Unless otherwise stated, references in this section to "we", "our" or "us" are to our Company together with our
Subsidiaries and Associate, on a consolidated basis. The following discussion is intended to convey the managements perspective on our financial condition and results of operations in Fiscals 2025, 2024 and 2023. Unless otherwise stated, the financial information in this section has been derived from the Restated Consolidated Financial Information included in this Draft Red Herring Prospectus available from page 375. The Restated Consolidated Financial Information is prepared and presented in accordance with Indian Accounting Standards
("Ind AS"), in each case restated in accordance with the requirements of Section 26 of the Companies Act, 2013 read with Rule 4 of Companies (Prospectus and Allotment of Securities) Rules 2014, as amended, the SEBI ICDR
Regulations and the Guidance Note on "Reports in Company Prospectus (Revised 2019)" issued by the ICAI (the "Guidance Note"). Ind AS differs in certain respects from IFRS and U.S. GAAP and other accounting principles with which prospective investors may be familiar. Please also see "Risk Factors - Internal Risks - Differences exist between Ind AS and other accounting principles, such as IFRS and U.S. GAAP, which may be material to investors assessments of our financial condition, result of operations and cash flows" on page 71. The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Consolidated Financial Information on page 375. Our financial year ends on March 31 of each year. Accordingly, references to "Fiscal 2025", "Fiscal 2024" and "Fiscal 2023"are to the 12-month period ended March 31 of the relevant year.
This discussion contains certain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, such as the risks set forth in the chapters entitled "Risk Factors" and "Forward Looking Statements" on pages 36 and 34, respectively.
Unless otherwise indicated, the industry-related information contained in this Draft Red Herring Prospectus is derived from the Everest Report, which has been commissioned and paid for by our Company for the purposes of confirming our understanding of the industry, exclusively in connection with the Offer. We officially engaged Everest Group for purposes of commissioning the report for the Offer pursuant to an engagement letter dated May 6, 2025. Everest Group is not related in any manner to our Company or any of our Directors. Unless otherwise indicated, all financial, operational, industry and other related information derived from the Everest Report and included herein with respect to any particular year, refers to such information for the relevant year. For more information, see "Risk Factors Certain sections of this Draft Red Herring Prospectus contain information from the Everest Report which has been commissioned and paid for by us and any reliance on such information for making an investment decision in this offering is subject to inherent risks" on page 65. Also see, "Certain conventions, Presentations of Financial, Industry and Market Data and Currency of Presentation Industry and Market Data" on page 28.
Overview
Founded in 2000, we are a globally recognized enterprise artificial intelligence ("AI") company (source: Everest Report), with a vision to power human decisions in our clients enterprises by leveraging AI. We support large global enterprises with data-driven insights and assist them in their decision making through our end-to-end AI solutions. We build our AI solutions by leveraging our technical, domain and functional capabilities built over our operating history of over 25 years. As of March 31, 2025, our full suite of AI solutions is organized under two segments: Fractal.ai (comprising AI services and AI products primarily hosted on Cogentiq) and Fractal Alpha (comprising AI businesses). Through these two segments, we cater to the diverse business needs of our clients across industries and business functions.
Fractal.ai consists of AI services and AI products our AI products are primarily hosted on Cogentiq, our flagship agentic AI platform designed to help product owners and enterprises accelerate building and upgrading products through a pre-built suite of agents, tools, connectors with in-built low-code, security, governance, auditability and inter-operability features; while Fractal Alpha consists of independent AI businesses that target Fractal.ais core "Must Win Clients" ("MWCs", which we define as enterprises that meet one of the three criteria: (i) over US$10 billion in revenue, (ii) over US$20 billion in market capitalization, or (iii) over 30 million end-customers) and broader markets and new geographies, with each business under separate management.
We work with large global enterprise clients to help them navigate the entire life cycle of AI transformation from ideation to adoption to drive decisions in the enterprise. Our ability to address clients problems across industries is driven by our deep technical, domain and functional expertise. We integrate AI, engineering and design
("AED") to power decisions in our clients enterprises and our strategic intent is to create outsized value for every client we work with. In this process, we aspire to become the most respected enterprise AI company globally.
For more details on our business, see "Our Business" on page 267.
Principal Factors Affecting Our Financial Condition and Results of Operations
The following is a discussion of factors that have had and we expect will continue to have a significant effect on our financial condition and results of operations.
Our ability to acquire, retain and expand client relationships
Acquire
Our success depends on our ability to attract clients, specifically our focus client base of MWCs. The following table shows the number of MWCs for the years indicated:
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| MWCs (number) | 113 | 110 | 107 |
From an industry perspective, we focus on acquiring new clients in our target industries of consumer packaged goods ("CPG") & retail (together with CPG, "CPGR"), technology, media and telecom ("TMT"), healthcare and life sciences ("HLS") and banking, financial services and insurance ("BFSI") in our target geographies across Americas, Europe and APAC.
At the start of our relationship with a client, our new logo acquisition teams and partnership & alliances teams, adopting the Fractal Approach, engage closely with the client to identify the right problem to start and scale the engagement. For more information, see "Our Business Fractal Approach" on page 281. Once the relationship has matured, it transitions to one of our industry practice teams, where we continue to focus on strengthening the client relationship by gaining a deeper understanding of their business functions and their specific areas of focus.
Our marketing team builds our market position and branding amongst existing and prospective clients and the community of AI & analytics professionals, by focusing on four key pillars (i) showcasing thought leadership focused on AI, engineering and design, (ii) engaging with industry analysts, (iii) hosting and participating in exclusive and relevant events and (iv) sharing inspiring stories of Fractalites and culture-in-action at Fractal. For further details, see "Our Business Sales and Marketing" on page 251.
The following table shows a breakdown of our revenue from operations in our Fractal.ai segment by industries serviced for the years indicated:
Revenue from operations contribution by industry in our Fractal.ai segment |
Fiscal | |||||
| 2025 Amount | % | 2024 Amount | % | 2023 Amount | % | |
| CPGR | 10,615 | 39.3% | 9,038 | 41.9% | 8,047 | 40.9% |
| TMT | 8,087 | 29.9% | 5,867 | 27.1% | 5,563 | 28.3% |
| HLS | 3,745 | 13.8% | 3,013 | 13.9% | 2,188 | 11.1% |
| BFSI | 2,980 | 11.0% | 2,325 | 10.8% | 2,842 | 14.4% |
| Others(1) | 1,610 | 6.0% | 1,372 | 6.3% | 1,051 | 5.3% |
Revenue from operations in our Fractal.ai segment |
27,037 | 100.0% | 21,615 | 100.0% | 19,691 | 100.0% |
Note:
(1) Others comprise primarily energy, travel and industrials.
Our ability to grow our client base depends on the strength of our brand, marketing, sales efforts to acquire new clients and our ability to continuously invent and invest to benefit our clients. Through acquiring new clients, our revenue from operations has also correspondingly demonstrated consistent growth. The requirements of our clients vary across industries, geographies and service or technical requirements. To service and grow our relationships with our existing clients and to win new clients, we must provide them with AI solutions that address their requirements, anticipate and understand trends in their markets and continually address their requirements as they change and evolve. If we are able to anticipate and respond to our clients requirements on a timely and cost-efficient basis, we could receive repeat business from existing clients.
We intend to acquire new clients, with a specific focus on MWCs in our strategic markets, and we have added industrial expertise across new industries, such as pharmaceutical, energy, travel and automotive. We have also accelerated our ecosystem of partnerships and alliances, which further enables us to acquire new clients. We have dedicated client acquisition teams for our respective industry segments who work together with our partnerships and alliances.
