the Bombay High Court. The petition will come up for admission in the near future. For the financial year 2005-06, the Income Tax Department decided against Syntel India with respect to a particular tax position and Syntel India filed an appeal with the CIT (A). During the year ended December 31, 2010, Syntel India’s appeal for the financial year was fully allowed by the CIT (A). The Income Tax Department filed a further appeal with the ITAT against the amounts allowed by the CIT (A). During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT. The Income Tax Department may file further appeals before the Bombay High Court. For the financial year 2006-07, the Income Tax Department decided against Syntel India with respect to a particular tax position and Syntel India filed an appeal with the CIT (A). During the three months ended September 30, 2011, the Company received an order for appeal filed with the CIT (A) that partially upheld Syntel India’s contentions. Syntel India filed a further appeal with the ITAT against the amounts not allowed by the CIT (A). The Income Tax Department filed a further appeal against the amounts allowed by the CIT (A). During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT. The Income Tax Department may file further appeals before the Bombay High Court. For the financial year 2007-08 to 2009-10, the Indian Income Tax Department decided against Syntel India with respect to a particular tax position and Syntel India filed appeals with the CIT (A). The Company received orders for appeals filed with the CIT (A) that upheld Syntel India’s contentions. The Income Tax Department filed further appeals against the amounts allowed by the CIT (A). These appeals are scheduled for hearing before the ITAT in the near future. During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT for the financial year 2007-08. The Income Tax Department may file further appeals before the Bombay High Court.

For the financial year 2010-11, the income tax department has raised a new tax dispute on a particular tax position. Management has evaluated the tax impact on this tax position for the aforesaid financial year and subsequent financial year. As per management estimates, the Company has provided for unrecognized tax benefits of $0.11 million and $0.86 million and for the nine months ended September 30, 2015 and the year ended December 31, 2014 respectively. Syntel India filed appeals with the CIT (A) against the aforesaid order. During the quarter ended September 30, 2015, Syntel India has received a favorable order from income tax department for the financial year 2011-12 and also received a rectification order for the assessment of the aforesaid tax position of the financial year 2010-11.

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For the financial year 2006-07, the Income Tax Department decided against the Syntel KPO entity with respect to a particular tax position and the Syntel KPO entity filed an appeal with the CIT (A). During the year ended December 31, 2011, the Syntel KPO entity received an order for appeal filed with CIT (A) wherein, the contention of Syntel KPO entity was upheld. The Income Tax department filed a further appeal against the amounts allowed by the CIT (A). The Income Tax Department appeal is fixed for hearing before ITAT in the near future. For the financial years 2007-08 to 2010-11, the Income Tax Department decided against the Syntel KPO entity with respect to a particular tax position and the Syntel KPO entity filed an appeal with the CIT (A). The Syntel KPO entity’s appeals for the financial years 2007-08 to 2009-10 were not allowed by the CIT (A). The Syntel KPO entity has filed further appeals with the ITAT against the amounts not allowed by the CIT (A). The Syntel appeal is fixed for hearing before ITAT in the near future.

For the financial year 2007-08, the Income Tax Department also decided against Syntel International Private Limited (“SIPL”) with respect to a particular tax position and SIPL filed an appeal with the CIT (A). During the three months ended September 30, 2012, SIPL received an order for appeal filed with CIT (A) wherein the contention of SIPL was upheld. Also, High Court orders are in favor of the tax position taken by SIPL. Based on the CIT (A) and the recent High Court orders, SIPL reviewed an Uncertain Tax Position (UTP) of $0.24 million and reversed the aforesaid tax provision in September 2012. The Income Tax Department filed a further appeal to the ITAT against the amounts allowed by the CIT (A). For the financial year 2011-12, the Income Tax Department also decided against SIPL with respect to a particular tax position and SIPL filed an appeal with the CIT (A).

All the above tax exposures involve complex issues and may need an extended period to resolve the issues with the Indian income tax authorities. Management, after consultation with legal counsel, believes that the resolution of the above matters will not have a material adverse effect on the Company’s consolidated financial position.

Branch Profit Tax

Syntel India is subject to a 15% U.S. Branch Profit Tax (BPT) related to its effectively connected income in the United States, to the extent its U.S. taxable adjusted net income during the taxable year is not invested in the United States. The Company expects that U.S. profits earned on or after January 1, 2008 will be permanently invested in the U.S. Accordingly, effective January 1, 2008, a provision for BPT is not required. The accumulated deferred tax liability of $1.73 million as of December 31, 2007 will continue to be carried forward. Estimated additional BPT which would be due, if U.S. profits were not to be permanently invested, were approximately $7.26 million as of September 30, 2015.

Undistributed Earnings of Foreign Subsidiaries

The Company intends to use the remaining accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and accordingly, undistributed earnings of foreign subsidiaries are considered to be indefinitely reinvested outside the United States and no provision for U.S. Federal and State income tax or applicable dividend distribution tax has been provided thereon. If the Company determines to repatriate all undistributed repatriable earnings of foreign subsidiaries as of September 30, 2015, the Company would have accrued taxes of approximately $299.5 million.

Service Tax Audit

During the three months ended September 30, 2010, a service tax audit was conducted for the Adyar facility in Chennai by the office of the Accountant General (Commercial Receipt Audit). The scope of the audit was to review transactions covered under the Central Excise and Customs Act. The Development Commissioner (DC) issued a letter stating the audit objections raised by the

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officer of the audit team. Most of the observations are pertaining to the service tax and are for an amount of $3.85 million. Syntel India filed a reply to said notice and provided further information.

Further to Syntel India’s reply and information filed earlier, Syntel India received a letter dated July 13, 2011 from the DC, indicating that the audit objections amounting to $3.0 million, out of the total amount of $3.85 million, have been closed. Syntel is pursuing closure of the balance of the audit objections of approximately $0.85 million but has not yet received any communication back from the DC office.

Syntel India obtained the views of a tax consultant in this matter and the consultant advised that the matter is time barred. Even if not time barred, the consultant also provided advice that Syntel India will be in a position to defend the objections raised and therefore no provision has been made in the Company’s books.

Syntel India regularly files quarterly refund applications and claims refunds of taxes on input services which remain unutilized against a zero service tax on export of services. During the quarter ended June 30, 2014, Syntel India received orders for a service tax refund for the period October – December 2011. The Assistant Commissioner of Service Tax granted a refund of $0.32 million and rejected refunds of $0.58 million. Syntel India filed appeals before the Commissioner of Appeal responding to the aforesaid rejections. The rejection orders stated that the input services did not meet the conditions qualifying them for a refund of service taxes. Syntel India obtained the views of a tax consultant in this matter and the consultant advised that Syntel India is in a strong position to defend the rejections and therefore, no provision has been made in the books.

The Syntel KPO entity regularly files quarterly refund applications and claims refunds of taxes on input services which remain unutilized against a zero service tax on export of services. During the three months ended September 30, 2012, the Syntel KPO entity received orders for the rejection of a service tax refund for the period April–September 2011 of $0.45 million. Per the rejection order, there is no nexus of input services with the export of services justifying the claim of refund of service tax. The Syntel KPO entity filed appeals before the Commissioner of Appeal against the aforesaid order. The Syntel KPO entity received service tax refunds for the periods October–December 2011 and January–March 2012 of $0.15 million and $0.13 million, respectively. During the quarter ended December 31, 2013, the KPO entity received orders for rejection of Service tax refunds for the period April–December 2012 of $0.71 million. As per the rejection order, there is no nexus of input services with the export of services and the entity is not eligible for refund of the service tax. The Syntel KPO entity filed appeals before the Commissioner of Appeal against the aforesaid orders. During the quarter ended June 30, 2014, the Commissioner of Appeal allowed appeals filed by the Syntel KPO entity. The Service tax department has filed an appeal against the said order before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and also an application for stay of refund. During the quarter ended June 30, 2014, the Syntel KPO entity received an order for a service tax refund for the period January–March 2013 of $0.20 million, after rejection of $0.05 million. The Syntel KPO entity filed appeals before the Commissioner of Appeal against the aforesaid rejection. During the quarter ended June 30, 2015, the Syntel KPO entity has received an order for a service tax refund for the period July 2013– March 2014 of US$0.512 million after rejection of US$0.30 million. Syntel has filed appeals before the Commissioner of Appeal against the aforesaid partial rejection.

The KPO entity has received an order for a service tax refund for the period April – June 2014 of $0.12 million after rejection of $0.12 million. Syntel plans to file appeals before the Commissioner of Appeal against the aforesaid partial rejection

The Company obtained a tax consultant’s advice on the aforesaid orders. The consultant is of the view that the aforesaid orders are contrary to the wording of the service tax notifications and provisions. The Company, therefore, believes that its claims of service tax refunds should be upheld at the appellate stage and

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the refunds should be accordingly granted. Based on the consultant’s tax advice, the Company is in a strong position to defend the rejection of the refunds. Accordingly, no provision has been made in the Company’s books.

SIPL regularly files service tax returns and filed a refund application claiming a tax refund of unutilized input service tax on account of export of services. The Company received a show cause notice on October 23, 2012 for a service tax demand of approximately $2.04 million. The Company filed submissions with the service tax department to oppose the aforementioned show cause notice. However, the service tax department passed an order dated February 11, 2013 confirming said demand. The total demand, including penalty amounts, was raised to $3.95 million. In addition to this amount, annual interest at 18%, calculated on a daily basis on the outstanding demand, is payable. SIPL filed an appeal against the said order before the CESTAT and also an application for stay of demand. The CESTAT allowed SIPL’s appeal, set aside the demand and directed the Commissioner to make a fresh examination. However, the service tax department filed an appeal before the Bombay High Court against the aforesaid CESTAT order. The Bombay High Court has directed to CESTAT to decide the case on merit rather than directing to commissioner for fresh consideration

The Company’s tax consultant is of the view that the aforementioned demand is contrary to the wording of the service tax notifications and provisions. The Company therefore believes it is in a strong position to defend the aforementioned demand. Accordingly, no provision has been made in the Company’s books.

India Finance Act 2015

The Finance Bill 2015 received the assent of the President of India on May 14, 2015 and has been enacted as the Finance Act 2015. The provisions include clarification on indirect transfers in the Income-tax Act and deferral of the General Anti-Avoidance Rule (GAAR) to financial year 2017-18. Withdrawals for the Direct Tax code and Goods and Service Tax to be implemented from April 1, 2016.

The Finance Bill also includes provisions for an increase in the Surcharge on Income tax from 10% to 12% (consequential increase in corporate tax rate from 33.99% to 34.60% and an increase in the Dividend distribution tax from 16.99% to 17.30% on the gross distributable amount including tax and an increase in the Minimum Alternative Tax (MAT) rate from 20.96% to 21.34%. The service tax rate is to increase to 14% against an earlier rate of 12.36%. In addition to the 14% rate, there would be Swachh Bharat Cess of 2% on the gross value of certain services as may be later established.

The changes, will have not have a material impact on the operations of the Company’s India based entities.

Local Taxes

As of September 30, 2015, the Company had a local tax liability of approximately $3.4 million (exclusive of interest and/or penalties) relating to employer withholding taxes and employer payroll expense tax.

As of December 31, 2014, the Company had a local tax liability provision of approximately $5.9 million, equal to $3.8 million net of tax, relating to local taxes including employer withholding taxes, employer payroll expense taxes, business license and corporate income taxes.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (“MAT”) is payable on Book Income, including the income for which deduction is claimed under section 10A and section 10AA of the Indian Income Tax Act. The excess tax paid under MAT provisions, over and above the normal tax liability is “MAT Credit”. MAT Credit can be carried forward and set-off against future tax liabilities computed under normal tax provisions in excess of tax payable under MAT. The MAT Credit can be carried forward for set-off up to a

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period of 10 years from the end of the financial year in which MAT Credit arises. Accordingly, the Company’s Indian subsidiaries have calculated the tax liability for current domestic taxes after considering MAT tax liability. Management estimates that the Company’s Indian subsidiaries would utilize the MAT credit within the prescribed limit of 10 years. The Company estimated that the Company may not be able to utilize part of the MAT credit for one of the Indian subsidiaries. Accordingly, a valuation allowance of $1.59 million was recorded against the accumulated MAT credit recognized as deferred tax assets. The MAT credit as of September 30, 2015 of $27.16 million (net of valuation allowance of $1.59 million) shall be utilized before March 31 of the following financial years and shall expire as follows:

Year of Expiry Of MAT Credit	Amount in USD (in millions)
2017-18		0.20
2018-19		0.27
2019-20		0.98
2020-21		1.63
2021-22		1.94
2022-23		6.02
2023-24		7.12
2024-25		7.51
2025-26		3.08
Total		28.75
Less: valuation allowance		(1.59	)
Total (net of valuation allowance)		27.16

15. COMMITMENTS AND CONTINGENCIES

As of September 30, 2015, and December 31, 2014, Syntel’s subsidiaries have commitments for capital expenditures (net of advances) of $32.0 million and $31.8 million, respectively, primarily related to the technology campuses being constructed at Pune and Chennai in India.

Syntel’s Indian subsidiaries’ operations are carried out from their development centers/units in Mumbai, Pune, Chennai and Gurgoan forming part of a Special Economic Zone (“SEZ”)/ Software Technology Parks (“STP”) scheme. Under these schemes, the registered units have export obligations, which are based on the formula provided by the notifications/circulars issued by the STP and SEZ authorities from time to time. The consequence of not meeting the above commitments would be a retroactive levy of import duty on items previously imported duty free for these units. Additionally, the respective authorities have rights to levy penalties for any defaults on a case-by-case basis. The Company is confident of meeting these obligations.

The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. The Company’s estimates regarding legal contingencies are based on information known about the matters and its experience in contesting, litigating and settling similar matters. It is the opinion of management with respect to pending or threatened litigation matters that unfavorable outcomes are remote and that estimates of possible loss are not able to be made. Although actual amounts could differ from management’s estimates, none of the actions are believed by management to involve future amounts that would be material to the Company’s financial position or results of operations.

The Company estimates the costs associated with known legal exposures and their related legal expenses and accrues reserves for either the probable liability, if that amount can be reasonably estimated, or otherwise the lower end of an estimated range of potential liability. There was no accrual related to customer related claim contingencies during the three months ended September 30, 2015. The Company made no accruals towards estimated legal exposures and their related legal expenses.

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As at December 31, 2014, the Company had recorded $0.35 million as an accrual towards liability for a customer claim related contingency. During the three months ended March 31, 2015, the Company settled the customer claim without admitting liability and the amount accrued was paid out.

16. STOCK BASED COMPENSATION

Share Based Compensation:

The Company originally established a Stock Option and Incentive Plan in 1997 (the “1997 Plan”). On June 1, 2006, the Company adopted the Amended and Restated Stock Option and Incentive Plan (the “Amended Plan”), which amended and extended the 1997 Plan. Under the plan, a total of sixteen million shares of Common Stock (adjusted for the effects of the 2014 stock split) were reserved for issuance. The dates on which options granted under the Amended Plan become first exercisable are determined by the Compensation Committee of the Board of Directors, but generally vest over a four-year period from the date of grant. The term of any option may not exceed ten years from the date of grant. No stock options were issued for the three months ended September 30, 2015 and 2014.

The Company accounts for share-based compensation based on the estimated fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Statement of Comprehensive Income. Share-based compensation expense recognized as above for the three months ended September 30, 2015 and 2014 was $1.69 million and $1.61 million, respectively, including a charge for restricted stock units. Share-based compensation expense recognized as above for the nine months ended September 30, 2015 and 2014 was $5.10 million and $4.62 million, respectively, including a charge for restricted stock.

The shares issued upon the exercise of the options are new share issues after taking into account the effects of the 2014 stock splits.

Restricted Stock Units:

Also under the Amended Plan, on different dates during the years ended December 31, 2011 and 2010, the Company issued restricted stock unit awards of 182,728 and 418,716 (adjusted to account for 2014 stock split), respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock unit awards were granted to employees for their future services as a retention tool at a zero exercise price, and vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

On different dates during the years ended December 31, 2014, 2013 and 2012, and for the nine months ended September 30, 2015 the Company issued restricted stock unit awards (adjusted to account for the 2014 stock split) of 293,904, 187,056, 217,656 and 18,840 respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock unit awards were granted to employees for their future services as a retention tool at a zero exercise price and vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

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The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock unit) for the three and nine months ended September 30, 2015 and 2014 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Cost of revenues	$	586	$	573	$	1,830	$	1,505
Selling, general and administrative expenses		1,104		1,033		3,274		3,114
	$	1,690	$	1,606	$	5,104	$	4,619

A summary of the activity for restricted stock unit awards (adjusted to reflect the stock split) granted under our stock-based compensation plans as of September 30, 2015 and changes during the period ended is presented below:

	Nine Months Ended September 30, 2015					2014
	Number Of Awards			Weighted Average Grant Date Fair Value		Number Of Awards			Weighted Average Grant Date Fair Value
Unvested at January 1		564,314		$	37.37		501,292		$	28.64
Granted		18,840		$	46.13		293,904		$	42.79
Vested		(143,704	)	$	35.63		(227,882	)	$	25.03
Forfeited		(25,681	)	$	35.86		(3,000	)	$	44.90
Unvested at September 30		413,769			38.47		564,314		$	37.37

As of September 30, 2015, $12.64 million of total remaining unrecognized stock-based compensation cost related to restricted stock unit awards is expected to be recognized over the weighted-average remaining requisite service period of 2.1 years.

17. VACATION PAY

The accrual for unutilized leave balance is determined for the entire available leave balance standing to the credit of the employees at period end. The leave balance eligible for carry-forward is valued at gross compensation rates and eligible for compulsory encashment at basic compensation rates.

The gross charge for unutilized earned leave was $1.5 million and $1.5 million for the three months ended September 30, 2015 and 2014, respectively.

The amounts accrued for unutilized earned leave are $23 million and $21.5 million as of September 30, 2015 and December 31, 2014, respectively, and are included within accrued payroll and related costs.

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18. EMPLOYEE BENEFIT PLANS

The Company maintains a 401(k) retirement plan that covers all regular employees on Syntel’s U.S. payroll. Eligible employees may contribute the lesser of 60% of their compensation or $18,000, subject to certain limitations, to the retirement plan. The Company may make contributions to the plan at the discretion of the Board of Directors; however, through September 30, 2015, no Company contributions have been made.

Eligible employees on Syntel’s Indian payroll receive benefits under the Provident Fund (“PF”), which is a defined contribution plan. Both the employee and the Company make monthly contributions equal to a specified percentage of the covered employee’s salary. The Company has no further obligations under the plan beyond its monthly contributions. The contributions made to the fund are administered and managed by the Government of India. The Company’s monthly contributions are expensed in the period they are incurred. Provident Fund Contribution expense recognized by Indian entities for the three months ended September 30, 2015 and 2014 was $1.5 million and $1.2 million, respectively, and for the nine months ended September 30, 2015 and 2014 were $4.8 million and $3.00 million,respectively.

In accordance with the Payment of Gratuity Act, 1972 of India, the Indian subsidiary provides for gratuity, a defined retirement benefit plan (the “Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, based on the respective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation and are expensed in the period determined. The Gratuity Plan is a non-funded plan. The amounts accrued under this plan are $13 million and $12.1 million as of September 30, 2015 and December 31, 2014, respectively, and are included within current liabilities and in other non-current liabilities, as applicable. Expense recognized by Indian entities under the Gratuity Plan for the nine months ended September 30, 2015 and 2014 were $2.8 million and $2.4 million, respectively.

19. CONSOLIDATION OF A VARIABLE INTEREST ENTITY

Syntel Delaware is a 100% subsidiary of Syntel, Inc. and a 49% shareholder of the joint venture (“JV”) entity SSSSML, the other shareholder being an affiliate of State Street Bank. Syntel Delaware has a variable interest in SSSSML as it is entitled to all the profits and solely responsible for all losses incurred by SSSSML even though it holds only 49% in the JV entity. Accordingly, Syntel Delaware consolidates the JV entity SSSSML.

The Company’s Banking and Financial Services to State Street Bank and one other client are provided through the above joint venture between the Company and an affiliate of State Street Bank. Sales of Banking and Financial Services to these two clients represented approximately 11.6% and 12.7% of the Company’s total revenues for the three months ended September 30, 2015 and 2014, respectively and 12.0% and 13.0% for the nine months ended September 30, 2015 and 2014, respectively.

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20. FAIR VALUE MEASUREMENTS

The Company follows the guidance for fair value measurements and fair value option for financial assets and liabilities, which primarily relate to the Company’s investments, forward contracts and nonfinancial assets and liabilities.

