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
34 Operating Segment Basis of segmentation The Group’s segments are reflected based on principal business activities carried on by the Group. The Group’s businesses are as under: 1) Fractal.ai segment leverage core competencies in AI, engineering, design, along with deep domain expertise, and are complemented with our functional capabilities. We leverage these competencies to provide bespoke AI consulting services and AI products, as a part of the Fractal.ai segment In addition, we set up proprietary AI businesses to leverage the growing maturity of certain AI products and expand their addressable market beyond our target set of Must Win Clients and specific geographies. 2) Fractal alpha segment is focused on incubated and acquired Intellectual property solutions which includes Asper.ai, Flyfish.ai, Analytics Vidhya, Theremin and Eugenie. These pre-built AI products, designed to address both horizontal cross-industry and vertical industry-specific use cases are easy-to-use and can be efficiently deployed by clients with limited implementation efforts or customization. D uring the current year, the Group has reclassified Crux.ai and Senseforth.ai from Alpha segment to Fractal.ai as the Group is building and strengthening its Gen AI offerings to its clients and considers these products to augment the offerings at Fractal.ai segment via Fractal.ai’s Go-to-market (GTM) strategy resulting into an increase in buying centers for clients beyond traditional data analytical services. The CoDM also expects the change will bring in synergies between the Crux.ai and Senseforth.ai teams and Fractal.ai teams in terms of cost and efficiency. W hile Fractal.ai and Fractal Alpha are distinct segments of the Fractal Group, both segments contribute collaboratively to create solutions with both product and services in their scope to solve business problems of clients and cater to both the AI services and software markets.
C Management Stock Options Scheme (MSOP) The Company has granted stock option under it ‘Employee Stock Option Plan (ESOP) Time/Performance Based Management Incentive Plan (MIP) 2019' to its employees which was approved by its Board and Shareholders. Pursuant to the Plan, the Company has issued grants to its various employees from time to time during the financial year 2023-2024. Of these options, time based options will vest over the period of 1-4 years from the grant date, whereas performance based options will vest over satisfaction of milestones stipulated in performance based management plan. These MIP's are exercisable within 10 years from grant date. In the case of termination of employment without Cause or resignation for good reason of the management personnel , the vested grant lapses (if not exercised) after 3 months 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 management personnel compensation expense for the year has been determined on fair value basis.
Movement of Options Granted with Weighted Average Exercise Price (WAEP)
Time Based
Performance Based
Time Based
Performance Based
As at March 31, 2024
As at March 31, 2024
As at March 31, 2023
As at March 31, 2023
No. of options
No. of options
No. of options
No. of options
Particulars
WA EP
WA EP
WA EP
WA EP
Options outstanding at the beginning of the year Options granted during the year Options lapsed during the year Options settled/cancelled during the year Options exercised during the year Options outstanding at the end of the year Options exercisable at the end of the year
10,60,602
1,055 21,29,772
1,044 10,55,156
1,054 21,35,688
1,054
-
-
-
- 53,016
1,580 1,06,184 1,702 (56,060) 1,582 (56,040)
1,579 1,702 1,787
(45,049)
1,676 (1,00,434)
1,598 (27,940)
-
-
-
- (19,630)
(8,274)
880
-
-
-
-
-
-
Geographical information The Group's operations are majorly based in America, Europe and APAC & Others.
10,07,279
1,029 20,29,338
1,016 10,60,602
1,055 21,29,772
1,044
6,55,513
1,024
-
- 3,35,679
1,046
-
-
Segment accounting policies Segment accounting policies are in line with accounting policies of the Group. In addition, the following specific accounting policies have been followed for segment reporting : i) Segment revenue includes income directly identifiable with the segments. ii) Operating income is derived after deducting employee related expenses and other expenses of respective segments iii) E xpenses and Incomes that are directly identifiable with the segments are considered for determining the segment result. Expenses and Income which relate to the Group as a whole and not allocable to segments are included under "Unallocated". vi) Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Group as a whole and not allocable to any segment. Summarised segment information for the years ended March 31, 2024 and March 31, 2023, is as follows:
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 Nil (March 31, 2023: 1,351). The weighted average stock price of the options granted during the year ended March 31, 2024 is Nil (March 31, 2023 : 2,270). The fair valuation of option has been done by an independent firm of Chartered Accountants on the date of grant using the Binomial Model. Weighted average remaining contractual life (years) of the options based on the exercise price :
Exercise Price
846
2,270
No. of options outstanding Weighted average remaining contractual life ( in years)*
26,64,787 3,71,830
7.77
7.97
(in Rupees million)
*includes remaining contractual life of both time based and performance based MSOPs
March 31, 2024
The key assumptions in the Binomial Model for calculating fair value as on the date of grant:
Intersegment elimination
Particulars
Fractal.aiFractal.alpha Unallocated
Total
Revenue from operations
21,615
365
-
(17)
21,963
MSOP 2023-24
MSOP 2022-23
Particulars Risk Free Rate
Operating income*
1,233
(494)
(5)
-
734 456
5.75% to 7.13% 5.75% to 7.13%
Other income Finance cost
Option Life (Based on Simplified Average Method)
5 years
5 years
(445) (832) (163)
Depreciation and amortisation Share of (loss) of associate
Expected Volatility*
19.98% -39.76% 19.98% -39.76%
Expected Growth in Dividend
0%
0%
Exceptional items Profit before tax
(55)
(305) *Operating income for Fractal.ai and Fractal alpha segment is net of one time bonus paid of C 347 million and C 36 million respectively.
*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.
240
241
Fractal Analytics Limited | Annual Report 2023-24
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