Retain and expand
One of our key values is to be "client first". We strive to be a strategic partner to our clients by delivering a wide range of end-to-end AI solutions across business functions and teams. We seek to expand our relationships by solving additional business problems within departments, scaling successful solutions to new locations and establishing partnerships with new departments within the same organization, which allows us the opportunity to evolve from a vendor into a comprehensive AI partner seeking to drive lasting value across our clients entire organizations. We help our clients power decisions in the enterprise by helping them navigate the entire life cycle of building multiple AI solutions, from ideation to adoption. Our ability to address industry-specific challenges through client-specific solutions across business functions is driven by our deep technical, domain and functional expertise. This expertise allows us to integrate technology within our clients business context to address their business problems.
Our ability to increase sales to existing clients, which we measure through Net Revenue Retention, depends on a number of factors, including client satisfaction with our services, which we measure through Net Promoter Scores
("NPS"); their willingness to avail additional services from us; and the size of the client and their engagement term with us.
Net Revenue Retention. Net Revenue Retention in our Fractal.ai segment measures how effectively we retain and expand revenue from our existing clients over a defined period and is calculated by comparing the current periods revenue from the same set of clients who existed at the start of the period, with their revenue in the previous period including the effects of upsells, cross-sells and contractions. The table below sets out our Net Revenue Retention for the years indicated.
Particulars |
Fiscal | ||
| 2025 | 2024 | 2023 | |
| Net Revenue Retention | 121.3% | 110.2% | 151.0% |
Net Promoter Score. NPS is used in Fractal.ai segment to gauge client satisfaction and advocacy. Clients rate us on a 10-point scale on their willingness to recommend Fractal and NPS is calculated as the percentage of promoters (scores of 9-10) minus the percentage of detractors (scores of 6 and below) (source: 1Lattice Report).
Particulars |
Fiscal | ||
| 2025 | 2024 | 2023 | |
| Net Promoter Score | 77 | 77 | 73 |
Size of client and client terms. As of March 31, 2025, we worked with 10 of the 20 largest CPG companies, eight of the 20 largest TMT companies, three of the 20 largest BFSI companies, 10 of the 20 largest HLS companies and five of the 20 largest retail companies based on Fiscal 2025 revenue (source: Everest Report). We have served our top ten clients by revenue in our Fractal.ai segment in Fiscal 2025 (who contributed 53.8% to our revenue from operations in our Fractal.ai segment) for an average of more than eight years. The table below sets out our number of clients by annual revenue above US$20 million, US$10 million, US$5 million and US$1 million in the years indicated.
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Clients by annual revenue contribution | |||
| >US$20 million (number) | 5 | 2 | 1 |
| >US$10 million (number) | 6 | 5 | 5 |
| >US$5 million (number) | 15 | 11 | 10 |
| >US$1 million (number) | 53 | 48 | 45 |
Pricing Model
The fees we charge our clients depend on the type of contract, the type of engagement, the AI solutions provided and the locations of personnel involved. Our contracts have four principal types of pricing models: (i) fixed price, (ii) subscription and licensing revenue (iii) output based and (iv) time and material, depending largely on a clients preference and internal specifications. The fees we charge our clients depend on the type of contracts, the type of engagement, the AI solution provided to a client and the mix and locations of personnel involved:
? Fixed price contracts: Under such contracts, the scope and price are agreed at the time of signing the contract. Our assessment of the execution risk is made on a case-to-case basis, considering type and complexity of engagement, skill mix required, length of engagement and geographic coverage. Revenue for fixed price retainership contracts is recognized based on time elapsed and is recognized on a straight-line basis over the period of performance. In respect of other fixed-price contracts, revenue is recognized using the percentage-of-completion method ("POC method") with contract costs incurred determining the degree of completion of the performance obligation.
? Subscription based contracts: Certain contracts for our AI products are license and /or subscription based, under which we charge our clients a license / subscription fee based on the terms of the engagement.
? Output-based contracts: Such contracts are based on an agreed upon output with the client. We recognize revenue under such contracts using milestones of agreed outputs completed or final output at completion.
? Time-and-material contracts: We charge our clients based on the number of employees assigned or the actual time expended towards the engagement. We are compensated for actual time incurred by our employees or contractors at agreed hourly/daily/monthly rates. Revenue under such contracts is recognized as services are rendered over time.
Our ability to leverage the latest trends in the fast-changing AI industry
AI is one of the biggest technological waves to date and is being leveraged by enterprises to guide their business strategies and optimize routine business operations (source: Everest Report). As we offer services across the data, analytics and AI ("DAAI") value chain, the overall DAAI market size can be interpreted as our total addressable market ("TAM"), valued at an estimated US$143 billion ( 12 trillion) in Fiscal 2025 and expected to grow at a
CAGR of 16.7% to US$310 billion ( 23 trillion) by Fiscal 2030 (source: Everest Report). Our serviceable addressable market ("SAM") in DAAI services was estimated to be US$76 billion ( 6 trillion) in Fiscal 2024, US$85 billion ( 7 trillion) in Fiscal 2025, and is likely to grow to US$171 billion ( 14 trillion) by FY2030 at an estimated CAGR of 15.1% (source: Everest Report). To reduce their reliance on multiple partners across the DAAI value chain, enterprises, especially large buyers, prefer to engage with a single partner for AI solutions (source: Everest Report). Service providers with end-to-end DAAI capabilities are thus well positioned to capture this market. We focus on AI and advanced analytics and provide DAAI consulting and technology services, software solutions, and AI products, with advanced capabilities in computer vision, natural language processing and Gen AI to enterprises, in essence, making us an end-to-end player in the DAAI market. (source: Everest Report).
We intend to continue capturing market opportunities in our industry, with a strategic focus on serving "MWCs" and we aim to leverage favorable industry trends to strengthen our position with such clients. To address our clients needs, we are committed to technological innovation. We have made investments in AI research and development, exploring the latest AI methodologies and technologies.This includes areas like advancements in quantum computing, computational neuroscience and generative AI ("Gen AI") (such as knowledge systems, reasoning models and agentic platforms and products i.e., Cogentiq platform and Cogentiq products). We have also made investments in capabilities and skilling through Fractal Analytics Academy and Analytics Vidhya as well as acquisitions that helps us keep up with the latest AI trends, for example, the acquisition of Senseforth.ai and their expertise in conversational AI and natural language processing which leads to additional Gen AI engagements. We also focus on pioneering new algorithms and frameworks that can be applied to real world problems, thereby enabling us to expedite results for our clients while demonstrating our AI expertise.
The table below sets out our research and development investments for the years indicated.
| 2025 | 2024 | 2023 | |
| Research and development investments(1) | 1,436 | 1,422 | 1,158 |
As a % of revenue from operations (%) |
5.2% | 6.5% | 5.8% |
Note:
(1) Research and development investments comprises operating expenditure and capital expenditure relating to research and development respectively.
For more details on our research and development initiatives, see "Our Business Our Strengths Track record of inventing and investing to benefit clients" on page 276 and "Our Business Research and Development" on page 299.
Our ability to recruit, train and retain employees
Recruitment, training and retention of our employees are fundamental to our success. We take several initiatives to drive engagement and retention such as active conversations with all Fractalites, one-on-one connects, mobility opportunities within the organization, stock options granted under employee stock options plans ("ESOPs"), annual merit increases, retention increments and new hire integration programs. We intend to continue building a great place to work by focusing on fostering a culture of trust, transparency and freedom; hiring game-changing talent through robust and scalable channels; investing in developing experts and leaders of tomorrow; and empowering Fractalites (our employees) to own their careers. We will also continue our hiring efforts to recruit specialists across our career tracks and train them through the Fractal Analytics Academy and Analytics Vidhya. The level of competition among employers across the globe for skilled personnel in our industry is high and we believe that our leading industry position, brand recognition and positive reputation are key advantages in attracting qualified and talented candidates. For more details, see "Our Business Our Human Capital" on page
304 and " Principal Components of Restated Consolidated Financial Information Expenses Employee Benefits Expense and Employee Stock Option Expense" on page 470.