This standard includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

The fair value hierarchy consists of the following three levels:

• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2015:

					(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	94.5	$	—	$	—	$	94.5
Term Deposits		—		409.2	$	—	$	409.2
Total Assets Measured at Fair Value	$	94.5	$	409.2			$	503.7

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2014:

					(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	186.8	$	—	$	—	$	186.8
Term Deposits		—		466.7		—		466.7
Total Assets Measured at Fair Value	$	186.8	$	466.7	$	—	$	653.5

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21. TERM DEPOSITS

The following table summarizes the term deposits with various banks outstanding as of September 30, 2015 and December 31, 2014.

	(In Millions)
Balance Sheet Item	As of September 30, 2015		As of December 31, 2014
Cash & Cash Equivalents	$	108.04	$	13.00
Short Term Investments		409.09		466.60
Non-Current Assets		0.08		0.10
Total	$	517.21	$	479.70

22. RECENT ACCOUNTING PRONOUNCEMENTS

ASU 2014-09, Revenue from Contracts with Customers – Issued May 2014, was scheduled to be effective for Syntel beginning January 1, 2017, however on July, 9 2015, the FASB approved the proposal to defer the effective date of the ASU for public companies to January 1, 2018 with an option to elect to adopt the ASU as of original effective date. The new standard is intended to substantially enhance the quality and consistency of how revenue is reported while also improving the comparability of the financial statements of companies using U.S. generally accepted accounting principles (GAAP) and those using International Financial Reporting Standards (IFRS). The core principle of ASU 2014-09 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The new guidance also addresses the accounting for some costs to obtain or fulfill a customer contract and provides a set of disclosure requirements intended to give financial statement users comprehensive information about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts. The requirements of this ASU and its impact on the Company are being evaluated.

ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40) Issued April 2015; will be effective for Syntel beginning January 1, 2016 with early adoption permitted. This ASU provides guidance to help entities in evaluating the accounting for fees paid by a customer in a cloud computing arrangement.

The new guidelines provide guidance on, how customers should evaluate whether such arrangements contain a software license that should be accounted for separately. Customers will need to apply the same criteria as vendors to determine whether the arrangement contains a software license or is solely a service contract. The requirements of this ASU and its impact on the Company are being evaluated.

ASU 2015-01, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20), Issued January 2015; will be effective for Syntel beginning January 1, 2016. The new standard is to simplify the income statement presentation requirements by eliminating the concept of extraordinary items from U.S. generally accepted accounting principles (GAAP) and also improving the comparability of the financial statements of companies using GAAP and those using International Financial Reporting Standards (IFRS).

The new guidance also addresses, transactions that are both unusual in nature and infrequently occurring which should be presented within income from continuing operations or disclosed in notes to financial statements because those items satisfy the conditions for an item that is unusual in nature or infrequently occurring. The adoption of Accounting Standards Update 2015-01 will not have any significant impact on the Company’s financial statement presentation or disclosures.

In April 2015, the FASB issued a standard related to the presentation of debt issuance costs. The standard requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability. The recognition and measurement guidance for

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debt issuance costs are not affected by this standard. The amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning on or after January 1, 2016. The adoption of this standard will affect financial statement presentation only and is expected to have no effect on our financial condition or results of operations.

23. RECLASSIFICATIONS

Certain amounts in previously issued consolidated financial statements have been reclassified to conform to the current period presentation. Reclassifications of prior period share and per-share amounts due to the two-for-one stock split that was effective on November 3, 2014 are effected to conform to the current period presentation.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SYNTEL INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

Net Revenues. The Company’s revenues consist of fees derived from its Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom business segments. Net revenues for the three months ended September 30, 2015 increased to $253.6 million from $228.3 million for the three months ended September 30, 2014, representing a 11.1% increase. The Company’s verticalization sales strategy focusing on Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom has enabled better focus and relationships with key customers leading to continued growth in business. Further, continued focus on execution and investments in new offerings such as our Testing and Center of Excellence have a potential to contribute growth in the business. The focus is to continue investments in more new offerings and geographical expansion. Worldwide utilized billable headcount as of September 30, 2015 increased by 8.7% to 18,516 employees as compared to 17,039 employees as of September 30, 2014. However, the growth in revenue was much higher when compared with the growth in the billable headcount. This is primarily because of a better utilization of onsite and offshore resources. As of September 30, 2015, the Company had approximately 76.4% of its utilized billable workforce in India as compared to 79.1% as of September 30, 2014. The Company’s top five clients accounted for 58.3% of the total revenues in the three months ended September 30, 2015, down from 60.6% of its total revenues in the three months ended September 30, 2014. The Company’s top five clients accounted for 59.5% of the total revenue in the nine months ended September 30, 2015 as compared to 60.3% of its total revenue in the nine months ended September 30, 2014. The Company’s top 10 clients accounted for 72.7% of the total revenues in the three months ended September 30, 2015 as compared to 74.3% in the three months ended September 30, 2014. The Company’s top 10 clients accounted for 73.8% of the total revenues in the nine months ended September 30, 2015 as compared to 73.5% in the nine months ended September 30, 2014. The Company’s top 4-30 clients accounted for 43.3% of the total revenues in the three months ended September 30, 2015, down from 46.7% of its total revenues in the three months ended September 30, 2014. The Company’s top 4-30 clients accounted for 44.2% of the total revenues in the nine months ended September 30, 2015, down from 46.1% of its total revenues in the nine months ended September 30, 2014.

Cost of Revenues. The Company’s cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. The cost of revenues decreased to 57.6% of total revenue for the three months ended September 30, 2015, from 58.6% for the three months ended September 30, 2014. The 1.0% decrease in cost of revenues, as a percent of revenues, for the three months ended September 30, 2015, as compared to the three months ended September 30, 2014, was attributable primarily to rupee depreciation, offset by increases in compensation due to increase in onsite headcount, increased contract cost, increased benefits costs and increased immigration expenses, in the third quarter of 2015. Salary increases are discretionary and determined by management. During the three months ended September 30, 2015, the Indian rupee has depreciated against the U.S. dollar, on average, 7.62% as compared to the three months ended September 30, 2014. This rupee depreciation positively impacted the Company’s gross margin by 118 basis points, operating income by 191 basis points and net income by 194 basis points, each as a percentage of revenue.

The cost of revenues increased to 61.1% of total revenue for the nine months ended September 30, 2015, from 58.6% for the nine months ended September 30, 2014. The 2.5% increase in cost of revenues, as a percent of revenues, for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to increases in compensation due to increased onsite headcount and changes in the Company’s salary model, increased contract cost, benefits costs and increased immigration expenses, offset by rupee depreciation and

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decreased travel expenses due to a decrease in foreign living allowances. During the nine months ended September 30, 2015, the Indian rupee has depreciated against the U.S. dollar, on average, 5.05% as compared to the nine months ended September 30, 2014. This rupee depreciation positively impacted the Company’s gross margin by 89 basis points, operating income by 141 basis points and net income by 134 basis points, each as a percentage of revenue.

Banking and Financial Services Revenues. Banking and Financial Services revenues increased to $125.8 million for the three months ended September 30, 2015 or 49.6% of total revenues, from $115.5 million, or 50.6% of total revenues for the three months ended September 30, 2014. The $10.3 million increase was attributable primarily to revenues from new engagements contributing $77.5 million, largely offset by $66.8 million in lost revenues as a result of project completion and a $0.4 million net reduction in revenues from existing projects. Banking and Financial Services revenues increased to $347.0 million for the nine months ended September 30, 2015 or 48.6% of total revenues, from $336.5 million, or 49.8% of total revenues for the nine months ended September 30, 2014. The $10.5 million increase was attributable primarily to revenues from new engagements contributing $195.1 million, largely offset by $118.2 million in lost revenues as a result of project completion and a $66.4 million net reduction in revenues from existing projects.

Banking and Financial Services Cost of Revenues. Banking and Financial Services cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Banking and Financial Services cost of revenues increased to 58.5% of total Banking and Financial Services revenues for the three months ended September 30, 2015, from 58.0% for the three months ended September 30, 2014. The 0.5% increase in cost of revenues, as a percent of revenues for the three months ended September 30, 2015, as compared to the three months ended September 30, 2014, was attributable primarily to increases in compensation due to increased onsite headcount, increased contract cost, benefits costs and increased immigration expenses, offset by rupee depreciation in the third quarter of 2015. Salary increases are discretionary and determined by management.

Cost of revenues for the nine months ended September 30, 2015 increased to 61.1% of Banking and Financial Services revenues, from 57.9% for the nine months ended September 30, 2014. The 3.2% increase in cost of revenues, as a percent of revenues for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to increases in compensation due to increased onsite headcount and changes in the Company’s salary model, increased contract cost, benefits costs and increased immigration expenses, offset by rupee depreciation and decreased travel expenses due to a decrease in foreign living allowances.

Healthcare and Life Sciences Revenues. Healthcare and Life Sciences revenues increased to $42.6 million for the three months ended September 30, 2015, or 16.8% of total revenues from $35.8 million for the three months ended September 30, 2014, or 15.7% of total revenues. The $6.8 million increase was attributable primarily to revenues from new engagements contributing $21.0 million, largely offset by $7.4 million net reduction in revenues from existing projects and a $6.8 million reduction in revenues as a result of project completion. The revenues for the nine months ended September 30, 2015 increased to $116.3 million, or 16.3% of total revenues, from $113.1 million or 16.7% of total revenues for the nine months ended September 30, 2014. The $3.2 million increase was attributable primarily to revenues from new engagements contributing $36.4 million, largely offset by $17.1 million reduction in lost revenues as a result of project completion and $16.1 million net reduction in revenues from existing projects.

Healthcare and Life Sciences Cost of Revenues. Healthcare and Life Sciences cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Healthcare and Life Sciences cost of revenues decreased to 52.3% of total Healthcare and Life Sciences revenues for the three months ended September 30, 2015, from 54.2% for the three months ended September 30, 2014. The 1.9% decrease in cost of revenues, as a

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percent of total revenues for the three months ended September 30, 2015, as compared to the three months ended September 30, 2014, was attributable primarily to rupee depreciation, offset by increases in compensation due to increase in onsite headcount, increased contract cost, increased benefits costs and increased immigration expenses in the third quarter of 2015. Salary increases are discretionary and determined by management.

Cost of revenues for the nine months ended September 30, 2015 increased to 57.4% of Healthcare and Life Sciences revenues, from 53.2% for the nine months ended September 30, 2014. The 4.2% increase in cost of revenues, as a percent of revenues for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to increases in compensation due to increased onsite headcount and changes in the Company’s salary model, increased contract cost, benefits costs and increased immigration expenses, offset by rupee depreciation and decreased travel expenses due to a decrease in foreign living allowances.

Insurance Revenues. Insurance revenues decreased to $32.7 million for the three months ended September 30, 2015 or 12.9% of total revenues, from $35.0 million, or 15.3% of total revenues for the three months ended September 30, 2014. The $2.3 million decrease was attributable primarily to $18.8 million in lost revenues as a result of project completion and a $2.1 million net reduction in revenues from existing projects, largely offset by an $18.6 million increase in revenue from new engagements. The revenues for the nine months ended September 30, 2015 increased to $102.1 million, or 14.3% of total revenues, from $101.2 million or 15.0% of total revenues for the nine months ended September 30, 2014. The $0.9 million increase was attributable primarily to revenues from new engagements contributing $53.5 million, largely offset by $37.6 million in lost revenues as a result of project completion and a $15.0 million net reduction in revenues from existing projects.

Insurance Cost of Revenues. Insurance cost of revenues consists of costs directly associated with billable consultants, including salaries, payroll taxes, benefits, finder’s fees, trainee compensation and travel. Insurance cost of revenues decreased to 59.8% of total insurance revenues for the three months ended September 30, 2015, from 62.6% for the three months ended September 30, 2014. The 2.8% decrease in cost of revenues, as a percent of total revenues for the three months ended September 30, 2015, as compared to the three months ended September 30, 2014, was attributable primarily to rupee depreciation, offset by increases in compensation due to increase in onsite headcount, increased contract cost, increased benefits costs and increased immigration expenses in the third quarter of 2015. Salary increases are discretionary and determined by management.

Cost of revenues for the nine months ended September 30, 2015 increased to 63.6% of insurance revenues, from 63.2% for the nine months ended September 30, 2014. The 0.4% increase in cost of revenues, as a percent of revenues for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to increases in compensation due to increased onsite headcount and changes in the Company’s salary model, increased contract cost, benefits costs and increased immigration expenses, offset by rupee depreciation and decreased travel expenses due to a decrease in foreign living allowances.

Manufacturing Revenues. Manufacturing revenues increased to $11.2 million for the three months ended September 30, 2015 or 4.4% of total revenues, from $7.0 million, or 3.1% of total revenues for the three months ended September 30, 2014. The $4.2 million increase was attributable primarily to $3.2 million increase in revenues from new engagements and a net $1.7 million increase in revenues from existing projects, largely offset by $0.7 million in lost revenues as a result of project completion. The revenues for the nine months ended September 30, 2015 increased to $29.8 million, or 4.2% of total revenues, from $19.9 million or 2.9% of total revenues for the nine months ended September 30, 2014. The $9.9 million increase was attributable primarily to $5.8 million net increase in revenues from existing projects and $5.6 million increase in revenues from new engagements, largely offset by $1.5 million in lost revenues as a result of project completion.

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Manufacturing Cost of Revenues. Manufacturing cost of revenues consists of costs directly associated with billable consultants in the U.S., including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Manufacturing cost of revenues decreased to 64.6% of total manufacturing revenues for the three months ended September 30, 2015, from 68.1% for the three months ended September 30, 2014. The 3.5% decrease in cost of revenues for the three months ended September 30, 2015, as a percent of total Manufacturing revenues, as compared to the three months ended September 30, 2014, was attributable primarily to rupee depreciation, offset by increases in compensation due to increase in onsite headcount, increased contract cost, increased benefits costs and increased immigration expenses in the third quarter of 2015. Salary increases are discretionary and determined by management.

Cost of revenues for the nine months ended September 30, 2015 decreased to 68.9% of Manufacturing revenues, from 69.9% for the nine months ended September 30, 2014. The 1.0% decrease in cost of revenues, as a percent of revenues for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to rupee depreciation and decreased travel expenses due to a decrease in foreign living allowances offset by increases in compensation due to increased onsite headcount and changes in the Company’s salary model, increased contract cost, benefits costs and increased immigration expenses.

Retail, Logistics and Telecom Revenues. Retail, Logistics and Telecom revenues increased to $41.3 million for the three months ended September 30, 2015 or 16.3% of total revenues, from $35.1 million, or 15.4% of total revenues for the three months ended September 30, 2014. The $6.2 million increase was attributable primarily to revenues from new engagements contributing $10.3 million and a $7.1 million net increase in revenues from existing projects, largely offset by $11.2 million in lost revenues as a result of project completion. The revenues for the nine months ended September 30, 2015 increased to $118.9 million, or 16.7% of total revenues, from $105.4 million or 15.6% of total revenues for the nine months ended September 30, 2014. The $13.5 million increase was attributable primarily to revenues from new engagements contributing $24.7 million and a $10.6 million net increase in revenues from existing projects, largely offset by $21.8 million in lost revenues as a result of project completion.

Retail, Logistics and Telecom Cost of Revenues. Retail, Logistics and Telecom, cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Retail, Logistics and Telecom cost of revenues decreased to 53.6% of total Retail, Logistics and Telecom revenues for the three months ended September 30, 2015, from 55.8% for the three months ended September 30, 2014. The 2.2% decrease in cost of revenues, as a percent of revenues for the three months ended September 30, 2015, as compared to the three months ended September 30, 2014, was attributable primarily to rupee depreciation, offset by increases in compensation due to increase in onsite headcount, increased contract cost, increased benefits costs and increased immigration expenses in the third quarter of 2015. Salary increases are discretionary and determined by management.

Cost of revenues for the nine months ended September 30, 2015 increased to 57.5% of Retail, Logistics and Telecom revenues, from 56.3% for the nine months ended September 30, 2014. The 1.2% increase in cost of revenues, as a percent of revenues for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to increases in compensation due to increased onsite headcount and changes in the Company’s salary model, increased contract cost, benefits costs and increased immigration expenses, offset by rupee depreciation and decreased travel expenses due to a decrease in foreign living allowances.

Corporate Direct Costs - Cost of Revenues. Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group, Research and Development, Cloud Computing, and Application Management, are not specifically allocated to specific segments because management believes it is not practical to allocate such

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expenses to individual segments as they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against the Total Gross Profit.

Corporate Direct Costs cost of revenues is constant at 0.5% of total revenue for the three months ended September 30, 2015 and for the three months ended September 30, 2014. The cost is constant primarily due to increase in headcount offset by rupee depreciation in the third quarter of 2015. Salary increases are discretionary and determined by management.

Corporate Direct Cost of revenues decreased to 0.5% of total revenue for the nine months ended September 30, 2015 from 0.6% for the nine months ended September 30, 2014. The 0.1% decrease in cost of revenues, for the nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014, was attributable primarily to rupee depreciation offset by increase in headcount.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses consist primarily of salaries, payroll taxes and benefits for sales, finance, administrative, and corporate staff; travel; telecommunications; business promotions; and marketing and various facility costs for the Company’s global development centers and other offices.

Selling, general, and administrative expenses for the three months ended September 30, 2015 were $15.1 million or 6.0% of total revenues, compared to $26.6 million or 11.6% of total revenues for the three months ended September 30, 2014.

Selling, general and administrative expenses for the three months ended September 30, 2015 were impacted by an increase in revenue of $25.3 million that resulted in a 0.6% decrease in selling, general and administrative expenses as a percentage of total revenue.

The overall decrease in selling, general and administrative expenses was attributable to (a) a decrease in corporate expenses of $10.5 million primarily due to an increase in foreign exchange gain of $10.3 million (a $14.5 million gain for the three months ended September 30, 2015 as against a gain of $4.2 million for the three months ended September 30, 2014) and $0.2 million decrease in legal and professional fees; (b) a decrease in facility related costs of $0.7 million; (c) decrease in marketing expenses of $0.3 million; (d) decrease in immigration expenses of $0.3 million; and (e) a decrease in other expenses of $0.3 million, offset by increase in compensation due to increase in bonus provision and increase in headcount of $0.6 million.

Selling, general, and administrative expenses for the nine months ended September 30, 2015 were $72.2 million or 10.1% of total revenues, compared to $85.1 million or 12.6% of total revenues for the nine months ended September 30, 2014.

Selling, general and administrative expenses for the nine months ended September 30, 2015 were impacted by an increase in revenue of $37.9 million that resulted in a 0.6% decrease in selling, general and administrative expenses as a percentage of total revenue.

The overall decrease in selling, general and administrative expenses was attributable to (a) a decrease in corporate expenses of $11.4 million primarily due to an increase in foreign exchange gain of $14.6 million (a $16.2 million gain for the nine months ended September 30, 2015 as against a gain of $1.6 million for the nine months ended September 30, 2014) offset by an out-of-period accounting adjustment of $3.0 million during the third quarter of 2014 which related to the prior period cumulative impact, arising out of the modification of the accounting treatment adopted by the Company during the third quarter, around certain foreign currency related balance sheet translations, exchange gains or losses on certain forward contracts and the related tax impacts and $0.2 million increase in legal and professional fees; (b) decrease in immigration expenses of $0.6 million; (c) a decrease in compensation due to decrease in headcount of $0.4 million; (d) decrease in marketing expenses of $0.3 million; and (e) a decrease in other expenses of $0.4 million, offset by increase in travel expenses of $0.2 million.

Other Income (Loss), Net. Other income includes interest and dividend income, gains and losses on forward contracts, gain and losses from the sale of securities, other investments, treasury operations and interest expenses on loans and borrowings.

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Other income (loss), net for the three months ended September 30, 2015 was $10.2 million or 4.0% of total revenues, compared to $10.7 million or 4.7% of total revenues for the three months ended September 30, 2014. The decrease in other income of $0.5 million was attributable to a decrease in interest income of $1.8 million, decrease in other miscellaneous income of $1.2 million and decrease in interest on an Income Tax (IT) refund of $0.3 million offset by increase in gains from the sale of mutual funds $2.8 million during the three months ended September 30, 2015 as compared to the three months ended September 30, 2014.

Other income (loss), net for the nine months ended September 30, 2015 was $29.5 million or 4.1% of total revenues, compared to $34.6 million or 5.1% of total revenues for the nine months ended September 30, 2014. The decrease in other income of $5.1 million was attributable to decrease in interest income of $4.2 million, a reduction in forward contract gain of $3.5 million, decrease in other miscellaneous income of $1.2 million and decrease in interest on an Income Tax (IT) refund of $0.3 million and offset by increase in gains from the sale of mutual funds $4.0 million and decrease in interest expenses of $0.1 million during the nine months ended September 30, 2015 as compared to the nine months ended September 30, 2014.

