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IDFC Ltd.

BSE: 532659 Sector: Financials
NSE: IDFC ISIN Code: INE043D01016
BSE 10:07 | 03 Apr 14.20 -0.33
(-2.27%)
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15.00

HIGH

15.00

LOW

14.05

NSE 09:59 | 03 Apr 14.20 -0.30
(-2.07%)
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14.95

HIGH

14.95

LOW

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OPEN 15.00
PREVIOUS CLOSE 14.53
VOLUME 23683
52-Week high 48.05
52-Week low 13.40
P/E 20.88
Mkt Cap.(Rs cr) 2,267
Buy Price 14.16
Buy Qty 300.00
Sell Price 14.20
Sell Qty 1016.00
OPEN 15.00
CLOSE 14.53
VOLUME 23683
52-Week high 48.05
52-Week low 13.40
P/E 20.88
Mkt Cap.(Rs cr) 2,267
Buy Price 14.16
Buy Qty 300.00
Sell Price 14.20
Sell Qty 1016.00

IDFC Ltd. (IDFC) - Director Report

Company director report

Your Directors have pleasure in presenting the Seventeenth Annual Report on thebusiness and operations of the Company together with the audited accounts for thefinancial year ended March 31 2014.

FINANCIAL RESULTS (STANDALONE) (J IN CRORE)
PARTICULARS FY14 FY13
Revenue from Operations 8214.21 7765.30
Other Income 17.72 11.19
Total Income 8231.93 7776.49
Less: Administrative Expenses * 237.95 249.21
Less: Provisions and Contingencies 628.83 394.11
Profit Before Finance Costs and Taxes 7365.15 7133.17
Less: Finance Costs 5006.96 4665.19
Profit Before Tax 2358.19 2467.98
Less: Tax Expenses ** 657.07 703.00
Profit After Tax 1701.12 1764.98
* Administrative Expenses include employee benefits expense other expenses and depreciation and amortisation expense.
**Tax Expenses is net of deferred tax.
APPROPRIATIONS
Transfer to Reserves:
Debenture Redemption Reserve 177.00 150.00
Special Reserve u/s. 36(1)(viii) of the Income-tax Act 1961 423.00 400.00
Special Reserve u/s. 45-IC of the RBI Act 1934 341.00 353.00
General Reserve 170.11 176.50
Dividend & Dividend Distribution Tax:
Proposed Dividend on Equity Shares [C 2.60 per share (Previous Year C 2.60 per share)] 394.24 393.84
Dividend on Equity Shares pertaining to previous year 0.15 0.20
Tax on proposed Equity Dividend 67.00 63.04
Tax on Equity Dividend for previous year (4.75) (0.04)

OPERATIONS REVIEW

Your Company is engaged inter alia in the business of financing infrastructureprojects in sectors like energy telecommunication transportation commercial andindustrial projects including hospitals education tourism and hotels.

Balance Sheet grew by 5.4% Year on Year (YoY) to reach C 73764 crore and Net Loans atC 58545 crore witnessed an increase of 5% YoY. As on March 31 2014 IDFC’s totalexposure was C 77621 crore of which Energy was highest at 37% followed byTelecommunication 28% Transportation 22% and Others 13%.

DIVIDEND

Your Directors are pleased to recommend a dividend of Rs. 2.60 per equity share of Rs.10 each (i.e. 26 %) for the year ended March 31 2014.

The Register of Members and Share Transfer Books will remain closed from July 19 2014to July 29 2014 (both days inclusive) for the purpose of payment of dividend for thefinancial year ended March 31 2014.

Dividend will be paid to those Members whose names appear in the Register of Members ason July 18 2014; in respect of shares held in dematerialised form it will be paid tothose Members whose names are furnished by National Securities Depository Limited andCentral Depository Services (India) Limited as beneficial owners as on that date.

Above dividend would be paid subject to approval by the Members at the ensuing AnnualGeneral Meeting ("AGM").

