Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2024
Notes to the Consolidated Financial Statements as at and for the year ended March 31, 2024
B Employee stock options scheme (ESOP) The Company has granted under Fractal Employees Stock Option Plan (ESOP) to its employees which was approved by its Board and Shareholders and further amended in line with the provisions of Companies Act, 2013. Pursuant to the Plan, the Parent Company has issued grants to its various employees from time to time during financial years 2008 to 2024. These options vest over the period of 1-4 years from the grant date and are exercisable within 10 years from vesting date for 2007 scheme and are exercisable within 10 years from grant date for 2019 scheme . In the case of resignation of the employee, the vested grants lapse (if not exercised) after 60 days from the date of resignation from service. Vesting of options is subject to continued employment with the Company. The plan is an equity settled plan. The employee compensation expense for the year is determined on fair value basis.
(ii) Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long- term debt obligations with floating interest rates. Exposure to interest rate risk The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans and borrowings. The Group is exposed to interest rate risk on the borrowing outstanding in the books as at March 31, 2024 pursuant to movement in Term SOFR. The interest reset period or the amortization schedule is not fixed under this credit facility and hence the same has not been hedged. Sensitivity analysis The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group's profit before tax is affected through the impact on floating rate borrowings, as follows:
Movement of Options Granted with Weighted Average Exercise Price (WAEP) Particulars As at March 31, 2024
As at March 31, 2023
ESOPs
No. of options
WAEP No. of options
WA EP
Options outstanding at the beginning of the year
25,97,381
952
28,56,378
787
Options granted during the year Options lapsed during the year
2,20,650 (2,02,139)
2,270 1,021
2,61,406 (2,34,810)
2,120 1,026
Options settled/cancelled during the year
(100)
846
(55,737)
846 640 506 952 707
(in Rupees Million)
Options revived during the year Options exercised during the year
-
-
3,000
Impact on profit after tax and equity March 31, 2024 March 31, 2023
(1,19,661) 24,96,131 13,52,786
621
(2,32,856) 25,97,381 10,56,133
Particulars
Options outstanding at the end of the year Options exercisable at the end of the year
1,078
Change in Term SOFR - Increase by 1%
850
(20)
(26)
- Decrease by 1%
20
26
The options granted under the above Scheme, shall vest in graded manner over a period of 1-4 years. Each option will entitle the participant to one equity share. The weighted average fair values of the options granted during the year was C 933 (March 31, 2023 : C 1109). The weighted average stock price of the options granted during the year ended March 31, 2024 is C 2,270 (March 31, 2023 : C 2,270). Weighted average remaining contractual life (years) of the options based on the exercise price :
(iii) Capital management The Group aims to manage its capital efficiently so as to safeguard its ability to continue as a going concern and to optimise returns to its shareholders. The capital structure is based on management’s judgement of the appropriate balance of key elements in order to meet its strategic and day-to-day needs. The policy is to maintain a stable and strong capital structure with a focus on total equity so as to maintain investor, creditors and market confidence and to sustain future development and growth of its business.
Net gearing ratio at the end of the reporting period is as follows:
Exercise Price No. of options outstanding
1*
40*
280
595
610
640
846
2,270
3,128
(in Rupees Million)
5,000 15,924 1,11,539 32,500 24,700 2,47,209 15,94,868 3,96,850 67,541
Particulars Borrowings
March 31, 2024 March 31, 2023
2,501
3,256 (2,132)
Weighted average remaining contractual life (in years)
0.25
0.30
5.12
5.00
7.12
7.69
7.96
9.01
8.12
Less : Cash and cash equivalents
(812)
Less : Other bank balances
(75)
(151)
Less : Investment in liquid mutual funds and other assets
(4,455) (2,841) 14,199
(2,906) (1,933)
* Time limit for vested options have been extended for one employee vide Circular Resolution No: 20/2023-24/NRC dated April 3, 2024. The fair valuation of options has been done by an independent firm of Chartered Accountants on the date of grant using the Black-Scholes Model. The key assumptions in the Black-Scholes Model for calculating fair value as on the date of grant:
Net Debt (A) Total Equity (B)
13,634
Net Gearing Ratio (A/B)
0.20
0.14
33 Employee Stock Options Scheme (ESOP) A The expense recognised for employee services received during the year is shown in the following table: (in Rupees Million)
Particulars
ESOP 2023-24
ESOP 2022-23
Risk Free Rate
5.45 % - 9.19 % 5.45 % - 9.19 %
Year ended March 31, 2024
Year ended March 31, 2023
Option Life (Based on Simplified Average Method)
Particulars
5 to 14 years
5 to 14 years
Employee Stock Options Scheme (Refer note b) Management Stock Options Scheme (Refer note c)
Expected Volatility*
641 307
1,019
9.76 % - 63.91 %
9.76 % - 63.91 %
554
Expected Growth in Dividend
0%
0%
Employee Stock Options Scheme expense pertaining to subsidiaries*
15
14
Total
963
1,587
*Expected volatility during the expected term of the options is based on historical volatility of the observed market price of the Groups publicly traded equity shares during the period equivalent to the expected term of the options.
* This expense pertains to ESOP of subsidiary companies and expense has been recognised using black-scholes model as per the terms of the respective plans.
238
239
Fractal Analytics Limited | Annual Report 2023-24
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