Income Taxes

The Company records provisions for income taxes based on enacted tax laws and rates in the various taxing jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes, when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly, are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or the management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

During the three months ended September 30, 2015 and 2014, the effective income tax rates were 24.3% and 21.6%, respectively. During the nine months ended September 30, 2015 and 2014, the effective income tax rates were 24.0% and 22.0%, respectively. The tax rate for the three months ended September 30, 2015 and 2014 was impacted by higher offshore profits and lower onsite profits, the taxable/nontaxable and onsite/offshore revenue and expense mix, exchange gain.

Other Comprehensive Income (Loss)

The other comprehensive income (loss) consists of foreign currency translation adjustments, gains (losses) on net investment hedge derivatives, unrealized gains (losses) on securities and a component of a defined benefit plan. During the three months ended September 30, 2015 the other comprehensive loss amounted to $35.4 million, primarily attributable to foreign currency translation adjustments of a loss of $34.0 million. During the nine months ended September 30, 2015 the other comprehensive loss amounted to $40.0 million, primarily attributable to foreign currency translation adjustments of a loss of $39.9 million.

During the three months ended September 30, 2014 the other comprehensive loss amounted to $20.7 million primarily attributable to foreign currency translation adjustments of a loss $22.9 million . During the nine months ended September 30, 2014 the other comprehensive gain amounted to $0.1 million, primarily attributable to foreign currency translation adjustments of a loss of $5.0 million , which includes an out-of-period adjustment of $3.0 million, related to the past period cumulative impact, arising out of the modification of the accounting treatment adopted by the Company during the second quarter, around certain foreign currency related balance sheet translations, exchange gains or losses on certain forward contracts and the related tax impacts, partially offset by unrealized holding gain on securities of $5.1 million.

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FINANCIAL POSITION

Cash and Cash Equivalents: Cash and Cash equivalents increased to $476.9 million at September 30, 2015 from $221.5 million at September 30, 2014.

LIQUIDITY AND CAPITAL RESOURCES

During 2014, the Company’s Board of Directors authorized a two-for-one stock split of its outstanding common shares. On November 3, 2014, an additional common share was issued for each existing common share held by shareholders of record on October 20, 2014. Accordingly, all share and per share amounts for all periods presented in these condensed consolidated financial statements and notes thereto, have been adjusted retroactively, where applicable, to reflect this stock split.

The Company generally has financed its working capital needs through operations. The Mumbai, Chennai, Pune (India) and other expansion programs are financed from internally generated funds. The Company’s cash and cash equivalents consist primarily of certificates of deposit and treasury notes. These amounts are held by various banking institutions including U.S.-based and India-based banks. As of September 30, 2015, the total cash and cash equivalents and short term investment balances was $980.5 million. Out of the above, an amount of $923.66 million was held by Indian subsidiaries which was composed of an amount of $542 million held in U.S. dollars with the balance of the amount held in Indian rupees. The Company believes that the amount of cash and cash equivalents outside the U.S. will not have a material impact on liquidity.

Net cash provided by operating activities was $155.92 million for the nine months ended September 30, 2015, consisting principally of increase in net income and increase in other liabilities, offset by increase in accounts receivable, other assets. The number of days sales outstanding in net accounts receivable was approximately 56 days and 54 days as of September 30, 2015 and 2014, respectively. The increase in the number of day’s sales outstanding in net accounts receivable was due to higher collections during the corresponding period in 2014.

Net cash provided by investing activities was $145.58 million for the nine months ended September 30, 2015, consisting principally of $188.56 million from sales of mutual funds, $334.1 million from maturities of term deposits with banks; offset by $13.68 million of capital expenditures primarily for the construction/acquisition of the Global Development Center at Pune, the Knowledge Process Outsourcing facility at Mumbai and an additional facility in Chennai, the acquisition of computers, software and communications equipment, purchase of mutual funds of $74.86 million and the purchase of term deposits with banks of $288.56 million.

Net cash used in financing activities was $6.31 million for the nine months ended September 30, 2015 consisting principally of a scheduled quarterly repayment of a loan $6.38 million and borrowing, which is partially offset by excess tax benefits on stock-based compensation plan of $0.07 million.

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three-year revolving credit facility of $90 million. The maturity date of both the three year term loan facility and the three year revolving credit facility is May 23, 2016. The Credit Agreement is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the credit facilities, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to the loans incurred under the Credit Agreement are (a) with respect to Revolving Loans, (i) the Eurodollar Rate plus 1.25% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.25% with respect to Base Rate Loans, and (b) with respect to the Term Loan, (i) the Eurodollar Rate plus 1.50% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.50% with respect to Base Rate Loans (each as defined in the Credit Agreement).

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As of September 30, 2015, the interest rate was 1.58% for the three year revolving credit facility and was 1.83% for the three year term loan facility.

With the interest rate charged on the credit facilities being variable, the fair value of the credit facilities approximates their reported value as of September 30, 2015, as it reflects the current market value.

Principal payments on the term loan are due every quarter. During the three months ended September 30, 2015, a principal payment of $ 2.25 million was made. The related Credit Agreement requires compliance with certain financial ratios and covenants. As of September 30, 2015, the Company was in compliance with all debt covenants.

As of September 30, 2015 the outstanding balances of the term loan and line of credit, including interest, were $42.08 million and $90.14 million, respectively.

Future scheduled payments on the three-year revolving credit facility and term loan, at September 30, 2015 are as follows:

	Term Loan		Revolving Credit Facility
	(In thousands)
2015	$	2,250	$	—
2016	$	39,750	$	90,000

The Company believes that the combination of present cash and short-term investment balances and future operating cash flows will be sufficient to meet the Company’s currently anticipated cash requirements for at least the next 12 months.

CRITICAL ACCOUNTING POLICIES

We believe the following critical accounting policies, among others, involve the more significant judgments and estimates used in the preparation of our consolidated financial statements. The Company has discussed this critical accounting policy and the estimates with the Audit Committee of the Board of Directors.

Revenue Recognition. Revenue recognition is the most significant accounting policy for the Company. The Company recognizes revenue from time and material contracts as services are performed. During the three months ended September 30, 2015 and 2014 revenues from time and material contracts constituted 60% and 62%, respectively, of total revenues. Revenue from fixed-price, application management, maintenance and support engagements is recognized as earned, which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagement. During the three months ended September 30, 2015 and 2014, revenues from fixed price application management and support engagements constituted 32% and 29% of total revenues, respectively.

Revenue on fixed price application development and integration projects is measured using the proportional performance method of accounting. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts required through the completion of the contract. The Company monitors estimates of total contract revenues and cost on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the change becomes known. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss. The Company issues invoices related to fixed price contracts based on either the achievement of milestones during a project or other contractual terms. Differences between the timing of billings and the recognition of revenue based upon the proportional performance method of

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accounting are recorded as revenue earned in excess of billings or deferred revenue in the accompanying financial statements. During the three months ended September 30, 2015 and 2014, revenues from fixed price application development and integration contracts constituted 8% and 9% of total revenues, respectively.

Significant Accounting Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. The Company bases its estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

Revenue Recognition. The use of the proportional performance method of accounting requires that the Company make estimates about its future efforts and costs relative to its fixed price contracts. While the Company has procedures in place to monitor the estimates throughout the performance period, such estimates are subject to change as each contract progresses. The cumulative impact of any such change is reflected in the period in which the change becomes known.

Allowance for Doubtful Accounts. The Company records an allowance for doubtful accounts based on a specific review of aged receivables. As of September 30, 2015 and December 31, 2014, the allowance for doubtful accounts was $0.6 million and 0.7 million respectively. The provision for the allowance for doubtful accounts is recorded in selling, general and administrative expenses. These estimates are based on our assessment of the probable collection from specific client accounts, the aging of the accounts receivable, analysis of credit data, bad debt write-offs and other known factors.

Income Taxes–Estimates of Effective Tax Rates and Reserves for Tax Contingencies. The Company records provisions for income taxes based on enacted tax laws and rates in the various taxing jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes, when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

Accruals for Legal Expenses and Exposures. The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. The Company has not accrued any liability for legal contingencies as no legal contingency has been deemed to be probable of occurring. The Company’s estimates regarding legal contingencies are based on information known about the matters and its experience in contesting, litigating and settling similar matters. It is the opinion of management with respect to pending or threatened litigation matters that unfavorable outcomes are remote and that estimates of possible loss are not able to be made. Although actual amounts could differ from management’s estimates, none of the actions are believed by management to involve future amounts that would be material to the Company’s financial position or results of operations.

The Company estimates the costs associated with known legal exposures and their related legal expenses and accrues reserves for either the probable liability, if that amount can be reasonably estimated, or otherwise the lower end of an

43

estimated range of potential liability. As of September 30, 2015 there was no accrual related to litigation. As of December 31, 2014, the Company had recorded $ 0.35 million, as an accrual towards liability for a customer claim related contingency. During the three months ended March 31, 2015, the Company settled the customer claim without admitting liability and the amount accrued was paid out.

Undistributed earnings of foreign subsidiaries. The Company intends to use accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and accordingly undistributed earnings of foreign subsidiaries are considered to be indefinitely reinvested outside the United States and no provision for U.S. federal and state income tax or applicable dividend distribution tax has been provided thereon.

FORWARD LOOKING STATEMENTS

Certain statements and information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this report, including the allowance for doubtful accounts, contingencies and litigation, potential tax liabilities, interest rate or foreign currency risks, and projections regarding our liquidity and capital resources, could be construed as forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements containing words such as “could”, “expects”, “may”, “anticipates”, “believes”, “estimates”, “plans”, and similar expressions. In addition, the Company or persons acting on its behalf may, from time to time, publish other forward looking statements. Such forward looking statements are based on management’s estimates, assumptions and projections and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward looking statements.

Although management believes that the expectations, forecasts and goals reflected in these forward-looking statements are reasonable, actual results could differ materially for a variety of reasons, including, without limitation, the risks and uncertainties detailed in “Item 1A. Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flows, financial position and prospects. There can be no assurance that future results will meet expectations. While we believe that the forward-looking statements in this Quarterly Report on Form 10-Q are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. We do not undertake, and expressly disclaim any obligation to update or alter any statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Goodwill

During the first quarter of year 2014, as a result of the completion of organizational changes, the Company changed its basis of segmentation to vertical segments. The company reassigned goodwill to the new reportable segment Healthcare and Life Sciences.

In accordance with guidance on goodwill impairment in the FASB Codification, goodwill is evaluated for impairment at least annually. Management believes goodwill was not impaired at September 30, 2015.

44

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to the impact of interest rate changes and foreign currency fluctuations.

Interest Rate Risk

The Company considers investments purchased with an original maturity of less than three months at date of purchase to be cash equivalents. The following table summarizes the Company’s cash and cash equivalents and investments in marketable securities:

	September 30,		December 31,
ASSETS	2015		2014
	(in thousands)
Cash and cash equivalents	$	476,904	$	197,708
Short-term investments		503,587		669,353
Total	$	980,491	$	867,061

As at September 30, 2015, the total cash and cash equivalents and short-term investment balance was $980.5 million. Out of the above, an amount of $923.7 million was held by Indian subsidiaries which were comprised of an amount of $542 million held in U.S. dollars with the balance of the amount held in Indian rupees. The Company believes that the amount of cash and cash equivalents outside the U.S. will not have a material impact on liquidity.

The Company’s exposure to market rate risk for changes in interest rates relates primarily to its investment portfolio. The Company does not use derivative financial instruments in its investment portfolio. The Company’s investments are in high-quality Indian Mutual Funds and, by policy, limit the amount of credit exposure to any one issuer. At any time, changes in interest rates could have a material impact on interest earnings for our investment portfolio. The Company strives to protect and preserve our invested funds by limiting default, market and reinvestment risk. Investments in interest earning instruments carry a degree of interest rate risk. Floating rate securities may produce less income than expected if there is a decline in interest rates. Due in part to these factors, the Company’s future investment income may fall short of expectations, or the Company may suffer a loss in principal if the Company is forced to sell securities, which have declined in market value due to changes in interest rates as stated above.

The currency composition of the investment portfolio also impacts the investment income generated by the Company. Investment income generated from the Indian rupee denominated investment portfolio is higher than that generated by the U.S. dollar denominated investment portfolio. As at September 30, 2015 and December 31, 2014, the Company held 39% and 61% of total funds in Indian rupees.

Foreign Currency Risk

The Company’s sales are primarily sourced in the United States of America and its subsidiary in the United Kingdom and are mostly denominated in U.S. dollars or UK pounds, respectively. Its foreign subsidiaries, primarily Indian entities, incur most of their expenses in the local currency, i.e. Indian rupees. All foreign subsidiaries use the local currency as their functional currency. The Company’s business is subject to risks typical of an international business, including, but not limited to differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. Accordingly, the Company’s future results could be materially adversely impacted by changes in these or other factors. The risk is partially mitigated as the Company has sufficient resources in the respective local currencies to meet immediate requirements. The Company is also exposed to foreign exchange rate fluctuations as the financial results of foreign subsidiaries are translated into U.S. dollars in consolidation. As exchange rates vary, these results, when translated, may vary from expectations.

45

During the three months ended September 30, 2015, the Indian rupee has depreciated against the U.S. dollar, on average, 2.64% as compared to the three months ended June 30, 2015. This rupee depreciation positively impacted the Company’s gross margin by 41 basis points, operating income by 66 basis points and net income by 67 basis points, each as a percentage of revenue. The Indian rupee denominated cost of revenues and selling, general and administrative expense was 28.1% and 82.2% of the expenses, respectively.

The rupee depreciation has also resulted in foreign currency translation adjustments of $34 million, during the three months ended September 30, 2015, which has been reported as other comprehensive income(loss).

Although the Company cannot predict future movement in interest rates or fluctuations in foreign currency rates, the Company currently anticipates that interest rate risk or foreign currency risk may have a significant impact on the financial statements. In order to limit the exposure to fluctuations in foreign currency rates, when the Company enters into foreign exchange forward contracts, where the counter party is a bank, these contracts may have a material impact on the financial statements.

During the quarter ended September 30, 2015, the Company did not enter into new foreign exchange forward contracts. At September 30, 2015, no foreign exchange forward contracts were outstanding.

46

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s principal executive officers (the Chairman of the Board, Chief Executive Officer and Chief Financial Officer), the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934) as of the end of the period covered by this report. Based on that evaluation, the principal executive officers have concluded that the Company’s disclosure controls and procedures were effective, at a reasonable assurance level, as of the end of the period covered by this report.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). We maintain internal control over financial reporting designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, internal control over financial reporting determined to be effective provides only reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

47

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

While the Company is a party to ordinary routine litigation incidental to the business, the Company is not currently a party to any material legal proceeding or governmental investigation. In the opinion of our management, the outcome of such litigation, if decided adversely, is not expected to have a material adverse effect on our quarterly or annual operating results, cash flows or consolidated financial position.

Item 1A. Risk Factors.

There have been no material changes in the Company’s risk factors as disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2014, except as described below.

As previously disclosed in the Company’s Form 8-K dated September 30, 2015, effective October 1, 2015, Syntel, Inc. (“Syntel”), State Street Syntel Services Private Limited (“S4PL”) and State Street Bank and Trust Company (“State Street”) entered into an Amendment of a Master Services Agreement (“Amended MSA”) modifying the existing Master Services Agreement with respect to KPO services that are and may be provided by S4PL to State Street and its affiliates under a joint venture which was created by a Shareholders Agreement between a State Street affiliate, Syntel, and certain Syntel affiliates. The Amended MSA extends the period for providing such services through September 30, 2020. As a result, the third paragraph of the risk factor entitled “The Company’s business could be materially adversely affected if one of the Company’s significant clients terminates its engagement of the Company or if there is a downturn in one of the industries the Company serves” in the Company’s Form 10-K for the year ended December 31, 2014 is amended and restated in its entirety as set forth below.

In addition, the Company’s KPO services to State Street Bank and Trust Company and its affiliate are provided through a joint venture between the Company and State Street Bank Trust and its affiliate. Sales of KPO services only to State Street Bank and Trust Company and its affiliate represented approximately 13%, 14% and 15% of the Company’s total revenues for the years ended December 31, 2014, 2013 and 2012, respectively. The current master agreement under which the Company is able to provide KPO services to State Street Bank and Trust Company and its affiliate appoints the Company as an authorized provider but does not require that the clients use the Company for KPO services. KPO services are ordered through separate work orders as may be agreed to by the clients and the Company from time to time. The master agreement is terminable on short notice, has no minimum volume commitments and, has an initial expiration date of September 30, 2020 with the ability to extend by mutual consent for an additional one-year term. The State Street Bank and Trust Company, through a separate shareholders agreement between its affiliate and the Company, has the right to purchase the Company’s interest in the joint venture at an agreed upon formula price. This purchase right is exercisable by the affiliate (i) during the 30-day period beginning on the first business day of the 90-day period prior to the expiration of the initial term of the master agreement (September 30, 2020) or the expiration of the renewal term (September 30, 2021), (ii) in the event that State Street Bank and Trust Company or its affiliate terminates the master agreement due to the Company’s change in control, insolvency, inadequate financial resources or material breach of the master agreement or the shareholders agreement, (iii) if the State Street Bank and Trust Company and its affiliates suffers certain cumulative losses under the master agreement that exceed $25 million, or (iv) if the master agreement is required by law or regulation to be terminated. The exercise of this purchase right would have the effect of terminating the Company’s ability to provide KPO services to State Street Bank and Trust Company and its affiliate and transferring some related KPO professionals and assets to the State Street Bank and Trust Company. The State Street Bank and Trust Company’s exercise of the purchase right under the shareholders agreement could have a material adverse effect on the Company’s business, results of operations and financial condition.

48

Item 6. Exhibits.

The Company’s Chairman shares certain principal executive officer responsibilities with the Company’s Chief Executive Officer and President. Therefore, in accordance with Rule 13a-14(a)/Rule 15d-14(a), both the Chairman and the Chief Executive Officer and President sign a 302 certification and the 906 certification as principal executive officers.

Exhibits

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.3	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32	Section 1350 Certification of Principal Executive Officers and Principal Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

49

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SYNTEL, INC.
Date : November 4, 2015	/s/ Nitin Rakesh
	Nitin Rakesh,
	Chief Executive Officer and President (principal executive officer)
Date : November 4, 2015	/s/ Arvind Godbole
	Arvind Godbole,
	Chief Financial Officer and Chief Information Security Officer
	(principal financial officer and principal accounting officer)

50

EXHIBIT INDEX

Exhibit No.	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.3	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32	Section 1350 Certification of Principal Executive Officers and Principal Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

51

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Nitin Rakesh, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Syntel, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date : November 4 , 2015

/s/ Nitin Rakesh

Nitin Rakesh,

Chief Executive Officer and President

(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bharat Desai, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Syntel, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date : November 4, 2015

/s/ Bharat Desai

Bharat Desai, Chairman

(principal executive officer)

EX-31.3

EXHIBIT 31.3

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Arvind Godbole, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Syntel, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date : November 4, 2015

/s/ Arvind Godbole

Arvind Godbole,

Chief Financial Officer &

Chief Information Security Officer.