Although our employee benefits expense has been increasing year-on-year, to 20,048 million in Fiscal 2025 from 17,370 million in Fiscal 2024 and 16,085 million in Fiscal 2023, our employee benefits expense as a percentage of our revenue from operations has decreased to 72.5% in Fiscal 2025, from 79.1% in Fiscal 2024 and 81.0% in Fiscal 2023. Our employee stock option expense has decreased year-on-year, to 798 million in Fiscal 2025 from 963 million in Fiscal 2024 and 1,587 million in Fiscal 2023, comprising 2.9%, 4.4% and 8.0% as a percentage of revenue from operations in the respective Fiscals. As a percentage of revenue from operations, our employee benefits expense and employee stock option expense combined has decreased to 75.4% in Fiscal 2025, from 83.5% in Fiscal 2024 and 89.0% in Fiscal 2023. We have historically managed to mitigate the impact of wage inflation on our margins through our efficient delivery systems and processes by (i) managing the mix of expertise and location of talent working on a client engagement (for example, through organizing our employees under specialized divisions with deepened domain and industry expertise which increased our efficiency in building AI solutions), (ii) cost of living adjusted price increases in our contracts with clients, (iii) driving better utilization, (iv) focused interventions on lowering cost of talent through diversified sourcing strategies and upskilling programs and (v) better use of technology in our internal processes. As we continue to grow, we are likely to incur costs in relation to increasing our market penetration, sales and marketing initiatives and recruiting and retaining sales and other employees in India and overseas. Our ability to continue to manage our employee benefits expense and employee stock option expense in the future will be important to our financial results.
Foreign exchange rate fluctuations
Our reporting and functional currency is the Indian rupee. However, we conduct business across multiple countries in currencies, such as the US dollar, euro, pound sterling ("GBP") and Australian dollar, and exchange rate fluctuations, especially between the Indian Rupee and the US dollar, impact our results of operations. See also " Quantitative and Qualitative Disclosures about Market Risk, Credit Risk and Liquidity Risk Market Risk Currency Risk" on page 483.
We are exposed to fluctuations in foreign exchange rates because a majority of our revenue from operations is derived from currencies other than Indian rupees, whereas relatively more of our expenses are denominated in Indian rupees. Currency fluctuations, especially the depreciation of the Indian rupee relative to the US dollar, the euro and GBP, could positively impact our results of operations, while an appreciation of the Indian rupee relative to the US dollar, euro and/or GBP could negatively impact our results of operations. We have adopted a risk management policy to enable us to mitigate, among others, cash flow risk and revaluation risk. In addition, we hedge exposures to changes in foreign currency through currency forwards and options with a bank counterparty.
We are also exposed to foreign exchange rate fluctuations on assets denominated in other foreign currencies. We utilize forward foreign exchange derivative contracts to hedge the risk of foreign exchange volatility on part of our future revenues. For further information regarding the impact of foreign exchange rate fluctuations on our results of operations and our use of foreign exchange derivative contracts, see "Risk Factors Exchange rate fluctuations may adversely affect our results of operations as a significant portion of our revenues are denominated in foreign currencies and may adversely affect the value of our Equity Shares" on page 46.
Macroeconomic conditions
Macroeconomic conditions and recessionary pressures may affect clients demand for our services. For example,
BFSI enterprises globally are facing cost pressures and diminishing profitability, driving the importance of analytics, AI and Gen AI capabilities to streamline operations, enhance decision-making processes and drive business growth (source: Everest Report). Persistent inflationary pressures, tightening monetary policies and geopolitical tensions can impact the spending appetites of enterprises in digital services. In response to challenging macroeconomic conditions, enterprises may increasingly focus on cutting costs and shortening time-to-deployment. In general, economic factors, such as interest rates, employment trends, inflation and industry trends affecting our clients industries can affect our business. For example, tighter monetary policies, including interest rate hikes adopted by the U.S. Federal Reserve or inflation may increase our clients costs of borrowing and business expenses, thereby reducing their disposable capital and propensity to pay for large-scale technology solutions, thereby affecting the demand for our services.
Principal Components of Restated Consolidated Statement of Profit and Loss
Total income
Our total income comprises (i) revenue from operations and (ii) other income.
Revenue from operations
We earn revenue from operations primarily from the sale of our AI solutions. Our full suite of AI solutions is categorized under Fractal.ai (AI services and AI products) and Fractal Alpha (AI businesses) segments. See "Our Business Our AI Solutions" for further details.
We have global operations and operate across multiple industries. We typically enter into master service agreements ("MSAs") that govern the overall relationship and terms of arrangement with the client. For each engagement under an MSA, we enter into a separate statement of work ("SOW") with the client. These SOWs define the scope, timing, pricing terms and performance criteria for each individual engagement under the respective MSA. Depending on client preference and internal specifications, our MSAs may include one or more of our pricing models as described above. The fees we charge our clients depend on the type of contracts, the nature and duration of engagement, the AI solution provided (and the underlying intellectual property involved) and locations and skillset of personnel involved.
We have two reportable segments: (i) Fractal.ai and (ii) Fractal Alpha. The table below shows revenue from operations from our segments for the years indicated:
| Fiscal | |||
Particulars |
2025 | 2024 | 2023 |
| Revenue from operations in our Fractal.ai segment | 27,037 | 21,615 | 19,691 |
| Revenue from operations in our Fractal | 644 | 365 | 190 |
| Alpha segment Intersegment elimination | (27) | (17) | (27) |
Revenue from operations |
27,654 | 21,963 | 19,854 |
Within our Fractal.ai segment, our revenue contribution across our industries serviced and geographies is provided below:
Revenue from operations in our Fractal.ai segment by industry
The following table provides a breakdown of our revenue from operations in our Fractal.ai segment by industries serviced for the years indicated.
| Revenue from operations contribution by industry in our Fractal.ai segment | Fiscal | |||||
| 2025 | 2024 | 2023 | ||||
| Amount | % | Amount | % | Amount | % | |
| CPGR | 10,615 | 39.3% | 9,038 | 41.9% | 8,047 | 40.9% |
| TMT | 8,087 | 29.9% | 5,867 | 27.1% | 5,563 | 28.3% |
| HLS | 3,745 | 13.8% | 3,013 | 13.9% | 2,188 | 11.1% |
| BFSI | 2,980 | 11.0% | 2,325 | 10.8% | 2,842 | 14.4% |
| Others(1) | 1,610 | 6.0% | 1,372 | 6.3% | 1,051 | 5. 3% |
Revenue from operations in our Fractal.ai segment |
27,037 | 100.0% | 21,615 | 100.0% | 19,691 | 100.0% |
Note:
(1) Others comprise primarily energy, travel and industrials.
Revenue from operations by geography
Within our Fractal.ai segment, we have consistently expanded in all of our major markets including the Americas, Europe and APAC and others, with a stable revenue contribution from these locations based on billing locations of our clients in Fiscals 2025, 2024 and 2023, respectively, as demonstrated in the table below.
| Revenue from operations contribution by geography in our Fractal.ai segment | Fiscal | |||||
| 2025 | 2024 | 2023 | ||||
| Amount | % | Amount | % | Amount | % | |
| Americas(1) | 17,988 | 66.5% | 13,791 | 63.8% | 13,221 | 67.2% |
| Europe(2) | 4,792 | 17.7% | 4,291 | 19.9% | 3,333 | 16.9% |
| APAC and others(3) | 4,257 | 15.8% | 3,533 | 16.3% | 3,137 | 15.9% |
Revenue from operations in our Fractal.ai segment |
27,037 | 100.0% | 21,615 | 100.0% | 19,691 | 100.0% |
(1) Primarily includes USA, Barbados, Canada, Brazil and Mexico.
