L&T Finance : LTF ESOP Information Board's Report FY2023 24

CONFIDENTIAL

L&T Finance Limited

(formerly known as L&T Finance Holdings Limited)

Information required to be disclosed under Regulation 14 of Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)

Regulations, 2021, as amended from time to time.

A.	Relevant disclosures in accordance with 'Indian Accounting Standard 102-	Refer	Note	No.	1	of
	Share based payment' as notified by the Ministry of Corporate Affairs including	Annexure A
	the 'Guidance note on accounting for employee share based payments'.
B.	Diluted EPS on issue of shares pursuant to all the schemes covered under the	Refer	Note	No.	2	of
	regulations shall be disclosed in accordance with 'Indian Accounting Standard	Annexure A
	33 - Earning per share' as notified by the Ministry of Corporate Affairs

1. Details related to ESOS

Sr.	Particulars	ESOP Scheme 2010	ESOP Scheme 2013
No.

1. A description of each ESOP that existed at any time during the year, including the general terms and conditions of each ESOP, including -

	a)	Date	of		November 29, 2010	April 4, 2014
		shareholders' approval
	b)	Total	number of	options	3,42,95,232	5,15,84,661
		approved under ESOP
	c)	Vesting requirements	Vesting will commence one year	Vesting will commence two years or
					after the date of grant at the rates	one year after the date of grant and
					given below or at such other rates as	may extend up to four years from the
					may be fixed by the Nomination &	date of grant as the case may be. The
					Remuneration Committee and may	percentage of vesting each year shall
					extend upto four years from the date	be at the rates decided by the
					of grant, unless otherwise varied in	Management.
					accordance with the Rules.
	d)	Exercise price or pricing	The exercise price for the purposes of the grant of Stock Options will be as per
		formula		terms & conditions decided by the Board and / or Nomination & Remuneration
					Committee at the time of respective grant of Stock Options, but at a price not
					below the face value of the equity share and not exceeding the market price as
					per the SEBI Regulations.
	e)	Maximum term	of	The Exercise Period would be seven	Eight years (96 months) from the date
		options granted		years (84 months) from the date of	of grant or Three years (36 months)
					grant or 3 years (36 months) from the	from the date of retirement/death
					date of retirement / death, whichever	whichever is earlier.
					is earlier.
	f)	Source of shares		Primary	Primary
		(primary, secondary or
		combination)

CONFIDENTIAL

g) Variation in terms of options

N.A.

N.A.

1. Method used to account for ESOP - Intrinsic or fair value.

Fair Value

1. Option movement during the year (For each ESOS):

			Particulars	ESOP Scheme 2010		ESOP Scheme 2013
			Number of options outstanding at the beginning of the	5,63,750		2,75,38,744
			period
			Number of options granted during the year	--		67,41,444
			Number of options forfeited / lapsed during the year*	--		32,49,742
			Number of options vested during the year	78,750		40,28,642
			Number of options exercised during the year	4,98,750		87,70,443
			Number of shares arising as a result of exercise of options	4,98,750		87,70,443
			Money realized by exercise of options (₹), if scheme is	1,75,02,187.50		40,75,92,940.98
			implemented directly by the Company
			Loan repaid by the Trust during the year from exercise	N.A.		N.A.
			price received
			Number of options outstanding at the end of	65,000		2,22,60,003
			the year
			Number of options exercisable at the end of the year	65,000		1,13,32,467
	(v) Weighted-average exercise prices and weighted-average fair	Weighted-average exercise prices - ₹ 10
	values of options shall be disclosed separately for options
	whose exercise price either equals or exceeds or is less than	Weighted-average fair values - ₹ 118.74
	the market price of the stock.
	(vi) Employee wise details (name of employee, designation,
	number of options granted during the year, exercise price) of
	options granted to -
	a) Key Managerial Personnel and Senior managerial	Please refer to Annexure B
			personnel;
	b)	any other employee who receives a grant in any one		None
			year of option amounting to 5% or more of option
			granted during that year: and
	c)	identified employees who were granted option, during any		None
			one year, equal to or exceeding 1% of the issued capital
			(excluding outstanding warrants and conversions) of the
			Company at the time of grant.

*Options lapsed during the year on account of resignation of the employee

1. A description of the method and significant assumptions used during the year to estimate the fair value of options including the following information:

Weighted	average	exercise	price	-
₹	10,	Weighted	average share	price	-
₹	131.38, Expected volatility - 36.53% Calculated

CONFIDENTIAL

	a) the weighted-average values of share price, exercise	by using the closing market prices of the
	price, expected volatility, expected option life, expected	Company's Shares during the last one year.
	dividends, the risk-free interest rate and any other inputs	Expected life - Full life of the option is the period
	to the model;	up to which it can be exercised.
		Expected dividends - Yield has been calculated on
		the basis of dividend yield of the financial year.
		Risk-free interest rate - This is the rate offered in
		the market with virtually zero risk. Normally the
		yield of Government backed securities with
		maturity similar to that of the option is taken into
		consideration.
	b) the method used and the assumptions made to	As decided by the Management in case of
	incorporate the effects of expected early exercise;	Retirement and Death of an employee.
	c) how expected volatility was determined, including an	Expected volatility is based on the historical
	explanation of the extent to which expected volatility was	volatility of the Company shares price applicable to
	based on historical volatility; and	the expected life of each option.
	d) whether and how any other features of the option grant	The price of underlying shares in market at the time
	were incorporated into the measurement of fair value,	of option grant - closing market price, on previous
	such as a market condition.	trading day on which the options are granted, on
		the Stock Exchange where the volume of shares
		traded is more.
	Disclosures in respect of grants made in three years prior to
	IPO under each ESOP
	Until all options granted in the three years prior to the IPO have been	Not Applicable
	exercised or have lapsed, disclosures of the information specified
	above in respect of such options shall also be made.