(principal financial officer and principal accounting officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Syntel, Inc. (the “Company”) on Form 10-Q for the period ending September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Bharat Desai, Chairman of the Company, Nitin Rakesh, Chief Executive Officer and President of the Company and Arvind Godbole, Chief Financial Officer & Chief Information Security Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Bharat Desai

Bharat Desai

Syntel, Inc. Chairman

(principal executive officer)

November 4, 2015

/s/ Nitin Rakesh

Nitin Rakesh

Syntel, Inc. Chief Executive Officer and President

(principal executive officer)

November 4, 2015

/s/ Arvind Godbole

Arvind Godbole

Syntel, Inc. Chief Financial Officer &

Chief Information Security Officer

(principal financial officer and principal accounting officer)

November 4, 2015

XML

STOCK BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2015

Stock-Based Compensation Impact on Company's Operations

The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock unit) for the three and nine months ended September 30, 2015 and 2014 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Cost of revenues	$	586	$	573	$	1,830	$	1,505
Selling, general and administrative expenses		1,104		1,033		3,274		3,114
	$	1,690	$	1,606	$	5,104	$	4,619

Summary of Activity for Restricted Stock Unit Awards Granted

A summary of the activity for restricted stock unit awards (adjusted to reflect the stock split) granted under our stock-based compensation plans as of September 30, 2015 and changes during the period ended is presented below:

	Nine Months Ended September 30, 2015					2014
	Number Of Awards			Weighted Average Grant Date Fair Value		Number Of Awards			Weighted Average Grant Date Fair Value
Unvested at January 1		564,314		$	37.37		501,292		$	28.64
Granted		18,840		$	46.13		293,904		$	42.79
Vested		(143,704	)	$	35.63		(227,882	)	$	25.03
Forfeited		(25,681	)	$	35.86		(3,000	)	$	44.90
Unvested at September 30		413,769			38.47		564,314		$	37.37

XML

Computation of Earnings Per Share (Detail) - $ / shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Earnings Per Share Basic And Diluted [Line Items]
Basic earnings per share, Weighted Average Shares	84,005	83,832	83,950	83,748
Potential dilutive effect of restricted stock options outstanding, Weighted Average Shares	126	136	181	194
Diluted earnings per share, Weighted Average Shares	84,131	83,968	84,131	83,942
Basic earnings per share, Earnings per Share	$ 0.92	$ 0.73	$ 2.12	$ 2.14
Potential dilutive effect of restricted stock options outstanding, Earnings per Share	0	0	0.00	(0.01)
Diluted earnings per share, Earnings per Share	$ 0.92	$ 0.73	$ 2.12	$ 2.13

XML

Cash and Cash Equivalents and Short Term Investments - Additional Information (Detail) - USD ($)	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalent and short term investments	$ 980,500,000
Money market fund	0	$ 30,300,000
Term deposits	$ 409,100,000	466,600,000
Term deposits, maximum maturity period (in months)	3 months
Cash and cash equivalents	$ 368,900,000
Fixed Maturity Plans (FMPs) of mutual funds, at cost	0	15,886,000
Non current term deposits with banks	80,000	110,000
Bank of America
Restricted Cash and Cash Equivalents Items [Line Items]
Term deposits	30,200,000
Punjab National Bank and Bank of India
Restricted Cash and Cash Equivalents Items [Line Items]
Term deposits	108,000,000	13,000,000
Restricted Deposits
Restricted Cash and Cash Equivalents Items [Line Items]
Term deposits	1,250,000	$ 530,000
Indian Subsidiaries
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalent and short term investments	923,700,000
Indian Subsidiaries | Us Dollar Denominated
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalent and short term investments	542,000,000
Indian Subsidiaries | Indian Rupee
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalent and short term investments	$ 381,700,000

XML

Reclassifications - Additional Information (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Subsidiary, Sale of Stock [Line Items]
Stock split	Two-for-one stock split
Stock split conversion ratio	2	2

XML

Financial Data for Each Segment (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Quarterly Financial Data [Line Items]
Net revenues	[1]	$ 253,636	$ 228,332	$ 714,032	$ 676,105
Corporate Direct cost		(1,205)	(1,205)	(3,910)	(3,955)
Gross Profit		107,575	94,528	277,482	280,099
Selling, general and administrative expenses		15,121	26,566	72,231	85,108
Income from operations		92,454	67,962	205,251	194,991
Banking and Financial Services
Quarterly Financial Data [Line Items]
Net revenues		125,779	115,454	346,952	336,495
Healthcare and Life Sciences
Quarterly Financial Data [Line Items]
Net revenues		42,595	35,834	116,341	113,091
Insurance
Quarterly Financial Data [Line Items]
Net revenues		32,692	35,002	102,058	101,219
Manufacturing
Quarterly Financial Data [Line Items]
Net revenues		11,239	6,989	29,760	19,890
Retail, Logistics & Telecom
Quarterly Financial Data [Line Items]
Net revenues		41,331	35,053	118,921	105,410
Operating Segments
Quarterly Financial Data [Line Items]
Gross Profit		108,780	95,733	281,392	284,054
Operating Segments | Banking and Financial Services
Quarterly Financial Data [Line Items]
Gross Profit		52,177	48,509	134,933	141,810
Operating Segments | Healthcare and Life Sciences
Quarterly Financial Data [Line Items]
Gross Profit		20,312	16,405	49,573	52,935
Operating Segments | Insurance
Quarterly Financial Data [Line Items]
Gross Profit		13,151	13,088	37,150	37,252
Operating Segments | Manufacturing
Quarterly Financial Data [Line Items]
Gross Profit		3,979	2,232	9,250	5,991
Operating Segments | Retail, Logistics & Telecom
Quarterly Financial Data [Line Items]
Gross Profit		$ 19,161	$ 15,499	$ 50,486	$ 46,066

[1] Net revenues are attributed to regions based upon customer location.

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Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gains (losses) on available for sale securities, Before tax amount	$ 1,477	$ 3,684	$ 4,769	$ 8,270
Unrealized gains (losses) on available for sale securities, Tax expense (benefit)	643	(619)	(184)	(527)
Amortization of prior service cost included in net periodic pension cost, Before tax amount	37	12	96	21
Direct Cost
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amortization of prior service cost included in net periodic pension cost, Before tax amount	37		96	21
Amortization of prior service cost included in net periodic pension cost, Tax expense (benefit)	(13)	(4)	(26)	(7)
Amortization of prior service cost included in net periodic pension cost, Net of tax	24	(4)	70	14
Other Income
Accumulated Other Comprehensive Income (Loss) [Line Items]
Unrealized gains (losses) on available for sale securities, Before tax amount	(3,341)	(840)	(4,360)	(3,207)
Unrealized gains (losses) on available for sale securities, Tax expense (benefit)	1,154	213	1,498	936
Unrealized gains (losses) on available for sale securities, Net of tax	$ (2,187)	$ (627)	$ (2,862)	$ (2,271)

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CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Summary of Short-term Investments

The following table summarizes short-term investments as at September 30, 2015 and December 31, 2014:

	2015 September 30		2014 December 31
	(In thousands)
Investments in mutual funds at fair value	$	94,503	$	186,842
Term deposits with banks		409,084		466,625
Fixed Maturity Plans (FMPs) of mutual funds, at cost		—		15,886
Total	$	503,587	$	669,353

Investments in Held-to-Maturity Securities

Held to Maturity Securities

Investments in held-to-maturity securities (“HTM”) of the Company consist of investments in the units of FMPs of mutual funds in Indian subsidiaries.

Description	As of September 30, 2015		As of December 31, 2014
(In thousands)
Aggregate fair value of the investment	$	—	$	16,612
Less: Gross unrecognized holding gain	$	—		726
Net carrying amount	$	—	$	15,886

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Net Revenues and Long Lived Assets by Geographic Area (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Segment Reporting Information [Line Items]
Net revenues	[1]	$ 253,636	$ 228,332	$ 714,032	$ 676,105
Long-lived assets	[2]	108,210		108,210		$ 109,957
North America
Segment Reporting Information [Line Items]
Net revenues	[1],[3]	229,312	207,541	645,121	614,921
Long-lived assets	[2],[3]	3,477		3,477		2,645
India
Segment Reporting Information [Line Items]
Net revenues	[1]	1,156	589	2,624	1,505
Long-lived assets	[2]	103,556		103,556		105,949
Europe
Segment Reporting Information [Line Items]
Net revenues	[1],[4]	22,672	19,146	64,225	56,635
Long-lived assets	[2],[4]	60		60		71
Rest of the World
Segment Reporting Information [Line Items]
Net revenues	[1]	496	$ 1,056	2,062	$ 3,044
Long-lived assets	[2]	$ 1,117		$ 1,117		$ 1,292

[1] Net revenues are attributed to regions based upon customer location.

[2] Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and goodwill.

[3] Primarily relates to operations in the United States.

[4] Primarily relates to operations in the United Kingdom.

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CONSOLIDATION OF A VARIABLE INTEREST ENTITY

9 Months Ended

Sep. 30, 2015

CONSOLIDATION OF A VARIABLE INTEREST ENTITY

19. CONSOLIDATION OF A VARIABLE INTEREST ENTITY

Syntel Delaware is a 100% subsidiary of Syntel, Inc. and a 49% shareholder of the joint venture (“JV”) entity SSSSML, the other shareholder being an affiliate of State Street Bank. Syntel Delaware has a variable interest in SSSSML as it is entitled to all the profits and solely responsible for all losses incurred by SSSSML even though it holds only 49% in the JV entity. Accordingly, Syntel Delaware consolidates the JV entity SSSSML.

The Company’s Banking and Financial Services to State Street Bank and one other client are provided through the above joint venture between the Company and an affiliate of State Street Bank. Sales of Banking and Financial Services to these two clients represented approximately 11.6% and 12.7% of the Company’s total revenues for the three months ended September 30, 2015 and 2014, respectively and 12.0% and 13.0% for the nine months ended September 30, 2015 and 2014, respectively.

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Investments in Held-to-Maturity Securities (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2014	Sep. 30, 2015
Schedule of Held-to-maturity Securities [Line Items]
Aggregate fair value of the investment	$ 16,612,000
Less: Gross unrecognized holding gain	726,000
Net carrying amount	$ 15,886,000	$ 0

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Derivative Instruments - Additional Information (Detail) - Foreign Exchange Forward - Derivative	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Derivative Instruments, Gain (Loss) [Line Items]
Foreign exchange forward contracts entered	0
Foreign exchange forward contracts outstanding	0	0

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GEOGRAPHIC INFORMATION (Tables)

9 Months Ended

Sep. 30, 2015

Net Revenues and Long-Lived Assets by Geographic Area

The Company’s net revenues and long-lived assets, by geographic area, are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Net Revenues (1)
North America (2)	$	229,312	$	207,541	$	645,121	$	614,921
India		1,156		589		2,624		1,505
Europe (3)		22,672		19,146		64,225		56,635
Rest of the World		496		1,056		2,062		3,044
Total revenue	$	253,636	$	228,332	$	714,032	$	676,105

	As of September 30		As of December, 31
	2015		2014
	(in thousands)
Long-Lived Assets (4)
North America (2)	$	3,477	$	2,645
India		103,556		105,949
Europe (3)		60		71
Rest of the world		1,117		1,292
Total	$	108,210	$	109,957

Notes for the Geographic Information Disclosure:

1. Net revenues are attributed to regions based upon customer location.

2. Primarily relates to operations in the United States.

3. Primarily relates to operations in the United Kingdom.

4. Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and goodwill.

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Future Scheduled Payments on Line of Credit and Term Loan (Detail) $ in Thousands	Sep. 30, 2015 USD ($)
Term Loan
Schedule Of Debt Instruments [Line Items]
Line of credit and term loan, future schedule payment 2015	$ 2,250
Line of credit and term loan, future schedule payment 2016	39,750
Revolving Credit Facility
Schedule Of Debt Instruments [Line Items]
Line of credit and term loan, future schedule payment 2016	$ 90,000

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Consolidation of Variable Interest Entity - Additional Information (Detail) - Person	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
State Street Bank | Banking and Financial Services
Revenue, Major Customer [Line Items]
Number of clients			2
Sales Revenue, Net | Customer Concentration Risk | State Street Bank
Revenue, Major Customer [Line Items]
Concentration of sales by customer	10.00%		10.00%
Sales Revenue, Net | Customer Concentration Risk | State Street Bank | Banking and Financial Services
Revenue, Major Customer [Line Items]
Concentration of sales by customer	11.60%	12.70%	12.00%	13.00%
Syntel Delaware
Revenue, Major Customer [Line Items]
Ownership percentage in subsidiary	100.00%		100.00%
SSSSML
Revenue, Major Customer [Line Items]
Ownership percentage in subsidiary	49.00%		49.00%

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Loss Contingencies [Line Items]
Commitments for capital expenditure	$ 32,000,000	$ 31,800,000
Accrual related to litigation	$ 0	$ 350,000

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Total Tax Expense on Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Components of Taxes Other Than Income [Line Items]
Foreign currency translation adjustments	$ (169)	$ (125)	$ (362)	$ (140)
Tax benefit (expense) on unrealized gains (losses) on securities	643	(619)	(184)	(527)
Tax benefit (expense) on defined benefit pension plans	(13)	(4)	(26)	(7)
Total tax benefit (expense) on other comprehensive income (loss)	$ 461	$ (748)	$ (572)	$ (674)

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USE OF ESTIMATES

9 Months Ended

Sep. 30, 2015

USE OF ESTIMATES

3. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, the allowance for doubtful accounts, impairment of long-lived assets and goodwill, contingencies and litigation, the recognition of revenues and profits based on the proportional performance method, potential tax liabilities and bonus accrual. Actual results could differ from those estimates and assumptions used in the preparation of the accompanying financial statements.

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Stock Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Jun. 01, 2006
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Restricted stock-based compensation expense	$ 1,690	$ 1,606	$ 5,104	$ 4,619
Restricted stock unit, unrecognized stock-based compensation cost	$ 12,640		$ 12,640
Restricted stock unit, weighted-average remaining requisite service period			2 years 1 month 6 days
25% of the shares issued
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Incentive restricted stock unit issued			18,840		293,904	187,056	217,656	182,728	418,716
Shares granted exercise price	$ 0		$ 0		$ 0	$ 0	$ 0	$ 0	$ 0
Percentage of shares vested			25.00%		25.00%	25.00%	25.00%	25.00%	25.00%
Employee Stock Option
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Common stock reserved for issuance										16,000,000
Options granted vesting period			4 years
Stock option issued	0	0
Employee Stock Option | Maximum
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Options granted vesting period			10 years

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Net Gains Recorded in Other Income and Consolidated Statements of Income (Expense), Net Relating to Foreign Exchange Contracts Not Designated as Hedges (Detail) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2014
Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Gains recognized in other income, net	$ 43	$ 3,499

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RECLASSIFICATIONS

9 Months Ended

Sep. 30, 2015

RECLASSIFICATIONS

23. RECLASSIFICATIONS

Certain amounts in previously issued consolidated financial statements have been reclassified to conform to the current period presentation. Reclassifications of prior period share and per-share amounts due to the two-for-one stock split that was effective on November 3, 2014 are effected to conform to the current period presentation.

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RECENT ACCOUNTING PRONOUNCEMENTS

9 Months Ended

Sep. 30, 2015

RECENT ACCOUNTING PRONOUNCEMENTS

22. RECENT ACCOUNTING PRONOUNCEMENTS

ASU 2014-09, Revenue from Contracts with Customers – Issued May 2014, was scheduled to be effective for Syntel beginning January 1, 2017, however on July, 9 2015, the FASB approved the proposal to defer the effective date of the ASU for public companies to January 1, 2018 with an option to elect to adopt the ASU as of original effective date. The new standard is intended to substantially enhance the quality and consistency of how revenue is reported while also improving the comparability of the financial statements of companies using U.S. generally accepted accounting principles (GAAP) and those using International Financial Reporting Standards (IFRS). The core principle of ASU 2014-09 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The new guidance also addresses the accounting for some costs to obtain or fulfill a customer contract and provides a set of disclosure requirements intended to give financial statement users comprehensive information about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts. The requirements of this ASU and its impact on the Company are being evaluated.

ASU 2015-05, Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (Subtopic 350-40) Issued April 2015; will be effective for Syntel beginning January 1, 2016 with early adoption permitted. This ASU provides guidance to help entities in evaluating the accounting for fees paid by a customer in a cloud computing arrangement.

The new guidelines provide guidance on, how customers should evaluate whether such arrangements contain a software license that should be accounted for separately. Customers will need to apply the same criteria as vendors to determine whether the arrangement contains a software license or is solely a service contract. The requirements of this ASU and its impact on the Company are being evaluated.

ASU 2015-01, Income Statement – Extraordinary and Unusual Items (Subtopic 225-20), Issued January 2015; will be effective for Syntel beginning January 1, 2016. The new standard is to simplify the income statement presentation requirements by eliminating the concept of extraordinary items from U.S. generally accepted accounting principles (GAAP) and also improving the comparability of the financial statements of companies using GAAP and those using International Financial Reporting Standards (IFRS).

The new guidance also addresses, transactions that are both unusual in nature and infrequently occurring which should be presented within income from continuing operations or disclosed in notes to financial statements because those items satisfy the conditions for an item that is unusual in nature or infrequently occurring. The adoption of Accounting Standards Update 2015-01 will not have any significant impact on the Company’s financial statement presentation or disclosures.

In April 2015, the FASB issued a standard related to the presentation of debt issuance costs. The standard requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by this standard. The amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning on or after January 1, 2016. The adoption of this standard will affect financial statement presentation only and is expected to have no effect on our financial condition or results of operations.

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Segment Reporting - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer	[1]	$ 253,636	$ 228,332	$ 714,032	$ 676,105
American Express Corp.
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer		$ 53,700	$ 51,300	$ 147,700	$ 147,500
Percent of total consolidated revenues from customer		21.20%	22.50%	20.70%	21.80%
Accounts receivable from customer		$ 21,700		$ 21,700		$ 19,000
State Street Bank
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer		$ 38,100	$ 31,200	$ 102,900	$ 94,900
Percent of total consolidated revenues from customer		15.00%	13.70%	14.40%	14.00%
Accounts receivable from customer		$ 17,100		$ 17,100		11,300
Federal Express Corp.
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer		$ 30,400	$ 25,400	$ 89,200	$ 76,400
Percent of total consolidated revenues from customer		12.00%	11.10%	12.50%	11.30%
Accounts receivable from customer		$ 12,800		$ 12,800		$ 14,300
Sales Revenue, Net | Customer Concentration Risk | American Express Corp.
Revenue, Major Customer [Line Items]
Concentration of sales by customer		10.00%		10.00%
Sales Revenue, Net | Customer Concentration Risk | State Street Bank
Revenue, Major Customer [Line Items]
Concentration of sales by customer		10.00%		10.00%
Sales Revenue, Net | Customer Concentration Risk | Federal Express Corp.
Revenue, Major Customer [Line Items]
Concentration of sales by customer		10.00%		10.00%

[1] Net revenues are attributed to regions based upon customer location.

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Net Gains (Losses) Recorded in Accumulated Other Comprehensive Income (Loss) Relating to Foreign Exchange Contracts Designated as Net Investment Hedges (Detail) $ in Thousands	9 Months Ended
	Sep. 30, 2014 USD ($)
Designated as Hedging Instrument
Derivative [Line Items]
Gains recognized in other comprehensive income (loss)	$ 724	[1]

[1] For and up to three months ended March 31, 2014

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DERIVATIVE INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Net Gains Recorded in Other Income and Consolidated Statements of Income (Expense), Net Relating to Foreign Exchange Contracts Not Designated as Hedges

The following table presents the net gains recorded in ‘other income, net’ relating to the foreign exchange contracts not designated as hedges for the periods ending September 30, 2015 and 2014.

Gains Recognized in Other Income:

	THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Gains recognized in other income, net		—	$	43		—	$	3,499

Net Gains (Losses) Recorded in Accumulated Other Comprehensive Income (Loss) Relating to Foreign Exchange Contracts Designated as Net Investment Hedges

The following table presents the net gains recorded in accumulated other comprehensive income relating to the foreign exchange contracts designated as net investment hedges for the periods ending September 30, 2015 and 2014.

Gains on Derivatives:

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Gains recognized in other comprehensive income (loss)		—	$	—		—	$	724	*

* For and up to three months ended March 31, 2014

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT) (Tables)

9 Months Ended

Sep. 30, 2015

Change in Balances of Accumulated Other Comprehensive Income (Loss)

The change in balances of accumulated other comprehensive income (loss) for the three months ended September 30, 2015 is as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(195,523	)	$	6,046		$	(1,388	)	$	(190,865	)
Other comprehensive income (loss) before reclassifications		(34,181	)		966			—			(33,215	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(2,187	)		24			(2,163	)
Net current-period other comprehensive income (loss)		(34,181	)		(1,221	)		24			(35,378	)
Ending Balance	$	(229,704	)	$	4,825		$	(1,364	)	$	(226,243	)

The change in balances of accumulated other comprehensive income (loss) for the three months ended September 30, 2014 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(138,864	)	$	6,119		$	(689	)	$	(133,434	)
Other comprehensive income (loss) before reclassifications		(22,978	)		2,852			12			(20,114	)
Amounts reclassified from accumulated other comprehensive income		—			(627	)		(4	)		(631	)
Out-of-period adjustment					—			—
Net current-period other comprehensive income (loss)	$	(22,978	)	$	2,225		$	8		$	(20,745	)
Ending Balance	$	(161,842	)	$	8,344		$	(681	)	$	(154,179	)

The change in balances of accumulated comprehensive income (loss) for the nine months ended September 30, 2015 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(189,410	)	$	4,600		$	(1,434	)	$	(186,244	)
Other comprehensive income before reclassifications		(40,294	)		3,087			—			(37,207	)
Amounts reclassified from accumulated other comprehensive income		—			(2,862	)		70			(2,792	)
Net current-period other comprehensive income	$	(40,294	)	$	225		$	70		$	(39,999	)
Ending Balance	$	(229,704	)	$	4,825		$	(1,364	)	$	(226,243	)

The change in balances of accumulated comprehensive income (loss) for the nine months ended September 30, 2014 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(157,416	)	$	3,808		$	(695	)	$	(154,303	)
Other comprehensive income before reclassifications		(1,426	)		6,807			—			5,381
Amounts reclassified from accumulated other comprehensive income		—			(2,271	)		14			(2,257	)
Out-of-period adjustment		(3,000	)		—			—			(3,000	)
Net current-period other comprehensive income	$	(4,426	)	$	4,536		$	14		$	124
Ending Balance	$	(161,842	))	$	8,344		$	(681	)	$	(154,179	)

Reclassifications out of Accumulated Other Comprehensive Income (Loss)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2015 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(3,341	)	$	1,154		$	(2,187	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	37		$	(13	)	$	24

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2014 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(840	)	$	213		$	(627	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	—		$	(4	)	$	(4	)

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2015 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(4,360	)	$	1,498		$	(2,862	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	96		$	(26	)	$	70

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(3,207	)	$	936		$	(2,271	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	21		$	(7	)	$	14

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PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

9 Months Ended

Sep. 30, 2015

PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

The condensed consolidated financial statements include the accounts of Syntel, Inc., a Michigan corporation (“Syntel”), its wholly owned subsidiaries, and a joint venture and its subsidiary. All significant inter-company balances and transactions have been eliminated.