(2) Primarily includes United Kingdom, Netherlands, Switzerland, Austria, Ireland, France, Belgium, Italy, Germany and Finland.
(3) Primarily includes India, Australia, UAE, Singapore, Vietnam, Malaysia, Philippines, Indonesia, Hong Kong, Thailand, Egypt, South Africa, Japan and South Korea.
Other income
Our other income comprises (i) interest on bank deposits, loan to directors and unwinding of security deposits given, (ii) fair value gain on derivative contracts carried at fair value through profit or loss, (iii) fair valuation gain of financial instruments, (iv) gain on redemption/sale of financial instruments, (v) foreign exchange gain (net) and (vi) miscellaneous income.
Expenses
Our expenses comprise (i) employee benefits expense, (ii) employee stock option expense, (iii) finance costs, (iv) depreciation and amortization expense and (v) other expenses. Our employee benefits expense and employee stock option expense represent a majority of our total expenses, as our employees and their capabilities are of critical importance to our business. See also " Principal Factors Affecting Our Financial Condition and Results of Operations Our ability to recruit, train and retain employees." on page 467.
Employee benefits expense and Employee stock option expense
The following table provides a breakdown of our employee benefits expense and employee stock option expense including as a percentage of revenue from operations for the years indicated.
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Employee benefits expense | 20,048 | 17,370 | 16,085 |
As a % of revenue from operations (%) |
72.5% | 79.1% | 81.0% |
| Employee stock option expense | 798 | 963 | 1,587 |
As a % of revenue from operations (%) |
2.9% | 4.4% | 8.0% |
As of March 31, 2025, 2024 and 2023, we had 5,254, 4,639 and 4,221 employees worldwide. Our employee benefits expense primarily includes salaries and bonus that we pay to our employees. We also incur employee stock option expense with respect to our employee stock option plans. For more information, see "Capital Structure Notes to Capital Structure" on page 96. Pursuant to the stock option plans, we have issued grants to our employees from Fiscal 2008. These options vest over periods of one to four years from the grant date. Options granted under our ESOP 2007 plan are exercisable within 10 years from the vesting date. Options granted under our ESOP - 2019 plan are exercisable within 10 years from the grant date.
Our employee benefits expense includes 293 million, 383 million and 541 million in Retention bonus pursuant to acquisition and 231 million, 241 million and 379 million in ESOP cash bonus for Fiscals 2025, 2024 and 2023, respectively. Our employee benefits expense also includes credit for government grants of 49 million, 76 million and Nil in Fiscals 2025, 2024 and 2023 respectively from various countries on compliance of several employment-related conditions which were accounted as credit to the employee benefit expense in the respective Fiscals.
Finance costs
Our finance costs primarily include interest expense on borrowings, lease liabilities and others. For more details on our indebtedness, see " Indebtedness" on page 481. Our finance costs for the years indicated are as below:
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Finance costs | 577 | 445 | 453 |
Depreciation and amortization expense
Our depreciation and amortization expense primarily includes expense associated with depreciation of our physical assets such as computers and accessories, furniture and fixtures, leasehold improvements and right of use assets and amortization of intangible assets such as computer software, internally generated intellectual property, brand, developed content and patent. Our depreciation and amortization expense, including as a percentage of revenue from operations for the years indicated is as below:
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Depreciation and amortization expense | 1,023 | 832 | 781 |
As a % of revenue from operations |
3.7% | 3.8% | 3.9% |
While our depreciation and amortization expense has been increasing year-on-year, it has been decreasing as a percentage of revenue from operations. See " Summary Results of Operations" for a detailed discussion of the changes in our depreciation and amortization expense.
Other expenses
Our other expenses primarily include (i) outsourced manpower expense that we incur to support our operations by engaging third party agencies and personnel; (ii) software license and maintenance expense that we incur for technology infrastructure and maintaining and upgrading our information technology systems, (iii) travelling and conveyance; (iv) cloud and communication charges; and (v) legal and professional fees, primarily for our acquisitions, corporate reorganizations, business support and ongoing global compliance.
The table below provides our other expenses, including as a percentage of revenue from operations for the years indicated:
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Other expenses | 3,309 | 2,896 | 3,346 |
As a % of revenue from operations |
12.0% | 13.2% | 16.9% |
Our other expenses have been decreasing as a percentage of revenue from operations across Fiscals 2023, 2024 and 2025. See " Summary Results of Operations" for a detailed discussion of the changes in our other expenses.
Tax expense
We are subject to income taxes in jurisdictions where we operate. Our profit is impacted by the tax regimes applicable to us and our effective tax rate may fluctuate significantly as a result of differences between, among other factors, domestic and foreign jurisdiction tax rates.
Summary Results of Operations
The following table sets forth select financial data from our restated consolidated statement of profit and loss for Fiscals 2025, 2024 and 2023, the components of which are also expressed as a percentage of total income.
| Fiscal | ||||||
| 2025 | 2024 | 2023 | ||||
| Amount | As a % of total income | Amount | As a % of total income | Amount | As a % of total income | |
Income |
||||||
| Revenue from operations | 27,654 | 98.2% | 21,963 | 98.0% | 19,854 | 97.1% |
| Other income | 508 | 1.8% | 456 | 2.0% | 583 | 2.9% |
Total Income |
28,162 | 100.0% | 22,419 | 100.0% | 20,437 | 100.0% |
Expenses |
||||||
| Employee benefits expense | 20,048 | 71.2% | 17,370 | 77.5% | 16,085 | 78.7% |
| Employee stock option expense | 798 | 2.8% | 963 | 4.3% | 1,587 | 7.8% |
| Finance costs | 577 | 2.1% | 445 | 2.0% | 453 | 2.2% |
| Depreciation and amortization expense | 1,023 | 3.6% | 832 | 3.7% | 781 | 3.8% |
| Other expenses | 3,309 | 11.8% | 2,896 | 12.9% | 3,346 | 16.4% |
Total Expenses |
25,755 | 91.5% | 22,506 | 100.4% | 22,252 | 108.9% |
Profit / (Loss) before |
2,407 | 8.5% | (87) | (0.4)% | (1,815) | (8.9)% |
| Fiscal | ||||||
| 2025 | 2024 | 2023 | ||||
| Amount | As a % of total income | Amount | As a % of total income | Amount | As a % of total income | |
share of loss of an associate, exceptional items and tax expense |
||||||
| Share of (loss) of an associate | (297) | (1.0)% | (163) | (0.7)% | (290) | (1.4)% |
Profit / (Loss) before exceptional items and tax expense |
2,110 | 7.5% | (250) | (1.1)% | (2,105) | (10.3)% |
| Exceptional items gain / (loss) | 270 | 1.0% | (55) | (0.3)% | 5,239 | 25.6% |
Profit / (Loss) before tax expense |
2,380 | 8.5% | (305) | (1.4)% | 3,134 | 15.3% |
Tax Expense |
||||||
| Current tax | 557 | 2.0% | 325 | 1.4% | 179 | 0.9% |
| Deferred tax (credit)/ charge | (383) | (1.4)% | (83) | (0.4)% | 1,011 | 4.9% |
Total Tax Expense |
174 | 0.6% | 242 | 1.0% | 1,190 | 5.8% |
Profit / (Loss) for the year |
2,206 | 7.9% | (547) | (2.4)% | 1,944 | 9.5% |
Fiscal 2025 compared to Fiscal 2024
Total Income
Our total income increased by 25.6% to 28,162 million in Fiscal 2025 from 22,419 million in Fiscal 2024, primarily due to an increase in our revenue from operations by 25.9% to 27,654 million in Fiscal 2025 from
21,963 million in Fiscal 2024. Revenue from operations
? Revenue from operations from our Fractal.ai segment increased by 25.1% to 27,037 million in Fiscal 2025 from 21,615 million in Fiscal 2024. The increase is primarily attributable to growth in revenue from existing clients (demonstrated by our Net Revenue Retention of 121.3% in Fiscal 2025), increase in the number of clients and our ability to charge a higher price for AI services and AI products.