CONFIDENTIAL

Annexure A

1. Stock option scheme

1. The Company has formulated Employee Stock Option Schemes 2010 (ESOP Scheme- 2010) and 2013 (ESOP Scheme 2013). The grant of options to the employees under the stock option schemes is on the basis of their performance and other eligibility criteria. The options allotted under the scheme 2010 are vested over a period of four years in the ratio of 15%, 20%, 30% and 35% respectively from the end of 12 months from the date of grant, subject to the discretion of the management and fulfillment of certain conditions. The options granted under the scheme 2013 are vested in a graded manner over a period of four years with 0%, 33%, 33% and 34% of grants vesting each year, commencing from the end of 24 months from the date of grant or w.e.f. July 10, 2019 vested in a graded manner over a period of four years with 25%, 25%, 25% and 25% of grants vesting each year, commencing from the end of 12 months from the date of grant.
2. Options allotted under scheme 2010 can be exercised anytime within a period of 7 years from the date of grant and would be settled by way of equity. The option granted under scheme 2013 can be exercised anytime within a period of 8 years from the date of grant. Management has discretion to modify the exercise period.
3. The option granted under scheme 2010 is at exercise price of ₹ 44.20. The option granted under scheme 2013 can be exercised either at market price which was the last closing price on National stock exchange preceding the date of grant or w.e.f. July 10, 2019 ₹ 10 respectively.
4. During the year ended March 31, 2024, 498,750 and 87,70,443 options were allotted under the scheme 2010 and 2013 respectively.
5. The details of the grants are summarised below:

Sr.	Particulars	ESOP Scheme 2010	ESOP Scheme 2013
No.	2023-24	2022-23	2023-24	2022-23
1	Options granted and outstanding at the	563,750	9,48,250	2,75,38,744	2,16,22,255
beginning of the year
2	Options granted during the year	0		67,41,444
3	Options cancelled/ lapsed during the	0	1,88,000	32,49,742	80,02,047
year
4	Options exercised during the year	498,750	1,96,500	87,70,443	54,39,129
5	Options granted and outstanding at the
end of the year of which -
	- Options vested	65,000	4,85,000	1,13,32,467	1,83,45,892
	- Options yet to vest	0	78,750	1,09,27,536	91,92,852
6	Weighted average remaining	0.75	2.81	4.18	4.78
contractual life of options (in years)

f) During the year, the Company has debited to the Statement of Profit and Loss

• 38.01 crore (Previous year ₹ 25.74 Crore) {net of recovery/(payment) from/to its subsidiary companies during the year ₹ (0.16) Crore (Previous year: ₹ (0.09) Crore)} towards the stock options granted to their employees, pursuant to the employee stock option schemes.

CONFIDENTIAL

1. Weighted average fair values of options granted during the year is ₹ 118.74 Crore
   (previous year: ₹ 69.48) per options.
2. The Fair value has been calculated using the Black-Scholes Option Pricing Model and the significant assumptions and inputs to estimate the fair value of options granted during the year are as follows:

Sr. No.		Particulars		2023-24	2022-23
a)	Weighted average risk-free interest rate	7.20%	6.65%
b)	Weighted average expected life of	2.77 years	2.75 years
	options
c)	Weighted	average	expected	36.53%	39.16%
	volatility
d)	Weighted	average	expected	₹ 5.54 per option	₹ 2.66 per option
	dividends
e)	Weighted average share price	₹ 131.38 per option	₹ 79.87 per option
f)	Weighted average exercise price	₹ 10.00 per share	₹ 10.00 per share
g)	Method used to determine expected	Expected volatility is based on the historical volatility of the
	volatility			Company shares price applicable to the expected life of
				each option.

2. Basic and Diluted Earnings per share [EPS] computed in accordance with Indian

Accounting Standard (Ind AS) 33 "Earnings per Share'':

Particulars		2023-24	2022-23
Basic
Profit after tax (₹ Crore)	A	2,286.23	1,919.87
Weighted average number of equity shares outstanding	B	2,48,43,28,659	2,47,68,83,662
Basic EPS before and after extraordinary items (₹)	A/B	9.20	7.75
Diluted
Profit after tax (₹ Crore)	A	2,286.23	1,919.87
Weighted average number of equity shares outstanding	B	2,48,43,28,659	2,47,68,83,662
Add: Weighted average no. of potential equity shares on		99,47,132	83,44,407
account of employee stock options	C
Weighted average number of shares outstanding for	D=B+C	2,49,42,75,791	2,48,52,28,068
diluted EPS
Diluted EPS before and after extraordinary items (₹)	A/D	9.17	7.73
Face value of shares (₹)		10.00	10.00

CONFIDENTIAL

Annexure B

Details of options granted to Key Managerial Personnel ("KMP") and

Senior Management Personnel ("SMP") during FY2023-24

Sr. No.	Names of KMP/SMP	Designation	Units granted
1	Sudipta Roy	Managing Director &CEO	6,00,000
2	Sachinn Joshi	Chief Financial Officer	4,74,294
3	Apurva Rathod	Company Secretary	2,12,008
4	Raju Dodti	Chief Operating Officer	4,74,294
5	Abhishek Animesh	Chief Executive - SME	4,74,294
	Sharma	Finance
6	Sonia Krishnankutty	Chief Executive - Rural	2,91,511
		Business Finance
7	Asheesh Goel	Chief Executive Officer -	1,32,505
		Farmer Finance
8	Rupa Rege Nitsure(1)	Chief Economist	1,59,006

1. Ceased to be a SMP w.e.f. April 1, 2024 pursuant to superannuation. Hence, grant lapses post her superannuation and reverts back to the company pool as per policy.