The wholly owned subsidiaries of Syntel, Inc. are:

• Syntel Private Limited, an Indian limited liability company, formerly known as Syntel Limited up to March 17, 2015 (“Syntel India”);

• Syntel Europe Limited, a United Kingdom limited liability company;

• Syntel Canada Inc., an Ontario limited liability company;

• Syntel Deutschland GmbH, a German limited liability company;

• Syntel (Hong Kong) Limited, a Hong Kong limited liability company;

• Syntel Delaware, LLC, a Delaware limited liability company (“Syntel Delaware”);

• SkillBay LLC, a Michigan limited liability company (“SkillBay”);

• Syntel (Mauritius) Limited, a Mauritius limited liability company;

• Syntel Consulting Inc., a Michigan corporation (“Syntel Consulting”);

• Syntel Holding (Mauritius) Limited, a Mauritius limited liability company (“SHML”);

• Syntel Worldwide (Mauritius) Limited, a Mauritius limited liability company (“SWML”);

• Syntel (Australia) Pty. Ltd., an Australian limited liability company; and

• Syntel Solutions Mexico, S. DE R. L. DE C. V., a Mexican limited liability company.

The wholly owned subsidiaries of Syntel Europe Limited are:

• Intellisourcing, SARL, a French limited liability company;

• Syntel Solutions BV, a Netherlands limited liability company; and

• Syntel Switzerland GmbH, a Switzerland limited liability company

The partially owned joint venture of Syntel Delaware is:

• State Street Syntel Services (Mauritius) Limited, a Mauritius limited liability company (“SSSSML”).

The wholly owned subsidiary of SSSSML is:

• State Street Syntel Services Private Limited, an Indian limited liability company.

The wholly owned subsidiaries of Syntel (Mauritius) Limited are:

• Syntel International Private Limited, an Indian limited liability company; and

• Syntel Global Private Limited, an Indian limited liability company.

The wholly owned subsidiaries of SHML are:

• Syntel Services Private Limited, an Indian limited liability company; and

• Syntel Solutions (Mauritius) Limited, a Mauritius limited liability company (“SSML”).

The wholly owned subsidiary of SSML is:

• Syntel Solutions (India) Private Limited, an Indian limited liability company.

The wholly owned subsidiary of SWML is:

• Syntel (Singapore) PTE Limited, a Singapore limited liability company.

The wholly owned subsidiary of Syntel (Singapore) PTE Limited is:

• Syntel Infotech, Inc., a Philippines corporation.

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TAX ON OTHER COMPREHENSIVE INCOME (Tables)

9 Months Ended

Sep. 30, 2015

Total Tax Expense on Other Comprehensive Income (Loss)

Total tax expense on other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(In thousands)						(In thousands)
Foreign currency translation adjustments	$	(169	)	$	(125	)	$	(362	)	$	(140	)
Tax benefit (expense) on unrealized gains (losses) on securities		643			(619	)		(184	)		(527	)
Tax benefit (expense) on defined benefit pension plans		(13	)		(4	)		(26	)		(7	)
Total tax benefit (expense) on other comprehensive income (loss)	$	461		$	(748	)	$	(572	)	$	(674	)

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2015

Financial Assets Measured at Fair Value on Recurring Basis

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2015:

					(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	94.5	$	—	$	—	$	94.5
Term Deposits		—		409.2	$	—	$	409.2
Total Assets Measured at Fair Value	$	94.5	$	409.2			$	503.7

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2014:

					(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	186.8	$	—	$	—	$	186.8
Term Deposits		—		466.7		—		466.7
Total Assets Measured at Fair Value	$	186.8	$	466.7	$	—	$	653.5

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Earnings Per Share - Additional Information (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Schedule Of Earnings Per Share Basic And Diluted [Line Items]
Stock split	Two-for-one stock split
Stock split conversion ratio	2	2

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Net revenues	[1]	$ 253,636	$ 228,332	$ 714,032	$ 676,105
Cost of revenues		146,061	133,804	436,550	396,006
Gross profit		107,575	94,528	277,482	280,099
Selling, general and administrative expenses		15,121	26,566	72,231	85,108
Income from operations		92,454	67,962	205,251	194,991
Other income, net		10,227	10,657	29,452	34,617
Income before provision for income taxes		102,681	78,619	234,703	229,608
Income tax expense		24,990	17,013	56,412	50,570
Net income		77,691	61,606	178,291	179,038
Other comprehensive income
Foreign currency translation adjustments		(34,012)	(22,853)	(39,932)	(5,010)
Gains on derivatives:
Gains arising during period on net investment hedges					724
Unrealized gains on securities:
Unrealized holding gains arising during period		1,477	3,684	4,769	8,270
Reclassification adjustment for gains included in net income		(3,341)	(840)	(4,360)	(3,207)
Unrealized gains on securities, Total		(1,864)	2,844	409	5,063
Defined benefit pension plans:
Net profit (loss) arising during period		0	0	0	0
Amortization of prior service cost included in net periodic pension cost		37	12	96	21
Defined Benefit Pension plans, Total		37	12	96	21
Other comprehensive income (loss), before tax		(35,839)	(19,997)	(39,427)	798
Income tax benefits (expenses) related to other comprehensive income		461	(748)	(572)	(674)
Other comprehensive income (loss), net of tax		(35,378)	(20,745)	(39,999)	124
Comprehensive income		$ 42,313	$ 40,861	$ 138,292	$ 179,162
Earnings per share:
Basic		$ 0.92	$ 0.73	$ 2.12	$ 2.14
Diluted		$ 0.92	$ 0.73	$ 2.12	$ 2.13
Weighted average common shares outstanding:
Basic		84,005	83,832	83,950	83,748
Diluted		84,131	83,968	84,131	83,942

[1] Net revenues are attributed to regions based upon customer location.

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Change in Balances of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	$ (190,865)	$ (133,434)	$ (186,244)	$ (154,303)
Other comprehensive income (loss) before reclassifications	(33,215)	(20,114)	(37,207)	5,381
Amounts reclassified from accumulated other comprehensive income	(2,163)		(2,792)	(2,257)
Out-of-period adjustment		(631)		(3,000)
Net current-period other comprehensive income (loss)	(35,378)	(20,745)	(39,999)	124
Ending Balance	(226,243)	(154,179)	(226,243)	(154,179)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(195,523)	(138,864)	(189,410)	(157,416)
Other comprehensive income (loss) before reclassifications	(34,181)	(22,978)	(40,294)	(1,426)
Out-of-period adjustment				(3,000)
Net current-period other comprehensive income (loss)	(34,181)	(22,978)	(40,294)	(4,426)
Ending Balance	(229,704)	(161,842)	(229,704)	(161,842)
Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	6,046	6,119	4,600	3,808
Other comprehensive income (loss) before reclassifications	966	2,852	3,087	6,807
Amounts reclassified from accumulated other comprehensive income	(2,187)	(627)	(2,862)	(2,271)
Net current-period other comprehensive income (loss)	(1,221)	2,225	225	4,536
Ending Balance	4,825	8,344	4,825	8,344
Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(1,388)	(689)	(1,434)	(695)
Other comprehensive income (loss) before reclassifications		12
Amounts reclassified from accumulated other comprehensive income	24	(4)	70	14
Net current-period other comprehensive income (loss)	24	8	70	14
Ending Balance	$ (1,364)	$ (681)	$ (1,364)	$ (681)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 178,291	$ 179,038
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	11,620	12,365
Provision for doubtful debts / advances	(83)
Realized gains on sales of short term investments	(10,437)	(6,359)
Deferred income taxes	(1,183)	(3,926)
Compensation expense related to restricted stock	5,104	4,619
Unrealized foreign exchange loss	308
Changes in assets and liabilities:
Accounts receivable and revenue earned in excess of billings	(29,667)	(30,064)
Other current assets	(21,426)	(16,403)
Accounts payable, accrued payroll and other liabilities	23,461	11,701
Deferred revenue	(71)	(326)
Net cash provided by operating activities	155,917	150,645
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures	(13,852)	(13,261)
Proceeds from sale of property and equipment	172	64
Purchase of mutual funds	(74,859)	(249,780)
Purchase of term deposits with banks	(288,559)	(212,035)
Proceeds from sales of mutual funds	188,557	189,860
Maturities of term deposits with banks	334,118	186,135
Net cash (used in)/provided by investing activities	145,577	(99,017)
CASH FLOWS FROM FINANCING ACTIVITIES:
Excess tax benefits on stock-based compensation plans	70	1,028
Repayment of loans and borrowings	(6,375)	(5,250)
Net cash (used in) financing activities	(6,305)	(4,222)
Effect of foreign currency exchange rate changes on cash	(15,993)	(4,665)
Change in cash and cash equivalents	279,196	42,741
Cash and cash equivalents, beginning of period	197,708	178,757
Cash and cash equivalents, end of period	476,904	221,498
Supplemental disclosures of cash flow information:
Cash paid for income taxes	51,826	50,876
Cash paid for interest	$ 1,658	$ 1,730

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Differentiation between Federal Statutory Tax Rate and Effective Tax Rate (Detail)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Tax Rate Reconciliation [Line Items]
Statutory provision	35.00%	35.00%	35.00%	35.00%
State taxes, net of federal benefit	0.60%	0.80%	0.60%	0.40%
City taxes		0.10%		0.10%
Foreign effective tax rates different from US statutory rate	(11.30%)	(15.30%)	(12.00%)	(14.00%)
Tax reserve			0.10%	(0.50%)
Valuation Allowance		1.00%	0.30%	1.00%
Effective Income Tax Rate	24.30%	21.60%	24.00%	22.00%

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

Computation of Earnings Per Share

The following tables set forth the computation of earnings per share:

	Three Months Ended September 30,
	2015				2014
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
	(in thousands, except per share earnings)
Basic earnings per share		84,005	$	0.92		83,832	$	0.73
Potential dilutive effect of restricted stock options outstanding		126		0		136		0
Diluted earnings per share		84,131	$	0.92		83,968	$	0.73
	Nine Months Ended September 30,
	2015				2014
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
	(in thousands, except per share earnings)
Basic earnings per share		83,950		2.12		83,748	$	2.14
Potential dilutive effect of restricted stock options outstanding		181		0		194		(0.01	)
Diluted earnings per share		84,131	$	2.12		83,942	$	2.13

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Vacation Pay - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Executive Compensation Plan Expense [Line Items]
Unutilized earned leave expense	$ 1.5	$ 1.5
Accrual for unutilized earned leave	$ 23.0		$ 21.5

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STOCK BASED COMPENSATION

9 Months Ended

Sep. 30, 2015

STOCK BASED COMPENSATION

16. STOCK BASED COMPENSATION

Share Based Compensation:

The Company originally established a Stock Option and Incentive Plan in 1997 (the “1997 Plan”). On June 1, 2006, the Company adopted the Amended and Restated Stock Option and Incentive Plan (the “Amended Plan”), which amended and extended the 1997 Plan. Under the plan, a total of sixteen million shares of Common Stock (adjusted for the effects of the 2014 stock split) were reserved for issuance. The dates on which options granted under the Amended Plan become first exercisable are determined by the Compensation Committee of the Board of Directors, but generally vest over a four-year period from the date of grant. The term of any option may not exceed ten years from the date of grant. No stock options were issued for the three months ended September 30, 2015 and 2014.

The Company accounts for share-based compensation based on the estimated fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Statement of Comprehensive Income. Share-based compensation expense recognized as above for the three months ended September 30, 2015 and 2014 was $1.69 million and $1.61 million, respectively, including a charge for restricted stock units. Share-based compensation expense recognized as above for the nine months ended September 30, 2015 and 2014 was $5.10 million and $4.62 million, respectively, including a charge for restricted stock.

The shares issued upon the exercise of the options are new share issues after taking into account the effects of the 2014 stock splits.

Restricted Stock Units:

Also under the Amended Plan, on different dates during the years ended December 31, 2011 and 2010, the Company issued restricted stock unit awards of 182,728 and 418,716 (adjusted to account for 2014 stock split), respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock unit awards were granted to employees for their future services as a retention tool at a zero exercise price, and vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

On different dates during the years ended December 31, 2014, 2013 and 2012, and for the nine months ended September 30, 2015 the Company issued restricted stock unit awards (adjusted to account for the 2014 stock split) of 293,904, 187,056, 217,656 and 18,840 respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock unit awards were granted to employees for their future services as a retention tool at a zero exercise price and vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock unit) for the three and nine months ended September 30, 2015 and 2014 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Cost of revenues	$	586	$	573	$	1,830	$	1,505
Selling, general and administrative expenses		1,104		1,033		3,274		3,114
	$	1,690	$	1,606	$	5,104	$	4,619

A summary of the activity for restricted stock unit awards (adjusted to reflect the stock split) granted under our stock-based compensation plans as of September 30, 2015 and changes during the period ended is presented below:

	Nine Months Ended September 30, 2015					2014
	Number Of Awards			Weighted Average Grant Date Fair Value		Number Of Awards			Weighted Average Grant Date Fair Value
Unvested at January 1		564,314		$	37.37		501,292		$	28.64
Granted		18,840		$	46.13		293,904		$	42.79
Vested		(143,704	)	$	35.63		(227,882	)	$	25.03
Forfeited		(25,681	)	$	35.86		(3,000	)	$	44.90
Unvested at September 30		413,769			38.47		564,314		$	37.37

As of September 30, 2015, $12.64 million of total remaining unrecognized stock-based compensation cost related to restricted stock unit awards is expected to be recognized over the weighted-average remaining requisite service period of 2.1 years.

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2015

Schedule of Revenues from External Customers and Segment Gross Profit

Revenues from external customers and gross profit for the Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom segments for the three and nine months ended September 30, 2015 and September 30, 2014 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Net Revenues:
Banking and Financial Services	$	125,779		$	115,454		$	346,952		$	336,495
Healthcare and Life Sciences		42,595			35,834			116,341			113,091
Insurance		32,692			35,002			102,058			101,219
Manufacturing		11,239			6,989			29,760			19,890
Retail, Logistics and Telecom		41,331			35,053			118,921			105,410
	$	253,636		$	228,332		$	714,032		$	676,105
Gross Profit:
Banking and Financial Services		52,177			48,509			134,933			141,810
Healthcare and Life Sciences		20,312			16,405			49,573			52,935
Insurance		13,151			13,088			37,150			37,252
Manufacturing		3,979			2,232			9,250			5,991
Retail, Logistics and Telecom		19,161			15,499			50,486			46,066
Total Segment Gross Profit		108,780			95,733			281,392			284,054
Corporate Direct cost		(1,205	)		(1,205	)		(3,910	)		(3,955	)
Gross Profit	$	107,575		$	94,528		$	277,482		$	280,099
Selling, general and administrative expenses		15,121			26,566			72,231			85,108
Income from operations	$	92,454		$	67,962		$	205,251		$	194,991

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EMPLOYEE BENEFIT PLANS

9 Months Ended

Sep. 30, 2015

EMPLOYEE BENEFIT PLANS

18. EMPLOYEE BENEFIT PLANS

The Company maintains a 401(k) retirement plan that covers all regular employees on Syntel’s U.S. payroll. Eligible employees may contribute the lesser of 60% of their compensation or $18,000, subject to certain limitations, to the retirement plan. The Company may make contributions to the plan at the discretion of the Board of Directors; however, through September 30, 2015, no Company contributions have been made.

Eligible employees on Syntel’s Indian payroll receive benefits under the Provident Fund (“PF”), which is a defined contribution plan. Both the employee and the Company make monthly contributions equal to a specified percentage of the covered employee’s salary. The Company has no further obligations under the plan beyond its monthly contributions. The contributions made to the fund are administered and managed by the Government of India. The Company’s monthly contributions are expensed in the period they are incurred. Provident Fund Contribution expense recognized by Indian entities for the three months ended September 30, 2015 and 2014 was $1.5 million and $1.2 million, respectively, and for the nine months ended September 30, 2015 and 2014 were $4.8 million and $3.00 million,respectively.

In accordance with the Payment of Gratuity Act, 1972 of India, the Indian subsidiary provides for gratuity, a defined retirement benefit plan (the “Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, based on the respective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation and are expensed in the period determined. The Gratuity Plan is a non-funded plan. The amounts accrued under this plan are $13 million and $12.1 million as of September 30, 2015 and December 31, 2014, respectively, and are included within current liabilities and in other non-current liabilities, as applicable. Expense recognized by Indian entities under the Gratuity Plan for the nine months ended September 30, 2015 and 2014 were $2.8 million and $2.4 million, respectively.

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Financial Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions	Sep. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short Term Investments- Available for Sale Securities	$ 94.5	$ 186.8
Term Deposits	409.2	466.7
Total Assets Measured at Fair Value	503.7	653.5
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Short Term Investments- Available for Sale Securities	94.5	186.8
Total Assets Measured at Fair Value	94.5	186.8
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Term Deposits	409.2	466.7
Total Assets Measured at Fair Value	$ 409.2	$ 466.7

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BASIS OF PRESENTATION:

9 Months Ended

Sep. 30, 2015

BASIS OF PRESENTATION:

1. BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements of Syntel, Inc. (the “Company” or “Syntel”) have been prepared by management, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of Syntel and its subsidiaries as of September 30, 2015, the results of their operations for the three and nine months ended September 30, 2015 and 2014, and cash flows for the nine months ended September 30, 2015 and 2014. The year-end condensed consolidated balance sheet as of December 31, 2014 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.

In September 2014, the Company’s Board of Directors authorized a two-for-one stock split of its outstanding common shares. On November 3, 2014, an additional common share was issued for each existing common share held by shareholders of record on October 20, 2014. Accordingly, all share and per share amounts for all periods presented in these condensed consolidated financial statements and notes thereto, have been adjusted retroactively, where applicable, to reflect this stock split.

Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 476,904	$ 197,708
Short-term investments	503,587	669,353
Accounts receivable, net of allowance for doubtful accounts of $ 624 and $703 at September 30, 2015 and December 31, 2014, respectively	115,393	111,993
Revenue earned in excess of billings	41,778	27,493
Deferred income taxes and other current assets	58,660	56,930
Total current assets	1,196,322	1,063,477
Property and equipment	216,016	210,206
Less accumulated depreciation and amortization	108,712	101,155
Property and equipment, net	107,304	109,051
Goodwill	906	906
Non-current term deposits with banks	78	105
Deferred income taxes and other non-current assets	66,613	50,476
TOTAL ASSETS	1,371,223	1,224,015
Current liabilities:
Accounts payable	12,171	9,323
Accrued payroll and related costs	55,216	60,765
Income taxes payable	32,004	23,781
Accrued liabilities	28,625	24,250
Deferred revenue	2,834	3,266
Loans and borrowings	132,223	8,852
Total current liabilities	263,073	130,237
Other non-current liabilities	16,854	16,198
Non-current loans and borrowings		129,750
TOTAL LIABILITIES	$ 279,927	$ 276,185
Commitments and contingencies (See Note 15)
SHAREHOLDERS' EQUITY
Total shareholders' equity	$ 1,091,296	$ 947,830
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 1,371,223	$ 1,224,015

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2015

EARNINGS PER SHARE

11. EARNINGS PER SHARE

Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the applicable period. If the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of basic and diluted earnings per share are adjusted retroactively for all periods presented to reflect that change in capital structure. If such changes occur after the close of the reporting period but before issuance of the financial statements, the per-share computations for that period and any prior-period financial statements presented are based on the new number of shares.

During 2014, The Company’s Board of Directors authorized a two-for-one stock split of its outstanding common shares. On November 3, 2014, an additional common share was issued for each existing common share held by shareholders of record on October 20, 2014. Accordingly, all share and per share amounts for all periods presented in these condensed consolidated financial statements and notes thereto, have been adjusted retroactively, where applicable, to reflect this stock split.