? Revenue from operations for our Fractal Alpha business segment increased by 76.4% to 644 million for Fiscal 2025 from 365 million for Fiscal 2024. This increase is primarily due to an increase in the sale of AI businesses in Fiscal 2025 compared to Fiscal 2024, attributable primarily to an increase in the number of clients and an increase in revenue from operations from existing clients and our ability to charge a higher price.
? All industries and geographies experienced growth. Within our Fractal.ai segment, we experienced particularly strong growth in TMT and BFSI, with an increase in revenue from operations of 37.8% (to
8,087 million from 5,867 million) and 28.2% (to 2,980 million from 2,325 million) respectively to
Fiscal 2025 from Fiscal 2024. Our revenue from operations in our Fractal.ai segment from Americas increased by 30.4% to 17,988 million for Fiscal 2025 from 13,791 million for Fiscal 2024.
Other income
Our other income increased by 11.4% to 508 million for Fiscal 2025 from 456 million in Fiscal 2024, primarily due to an increase in gain on redemption/sale of financial instruments of 291 million in Fiscal 2025 compared to
163 million in Fiscal 2024 and a foreign exchange gain (net) of 126 million in Fiscal 2025 compared to 65 million in Fiscal 2024.
Expenses
Employee benefits expense
Our employee benefits expense increased by 15.4% to 20,048 million in Fiscal 2025 from 17,370 million in Fiscal 2024, primarily due to salary increments offered to our employees and increase in our employee headcount to 5,254 as of March 31, 2025 from 4,639 as of March 31, 2024.
Employee stock option expense
Our employee stock option expense decreased by 17.1% to 798 million in Fiscal 2025 from 963 million in Fiscal 2024, primarily due to graded vesting of a majority of the employee stock options, which were granted towards the end of Fiscal 2022.
Finance costs
Our finance costs increased by 29.7% to 577 million in Fiscal 2025 from 445 million in Fiscal 2024, primarily due to an increase in interest on lease liabilities to 121 million in Fiscal 2025 from 41 million in Fiscal 2024 due to additional office premises taken on lease and renewal of lease terms for existing office premises. We also incurred other borrowing cost of 146 million in Fiscal 2025 which primarily related to an arrangement fee for a loan refinancing. This was partially offset by a decrease in interest on borrowings to 255 million in Fiscal 2025 from 313 million in Fiscal 2024, as a result of such loan refinancing.
Depreciation and amortization expense
Our depreciation and amortization expense increased by 23.0% to 1,023 million in Fiscal 2025 from 832 million in Fiscal 2024, primarily due to an increase in depreciation on right-of use assets to 340 million in Fiscal 2025 from 249 million in Fiscal 2024 due to additional office premises taken on lease and an increase in amortization of intangible assets to 511 million in Fiscal 2025 from 321 million in Fiscal 2024 relating to software acquired in 2024, which was accounted for the full year in Fiscal 2025, as compared to a shorter period in Fiscal 2024.
Other expenses
Our other expenses increased by 14.3% to 3,309 million in Fiscal 2025 compared to 2,896 million in Fiscal 2024, primarily due to:
? Travelling and conveyance expense: increased by 35.5% to 469 million in Fiscal 2025 compared to
346 million in Fiscal 2024, largely in line with our increase in revenue from operations.
? Software license and maintenance expenses: increased by 25.1% to 544 million in Fiscal 2025 from
435 million in Fiscal 2024, due to increase in software licensing fees in line with our increased employee count.
? Cloud and Communication expense: increased by 31.0% to 423 million in Fiscal 2025 compared to
323 million in Fiscal 2024, as we incurred additional cloud and communication expense in line with our increase in revenue from operations, primarily attributable to increased Gen AI adoption, delivery-based needs for clients, research and development usage.
? Legal and professional fees: increased by 13.0% to 523 million in Fiscal 2025 compared to 463 million in Fiscal 2024, primarily due to increase in fees paid to consultants and/or professionals for various compliance requirements, higher costs for increased business and technical support as well as various corporate activities.
These increases were partially offset by a decrease in our marketing expenses, which decreased by 30.6% to 134 million in Fiscal 2025 from 193 million in Fiscal 2024, primarily due to a change in marketing strategy and change in marketing partners during Fiscal 2025.
Tax expense
Our total tax expense in Fiscal 2025 was 174 million compared to 242 million in Fiscal 2024. The primary reason for this was deferred tax credit of 383 million in Fiscal 2025 as the Finance Act 2024 passed in Fiscal 2025 included amendments in the manner of calculation of long-term capital gain and reduced the tax rate on long term capital gain from 20% to 12.5% (excluding applicable surcharge and education cess thereon). Consequent to these amendments, our Company reversed a deferred tax liability of 370 million in Fiscal 2025, partially offset by additional deferred tax liability of 42 million created on remeasurement gain on retained interest in associate company recorded under exceptional items.
Profit/ (Loss) for the year
As a result of the foregoing factors, Profit for the year was 2,206 million in Fiscal 2025 compared to a loss of
547 million in Fiscal 2024.
Fiscal 2024 compared to Fiscal 2023
Total Income
Our total income increased by 9.7% to 22,419 million in Fiscal 2024 from 20,437 million in Fiscal 2023, primarily due to an increase in our revenue from operations by 10.6% to 21,963 million in Fiscal 2024 from 19,854 million in Fiscal 2023. The increase in our total income was partially offset by a decrease in other income by 21.8% to 456 million in Fiscal 2024 from 583 million in Fiscal 2023 primarily due to a decrease in foreign exchange gain (net) to 65 million in Fiscal 2024 from 306 million in Fiscal 2023.
Revenue from operations
? Revenue from operations from our Fractal.ai segment increased by 9.8% to 21,615 million in Fiscal 2024 from 19,691 million in Fiscal 2023. The increase is primarily attributable to growth in revenue from existing clients (demonstrated by our Net Revenue Retention of 110.2% in Fiscal 2024), increase in the number of clients and our ability to charge a higher price for AI solutions.
? Revenue from operations for our Fractal Alpha business segment increased by 92.1% to 365 million in Fiscal 2024 from 190 million in Fiscal 2023. This increase is primarily due to an increase in the sale of
AI businesses in Fiscal 2024 compared to Fiscal 2023, attributable primarily to an increase in the number of clients and an increase in revenue from operations from existing clients and our ability to charge a higher price.
? Most industries and all geographies experienced growth. Within our Fractal.ai segment, we experienced particularly strong growth in HLS and CPGR, with an increase in revenue from operations of 37.7% (to
3,013 million in Fiscal 2024 from 2,188 million in Fiscal 2023) and 12.3% (to 9,038 million in Fiscal 2024 from 8,047 million in Fiscal 2023) respectively, partially offset by a decrease in revenue from BFSI by 18.2% to 2,325 million in Fiscal 2024 from 2,842 million in Fiscal 2023. Our revenue from operations within Fractal.ai from Europe increased by 28.7% to 4,291 million in Fiscal 2024 from 3,333 million in Fiscal 2023.
