27.

Share-based payments

Share based payments are designed as equity-settled plans. Under the equity settled plans, the Group had issued stock options under Associate Stock Option Plan (ASOP) 1999, ASOP 2000, ASOP 2002, ASOP 2005, ASOP 2007 and ASOP 2014. Each option entitles the holder to purchase one American Depository Share (ADS) at an exercise price determined by the Compensation committee on the date of the grant. There are no options outstanding in respect of ASOP 1999, ASOP 2000, ASOP 2002, ASOP 2005 and ASOP 2007 plans as at March 31, 2018. Our stock option plans are detailed as under:

Associate Stock Option Plan 2014

In July 2014, the Shareholders of the Group approved a new scheme for allotment of stock options to employees, the Associate Stock Option Plan 2014. 25,000,000 shares are reserved for this plan. Consequently 5,870,800 options were granted to the employees on January 20, 2015. The Group has granted additional 150,000 , 525,000 and 184,300 options to employees during the year 2017-18, 2016-17 and 2015-16 respectively.

The options vest in the following manner:

4,304,600 Options (Option Plan I): 3/5th of the options vest at the end of one year from the date of grant. The remaining 2/5th vests at the end of every half year during second and third years from the date of grant in four equal instalments

487,700 Options (Option Plan II): 2/5th of the options vest at the end of one year from the date of grant. The remaining 3/5th vests at the end of every half year during second, third and fourth years in six equal instalments

1,937,800 Options (Option Plan III): 2/5th of the options vest at the end of two years from the date of grant. The remaining 3/5th vests at the end of every half year during third, fourth and fifth years in six equal instalments.

The stock options can be exercised within a period of twelve months from the date of last vesting.

As the number of stock options and the price of those options were made known to each allottee, the Plan has been considered as a fixed price grant. Stock option activity under the ASOP 2014 and ASOP 2007 Plan is as follows:

No. of options granted, exercised and forfeited	Number of options		Weighted average exercise price in ₹		Number of options		Weighted average exercise price in ₹		Number of options		Weighted average exercise price in ₹
	2018		2018		2017		2017		2016		2016
Outstanding at the beginning of the year		5,837,400		73.55		5,665,800		79.10		5,870,800		79.10
Granted during the year		150,000		146.23		525,000		58.69		184,300		79.10
Forfeited during the year		(653,100)		79.10		(353,400)		79.10		(389,300)		79.10
Expired during the year		-		-		-		-		-		-
Exercised during the year		(153,860)		79.10		-		-		-		-
Outstanding at the end of the year		5,180,440		78.79		5,837,400		73.55		5,665,800		79.10
Exercisable at the end of the year		4,340,070		79.00		3,711,130		79.14		2,544,180		79.10

The fair value of stock options granted has been measured using the Black Scholes model at the date of the grant. The Black Scholes model includes assumptions regarding dividend yields, expected volatility, expected term (or “option life”) and risk free interest rates. In respect of the options granted, the expected term is estimated based on the vesting term, contractual term as well as expected exercise behavior of the employees receiving the option. Expected volatility of the option is based on historical volatility, during a period equivalent to the option life, of the observed market prices of the Company’s publicly traded equity shares. Share prices for the year 2011-12 have been eliminated in determining volatility as there had been extra ordinary price movements during the said period on account of capital infusion by promoters. Dividend yield of the options is based on the recent dividend activity. Risk-free interest rates are based on the Government securities yield in effect at the time of the grant. These assumptions reflect management’s best estimates, but these assumptions involve inherent market uncertainties based on market conditions generally outside the Company’s control. As a result, if other assumptions had been used in the current period, stock-based compensation expense could have been materially impacted. Further, if management uses different assumptions in the future periods, stock compensation expense could be materially impacted in future years.

The estimated fair value of stock options is charged to income on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards.

A summary of information about fixed price stock options outstanding with respect to ASOP 2014 is furnished below:

As at

Range of
exercise price
in ₹

Number
outstanding at
March 31

Weighted
average
exercise price
in ₹

Weighted average
remaining
contractual life

Number
exercisable at
March 31

Weighted
average
exercise price
In ₹

March 31, 2018

57.66 - 146.23

5,180,440

57.66 - 146.23

0.06 - 4.81 years

4,340,070

78.79

March 31, 2017

60.60 – 82.00

5,837,400

60.60 – 82.00

1.80 – 5.79 years

3,711,130

79.14

The assumptions used in Black Scholes model to arrive at the fair value on grant date for the options granted during the year are summarised below:

Grant date		Jan 18, 2018
Category		Category III
Current market price		₹ 162.51
Exercise price		₹ 146.23
Expected term		2-5 years
Volatility		53.15% to 97.76%
Dividend yield		12%
Discount rate		3%