SUBSIDIARY COMPANIES

IDFC Limited ("IDFC" or "the Company") has thirteendirect subsidiary companies which are as follows:

• IDFC Alternatives Limited

• IDFC Trustee Company Limited

• IDFC Projects Limited

• IDFC Finance Limited

• IDFC Securities Limited

• IDFC Primary Dealership Company Limited

• IDFC Asset Management Company Limited

• IDFC AMC Trustee Company Limited

• IDFC Foundation (Section 25 Company under Companies Act 1956)

• IDFC Housing Finance Company Limited

• IDFC Infra Debt Fund Limited

• Neopro Technologies Private Limited

• Galaxy Mercantiles Limited

In addition

a. IDFC Alternatives Limited has a wholly owned subsidiary company namely IDFCProject Equity Company Limited.

b. IDFC Securities Limited has four wholly owned subsidiary companies namely IDFCFund of Funds Limited IDFC Capital (Singapore) Pte. Limited IDFC Securities SingaporePte. Limited and IDFC Capital (USA) Inc.

c. IDFC Asset Management Company Limited has two subsidiaries namely IDFCInvestment Advisors Limited and IDFC Investment Managers (Mauritius) Limited. During theyear under review the following changes took place in the group corporate structure ofyour Company –

1. On August 23 2013 the name of IDFC PPP Trusteeship Company Limited (subsidiarycompany of IDFC Foundation) was struck off from the Register of Registrar of Companies andwas dissolved pursuant to Section 560 of the Companies Act 1956 through Fast Track ExitMode.

2. On October 18 2013 the entire equity stake in IDFC Pension Fund Management CompanyLimited which was held by IDFC and IDFC Asset Management Company Limited was transferredto IDFC Securities Limited thereby making IDFC Pension Fund Management Company Limited awholly owned subsidiary of IDFC Securities Limited.

3. On November 16 2013 the Scheme of Amalgamation under Sections 391 to 394 ofCompanies Act 1956 was filed with the Hon’ble High Court of Bombay to amalgamateIDFC Distribution Company Limited IDFC Capital Limited and IDFC Pension Fund ManagementCompany Limited (the wholly owned subsidiaries of IDFC Securities Limited) with IDFCSecurities Limited and their respective shareholders. The Hon’ble High Court ofBombay approved the amalgamation of the above entities on March 28 2014.

4. By virtue of the above amalgamation the subsidiaries of IDFC Capital Limited i.e.IDFC Fund of Funds Limited IDFC Capital (Singapore) Pte. Limited and IDFC SecuritiesSingapore Pte. Limited became direct subsidiaries of IDFC Securities Limited.

Balance Sheet grew by 5.4% Year on Year (YoY) to reach L 73764 crore and NetLoans at L 58545 crore witnessed an increase of 5% YoY. As on March 31 2014IDFC’s total exposure was L 77621 crore of which Energy was highest at 37%followed by Telecommunication 28% Transportation 22% and Others 13%.

5. IDFC Housing Finance Company Limited was incorporated as a wholly owned subsidiaryof IDFC on March 4 2014.

6. IDFC Infra Debt Fund Limited was incorporated as a wholly owned subsidiary of IDFCon March 7 2014.

7. During the year IDFC increased its share of investment in equity shares of GalaxyMercantiles Limited from 43.44% in previous year to 100% in current year and by virtue ofthe same Galaxy Mercantiles Limited which was earlier an associate company of IDFC hasnow become a wholly owned subsidiary of IDFC.

Detailed analysis of the performance of IDFC and its businesses including initiativesin the areas of Risk Management Human Resources Information Technology and IDFCFoundation activities has been presented in the section on Management Discussion &Analysis of this Annual Report.

The Ministry of Corporate Affairs ("MCA") vide its General CircularNo. 2 / 2011 dated February 8 2011 granted general exemption under Section 212(8) of theCompanies Act 1956 to companies from attaching accounts of its subsidiaries in itsAnnual Report subject to fulfilment of certain conditions prescribed therein. The Board ofDirectors of the Company at it’s meeting held on March 14 2014 noted the provisionsof the above mentioned circular of MCA and passed the necessary resolution granting therequisite approvals for not attaching copies of Balance Sheet Statement of Profit andLoss Reports of the Board of Directors and Auditors of each of the subsidiary companiesto the accounts of the Company for FY14 subject to complying with the provisions of thesaid circular.