Other income
Other income decreased by 21.8% to 456 million in Fiscal 2024 from 583 million in Fiscal 2023 primarily due to decrease in foreign exchange gain (net) of 65 million in Fiscal 2024 compared to 306 million in Fiscal 2023, which was partially offset by (i) an increase in fair valuation gain of financial instrument of 122 million in Fiscal 2024 compared to 69 million in Fiscal 2023 and (ii) an increase in gain on redemption/sale of financial instruments of 163 million in Fiscal 2024 compared to 96 million in Fiscal 2023.
Expenses
Employee benefits expense
Our employee benefits expense increased by 8.0% to 17,370 million in Fiscal 2024 from 16,085 million in
Fiscal 2023, primarily due to salary increments offered to our employees and increase in our employee headcount to 4,639 as of March 31, 2024 from 4,221 as of March 31, 2023.
Employee stock option expense
Our employee stock option expense decreased by 39.3% to 963 million in Fiscal 2024 from 1,587 million in
Fiscal 2023, primarily due to the effect of graded vesting of employee stock options, which were granted towards the end of Fiscal 2022.
Finance costs
Our finance costs marginally decreased by 1.8% to 445 million in Fiscal 2024 from 453 million in Fiscal 2023.
Depreciation and amortization expense
Our depreciation and amortization expense increased by 6.5% to 832 million in Fiscal 2024 from 781 million in Fiscal 2023, primarily due to an increase in amortization of intangible assets such as software licenses purchased during the year.
Other expenses
Our other expenses decreased by 13.4% to 2,896 million in Fiscal 2024 compared to 3,346 million in Fiscal
2023, primarily due to:
? Legal and professional fees: our legal and professional fees decreased by 17.3% to 463 million in Fiscal 2024 compared to 560 million in Fiscal 2023, as we incurred higher legal and professional services in
Fiscal 2023 in connection with certain acquisitions related costs.
? Recruitment expenses: our recruitment expenses decreased by 80.5% to 33 million in Fiscal 2024 from 169 million in Fiscal 2023, primarily due to a significant decline in the use of external recruitment agencies, driven by the insourcing of recruitment efforts during Fiscal 2024.
? Rent, rates and taxes: our rent, rates and taxes decreased by 44.4% to 94 million in Fiscal 2024 compared to 169 million in Fiscal 2023, primarily due to a provision booked for compounding of tax offence, without acceptance or admission of guilt under the provisions of the Income Tax Act, 1961 in Fiscal 2023 relating to a delay in deposit of tax deducted at source during an earlier Fiscal.
? Fair value loss on derivative and forward contracts: We incurred fair value loss (net) on derivative contracts carried at fair value through profit or loss of 152 million in Fiscal 2023. In Fiscal 2024, the same was recorded under other income on account of fair value gain on derivatives and forward contracts.
This decrease was partially offset by an increase in our cloud and communication expenses by 20.1% to 323 million in Fiscal 2024 from 269 million in Fiscal 2023.
Exceptional items
We incurred an exceptional loss of (55) million in Fiscal 2024 as a result of remeasurement of retained interest in associate; and exceptional gain of 5,239 million in Fiscal 2023, as a result of (i) gain on loss of control of subsidiary of 5,410 million, as we ceased to consolidate Qure.ai as part of our consolidated financial statements after deemed loss of control, and as a result recognized the investment in Qure.ai at fair value with effect from April 1, 2022 in our restated consolidated statement of profit and loss in Fiscal 2023; and (ii) impairment in value of intangible assets and intangible assets under development of (171) million.
Tax expense
Our tax expense decreased by 79.7% to 242 million in Fiscal 2024 from 1,190 million in Fiscal 2023, primarily due to recognition of deferred tax liability of 1,016 million on fair value of associate company in Fiscal 2023.
Profit/ (Loss) for the year
As a result of the foregoing factors, loss for the year was 547 million in Fiscal 2024 compared to profit for the year of 1,944 million in Fiscal 2023.
Selected Financial and Operational Measures
In evaluating our business, we consider and use certain non-GAAP financial measures and operational measures as supplemental measures to review and assess our operating performance. The presentation of these non-GAAP financial measures and operational measures are not intended to be considered in isolation or as a substitute for the Restated Consolidated Financial Information. We present these non-GAAP financial measures and operational measures because they are used by our management to evaluate our operating performance. These non-GAAP financial measures are not defined under GAAP and are not presented in accordance with GAAP. The non-GAAP financial measures and operational measures have limitations as analytical tools. Further, these non-GAAP financial measures and operational measures are not standardized terms and may differ from the similar information used by other companies and hence their comparability may be limited. Therefore, these measures should not be considered in isolation or construed as an alternative to GAAP measures of performance or as an indicator of our operating performance, liquidity, profitability or results of operation.
Particulars |
Unit | As at and for Fiscal ended March 31, | ||
| 2025 | 2024 | 2023 | ||
Financial Measures |
||||
Our Group |
||||
| Revenue from operations | million | 27,654 | 21,963 | 19,854 |
| Growth in revenue from operations from previous | % | 25.9 | 10.6 | N/A* |
| Fiscal | ||||
| Cash flow from operations (1) | million | 3,970 | 1,595 | (306) |
| Profit/(Loss) for the year | million | 2,206 | (547) | 1,944 |
| PAT Margin (2) | % | 8.0 | (2.5) | 9.8 |
| Adjusted PAT (3) | million | 3,478 | (45) | 540 |
| Adjusted PAT Margin (4) | % | 12.6 | (0.2) | 2.7 |
| EBITDA (5) | million | 3,980 | 972 | 4,368 |
| EBITDA Margin (6) | % | 14.4 | 4.4 | 22.0 |
| Adjusted EBITDA (7) | million | 4,821 | 2,321 | 1,343 |
| Adjusted EBITDA Margin (8) | % | 17.4 | 10.6 | 6.8 |
Fractal.ai segment |
||||
| Revenue from operations | million | 27,037 | 21,615 | 19,691 |
| Growth in revenue from operations from previous | % | 25.1 | 9.8 | N/A* |
| Fiscal | ||||
| Revenue in Fractal.ai segment by industry | ||||
| CPGR | million | 10,615 | 9,038 | 8,047 |
| TMT | million | 8,087 | 5,867 | 5,563 |
| HLS | million | 3,745 | 3,013 | 2,188 |
| BFSI | million | 2,980 | 2,325 | 2,842 |
| Others(9) | million | 1,610 | 1,372 | 1,051 |
| Revenue in Fractal.ai segment by industry, as a % of revenue from Fractal.ai segment | ||||
| CPGR | % | 39.3 | 41.9 | 40.9 |
| TMT | % | 29.9 | 27.1 | 28.3 |
| HLS | % | 13.8 | 13.9 | 11.1 |
| BFSI | % | 11.0 | 10.8 | 14.4 |
| Others(9) | % | 6.0 | 6.3 | 5.3 |
| Revenue in Fractal.ai segment by geography | ||||
| Americas | million | 17,988 | 13,791 | 13,221 |
| Europe | million | 4,792 | 4,291 | 3,333 |
| APAC and others | million | 4,257 | 3,533 | 3,137 |
| Revenue in Fractal.ai segment by geography, as a | ||||
| % of revenue from Fractal.ai segment | ||||
| Americas | % | 66.5 | 63.8 | 67.2 |
| Europe | % | 17.7 | 19.9 | 16.9 |
| APAC and others | % | 15.8 | 16.3 | 15.9 |
| Segment results Fractal.ai segment(10) | million | 3,788 | 1,233 | (315) |
| Segment results Fractal.ai segment, as a % of revenue from operations - Fractal.ai segment | % | 14.0 | 5.7 | (1.6) |
| Adjusted segment results Fractal.ai segment (11) | million | 5,084 | 2,769 | 2,115 |
| Adjusted segment results Margin Fractal.ai segment (12) | % | 18.8 | 12.8 | 10.7 |
Fractal Alpha segment |
||||
| Revenue from operations | million | 644 | 365 | 190 |
| Growth in revenue from operations from previous | % | 76.4 | 92.1 | N/A* |
| Fiscal | ||||
| Segment results Fractal Alpha segment(13) | million | (283) | (494) | (616) |
| Segment results Fractal Alpha segment, as a % of revenue from operations - Fractal Alpha segment | % | (43.9) | (135.3) | (324.2) |
| Adjusted segment results Fractal Alpha segment(14) | million | (257) | (443) | (539) |
Particulars |
Unit | As at and for Fiscal ended March 31, | ||
| 2025 | 2024 | 2023 | ||
| Adjusted segment results Margin Fractal Alpha segment(15) | % | (39.9) | (121.4) | (283.7) |
Operational Measures |
||||
Our Group |
||||
| Total employees | number | 5,254 | 4,639 | 4,221 |
Fractal.ai segment |
||||
| Net Revenue Retention(16) | % | 121.3 | 110.2 | 151.0 |
| Clients by annual revenue contribution | ||||
| >US$20 million | number | 5 | 2 | 1 |
| >US$10 million | number | 6 | 5 | 5 |
| >US$5 million | number | 15 | 11 | 10 |
| >US$1 million | number | 53 | 48 | 45 |
| Client concentration | ||||
| Top 10 | million | 14,537 | 11,809 | 10,064 |
| Top 10 | % | 53.8 | 54.6 | 51.1 |
| Top 20 | million | 18,831 | 15,114 | 13,194 |
| Top 20 | % | 69.6 | 69.9 | 67.0 |
| Net Promoter Score(17) | Score | 77 | 77 | 73 |
* not applicable, as revenue from operations from Fiscal 2022 has not been included in this Draft Red Herring Prospectus.