The Company has issued stock options and restricted stock units, which are considered to be potentially dilutive to its basic earnings per share. Diluted earnings per share is calculated using the treasury stock method for the dilutive effect of options and restricted stock units granted pursuant to the stock option and incentive plan, by dividing the net income by the weighted average number of shares outstanding during the period adjusted for these potentially dilutive options, except when the results would be anti-dilutive. The potential tax benefit on exercise of stock options is considered as additional proceeds while computing dilutive earnings per share using the treasury stock method.

The following tables set forth the computation of earnings per share:

	Three Months Ended September 30,
	2015				2014
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
	(in thousands, except per share earnings)
Basic earnings per share		84,005	$	0.92		83,832	$	0.73
Potential dilutive effect of restricted stock options outstanding		126		0		136		0
Diluted earnings per share		84,131	$	0.92		83,968	$	0.73
	Nine Months Ended September 30,
	2015				2014
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
	(in thousands, except per share earnings)
Basic earnings per share		83,950		2.12		83,748	$	2.14
Potential dilutive effect of restricted stock options outstanding		181		0		194		(0.01	)
Diluted earnings per share		84,131	$	2.12		83,942	$	2.13

The number of shares and per share amounts for the prior period presented have been retroactively restated to reflect the 2014 stock split.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2015 shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Trading Symbol	SYNT
Entity Registrant Name	SYNTEL INC
Entity Central Index Key	0001040426
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	83,885,622

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2015

SEGMENT REPORTING

12. SEGMENT REPORTING

The Company’s reportable business segments are as follows:

• Banking and Financial Services

• Healthcare and Life Sciences

• Insurance

• Manufacturing

• Retail, Logistics and Telecom

Syntel’s leadership evaluates the Company’s performance and allocates resources based on segment revenues and segment cost of revenues. Segment gross profit is defined as gross profit before Corporate Direct Costs.

The Company’s cost of revenues consists of costs directly associated with billable professionals in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Generally, the cost of revenues for each operating segment has similar characteristics and is subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating groups may affect revenue and cost of revenues to differing degrees.

In each of our business segments, we help our customers adapt to market change by providing a broad array of technology-based, industry-specific solutions, which leverage the strong understanding we have of underlying trends in each industry segment that we focus on. These solutions are complemented by strong capabilities in application services, testing, Business Intelligence (BI), IT Infrastructure Management Services (IMS), Knowledge Process Outsourcing (KPO), Social, Mobile, Analytics and Cloud (SMAC) technologies, Enterprise Resource Planning (ERP), and business and technology consulting.

Banking and Financial Services

Our Banking and Financial Services segment serves financial institutions throughout the world. Our clients include companies providing banking, capital markets, cards and payments, investments and transaction processing services to third parties. Our clients engage us to help make their operations as effective, productive and cost-efficient as possible, and to support new capabilities. We assist these clients in such areas as: cards and payments, retail banking, wholesale banking, consumer lending, risk management, investment banking, reconciliations, fraud analysis, mobile banking, and compliance and securities services. The demand for our services in the banking and financial services sector is being driven by rising global regulatory requirements, an ongoing focus on cost reduction and operational efficiencies and interest in newer technology areas and related services.

Healthcare and Life Sciences

Our Healthcare and Life Sciences segment serves many companies, including healthcare payers, providers and pharmaceutical and medical device providers, among others. The healthcare industry is constantly seeking to improve the quality of care while lowering the cost of care and making healthcare affordable to a larger population. Our healthcare practice focuses on providing a broad range of services and solutions to the industry to address regulatory requirements and emerging industry trends such as: integrated care, wider use of Electronic Health Records, the increasing prevalence of healthcare banking among others. We also partner with clients to enable their systems and processes to deal with the increasing retail orientation of healthcare, such as support for individual mandates and the adoption of mobile and analytics solutions to improve access to health information and decision making by end consumers.

In the life sciences category, we partner with leading pharmaceutical, biotech, and medical device companies, as well as providers of generics, animal health and consumer health products. Our life sciences solutions help transform many of the business processes in the life sciences value chain (research, clinical development, manufacturing and supply chain, sales and marketing) as well as regulatory and administrative functions.

Insurance

We serve the needs of global property and casualty insurers, insurance brokers, personal, commercial, life and retirement insurance service providers. These customers turn to us for assistance in improving the efficiency and effectiveness of their operations and in achieving business transformation. We focus on aspects of our clients’ operations, such as: policy administration, claims processing and compliance reporting. We also serve the growing trend among insurers to improve their sales and marketing processes by deepening direct retail customer relationships and strengthening interactions with networks of independent and captive insurance agents, often through the use of social media and mobile technologies. Additionally, many insurers seek to improve business effectiveness by reducing expense ratios and exiting non-core lines of business and operations.

Manufacturing

Our Manufacturing segment provides business consulting and technology services in a range of sub-sectors, including industrial product and aerospace and automotive manufacturing, as well as processors of natural resources and chemicals, and the supply chain of raw materials. Some of our manufacturing solutions for industrial and automotive clients include warranty management, dealer system integration, Product Lifecycle Management (PLM), Supply Chain Management (SCM), sales and operations planning, and mobility.

Industry trends that influence the demand for our services in this segment include the increasing globalization of sourcing and the desire of clients to further penetrate emerging markets, leading to longer and more complex supply chains.

Retail, Logistics and Telecom

In Retail, we serve a wide spectrum of retailers and distributors, including supermarkets, specialty premium retailers, department stores and large mass-merchandise discounters, who seek our assistance in becoming more efficient and cost-effective and in helping to drive business transformation. We also serve the entire travel and hospitality industry including airlines, hotels and restaurants, as well as online and retail travel, global distribution systems, and intermediaries and real estate companies.

In Logistics, our clients look to Syntel to implement business-relevant changes that will make them more productive, competitive and cost effective. To that end, we help organizations improve operational efficiencies, enhance responsiveness and collaborate with trading partners to better serve their markets and end customers. We leverage a comprehensive understanding of the business and technology drivers of the industry. Our solutions for retail and logistics clients include SCM, sales and operations planning mobility, Point of Sale testing, and Multi-Channel, customer and retail store analytics, among others.

In Telecom, we help our clients address important changes in the telecom industry, such as the transition to new network technologies, designing, developing, testing and introducing new products and channels, improving customer service and increasing customer satisfaction.

Corporate Direct Costs

Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group, Research and Development, Cloud Computing, and Application Management, are not allocated to specific industry segments because management believes it is not practical to allocate such expenses to individual segments as they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against Total Gross Profit.

In accordance with ASC 280 “Disclosures about Segments of an Enterprise and Related Information,” segment disclosures presented below. Revenues from external customers and gross profit for the Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom segments for the three and nine months ended September 30, 2015 and September 30, 2014 are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(in thousands)						(in thousands)
Net Revenues:
Banking and Financial Services	$	125,779		$	115,454		$	346,952		$	336,495
Healthcare and Life Sciences		42,595			35,834			116,341			113,091
Insurance		32,692			35,002			102,058			101,219
Manufacturing		11,239			6,989			29,760			19,890
Retail, Logistics and Telecom		41,331			35,053			118,921			105,410
	$	253,636		$	228,332		$	714,032		$	676,105
Gross Profit:
Banking and Financial Services		52,177			48,509			134,933			141,810
Healthcare and Life Sciences		20,312			16,405			49,573			52,935
Insurance		13,151			13,088			37,150			37,252
Manufacturing		3,979			2,232			9,250			5,991
Retail, Logistics and Telecom		19,161			15,499			50,486			46,066
Total Segment Gross Profit		108,780			95,733			281,392			284,054
Corporate Direct cost		(1,205	)		(1,205	)		(3,910	)		(3,955	)
Gross Profit	$	107,575		$	94,528		$	277,482		$	280,099
Selling, general and administrative expenses		15,121			26,566			72,231			85,108
Income from operations	$	92,454		$	67,962		$	205,251		$	194,991

During the three and nine months ended September 30, 2015, American Express Corp., State Street Bank and Federal Express Corp. each contributed revenues in excess of 10% of total consolidated revenues. Revenues from American Express Corp., State Street Bank and Federal Express Corp. were $53.7 million, $38.1 million and $30.4 million, respectively, during the three months ended September 30, 2015, contributing approximately 21.2%, 15.0% and 12.0%, respectively of total consolidated revenues. The revenues from American Express Corp. and State Street Bank were generated in the Banking and Financial Services segment. The revenue from Federal Express Corp. was generated in the Retail, Logistics and Telecom segment. The corresponding revenues for the three months ended September 30, 2014 from American Express Corp., State Street Bank and Federal Express Corp. were $51.3 million, $31.2 million and $25.4 million, respectively, contributing approximately 22.5%, 13.7% and 11.1%, respectively, of total consolidated revenues. During the nine months ended September 30, 2015, revenue from American Express Corp., State Street Bank and Federal Express Corp. were $147.7 million, $102.9 million and $89.2 million, respectively, contributing approximately 20.7%, 14.4% and 12.5%, respectively, of total consolidated revenues. The revenues from American Express Corp. and State Street Bank were generated in the Banking and Financial Services segment. The revenue from Federal Express Corp. was generated in the Retail, Logistics and Telecom segment. The corresponding revenues for the nine months ended September 30, 2014 from American Express Corp., State Street Bank and Federal Express Corp. were $147.5 million, $94.9 million and $76.4 million, respectively, contributing approximately 21.8%, 14.0% and 11.3%, respectively, of total consolidated revenues. At September 30, 2015 and December 31, 2014, accounts receivable from American Express Corp. were $21.7 million and $19.0 million, respectively. Accounts receivable from State Street Bank were $17.1 million and $11.3 million, respectively, at September 30, 2015 and December 31, 2014. Accounts receivable from Federal Express Corp. were $12.8 million and $14.3 million, respectively, at September 30, 2015 and December 31, 2014.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Accounts receivable, allowance for doubtful accounts	$ 624	$ 703

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DERIVATIVE INSTRUMENTS

9 Months Ended

Sep. 30, 2015

DERIVATIVE INSTRUMENTS

6. DERIVATIVE INSTRUMENTS

The Company periodically enters into foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange rates, specifically changes between the Indian Rupee currency and U.S. dollar currency. The contracts are adjusted to fair value at each reporting period. Gains and losses on forward contracts are generally recorded in ‘other income, net’ unless they are designated as an effective hedge. Although the Company cannot predict fluctuations in foreign currency rates, the Company currently anticipates that foreign currency risk may have a significant impact on the financial statements. In order to limit the exposure to fluctuations in foreign currency rates, when the Company enters into foreign exchange forward contracts, where the counter party is a bank, these contracts may have a material impact on the financial statements. The Company considers the risks of non-performance by the counter party as not material. The Company utilizes standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction obligations. The Company also mitigates the credit risk of these derivatives by transacting with highly rated counterparties in India which are major banks. The Company evaluates the credit and non-performance risks associated with its derivative counterparties, and believe that the impact of the credit risk associated with the outstanding derivatives was insignificant. .

The Company’s Indian subsidiaries, whose functional currency is the Indian Rupee, periodically enter into foreign exchange forward contracts to buy Indian rupees and sell U.S. dollars to mitigate the risk of changes in foreign exchange rates on U.S. dollar denominated assets, primarily comprising of receivables from the parent (Syntel Inc.), other direct customers and liabilities recorded on the books of the Indian subsidiaries. These forward contracts are denominated in U.S. dollars.

These forward contracts do not qualify for hedge accounting under ASC 815, ‘Derivative and Hedging’. Accordingly, these contracts are carried at a fair value with the resulting gains or losses included in the statement of comprehensive income under ‘other income’. The related cash flow impacts of all of our derivative activities are recorded in cash flows from operating activities.

During the nine months ended September 30, 2015, the Company did not enter into new foreign exchange forward contracts. At September 30, 2015 and December 31, 2014, no foreign exchange forward contracts were outstanding.

The following table presents the net gains recorded in ‘other income, net’ relating to the foreign exchange contracts not designated as hedges for the periods ending September 30, 2015 and 2014.

Gains Recognized in Other Income:

	THREE MONTHS ENDED September 30,				NINE MONTHS ENDED September 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Gains recognized in other income, net		—	$	43		—	$	3,499

The following table presents the net gains recorded in accumulated other comprehensive income relating to the foreign exchange contracts designated as net investment hedges for the periods ending September 30, 2015 and 2014.

Gains on Derivatives:

	THREE MONTHS ENDED SEPTEMBER 30,				NINE MONTHS ENDED SEPTEMBER 30,
	2015		2014		2015		2014
	(In thousands)				(In thousands)
Gains recognized in other comprehensive income (loss)		—	$	—		—	$	724	*

* For and up to three months ended March 31, 2014

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STOCK-BASED EMPLOYEE COMPENSATION PLANS

9 Months Ended

Sep. 30, 2015

STOCK-BASED EMPLOYEE COMPENSATION PLANS

5. STOCK-BASED EMPLOYEE COMPENSATION PLANS

The Company recognizes stock-based compensation expense in the consolidated financial statements for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards on a straight-line basis over the requisite service period of the award, which is generally the vesting term. The benefits of tax deductions in excess of recognized compensation expense is reported as a financing cash flow.

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VACATION PAY

9 Months Ended

Sep. 30, 2015

VACATION PAY

17. VACATION PAY

The accrual for unutilized leave balance is determined for the entire available leave balance standing to the credit of the employees at period end. The leave balance eligible for carry-forward is valued at gross compensation rates and eligible for compulsory encashment at basic compensation rates.

The gross charge for unutilized earned leave was $1.5 million and $1.5 million for the three months ended September 30, 2015 and 2014, respectively.

The amounts accrued for unutilized earned leave are $23 million and $21.5 million as of September 30, 2015 and December 31, 2014, respectively, and are included within accrued payroll and related costs.

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GEOGRAPHIC INFORMATION

9 Months Ended

Sep. 30, 2015

GEOGRAPHIC INFORMATION

13. GEOGRAPHIC INFORMATION

The Company’s net revenues and long-lived assets, by geographic area, are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
	(in thousands)				(in thousands)
Net Revenues (1)
North America (2)	$	229,312	$	207,541	$	645,121	$	614,921
India		1,156		589		2,624		1,505
Europe (3)		22,672		19,146		64,225		56,635
Rest of the World		496		1,056		2,062		3,044
Total revenue	$	253,636	$	228,332	$	714,032	$	676,105

	As of September 30		As of December, 31
	2015		2014
	(in thousands)
Long-Lived Assets (4)
North America (2)	$	3,477	$	2,645
India		103,556		105,949
Europe (3)		60		71
Rest of the world		1,117		1,292
Total	$	108,210	$	109,957

Notes for the Geographic Information Disclosure:

1. Net revenues are attributed to regions based upon customer location.

2. Primarily relates to operations in the United States.

3. Primarily relates to operations in the United Kingdom.

4. Long-lived assets include property and equipment, net of accumulated depreciation and amortization, and goodwill.

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CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

9 Months Ended

Sep. 30, 2015

CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

9. CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

Cash and Cash Equivalents

For the purpose of reporting cash and cash equivalents, the Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents.

As of September 30, 2015, the total cash and cash equivalents and short term investments balance was $980.5 million of that amount, $923.7 million was held by Indian subsidiaries consisting of $542 million held in U.S. dollars and $381.7 million held in Indian rupees. The Company believes that the amount of cash and cash equivalents outside the U.S. will not have a material impact on liquidity.

At September 30, 2015 and December 31, 2014, approximately $Nil and $30.3 million, respectively, were held in JPMorgan Chase Bank NA through a sweep account. At September 30, 2015 approximately $30.2 million was held in Bank of America. At September 30, 2015, $108 million in term deposits with an original maturity of three months or less were held with the Bank of India and Punjab National Bank. At year end, December 31, 2014, $13.0 million in term deposits with an original maturity of three months or less were held with the Bank of India and Punjab National Bank. The remaining amounts of cash and cash equivalents of $368.9 million were held in bank and fixed deposits with various banking and financial institutions.

Short-term Investments

The Company’s short-term investments consist of short-term mutual funds, which have been classified as available-for-sale and are carried at estimated fair value. Fair value is determined based on quoted market prices. Unrealized gains and losses, net of taxes, on available-for-sale securities are reported as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Net realized gains or losses resulting from the sale of these investments, and losses resulting from decline in fair values of these investments that are other than temporary declines, are included in other income. The cost of securities sold is determined using the weighted-average method.

Short-term investments include term deposits with an original maturity exceeding three months and whose maturity date is within one year from the date of the balance sheet. Term deposits were $409.1 million and $466.6 million at September 30, 2015 and December 31, 2014, respectively.

Short-term investments also include Fixed Maturity Plans (FMPs) of mutual funds, which are classified as held to maturity securities and are reported at cost. As at September 30, 2015, the Company’s Indian subsidiaries had no investments in FMPs of mutual funds and as at December 31, 2014, the Company’s Indian subsidiaries invested $15.9 million in FMPs of mutual funds.

The following table summarizes short-term investments as at September 30, 2015 and December 31, 2014:

	2015 September 30		2014 December 31
	(In thousands)
Investments in mutual funds at fair value	$	94,503	$	186,842
Term deposits with banks		409,084		466,625
Fixed Maturity Plans (FMPs) of mutual funds, at cost		—		15,886
Total	$	503,587	$	669,353

Non-current Term Deposits with Banks

Non-current term deposits with banks include deposits with maturity exceeding one year from the date of the balance sheet. As at September 30, 2015 and December 31, 2014 non-current term deposits with banks were $0.08 and $0.11 million, respectively. Term deposits with banks include restricted deposits of $1.25 million and $0.53 million as at September 30, 2015 and December 31, 2014 respectively, placed as security towards performance guarantees issued by the Company’s bankers on the Company’s behalf.

Held to Maturity Securities

Investments in held-to-maturity securities (“HTM”) of the Company consist of investments in the units of FMPs of mutual funds in Indian subsidiaries.

Description	As of September 30, 2015		As of December 31, 2014
(In thousands)
Aggregate fair value of the investment	$	—	$	16,612
Less: Gross unrecognized holding gain	$	—		726
Net carrying amount	$	—	$	15,886

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Expiration Years of Minimum Alternate Tax Credit (Detail) - USD ($)	Sep. 30, 2015	Mar. 31, 2015
Tax Credit Carryforward [Line Items]
Less: valuation allowance	$ 0	$ (790,000)
Minimum Alternate Tax (MAT)
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	28,750,000
Less: valuation allowance	(1,590,000)
Total (net of valuation allowance)	27,160,000
Minimum Alternate Tax (MAT) | 2017-18
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	200,000
Minimum Alternate Tax (MAT) | 2018-19
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	270,000
Minimum Alternate Tax (MAT) | 2019-20
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	980,000
Minimum Alternate Tax (MAT) | 2020-21
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	1,630,000
Minimum Alternate Tax (MAT) | 2021-22
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	1,940,000
Minimum Alternate Tax (MAT) | 2022-23
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	6,020,000
Minimum Alternate Tax (MAT) | 2023-24
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	7,120,000
Minimum Alternate Tax (MAT) | 2024-25
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	7,510,000
Minimum Alternate Tax (MAT) | 2025-26 [Member]
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	$ 3,080,000

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

9 Months Ended

Sep. 30, 2015

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

7. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

The change in balances of accumulated other comprehensive income (loss) for the three months ended September 30, 2015 is as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(195,523	)	$	6,046		$	(1,388	)	$	(190,865	)
Other comprehensive income (loss) before reclassifications		(34,181	)		966			—			(33,215	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(2,187	)		24			(2,163	)
Net current-period other comprehensive income (loss)		(34,181	)		(1,221	)		24			(35,378	)
Ending Balance	$	(229,704	)	$	4,825		$	(1,364	)	$	(226,243	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2015 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(3,341	)	$	1,154		$	(2,187	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	37		$	(13	)	$	24

The change in balances of accumulated other comprehensive income (loss) for the three months ended September 30, 2014 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(138,864	)	$	6,119		$	(689	)	$	(133,434	)
Other comprehensive income (loss) before reclassifications		(22,978	)		2,852			12			(20,114	)
Amounts reclassified from accumulated other comprehensive income		—			(627	)		(4	)		(631	)
Out-of-period adjustment					—			—
Net current-period other comprehensive income (loss)	$	(22,978	)	$	2,225		$	8		$	(20,745	)
Ending Balance	$	(161,842	)	$	8,344		$	(681	)	$	(154,179	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended September 30, 2014 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(840	)	$	213		$	(627	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	—		$	(4	)	$	(4	)

The change in balances of accumulated comprehensive income (loss) for the nine months ended September 30, 2015 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(189,410	)	$	4,600		$	(1,434	)	$	(186,244	)
Other comprehensive income before reclassifications		(40,294	)		3,087			—			(37,207	)
Amounts reclassified from accumulated other comprehensive income		—			(2,862	)		70			(2,792	)
Net current-period other comprehensive income	$	(40,294	)	$	225		$	70		$	(39,999	)
Ending Balance	$	(229,704	)	$	4,825		$	(1,364	)	$	(226,243	)

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2015 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(4,360	)	$	1,498		$	(2,862	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	96		$	(26	)	$	70

The change in balances of accumulated comprehensive income (loss) for the nine months ended September 30, 2014 is as follows:

	(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income (Loss)
Beginning balance	$	(157,416	)	$	3,808		$	(695	)	$	(154,303	)
Other comprehensive income before reclassifications		(1,426	)		6,807			—			5,381
Amounts reclassified from accumulated other comprehensive income		—			(2,271	)		14			(2,257	)
Out-of-period adjustment		(3,000	)		—			—			(3,000	)
Net current-period other comprehensive income	$	(4,426	)	$	4,536		$	14		$	124
Ending Balance	$	(161,842	))	$	8,344		$	(681	)	$	(154,179	)

Reclassifications out of accumulated other comprehensive income (loss) for the nine months ended September 30, 2014 is as follows:

	(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(3,207	)	$	936		$	(2,271	)
Amortization of prior service cost included in net periodic pension cost	Direct cost	$	21		$	(7	)	$	14

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TAX ON OTHER COMPREHENSIVE INCOME

9 Months Ended

Sep. 30, 2015

TAX ON OTHER COMPREHENSIVE INCOME

8. TAX ON OTHER COMPREHENSIVE INCOME

Total tax expense on other comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
	(In thousands)						(In thousands)
Foreign currency translation adjustments	$	(169	)	$	(125	)	$	(362	)	$	(140	)
Tax benefit (expense) on unrealized gains (losses) on securities		643			(619	)		(184	)		(527	)
Tax benefit (expense) on defined benefit pension plans		(13	)		(4	)		(26	)		(7	)
Total tax benefit (expense) on other comprehensive income (loss)	$	461		$	(748	)	$	(572	)	$	(674	)

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LINE OF CREDIT AND TERM LOAN

9 Months Ended

Sep. 30, 2015

LINE OF CREDIT AND TERM LOAN

10. LINE OF CREDIT AND TERM LOAN

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three year revolving credit facility of $90 million. The maturity date of both the three year term loan facility and the three year revolving credit facility is May 23, 2016. The Credit Agreement is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the credit facilities, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to loans incurred under the Credit Agreement are (a) with respect to Revolving Loans, (i) the Eurodollar Rate plus 1.25% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.25% with respect to Base Rate Loans, and (b) with respect to the Term Loan, (i) the Eurodollar Rate plus 1.50% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.50% with respect to Base Rate Loans (each as defined in the Credit Agreement).