The Company undertakes that annual accounts of the subsidiary companies and the relateddetailed information will be made available to the Shareholders of the holding andsubsidiary companies seeking such information at any point of time. The annual accounts ofthe subsidiary companies will be available on the Company’s website: www.idfc.com andwill also be available for inspection by any Shareholder at the Registered and CorporateOffices of the Company and the concerned subsidiaries. The Company shall furnish ahardcopy of details of accounts of subsidiaries to Shareholders on demand. In accordancewith the requirements of Accounting Standard 21 (Consolidated Financial Statements) andAccounting Standard 23 (Accounting for Investment in Associates in Consolidated FinancialStatements) notified by the Companies (Accounting Standards) Rules 2006 the ConsolidatedAccounts of IDFC and its subsidiaries have been prepared and the same forms part of thisAnnual Report.

Statement of particulars of IDFC’s subsidiaries under Section 212 of the CompaniesAct 1956 is provided in Note 41 of the Notes forming part of the Consolidated FinancialStatements.

JOINT VENTURES

IDFC Foundation a Section 25 Company under the Companies Act 1956 and a wholly ownedsubsidiary of the Company has following three Joint Ventures:

• Delhi Integrated Multi-Modal Transit System Limited ("DIMTS")

• Infrastructure Development Corporation (Karnataka) Limited ("iDeCK")

• Uttarakhand Infrastructure Development Company Limited ("UDeC")

ASSOCIATES

IDFC has one associate company namely Feedback Infra Private Limited (formerly known asFeedback Infrastructure Services Private Limited).

In addition IDFC Projects Limited a wholly owned subsidiary of the Company has oneassociate company namely Jetpur Somnath Tollways Private Limited.

PARTICULARS OF EMPLOYEES

IDFC had 225 employees as on March 31 2014 and 570 employees at the group level.Particulars of employees as required to be furnished pursuant to Section 217(2A) of theCompanies Act 1956 read with the rules thereunder form part of this Report.

However as per the provisions of Section 219(1)(b)(iv) of the Companies Act 1956 thereports and accounts are being sent to all the Shareholders of the Company excluding thestatement of particulars of employees. Any Shareholder interested in obtaining a copy ofthe same may write to the Company Secretary of the Company.

EMPLOYEE STOCK OPTION SCHEME

Pursuant to the resolution passed by the Members at the AGM held on August 2 2006IDFC had introduced Employee Stock Option Scheme 2007 (referred to as "theScheme") to enable the employees of IDFC and its subsidiaries to participate inthe future growth and financial success of the Company. Out of 35568940 Optionsoutstanding at the beginning of the current financial year 3367575 Options lapsed onaccount of resignation and 1558622 Options were exercised during the year.

Your Directors have pleasure in informing you that RBI vide its letter dated April 92014 granted its In-principle approval to IDFC to establish a new bank in the privatesector under Section 22 of the Banking Regulation Act 1949. One of the conditions of theletter is that the bank is required to be established within 18 months from April 9 2014.

Additionally during the year 2246667 Options were granted to eligible employeesunder the Scheme. Accordingly 32889410 Options remain outstanding as of March 31 2014.

All Options vest in graded manner and are required to be exercised within a specificperiod. The Company has used the intrinsic value method to account for the compensationcost of stock to employees of the Company. Intrinsic value is the amount by which thequoted market price of the underlying share on the date prior to the date of the grantexceeds the exercise price on the option.

Disclosures as required by Clause 12 of the Securities and Exchange Board of India(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines 1999 areannexed to this Report.

MANAGEMENT DISCUSSION & ANALYSIS AND REPORT ON CORPORATE GOVERNANCE

In compliance with the provisions of Clause 49 of the Listing Agreement separatedetailed chapters on Management Discussion & Analysis Report on Corporate Governanceand Additional Shareholder Information forms part of this Annual Report.

BUSINESS RESPONSIBILITY REPORT

SEBI through its circular CIR / CFD / DIL / 8 / 2012 dated August 13 2012 mandatedinclusion of Business Responsibility Report ("BRR") as part of the AnnualReport for top 100 listed entities based on market capitalisation at BSE and NSE as onMarch 31 2012. In compliance with the said circular a separate report called BRR formspart of this Annual Report and is also hosted on the Company’s website:http://www.idfc.com/investor_relations/annual_ report.htm

PUBLIC DEPOSITS

During FY14 your Company has not accepted any deposits from the public within themeaning of the provisions of the Non-Banking Financial Companies Acceptance of PublicDeposits (Reserve Bank) Directions 1998.