Notes:
(1) Cash flow from operations is net cash flow generated from / (used in) operating activities.
(2) PAT Margin is calculated as profit/(loss) for the year as a percentage of revenue from operations for the year. For a reconciliation of
PAT Margin, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478.
(3) Adjusted PAT is calculated as profit/(loss) for the year plus (i) employee stock option expense; (ii) ESOP cash bonus; (iii) retention bonus pursuant to acquisition; and less (iv) exceptional items gain/(loss), (v) the tax effect of the aforesaid adjustments; less (vi) share of (loss) of an associate. For a reconciliation of Adjusted PAT, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (4) Adjusted PAT Margin is calculated as Adjusted PAT for the year as a percentage of revenue from operations for the year. For a reconciliation of Adjusted PAT Margin, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (5) EBITDA is calculated as profit/(loss) for the year plus (i) total tax expense, (ii) depreciation and amortisation expense and (iii) finance costs. For a reconciliation of EBITDA, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (6) EBITDA Margin is calculated as EBITDA for the year as a percentage of revenue from operations for the year. For a reconciliation of
EBITDA Margin, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478.
(7) Adjusted EBITDA is calculated as EBITDA plus (i) employee stock option expense; (ii) ESOP cash bonus; (iii) retention bonus pursuant to acquisition; less (iv) other income; (v) exceptional items gain / (loss); (vi) share of (loss) of an associate. For a reconciliation of
Adjusted EBITDA, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478.
(8) Adjusted EBITDA Margin is calculated as Adjusted EBITDA for the year as a percentage of revenue from operations for the year. For a reconciliation of Adjusted EBITDA Margin, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (9) Others comprises primarily energy, travel and industrials. (10) Segment results Fractal.ai segment is calculated as Fractal.ai revenue from operations for the year less (i) employee related expenses and (ii) other expenses for Fractal.ai segment. (11) Adjusted segment results Fractal.ai segment is calculated as Segment results - Fractal.ai segment; plus (i) Employee stock option expense (including ESOP cash bonus); and (ii) Retention bonus pursuant to acquisition. For a reconciliation of Adjusted segment results
Fractal.ai segment, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (12) Adjusted segment results Margin Fractal.ai segment is calculated as Adjusted segment results Fractal.ai segment for the year as a percentage of Fractal.ai revenue from operations for the year. For a reconciliation of Adjusted segment results Margin Fractal.ai segment, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (13) Segment results Fractal Alpha segment is calculated as Fractal Alpha revenue from operations for the year less (i) employee related expenses and (ii) other expenses for Fractal Alpha segment. (14) Adjusted segment results - Fractal Alpha segment is calculated as Segment results - Fractal Alpha segment; plus (i) Employee stock option expense (including ESOP cash bonus); and (ii) Retention bonus pursuant to acquisition. For a reconciliation of Adjusted segment results - Fractal Alpha segment, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page
478.
(15) Adjusted segment results Margin Fractal Alpha segment is calculated as Adjusted segment results Fractal Alpha segment for the year as a percentage of Fractal Alpha revenue from operations for the year. For a reconciliation of Adjusted segment results Margin
Fractal Alpha segment, see "Managements Discussion and Analysis of Results of Operations Non-GAAP measures" on page 478. (16) Net Revenue Retention in our Fractal.ai segment measures how effectively we retain and expand revenue from our existing clients over a defined period and is calculated by comparing the current periods revenue from the clients who existed at the start of the period with their revenue in the previous period including the effects of upsells, cross-sells and contractions. (17) Net Promoter Score is used in Fractal.ai segment to gauge client satisfaction and advocacy. Clients rate us on a 10-point scale on their willingness to recommend Fractal and NPS is calculated as the percentage of promoters (scores of 9-10) minus the percentage of detractors (scores of 6 and below) (source: 1Lattice Report). Note: Our Top 10 clients include Philips, Mars, Mondelez, and C3 AI. The names of the remaining Top 10 clients have not been disclosed due to non-receipt of their consents.
Non-GAAP measures
Reconciliations of EBITDA, Adjusted EBITDA, Adjusted PAT, EBITDA Margin, Adjusted EBITDA Margin and Adjusted PAT Margin
PAT Margin is calculated as profit/(loss) for the year as a percentage of revenue from operations for the year.
Adjusted PAT is calculated as profit/(loss) for the year plus (i) employee stock option expense; (ii) ESOP cash bonus; (iii) retention bonus pursuant to acquisition; and less (iv) exceptional items gain/(loss), (v) the tax effect of the aforesaid adjustments; less (vi) share of (loss) of an associate.
Adjusted PAT Margin is calculated as Adjusted PAT for the year as a percentage of revenue from operations for the year.
EBITDA is calculated as profit/(loss) for the year plus (i) total tax expense, (ii) depreciation and amortisation expense and (iii) finance costs.
EBITDA Margin is calculated as EBITDA for the year as a percentage of revenue from operations for the year.
Adjusted EBITDA is calculated as EBITDA plus (i) employee stock option expense; (ii) ESOP cash bonus; (iii) retention bonus pursuant to acquisition; less (iv) other income; (v) exceptional items gain / (loss); (vi) share of (loss) of an associate.
Adjusted EBITDA Margin is calculated as Adjusted EBITDA for the year as a percentage of revenue from operations for the year.