As of September 30, 2015, the interest rate was 1.58% for the three year revolving credit facility and was 1.83% for the three year term loan facility.

With the interest rate charged on the credit facilities being variable, the fair value of the credit facilities approximates their reported value as of September 30, 2015, as it reflects the current market value.

Principal payments on the term loan are due every quarter. During the three months ended September 30, 2015, a principal payment of $2.25 million was made. The related Credit Agreement requires compliance with certain financial ratios and covenants. As of September 30, 2015, the Company was in compliance with all debt covenants.

As of September 30, 2015 the outstanding balances of the term loan and line of credit, including interest, were $42.08 million and $90.14 million, respectively.

Future scheduled payments on the three-year revolving credit facility and term loan, at September 30, 2015 are as follows:

	Term Loan		Revolving Credit Facility
	(In thousands)
2015	$	2,250	$	—
2016	$	39,750	$	90,000

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Summary of Activity for Restricted Stock Unit Awards Granted (Detail) - $ / shares	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Number Of Awards
Unvested at beginning of period	564,314	501,292
Granted	18,840	293,904
Vested	(143,704)	(227,882)
Forfeited	(25,681)	(3,000)
Unvested at end of period	413,769	564,314
Weighted Average Grant Date Fair Value
Unvested at beginning of period	$ 37.37	$ 28.64
Granted	46.13	42.79
Vested	35.63	25.03
Forfeited	35.86	44.90
Unvested at end of period	$ 38.47	$ 37.37

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Employee Benefit Plans - Additional Information (Detail) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Defined Benefit Plan Disclosure [Line Items]
Employee contribution percentage			60.00%
Employee contribution amount			$ 18,000
Defined Benefit Plan, contributions by employer			0
Provident Fund
Defined Benefit Plan Disclosure [Line Items]
Contribution expense recognized by Indian entities	$ 1,500,000	$ 1,200,000	4,800,000	$ 3,000,000
Gratuity Plan
Defined Benefit Plan Disclosure [Line Items]
Contribution expense recognized by Indian entities			2,800,000	$ 2,400,000
Accrued liability for retirement plan	$ 13,000,000		$ 13,000,000		$ 12,100,000

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Stock-Based Compensation Impact on Company Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Restricted stock-based compensation expense	$ 1,690	$ 1,606	$ 5,104	$ 4,619
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Restricted stock-based compensation expense	586	573	1,830	1,505
Selling, general and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Restricted stock-based compensation expense	$ 1,104	$ 1,033	$ 3,274	$ 3,114

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LINE OF CREDIT AND TERM LOAN (Tables)

9 Months Ended

Sep. 30, 2015

Future Scheduled Payments on Line of Credit and Term Loan

Future scheduled payments on the three-year revolving credit facility and term loan, at September 30, 2015 are as follows:

	Term Loan		Revolving Credit Facility
	(In thousands)
2015	$	2,250	$	—
2016	$	39,750	$	90,000

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Line of Credit and Term Loan - Additional Information (Detail) - USD ($)		3 Months Ended
	May. 23, 2013	Sep. 30, 2015	Dec. 31, 2014
Line of Credit Facility [Line Items]
Line of credits, outstanding balance			$ 129,750,000
Term Loan Facility
Line of Credit Facility [Line Items]
Line of credit, principal payment		$ 2,250,000
Credit Agreement
Line of Credit Facility [Line Items]
Line of credit, interest rate description	The interest rates applicable to loans incurred under the Credit Agreement are (a) with respect to Revolving Loans, (i) the Eurodollar Rate plus 1.25% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.25% with respect to Base Rate Loans, and (b) with respect to the Term Loan, (i) the Eurodollar Rate plus 1.50% with respect to Eurodollar Loans and (ii) the Base Rate plus 0.50% with respect to Base Rate Loans (each as defined in the Credit Agreement).
Credit Agreement | Term Loan Facility
Line of Credit Facility [Line Items]
Line of credit, effective interest rate		1.83%
Line of credits, outstanding balance		$ 42,080,000
Credit Agreement | Term Loan Facility | Eurodollar Rate Loans
Line of Credit Facility [Line Items]
Line of credit, interest rate	1.50%
Credit Agreement | Term Loan Facility | Base Rate Loan
Line of Credit Facility [Line Items]
Line of credit, interest rate	0.50%
Credit Agreement | Revolving Loans
Line of Credit Facility [Line Items]
Line of credit, effective interest rate		1.58%
Credit Agreement | Revolving Loans | Eurodollar Rate Loans
Line of Credit Facility [Line Items]
Line of credit, interest rate	1.25%
Credit Agreement | Revolving Loans | Base Rate Loan
Line of Credit Facility [Line Items]
Line of credit, interest rate	0.25%
Credit Agreement | Revolving Credit Facilities
Line of Credit Facility [Line Items]
Line of credits, outstanding balance		$ 90,140,000
Bank of America | Credit Agreement
Line of Credit Facility [Line Items]
Line of credit, total borrowings	$ 150,000,000
Line of credit, pledge equity interest	65.00%
Bank of America | Credit Agreement | Term Loan Facility
Line of Credit Facility [Line Items]
Line of credit, maturity period	3 years
Line of credit, value	$ 60,000,000
Maturity date of debt instrument	May 23, 2016
Bank of America | Credit Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Line of credit, maturity period	3 years
Line of credit, value	$ 90,000,000
Maturity date of debt instrument	May 23, 2016

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES

15. COMMITMENTS AND CONTINGENCIES

As of September 30, 2015, and December 31, 2014, Syntel’s subsidiaries have commitments for capital expenditures (net of advances) of $32.0 million and $31.8 million, respectively, primarily related to the technology campuses being constructed at Pune and Chennai in India.

Syntel’s Indian subsidiaries’ operations are carried out from their development centers/units in Mumbai, Pune, Chennai and Gurgoan forming part of a Special Economic Zone (“SEZ”)/ Software Technology Parks (“STP”) scheme. Under these schemes, the registered units have export obligations, which are based on the formula provided by the notifications/circulars issued by the STP and SEZ authorities from time to time. The consequence of not meeting the above commitments would be a retroactive levy of import duty on items previously imported duty free for these units. Additionally, the respective authorities have rights to levy penalties for any defaults on a case-by-case basis. The Company is confident of meeting these obligations.

The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. The Company’s estimates regarding legal contingencies are based on information known about the matters and its experience in contesting, litigating and settling similar matters. It is the opinion of management with respect to pending or threatened litigation matters that unfavorable outcomes are remote and that estimates of possible loss are not able to be made. Although actual amounts could differ from management’s estimates, none of the actions are believed by management to involve future amounts that would be material to the Company’s financial position or results of operations.

The Company estimates the costs associated with known legal exposures and their related legal expenses and accrues reserves for either the probable liability, if that amount can be reasonably estimated, or otherwise the lower end of an estimated range of potential liability. There was no accrual related to customer related claim contingencies during the three months ended September 30, 2015. The Company made no accruals towards estimated legal exposures and their related legal expenses.

As at December 31, 2014, the Company had recorded $0.35 million as an accrual towards liability for a customer claim related contingency. During the three months ended March 31, 2015, the Company settled the customer claim without admitting liability and the amount accrued was paid out.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2015

FAIR VALUE MEASUREMENTS

20. FAIR VALUE MEASUREMENTS

The Company follows the guidance for fair value measurements and fair value option for financial assets and liabilities, which primarily relate to the Company’s investments, forward contracts and nonfinancial assets and liabilities.

This standard includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

The fair value hierarchy consists of the following three levels:

• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of September 30, 2015:

					(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	94.5	$	—	$	—	$	94.5
Term Deposits		—		409.2	$	—	$	409.2
Total Assets Measured at Fair Value	$	94.5	$	409.2			$	503.7

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2014:

					(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	186.8	$	—	$	—	$	186.8
Term Deposits		—		466.7		—		466.7
Total Assets Measured at Fair Value	$	186.8	$	466.7	$	—	$	653.5

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Summary of Short-term Investments (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Investments [Line Items]
Investments in mutual funds at fair value	$ 94,503	$ 186,842
Term deposits with banks	409,084	466,625
Fixed Maturity Plans (FMPs) of mutual funds, at cost		15,886
Total	$ 503,587	$ 669,353

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TERM DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2015

Term Deposits with Various Banks Outstanding

The following table summarizes the term deposits with various banks outstanding as of September 30, 2015 and December 31, 2014.

	(In Millions)
Balance Sheet Item	As of September 30, 2015		As of December 31, 2014
Cash & Cash Equivalents	$	108.04	$	13.00
Short Term Investments		409.09		466.60
Non-Current Assets		0.08		0.10
Total	$	517.21	$	479.70

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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Restricted Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning Balance at Dec. 31, 2014	$ 947,830	$ 1	$ 30,935	$ 67,422	$ 1,035,716	$ (186,244)
Beginning Balance (in shares) at Dec. 31, 2014		83,742	564
Net income	178,291				178,291
Other comprehensive loss, net of tax	(39,999)					(39,999)
Excess tax benefits on stock compensation plan	70		$ 70
Restricted stock activity	5,104		$ 5,104
Restricted stock activity (in shares)		144	(150)
Ending Balance at Sep. 30, 2015	$ 1,091,296	$ 1	$ 36,109	$ 67,422	$ 1,214,007	$ (226,243)
Ending Balance (in shares) at Sep. 30, 2015		83,886	414

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REVENUE RECOGNITION

9 Months Ended

Sep. 30, 2015

REVENUE RECOGNITION

4. REVENUE RECOGNITION

The Company recognizes revenues from time and materials contracts as the services are performed.

Revenue from fixed-price applications management, maintenance and support engagements is recognized as earned which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagement.

Revenue on fixed-price, applications development and integration projects are measured using the proportional performance method of accounting. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts to the completion of the contract. The Company monitors estimates of total contract revenues and costs on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the changes become known. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss. The Company issues invoices related to fixed price contracts based on either the achievement of milestones during a project or other contractual terms. Differences between the timing of billings and the recognition of revenue based upon the proportional performance method of accounting are recorded as revenue earned in excess of billings or deferred revenue in the accompanying consolidated balance sheets.

Revenues are reported net of sales incentives to customers.

Reimbursements of out-of-pocket expenses are included in revenue in accordance with revenue guidance in the FASB Codification.

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Income Taxes - Additional Information (Detail)		3 Months Ended											9 Months Ended			12 Months Ended
	Jul. 13, 2011 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($) Entity	Sep. 30, 2014	Jun. 30, 2014 USD ($)	Dec. 31, 2013 USD ($)	Mar. 31, 2013 Entity	Sep. 30, 2012 USD ($)	Mar. 31, 2012 USD ($) Entity	Dec. 31, 2011 USD ($)	Sep. 30, 2010 USD ($)	Sep. 30, 2015 USD ($)	Sep. 30, 2014	Sep. 30, 2012 USD ($)	Mar. 31, 2012 Entity	Dec. 31, 2010 USD ($)	Dec. 31, 2014 USD ($)	Dec. 31, 2007 USD ($)	Dec. 31, 2005 USD ($)
Income Taxes [Line Items]
Statutory provision		35.00%			35.00%								35.00%	35.00%
Effective holiday tax rate		50.00%
Reversed provision for tax				$ 230,000
Provision for tax to a separate particular tax provision				70,000
Valuation allowance		$ 0		$ 790,000									$ 0
Expense recognized for accrued interest and penalties		40,000
Accrued interest and penalties related to unrecognized tax benefits		1,280,000											1,280,000					$ 1,320,000
Income taxes paid against liabilities for unrecognized tax benefits		40,480,000											40,480,000					35,860,000
Unrecognized tax liability		48,540,000											48,540,000					40,470,000
Unrecognized tax benefits, tax disputes													1,510,000
Unrecognized tax benefits, potential tax disputes													$ 3,070,000
Exemption from corporate income taxes													10 years
Corporate income taxes, years													15 years
Income tax adjustments provision reversal																	$ 330,000
Provision for unrecognized tax benefit against tax dispute		110,000											$ 110,000					860,000
Favorable adjustment upon review of tax liabilities															$ 240,000
Branch Profit Tax (BPT)													15.00%
Accumulated deferred tax liability on BPT																			$ 1,730,000
Additional branch profit taxes if profits were not permanently invested		7,260,000											$ 7,260,000
Accrued taxes, likely amount		299,500,000											299,500,000
Income tax audit, service tax objection amount							$ 710,000		$ 450,000			$ 3,850,000
Service tax audit objection received	$ 3,000,000
Closure of service tax audit objection amount		850,000											850,000
Service tax return with show cause notice													2,040,000
Service tax including penalty and interest demanded by tax department		$ 3,950,000											$ 3,950,000
Interest percentage on service tax penalty													18.00%
Local tax expense													$ 3,400,000
Local tax liability gross																		5,900,000
Local tax liability net																		$ 3,800,000
Two Thousand Two To Two Thousand Five Financial Years
Income Taxes [Line Items]
Unrecognized Indian income tax liabilities																				$ 4,780,000
Income tax liability recognized																				$ 720,000
Fourth Quarter Twenty Eleven
Income Taxes [Line Items]
Income tax audit, service tax objection amount						$ 580,000
Received service tax refund						320,000					$ 150,000
First Quarter Twenty Twelve
Income Taxes [Line Items]
Received service tax refund										$ 130,000
Fourth Quarter Twenty Thirteen
Income Taxes [Line Items]
Income tax audit, service tax objection amount						50,000
Received service tax refund						200,000
July 2013 - March 2014
Income Taxes [Line Items]
Income tax audit, service tax objection amount			$ 300,000
Received service tax refund			$ 512,000
Second Quarter Two Thousand Fourteen
Income Taxes [Line Items]
Income tax audit, service tax objection amount						120,000
Received service tax refund						$ 120,000
Mumbai
Income Taxes [Line Items]
Number of units | Entity								3		1						1
Five Years
Income Taxes [Line Items]
Effective holiday tax rate													100.00%
India Tax Authority | Finance Act 2015
Income Taxes [Line Items]
Cess on services													2.00%
Minimum
Income Taxes [Line Items]
Increase in Minimum Alternative Tax rate													20.96%
Minimum | India Tax Authority
Income Taxes [Line Items]
Increase in surcharge rate		10.00%											10.00%
Increase in corporate tax rate													33.99%
Increase in dividend distribution tax													16.99%
Increase in service tax rate													12.36%
Maximum | Finance Act 2015
Income Taxes [Line Items]
Increase in Minimum Alternative Tax rate													21.34%
Maximum | India Tax Authority | Finance Act 2015
Income Taxes [Line Items]
Increase in surcharge rate		12.00%											12.00%
Increase in corporate tax rate													34.60%
Increase in dividend distribution tax													17.30%
Increase in service tax rate													14.00%
Unit in Chennai
Income Taxes [Line Items]
Number of units | Entity				1						1						1
Unit in Chennai | First Five Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage				100.00%												100.00%
Unit In Pune | KPO SEZ
Income Taxes [Line Items]
Number of units | Entity								1
Unit In Pune | IT SEZ
Income Taxes [Line Items]
Number of units | Entity								2
Unit In Pune | First Five Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage								100.00%
Other Disputes
Income Taxes [Line Items]
Unrecognized Indian income tax liabilities		$ 1,580,000											$ 1,580,000
Income tax liability recognized		790,000											$ 790,000
Certain Units In Sez | First Five Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage													100.00%
Certain Units In Sez | Additional Two Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage													50.00%
Certain Units In Sez | Additional Three Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage													50.00%
New Units In Sez | First Five Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage													100.00%
New Units In Sez | Next Five Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage													50.00%
New Units In Sez | Another Five Years
Income Taxes [Line Items]
Corporate income taxes, exemption percentage													50.00%
Minimum Alternate Tax (MAT)
Income Taxes [Line Items]
Valuation allowance		1,590,000											$ 1,590,000
Minimum alternate tax credit expiration period													10 years
Valuation allowance, net tax charge		$ 27,160,000											$ 27,160,000

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Term Deposits with Various Banks Outstanding (Detail) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	$ 517,210	$ 479,700
Cash & Cash Equivalents
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	108,040	13,000
Short Term Investments
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	409,090	466,600
Non Current Assets
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	$ 80	$ 100

XML

TERM DEPOSITS

9 Months Ended

Sep. 30, 2015

TERM DEPOSITS

21. TERM DEPOSITS

The following table summarizes the term deposits with various banks outstanding as of September 30, 2015 and December 31, 2014.

	(In Millions)
Balance Sheet Item	As of September 30, 2015		As of December 31, 2014
Cash & Cash Equivalents	$	108.04	$	13.00
Short Term Investments		409.09		466.60
Non-Current Assets		0.08		0.10
Total	$	517.21	$	479.70

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INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2015

Differentiation between Federal Statutory Tax Rate and Effective Tax Rate

The following table accounts for the differences between the federal statutory tax rate of 35% and the Company’s overall effective tax rate:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Statutory provision		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		0.6	%		0.8	%		0.6	%		0.4	%
City taxes		—			0.1	%		—			0.1	%
Foreign effective tax rates different from US statutory rate		(11.3	)%		(15.3	)%		(12.0	)%		(14.0	)%
Tax reserve		—			—			0.1	%		(0.5	)%
Valuation Allowance		—			1.0	%		0.3	%		1.0	%
Effective Income Tax Rate		24.3	%		21.6	%		24.0	%		22.0	%

Minimum Alternate Tax (MAT)

Expiration Years of Minimum Alternate Tax Credit

Year of Expiry Of MAT Credit	Amount in USD (in millions)
2017-18		0.20
2018-19		0.27
2019-20		0.98
2020-21		1.63
2021-22		1.94
2022-23		6.02
2023-24		7.12
2024-25		7.51
2025-26		3.08
Total		28.75
Less: valuation allowance		(1.59	)
Total (net of valuation allowance)		27.16

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INCOME TAXES

9 Months Ended

Sep. 30, 2015

INCOME TAXES

14. INCOME TAXES

The following table accounts for the differences between the federal statutory tax rate of 35% and the Company’s overall effective tax rate:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Statutory provision		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		0.6	%		0.8	%		0.6	%		0.4	%
City taxes		—			0.1	%		—			0.1	%
Foreign effective tax rates different from US statutory rate		(11.3	)%		(15.3	)%		(12.0	)%		(14.0	)%
Tax reserve		—			—			0.1	%		(0.5	)%
Valuation Allowance		—			1.0	%		0.3	%		1.0	%
Effective Income Tax Rate		24.3	%		21.6	%		24.0	%		22.0	%

The effective tax rate for the three months ended September 30, 2015, was affected by an increase in the mix of services being performed on-shore within the U.S. where tax rates are higher, changes in the offshore/onshore, taxable/nontaxable units profit mix of the Company and by a SEZ unit entering a 50% tax holiday effective April 1, 2015 for a 100% tax holiday of five years.