FOREIGN EXCHANGE

The particulars regarding foreign exchange expenditure and earnings are furnished atItem Nos. 29 & 30 respectively in the Notes forming part of the Financial Statements.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

Since the Company does not carry out any manufacturing activity the particularsregarding conservation of energy technology absorption and other particulars as requiredby the Companies (Disclosure of Particulars in the Report of the Board of Directors)Rules 1998 are not applicable.

DIRECTORS

Mr. Shardul Shroff (DIN-00009379) an Independent Director of the Company tendered hisresignation from the Board of the Company w.e.f. June 3 2014. The Board placed on recordit’s appreciation for the valuable services rendered by him during his tenure as anIndependent Director of the Company.

In accordance with the Articles of Association of the Company and pursuant to theprovisions of Section 152 of the Companies Act 2013 Mr. Joseph Dominic Silva (DIN -06388807) would retire by rotation at the ensuing AGM and being eligible offers himselffor reappointment. Mr. S. H. Khan (DIN - 00006170) Mr. Gautam Kaji (DIN - 02333127) andMr. Donald Peck (DIN - 00140734) were liable to retire by rotation at the ensuing AGMunder the erstwhile Companies Act 1956.

Accordingly on the recommendation of Nomination and Remuneration Committee of theCompany and subject to the approval of the Members at the AGM the Board of Directors ofthe Company at its meeting held on June 3 2014 accorded its consent to appoint the aboveDirectors as Independent Directors of the Company under the Companies Act 2013 for aperiod of two (2) consecutive years to hold office from the conclusion of the SeventeenthAGM till the conclusion of the Nineteenth AGM of the Company. The Company has received adeclaration from the aforesaid Directors that they meet the criteria of independencespecified under sub-section (6) of Section 149 of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Qualification of Directors) Rules 2014 for holdingthe position of Independent Directors and that they shall abide by the "Code forIndependent Directors" as per Schedule IV of the Companies Act 2013.

MCA vide its circular dated June 9 2014 clarified that if the existing IndependentDirectors are to be appointed under Companies Act 2013 the Company would be required toappoint those Independent Directors within a period of one year from April 1 2014.Accordingly the Company would appoint the remaining existing Independent Directors withinthe prescribed period.

The Profiles of all the above Directors are provided in the Exhibit to the Noticeconvening the ensuing AGM sent along with this Annual Report.

The Board of Directors recommends appointment / reappointment of all the aboveDirectors at the ensuing AGM.

SHAREHOLDERS’ UPDATE

BANKING LICENSE

Your Company had filed an application with the Reserve Bank of India ("RBI")on July 1 2013 seeking a banking license.

Your Directors have pleasure in informing you that RBI vide its letter dated April 92014 granted its In-principle approval to IDFC to establish a new bank in the privatesector under Section 22 of the Banking Regulation Act 1949. One of the conditions of theletter is that the bank is required to be established within 18 months from April 9 2014.

The Board of Directors recommend the following items under special business forapproval of the shareholders at the ensuing AGM.

ALTERATION IN THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION

On receipt of the In-principle approval from RBI to set up a new bank in the privatesector the Company is required to alter the Object Clause of Memorandum of Association("MoA")of the Company by inserting a new Object Clause no. 29A pertaining to banking business tobe carried out through a subsidiary company. Also the existing Clause no. 31 relating torestructuring / rearrangement would be required to be replaced with a new clause so as toinsert few more restructuring options that the Company can opt from time to time.

The approval of the Shareholders by passing of a Special Resolution at the ensuing AGMwould be required for alteration of "Objects incidental and ancillary to theattainment of the Main Objects" of MoA of the Company.

FURTHER ISSUE OF SECURITIES

RBI introduced the guidelines for licensing of new banks in the Private Sector onFebruary 22 2013 which inter alia states that the promoters eligible to promote abank pursuant to the said guidelines should be ‘owned and controlled byresidents’. Your Company received In-principal approval for banking license from RBIon April 9 2014. One of the conditions of the letter requires IDFC to reduce foreignshareholding below 50% so as to make the Company ‘owned and controlled byresidents’. To achieve this IDFC proposes to offer securities to the domesticinvestors in one or more tranches.

