The Company has noncontributory defined benefit plans (the “Benefit Plans”) covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. Benefits are based on the employee’s years of service and compensation at the time of termination. The Company uses March 31 as the measurement date for its plans.

In accordance with the recently adopted FASB ASU 2017-07, Compensation—Retirement Benefits (Topic 715), “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, the Company presented the service cost component in costs of revenue and selling, general and administrative expenses. The other components of net periodic pension cost are presented within other (income) expense in the Consolidated Statements of

Income (Loss). The adoption of this guidance did not have a material impact on the consolidated financial statements, therefore, the Company did not retrospectively change the presentation of the financial statements.

The discount rate is based upon high quality fixed income investments in India and Sri Lanka. The discount rates at March 31, 2020 were used to measure the year-end benefit obligations and the pension cost for the subsequent year.

To determine the expected long-term rate of return on pension plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. The Company amortizes unrecognized actuarial gains or losses over a period no longer than the average future service of employees.

The Company’s benefit obligations are described in the following tables. Accumulated and projected benefit obligations (“ABO” and “PBO”, respectively) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation.

At March 31, 2020 and 2019 India and Sri Lanka together had $2,472 and $1,873, respectively, net projected benefit obligation recorded in the consolidated balance sheets as “accrued employee compensation and benefits”.

The Company’s plan assets are being managed by insurance companies in India and Sri Lanka.

The following table presents the fair values of the Company’s pension plan assets.

(1)	This category comprises government fixed income investments with investments in India and Sri Lanka.

(2)	This category represents investment in bonds and debentures from diverse industries.

(3)	This category represents equity shares, money market investments and other investments.

The fair values of the government bonds are measured based on market quotes. Corporate bonds and other bonds are valued based on market quotes as of the balance sheet date. Equity share funds are valued at their market prices as of the balance sheet date. Money market funds are valued at their market price.

Pension liability


	March 31,
	2020		2019
PBO	$	13,829	$	11,928
Fair value of plan assets		11,357		10,055
Funded status recognized	$	2,472	$	1,873
Amount recorded in accumulated other comprehensive income	$	2,298	$	2,402

The amount in accumulated other comprehensive income (loss) that is expected to be recognized as a component of net periodic benefit cost over the fiscal year ended March 31, 2021 is $418. The Company expects to contribute $5,335 to its gratuity plans during the fiscal year ending March 31, 2021.

The pretax amounts of prior service cost and actuarial gain (loss) recognized from accumulated other comprehensive income consists of:


	Year Ended March 31,
	2020		2019		2018
Prior service cost	$	(26)	$	(44)	$	(9)
Net amortization gain (loss)		(276)		(146)		(138)
Total	$	(302)	$	(190)	$	(147)

Estimated future benefits payments


Fiscal year ending March 31 :
2021	$	2,047
2022		1,768
2023		1,939
2024		2,406
2025		2,913
2026 - 2028	$	15,399