The Company records provisions for income taxes based on enacted tax laws and rates in the various tax jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly, are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

Syntel, Inc. and its subsidiaries file income tax returns in various tax jurisdictions. The Company is no longer subject to U.S. Federal tax examinations by tax authorities for years before 2011 and for State tax examinations for years before 2010. During 2014, the Internal Revenue Service (IRS) commenced an examination of the 2012 U.S. Federal Income Tax Return filed by Syntel Inc. and subsidiaries, which was closed without any material adjustments.

Syntel India, the Company’s India subsidiary, has disputed tax matters for the financial years 1996-97 to 2010-11 pending at various levels of the Indian tax authorities. Financial year 2011-12 and onwards are open for regular tax scrutiny by the Indian tax authorities. However, the tax authorities in India are authorized to reopen the already concluded tax assessments and may re-open the case of Syntel India for financial years 2008-09 and onwards. The Indian tax authority served a notice for re-opening the tax assessment of financial year 2008-09 for Syntel Global Private Limited (“SGPL”) on April 12, 2014. During the three months ended June 30, 2015, SGPL defended its tax position for the aforesaid year and the Indian Tax authority dropped the re-opening of the tax assessment for financial year 2008-09.

The Company has reversed a provision for tax of $ 0.23 million for the quarter ended March 31, 2015 due to the expiration of the time limit with respect to a particular tax provision and made a provision for tax of $0.07 million with respect to a separate particular tax provision.

For the three months ended March 31, 2015, the Company has provided a tax charge of $0.79 million on account of valuation allowance against deferred tax assets recognized on minimum alternative tax. For the three months ended September 30, 2015, the Company has evaluated deferred tax assets and no provision is made on account of valuation allowance against deferred tax assets recognized on minimum alternative tax.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. During the three months ended September 30, 2015, the Company has accrued interest of approximately $0.04 million. The Company has accrued approximately $1.28 million and $1.32 million for interest and penalties as of September 30, 2015 and December 31, 2014, respectively.

The liability for unrecognized tax benefits was $48.54 million and $40.47 million as of September 30, 2015 and December 31, 2014, respectively. The Company has paid income taxes of $40.48 million and $35.86 million against the liabilities for unrecognized tax benefits of $48.54 million and $40.47 million, as of September 30, 2015 and December 31, 2014, respectively. The Company has paid the taxes in order to reduce the possible interest and penalties related to these unrecognized tax benefits.

The Company’s net amount of unrecognized tax benefits for the tax disputes of $1.51 million and potential tax disputes of $3.07 million could change in the next twelve months as the court cases and global tax audits progress. At this time, due to the uncertain nature of this process, it is not reasonably possible to estimate an overall range of possible change.

Syntel’s software development centers/units are located in Mumbai, Chennai, Pune and Gurgaon, India and registered in Special Economic Zones (SEZ), as Export Oriented Units (EOU) and as units located in Software Technologies Parks of India (STPI). Software development centers/units enjoy favorable tax provisions due to their registration in SEZ.

Certain units located in SEZ were eligible for 100% exemption from payment of corporate taxes for the first five years of operation, 50% exemption for the next two years and for a further 50% exemption for another three years, subject to fulfillment of certain criteria. New units in SEZ that were operational after April 1, 2005 are eligible for 100% exemption from payment of corporate taxes for the first five years of operation, 50% exemption for the next five years and a further 50% exemption for another five years, subject to fulfillment of certain criteria.

Most units located at SEEPZ Mumbai and the STPI/EOU units ceased to enjoy the tax exemption on March 31, 2011, except that one SEZ unit located at Mumbai and three more SEZ units located at Mumbai completed the tax holiday period on March 31, 2012 and March 31, 2013 respectively. The Company started an IT SEZ unit in the Syntel Chennai SEZ during the year ended December 31, 2010. The Company has started operation in a KPO SEZ unit and IT SEZ unit in Airoli, Navi Mumbai in the quarter ended June 30, 2011 and September 30, 2011 respectively. One SEZ unit located at Chennai has completed its first five years of 100% exemption as of March 31, 2012 and another SEZ unit located at Chennai has completed its first five years of 100% exemption as of March 31, 2015. Two IT SEZ units and one KPO SEZ unit located at Syntel Pune SEZ have completed their first five years of 100% exemption as of March 31, 2013. The Company started operation in a new IT SEZ unit and a new KPO SEZ unit in the Syntel Pune SEZ in the quarter ended June 30, 2013. The Company started operation in a new SEZ unit in the Syntel Chennai SEZ and Syntel Pune SEZ in the quarter ended June 30, 2014 and December 31, 2014 respectively. The Company has started operation in a KPO SEZ unit in Airoli, Navi Mumbai in the quarter ended June 30, 2015.

Syntel’s SEZ in Pune set up under the SEZ Act 2005, commenced operations in 2008. The SEZ for Chennai commenced operations in 2010. Income from operation of the SEZ, as a developer, is exempt from payment of corporate income taxes for ten out of 15 years from the date of SEZ notification.

Provision for Indian Income Tax is made only in respect of business profits generated from these software development units to the extent they are not covered by the above exemptions and also for income from treasury operations and other income.

Syntel India has not provided for disputed Indian income tax liabilities amounting to $1.58 million for the financial years 1996-97, 1997-98 and 2001-02, which is after recognizing certain tax liabilities aggregating $0.79 million.

Syntel India received orders for appeals filed with the Commissioner of Income Tax Appeals (“CIT (A)”) against the demands raised by the Income Tax Officer in respect of certain matters relating to the financial years 1996-97, 1997-98, and 2000-01. Syntel India’s contention was partially upheld by the CIT (A). Syntel India further appealed with the Income Tax Appellate Tribunal (“ITAT”) for the amounts not allowed by the CIT (A). Syntel India received favorable orders from the ITAT. The Income Tax Department filed further appeals before the Bombay High Court. The Bombay High Court dismissed the Income Tax Department appeals and upheld the ITAT orders on December 15, 2009. The Income Tax Department filed a review petition before the Bombay High Court that was rejected due to filing defects. The Income Tax Department may rectify the defects and re-submit the review petition.

Syntel India has also not provided for disputed Indian income tax liabilities aggregating $4.78 million for the financial years 2002-03 to 2004-05, which is after recognizing tax on certain tax liabilities aggregating $0.72 million provided for uncertain income tax positions, against which Syntel India filed appeals with the CIT(A). Syntel India received the order for appeal filed with the CIT (A) relating to financial year 2002-03 and financial year 2003-04, wherein the contention of Syntel India was partially upheld. Syntel India has further appealed to the ITAT for the amounts not allowed by the CIT (A). The Income Tax Department has also filed a further appeal against the relief granted to Syntel India by the CIT (A). Syntel India has obtained opinions from independent legal counsels that support Syntel India’s stand in this matter. During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT. The Income Tax Department may file further appeals before the Bombay High Court.

For the financial year 2004-05, the appeal of Syntel India was fully allowed by the CIT (A). The Income Tax Department filed a further appeal with the ITAT against the amounts allowed by the CIT (A) except with regard to one item. The Income Tax department’s appeal was rejected by the ITAT. The Income Tax Department filed a further appeal before the Bombay High Court for the amounts allowed by the ITAT, except an item on which the CIT (A) granted relief to Syntel India and the Income Tax department did not appeal. Accordingly, Syntel India reversed a tax provision of $0.33 million during the year ended December 31, 2010 with regard to that one item. The Bombay High Court dismissed the Income Tax Department appeal. The Income Tax Department filed a Special Leave Petition with the Supreme Court of India on January 24, 2013, challenging the order passed by the Bombay High Court. The petition will come up for admission in the near future. For the financial year 2005-06, the Income Tax Department decided against Syntel India with respect to a particular tax position and Syntel India filed an appeal with the CIT (A). During the year ended December 31, 2010, Syntel India’s appeal for the financial year was fully allowed by the CIT (A). The Income Tax Department filed a further appeal with the ITAT against the amounts allowed by the CIT (A). During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT. The Income Tax Department may file further appeals before the Bombay High Court. For the financial year 2006-07, the Income Tax Department decided against Syntel India with respect to a particular tax position and Syntel India filed an appeal with the CIT (A). During the three months ended September 30, 2011, the Company received an order for appeal filed with the CIT (A) that partially upheld Syntel India’s contentions. Syntel India filed a further appeal with the ITAT against the amounts not allowed by the CIT (A). The Income Tax Department filed a further appeal against the amounts allowed by the CIT (A). During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT. The Income Tax Department may file further appeals before the Bombay High Court. For the financial year 2007-08 to 2009-10, the Indian Income Tax Department decided against Syntel India with respect to a particular tax position and Syntel India filed appeals with the CIT (A). The Company received orders for appeals filed with the CIT (A) that upheld Syntel India’s contentions. The Income Tax Department filed further appeals against the amounts allowed by the CIT (A). These appeals are scheduled for hearing before the ITAT in the near future. During the quarter ended September 30, 2015, Syntel India received favorable orders from the ITAT for the financial year 2007-08. The Income Tax Department may file further appeals before the Bombay High Court.

For the financial year 2010-11, the income tax department has raised a new tax dispute on a particular tax position. Management has evaluated the tax impact on this tax position for the aforesaid financial year and subsequent financial year. As per management estimates, the Company has provided for unrecognized tax benefits of $0.11 million and $0.86 million and for the nine months ended September 30, 2015 and the year ended December 31, 2014 respectively. Syntel India filed appeals with the CIT (A) against the aforesaid order. During the quarter ended September 30, 2015, Syntel India has received a favorable order from income tax department for the financial year 2011-12 and also received a rectification order for the assessment of the aforesaid tax position of the financial year 2010-11.

For the financial year 2006-07, the Income Tax Department decided against the Syntel KPO entity with respect to a particular tax position and the Syntel KPO entity filed an appeal with the CIT (A). During the year ended December 31, 2011, the Syntel KPO entity received an order for appeal filed with CIT (A) wherein, the contention of Syntel KPO entity was upheld. The Income Tax department filed a further appeal against the amounts allowed by the CIT (A). The Income Tax Department appeal is fixed for hearing before ITAT in the near future. For the financial years 2007-08 to 2010-11, the Income Tax Department decided against the Syntel KPO entity with respect to a particular tax position and the Syntel KPO entity filed an appeal with the CIT (A). The Syntel KPO entity’s appeals for the financial years 2007-08 to 2009-10 were not allowed by the CIT (A). The Syntel KPO entity has filed further appeals with the ITAT against the amounts not allowed by the CIT (A). The Syntel appeal is fixed for hearing before ITAT in the near future.

For the financial year 2007-08, the Income Tax Department also decided against Syntel International Private Limited (“SIPL”) with respect to a particular tax position and SIPL filed an appeal with the CIT (A). During the three months ended September 30, 2012, SIPL received an order for appeal filed with CIT (A) wherein the contention of SIPL was upheld. Also, High Court orders are in favor of the tax position taken by SIPL. Based on the CIT (A) and the recent High Court orders, SIPL reviewed an Uncertain Tax Position (UTP) of $0.24 million and reversed the aforesaid tax provision in September 2012. The Income Tax Department filed a further appeal to the ITAT against the amounts allowed by the CIT (A). For the financial year 2011-12, the Income Tax Department also decided against SIPL with respect to a particular tax position and SIPL filed an appeal with the CIT (A).

All the above tax exposures involve complex issues and may need an extended period to resolve the issues with the Indian income tax authorities. Management, after consultation with legal counsel, believes that the resolution of the above matters will not have a material adverse effect on the Company’s consolidated financial position.

Branch Profit Tax

Syntel India is subject to a 15% U.S. Branch Profit Tax (BPT) related to its effectively connected income in the United States, to the extent its U.S. taxable adjusted net income during the taxable year is not invested in the United States. The Company expects that U.S. profits earned on or after January 1, 2008 will be permanently invested in the U.S. Accordingly, effective January 1, 2008, a provision for BPT is not required. The accumulated deferred tax liability of $1.73 million as of December 31, 2007 will continue to be carried forward. Estimated additional BPT which would be due, if U.S. profits were not to be permanently invested, were approximately $7.26 million as of September 30, 2015.

Undistributed Earnings of Foreign Subsidiaries

The Company intends to use the remaining accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and accordingly, undistributed earnings of foreign subsidiaries are considered to be indefinitely reinvested outside the United States and no provision for U.S. Federal and State income tax or applicable dividend distribution tax has been provided thereon. If the Company determines to repatriate all undistributed repatriable earnings of foreign subsidiaries as of September 30, 2015, the Company would have accrued taxes of approximately $299.5 million.

Service Tax Audit

During the three months ended September 30, 2010, a service tax audit was conducted for the Adyar facility in Chennai by the office of the Accountant General (Commercial Receipt Audit). The scope of the audit was to review transactions covered under the Central Excise and Customs Act. The Development Commissioner (DC) issued a letter stating the audit objections raised by the officer of the audit team. Most of the observations are pertaining to the service tax and are for an amount of $3.85 million. Syntel India filed a reply to said notice and provided further information.

Further to Syntel India’s reply and information filed earlier, Syntel India received a letter dated July 13, 2011 from the DC, indicating that the audit objections amounting to $3.0 million, out of the total amount of $3.85 million, have been closed. Syntel is pursuing closure of the balance of the audit objections of approximately $0.85 million but has not yet received any communication back from the DC office.

Syntel India obtained the views of a tax consultant in this matter and the consultant advised that the matter is time barred. Even if not time barred, the consultant also provided advice that Syntel India will be in a position to defend the objections raised and therefore no provision has been made in the Company’s books.

Syntel India regularly files quarterly refund applications and claims refunds of taxes on input services which remain unutilized against a zero service tax on export of services. During the quarter ended June 30, 2014, Syntel India received orders for a service tax refund for the period October – December 2011. The Assistant Commissioner of Service Tax granted a refund of $0.32 million and rejected refunds of $0.58 million. Syntel India filed appeals before the Commissioner of Appeal responding to the aforesaid rejections. The rejection orders stated that the input services did not meet the conditions qualifying them for a refund of service taxes. Syntel India obtained the views of a tax consultant in this matter and the consultant advised that Syntel India is in a strong position to defend the rejections and therefore, no provision has been made in the books.

The Syntel KPO entity regularly files quarterly refund applications and claims refunds of taxes on input services which remain unutilized against a zero service tax on export of services. During the three months ended September 30, 2012, the Syntel KPO entity received orders for the rejection of a service tax refund for the period April–September 2011 of $0.45 million. Per the rejection order, there is no nexus of input services with the export of services justifying the claim of refund of service tax. The Syntel KPO entity filed appeals before the Commissioner of Appeal against the aforesaid order. The Syntel KPO entity received service tax refunds for the periods October–December 2011 and January–March 2012 of $0.15 million and $0.13 million, respectively. During the quarter ended December 31, 2013, the KPO entity received orders for rejection of Service tax refunds for the period April–December 2012 of $0.71 million. As per the rejection order, there is no nexus of input services with the export of services and the entity is not eligible for refund of the service tax. The Syntel KPO entity filed appeals before the Commissioner of Appeal against the aforesaid orders. During the quarter ended June 30, 2014, the Commissioner of Appeal allowed appeals filed by the Syntel KPO entity. The Service tax department has filed an appeal against the said order before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and also an application for stay of refund. During the quarter ended June 30, 2014, the Syntel KPO entity received an order for a service tax refund for the period January–March 2013 of $0.20 million, after rejection of $0.05 million. The Syntel KPO entity filed appeals before the Commissioner of Appeal against the aforesaid rejection. During the quarter ended June 30, 2015, the Syntel KPO entity has received an order for a service tax refund for the period July 2013– March 2014 of US$0.512 million after rejection of US$0.30 million. Syntel has filed appeals before the Commissioner of Appeal against the aforesaid partial rejection.

The KPO entity has received an order for a service tax refund for the period April – June 2014 of $0.12 million after rejection of $0.12 million. Syntel plans to file appeals before the Commissioner of Appeal against the aforesaid partial rejection

The Company obtained a tax consultant’s advice on the aforesaid orders. The consultant is of the view that the aforesaid orders are contrary to the wording of the service tax notifications and provisions. The Company, therefore, believes that its claims of service tax refunds should be upheld at the appellate stage and the refunds should be accordingly granted. Based on the consultant’s tax advice, the Company is in a strong position to defend the rejection of the refunds. Accordingly, no provision has been made in the Company’s books.

SIPL regularly files service tax returns and filed a refund application claiming a tax refund of unutilized input service tax on account of export of services. The Company received a show cause notice on October 23, 2012 for a service tax demand of approximately $2.04 million. The Company filed submissions with the service tax department to oppose the aforementioned show cause notice. However, the service tax department passed an order dated February 11, 2013 confirming said demand. The total demand, including penalty amounts, was raised to $3.95 million. In addition to this amount, annual interest at 18%, calculated on a daily basis on the outstanding demand, is payable. SIPL filed an appeal against the said order before the CESTAT and also an application for stay of demand. The CESTAT allowed SIPL’s appeal, set aside the demand and directed the Commissioner to make a fresh examination. However, the service tax department filed an appeal before the Bombay High Court against the aforesaid CESTAT order. The Bombay High Court has directed to CESTAT to decide the case on merit rather than directing to commissioner for fresh consideration

The Company’s tax consultant is of the view that the aforementioned demand is contrary to the wording of the service tax notifications and provisions. The Company therefore believes it is in a strong position to defend the aforementioned demand. Accordingly, no provision has been made in the Company’s books.

India Finance Act 2015

The Finance Bill 2015 received the assent of the President of India on May 14, 2015 and has been enacted as the Finance Act 2015. The provisions include clarification on indirect transfers in the Income-tax Act and deferral of the General Anti-Avoidance Rule (GAAR) to financial year 2017-18. Withdrawals for the Direct Tax code and Goods and Service Tax to be implemented from April 1, 2016.

The Finance Bill also includes provisions for an increase in the Surcharge on Income tax from 10% to 12% (consequential increase in corporate tax rate from 33.99% to 34.60% and an increase in the Dividend distribution tax from 16.99% to 17.30% on the gross distributable amount including tax and an increase in the Minimum Alternative Tax (MAT) rate from 20.96% to 21.34%. The service tax rate is to increase to 14% against an earlier rate of 12.36%. In addition to the 14% rate, there would be Swachh Bharat Cess of 2% on the gross value of certain services as may be later established.

The changes, will have not have a material impact on the operations of the Company’s India based entities.

Local Taxes

As of September 30, 2015, the Company had a local tax liability of approximately $3.4 million (exclusive of interest and/or penalties) relating to employer withholding taxes and employer payroll expense tax.

As of December 31, 2014, the Company had a local tax liability provision of approximately $5.9 million, equal to $3.8 million net of tax, relating to local taxes including employer withholding taxes, employer payroll expense taxes, business license and corporate income taxes.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (“MAT”) is payable on Book Income, including the income for which deduction is claimed under section 10A and section 10AA of the Indian Income Tax Act. The excess tax paid under MAT provisions, over and above the normal tax liability is “MAT Credit”. MAT Credit can be carried forward and set-off against future tax liabilities computed under normal tax provisions in excess of tax payable under MAT. The MAT Credit can be carried forward for set-off up to a period of 10 years from the end of the financial year in which MAT Credit arises. Accordingly, the Company’s Indian subsidiaries have calculated the tax liability for current domestic taxes after considering MAT tax liability. Management estimates that the Company’s Indian subsidiaries would utilize the MAT credit within the prescribed limit of 10 years. The Company estimated that the Company may not be able to utilize part of the MAT credit for one of the Indian subsidiaries. Accordingly, a valuation allowance of $1.59 million was recorded against the accumulated MAT credit recognized as deferred tax assets. The MAT credit as of September 30, 2015 of $27.16 million (net of valuation allowance of $1.59 million) shall be utilized before March 31 of the following financial years and shall expire as follows:

Year of Expiry Of MAT Credit	Amount in USD (in millions)
2017-18		0.20
2018-19		0.27
2019-20		0.98
2020-21		1.63
2021-22		1.94
2022-23		6.02
2023-24		7.12
2024-25		7.51
2025-26		3.08
Total		28.75
Less: valuation allowance		(1.59	)
Total (net of valuation allowance)		27.16