The approval of the Shareholders by passing of a Special Resolution at the ensuing AGMwould be required for the aforesaid further issue of securities.

APPROVAL OF THE BORROWING LIMITS OF THE COMPANY

The Company at its 13th AGM held on June 28 2010 had approved the proposalto borrow monies up to C 80000 crore under the then applicable Section 293(1)(d) of theCompanies Act 1956.

In compliance with the provisions of Section 180(1)(c) of the Companies Act 2013 andafter taking into consideration Circular No. 4 / 2014 of MCA dated March 25 2014 it isproposed to seek the approval of the Shareholders by way of a Special Resolution at theensuing AGM to approve the limit of borrowings of the Company not exceeding C 80000crore.

APPROVAL TO OFFER & ISSUE NON-CONVERTIBLE SECURITIES UNDER PRIVATE PLACEMENT

In compliance with the provisions of Section 42 of the Companies Act 2013 read withRule 14 of Companies (Prospectus and Allotment of Securities) Rules 2014 it is proposedto seek the approval of the Shareholders by way of a Special Resolution at the ensuing AGMfor borrowing funds through issuance of Non-Convertible Securities on Private Placementbasis for an amount not exceeding the overall borrowing limit of C 80000 crore as may beapproved under Section 180(1)(c) of the Companies Act 2013 by the Shareholders at theensuing AGM.

AUDITORS

Deloitte Haskins & Sells LLP ("DHS") Chartered Accountants(Registration No. 117366W/W-100018) along with their associates have been StatutoryAuditors of the Company for an aggregate period of more than 10 years. DHS will retire asthe Statutory Auditors of the Company at the ensuing AGM.

DHS the retiring Auditors have confirmed that their reappointment if made would bein conformity with the provisions of Section 139(1) of Companies Act 2013 read with Rule4 of the Companies (Audit and Auditors) Rules 2014 and Section 141 of the Companies Act2013 and have given their consent to be reappointed.

The approval of the Members is requested to reappoint DHS by passing an OrdinaryResolution as Statutory Auditors of the Company for a period of one (1) year to holdoffice from the conclusion of this AGM up to the conclusion of the next AGM of theCompany.

INTERNAL CONTROL SYSTEMS

The Company has in place adequate systems of Internal Control to ensure compliancewith policies and procedures. It is being constantly assessed and strengthened with new /revised standard operating procedures and tighter Information Technology controls.Internal audits of all the units of the Company are regularly carried out to review theInternal Control Systems. The Internal Audit Reports along with the recommendations andimplementation contained therein are regularly reviewed by the Audit Committee of theBoard.

CONCURRENT AUDIT

The Company has appointed KPMG as Concurrent Auditors for FY15 to augment the existinginternal control framework and ensure compliance to the policies and procedures as laidout by the Company. The scope of coverage covers the areas of Fixed Income TreasuryProprietary Equity Resources and Regulatory Compliance and Reporting.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Sections 205A and 205C of the Companies Act 1956 thedividend / interest / refund of applications which remains unclaimed / unpaid for a periodof seven years from the date of transfer to the unpaid dividend / interest / refundaccount was required to be transferred to the Investor Education and Protection Fund ("IEPF")established by the Central Government.

Accordingly an amount of C 1722962 being unclaimed / unpaid dividend for the yearFY06 and which remained unpaid and unclaimed for a period of 7 years has been transferredby the Company to the IEPF.

The Company updates the details of unclaimed / unpaid dividend / interest on theCompany’s website (www.idfc.com) and on MCA website from time to time.

Further the unpaid dividend amount pertaining to the financial year FY07 will betransferred to IEPF during this year.

DIRECTORS’ RESPONSIBILITY STATEMENT

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

• in the preparation of the annual accounts the applicable accounting standardshave been followed along with proper explanation relating to material departures;

• appropriate accounting policies have been selected and applied consistently andhave made judgements and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company at the end of the financial year andof the profit of the Company for the year ended March 31 2014;

• proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 1956 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

• the annual accounts have been prepared on a going concern basis.

GREEN INITIATIVE

In accordance with the ‘Green Initiative’ the Company has been sending AnnualReport Notice of AGM etc. in electronic mode to those Shareholders whose e-mail ids areregistered with the Company and / or the Depository Participants.

Your Directors are thankful to the Shareholders for actively participating in the GreenInitiative.

ACKNOWLEDGEMENTS

We are grateful to the Government of India State Governments National HighwaysAuthority of India RBI SEBI Stock Exchanges various Ministries and other domestic andoverseas regulatory bodies for their continuous collaboration and support.

We would like to thank all our Shareholders Bondholders Banks and FinancialInstitutions for their co-operation and assistance during the year under review.

We would like to express our deep sense of appreciation for the hard work and effortsput in by the employees at all levels of the Company.

FOR AND ON BEHALF OF THE BOARD

RAJIV B. LALL

Executive Chairman

Mumbai June 30 2014

DISCLOSURE IN THE DIRECTORS’ REPORT AS PER SEBI GUIDELINES

SR. NO. PARTICULARS FY14
1. Options outstanding as at the beginning of the year 35568940
2. Options granted during the year 2246667
3. Pricing Formula Options may be granted at a price not less than the face value per share.
Options have been granted in the range of Rs. 80.5 to Rs. 163.85
4. Options vested during the year 6946400
5. Options exercised during the year 1558622
6. Total number of shares arising as a result of exercise of Options 1558622
7. Options lapsed / cancelled 3367575
8. Variation in terms of Options None
9. Money realised by exercise of Options (Rs. in crore) 8.95
10. Total number of Options in force 32889410
11. Diluted Earnings Per Share pursuant to issue of shares on exercise of Options calculated in accordance with AS 20 ‘Earnings Per Share’ (Rs.) 11.21

PRO FORMA ADJUSTED NET INCOME AND EARNINGS PER SHARE

SR. NO. PARTICULARS FY14
12. Net Income as Reported (Rs. in crore) 1701.12
Add: Intrinsic Value Compensation Cost (Rs. in crore)
Less: Fair Value Compensation Cost (Rs. in crore) 4.20
Adjusted Pro forma Net Income (Rs. in crore) 1696.92
Earning Per Share: Basic
As Reported (Rs.) 11.22
Adjusted Pro forma (Rs.) 11.20
Earning Per Share: Diluted
As Reported (Rs.) 11.21
Adjusted Pro forma (Rs.) 11.18
13. Weighted average exercise price of Options granted during the year whose:
(a) exercise price equals market price (Rs.) 99.11
(b) exercise price is greater than market price N.A.
(c) exercise price is less than market price N.A.

PRO FORMA ADJUSTED NET INCOME AND EARNINGS PER SHARE

SR. NO. PARTICULARS FY14
14. Weighted average fair value of Options granted during the year whose:
(a) exercise price equals market price (Rs.) 31.32
(b) exercise price is greater than market price N.A.
(c) exercise price is less than market price N.A.
15. Description of method and significant assumptions used to The fair value of the Options granted has been estimated using the
estimate the fair value of Options Black-Scholes option pricing Model. Each tranche of vesting have been considered as a separate grant for the purpose of valuation. The assumptions used in the estimation of the same have been detailed below:

 

VARIABLES WEIGHTED AVERAGE VALUES FOR ALL GRANTS MADE DURING THE YEAR
Stock Price (Rs.) 99.11
Volatility 40.37%
Risk-free Rate 8.65%
Exercise Price (Rs.) 99.11
Time to Maturity (Years) 3.16
Dividend yield 2.68%
Weighted Average Value (Rs.) 31.32

Stock Price: The closing market price on NSE one day prior to the date of grant hasbeen considered for the purpose of Option valuation.

Volatility: The daily volatility of the stock prices on NSE over a period prior tothe date of grant corresponding with the expected life of the Options has been consideredto calculate the fair value.

Risk-free rate of return: The risk-free interest rate being considered for thecalculation is the interest rate applicable for a maturity equal to the expected life ofthe Options based on the zero-coupon yield curve for Government Securities.

Exercise Price: Price of each specific grant has been considered.

Time to Maturity: Time to Maturity / Expected Life of Options is the period forwhich the Company expects the Options to be live. The minimum life of a stock option isthe minimum period before which the Options cannot be exercised and the maximum life isthe period after which the Options cannot be exercised.

Expected dividend yield: Expected dividend yield has been calculated based on thedividend declared prior to the date of grant. The dividend yield has been derived bydividing the dividend per share for the year by the market price per share on the date ofgrant.