The table below reconciles EBITDA and Adjusted EBITDA to profit/(loss) for the year.
| Fiscal | |||
| 2025 | 2024 | 2023 | |
Profit / (Loss) for the year (A) |
2,206 | (547) | 1,944 |
| Add: Total tax expense (B) | 174 | 242 | 1,190 |
| Add: Depreciation and amortization expense (C) | 1,023 | 832 | 781 |
| Add: Finance costs (D) | 577 | 445 | 453 |
EBITDA (E = A + B + C+ D) |
3,980 | 972 | 4,368 |
| Add: Employee stock option expense (F) | 798 | 963 | 1,587 |
| Add: ESOP cash bonus (G) | 231 | 241 | 379 |
| Add: Retention bonus pursuant to acquisition (H) | 293 | 383 | 541 |
| Less: Other income (I) | 508 | 456 | 583 |
| Less: Exceptional items gain / (loss) (J) | 270 | (55) | 5,239 |
| Less: Share of (loss) of an associate (K) | (297) | (163) | (290) |
Adjusted EBITDA (L = E+F+G+H-I-J-K) |
4,821 | 2,321 | 1,343 |
| Revenue from operations (M) | 27,654 | 21,963 | 19,854 |
EBITDA Margin (N = E/M) |
14.4% | 4.4% | 22.0% |
Adjusted EBITDA Margin (O = L/M) |
17.4% | 10.6% | 6.8% |
The table below reconciles Adjusted PAT to Profit / (Loss) for the year.
| Fiscal | |||
| 2025 | 2024 | 2023 | |
Profit / (Loss) for the year (A) |
2,206 | (547) | 1,944 |
| Add: Employee stock option expense (B) | 798 | 963 | 1,587 |
| Add: ESOP cash bonus (C) | 231 | 241 | 379 |
| Add: Retention bonus pursuant to acquisition (D) | 293 | 383 | 541 |
| Less: Exceptional items gain / (loss) (E) | 270 | (55) | 5,239 |
Total adjustments (F = B+C+D-E) |
1,052 | 1,642 | (2,732) |
| Consolidated effective tax rate (G) | 7.3% | 79.4% | 38.0% |
| Tax adjustment (H = F*G) | 77 | 1,303 | (1,038) |
| Less: Share of (loss) of an associate (I) | (297) | (163) | (290) |
Adjusted PAT (J = A+F-H-I) |
3,478 | (45) | 540 |
| Revenue from operations (K) | 27,654 | 21,963 | 19,854 |
| Fiscal | |||
| 2025 | 2024 | 2023 | |
PAT Margin (L=A/K) |
8.0% | (2.5)% | 9.8% |
Adjusted PAT Margin (M = J/K) |
12.6% | (0.2)% | 2.7% |
Reconciliations of Adjusted segment results and Adjusted segment results Margin
Adjusted segment results Fractal.ai segment is calculated as Segment results - Fractal.ai segment; plus (i) Employee stock option expense (including ESOP cash bonus); and (ii) Retention bonus pursuant to acquisition.
Adjusted segment results Margin - Fractal.ai segment is calculated as Adjusted segment results Fractal.ai segment for the year as a percentage of Fractal.ai revenue from operations for the year.
Adjusted segment results - Fractal Alpha segment is calculated as Segment results - Fractal Alpha segment; plus (i) Employee stock option expense (including ESOP cash bonus); and (ii) Retention bonus pursuant to acquisition.
Adjusted segment results Margin - Fractal Alpha segment is calculated as Adjusted segment results Fractal Alpha segment for the year as a percentage of Fractal Alpha revenue from operations for the year.
The table below reconciles Adjusted segment results for our Fractal.ai and Fractal Alpha segments to their respective segment results:
Particulars |
Fiscal | ||
| 2025 | 2024 | 2023 | |
Fractal.ai Segment |
|||
| Segment results Fractal.ai segment (A) | 3,788 | 1,233 | (315) |
| Add: Employee stock option expense (including ESOP cash bonus) (B) | 1,019 | 1,189 | 1,947 |
| Add: Retention bonus pursuant to acquisition (C) | 277 | 347 | 483 |
Adjusted segment results - Fractal.ai segment |
5,084 | 2,769 | 2,115 |
(D = A+B+C) |
|||
| Revenue from operations -- Fractal.ai (E) | 27,037 | 21,615 | 19,691 |
Adjusted segment results Margin Fractal.ai segment |
18.8% | 12.8% | 10.7% |
(F = D/E) |
|||
Fractal Alpha Segment |
|||
| Segment results Fractal Alpha segment (G) | (283) | (494) | (616) |
| Add: Employee stock option expense (including ESOP cash bonus) (H) | 10 | 15 | 19 |
| Add: Retention bonus pursuant to acquisition (I) | 16 | 36 | 58 |
Adjusted segment results Fractal Alpha segment |
(257) | (443) | (539) |
(J=G+H+I) |
|||
| Revenue from operations Fractal Alpha (K) | 644 | 365 | 190 |
Adjusted segment results Margin Fractal Alpha segment (L = J/K) |
(39.9)% | (121.4)% | (283.7)% |
Net Worth and Return on Net Worth
As per Regulation 2(1)(hh) of the SEBI ICDR Regulations Net Worth means the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the restated consolidated statement of assets and liabilities, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation. Further, Net Worth is calculated by deducting the Remeasurement of defined benefit plans, Exchange differences on translating the financial statements of a foreign operations and Effective portion of gains on derivatives designated as cash flow hedge (net) from the equity attributable to owners of the Company. Equity attributable to owners of the Company comprises of equity share capital and other equity.
Return on Net Worth is calculated as profit/(loss) for the year divided by Net Worth at the end of the year.
Particulars |
Fiscal | ||
| 2025 | 2024 | 2023 | |
| Share Capital (A) | 31 | 31 | 31 |
| Other equity (B) | 17,501 | 14,026 | 13,400 |
Equity attributable to owners of the Company (C = A+B) |
17,532 | 14,057 | 13,431 |
| Less: Remeasurement of defined benefit plans (D) | (89) | (112) | (127) |
| Less: Exchange differences on translating the financial statements of a foreign operation (E) | 155 | 167 | 166 |
| Less: Effective portion of gains on derivatives designated as cash flow hedge (net) (F) | (17) | 32 | - |
Net Worth (G = C+D+E+F) |
17,483 | 13,970 | 13,392 |
| Profit / (Loss) for the year (H) | 2,206 | (547) | 1,944 |
Return on Net Worth (I = H/G) |
12.6% | (3.9)% | 14.5% |
Net Asset Value per Equity Share
Net Asset Value per equity share is Net Worth at the end of the year divided by number of shares outstanding at the end of the year. Number of shares outstanding at the end of the year is an aggregate of number of equity shares, compulsory convertible preference shares (basis as is converted basis) and options exercisable at the end of the year.
Particulars |
Fiscal | ||
| 2025 | 2024 | 2023 | |
| Net Worth (A) | 17,483 | 13,970 | 13,392 |
| Equity shares outstanding at the end of the year* (B) | 134,192,040 | 131,588,945 | 130,949,270 |
| Compulsory convertible preference shares outstanding at end of the year* (C) | 22,618,020 | 22,618,020 | 22,618,020 |
| Options exercisable at end of the year* (D) | 11,306,165 | 10,041,495 | 6,959,060 |
Total shares outstanding at end of the year (E = B+C+D) |
168,116,225 | 164,248,460 | 160,526,350 |
Net Asset Value (NAV) per equity share (F = A/E) |
104 | 85 | 83 |
*Adjusted to give impact of bonus issue subsequent to the year ended March 31, 2025.
Liquidity and Capital Resources
Historically, our primary liquidity requirements have been to finance our working capital needs for our operations and acquisitions. We have met these requirements primarily through cash flows from operations, equity infusions from shareholders and borrowings. As of March 31, 2025, we had 2,649 million in cash and cash equivalents,
243 million in bank balances and deposits other than cash and cash equivalents and 5,614 million in investment in liquid mutual funds units (unquoted).
We believe that our current cash and bank balances, investment in liquid mutual fund units (unquoted) and cash flows provided by operating activities and the estimated net proceeds from this Offering will be sufficient to meet our present working capital needs and in the next 12 months following the date of this Draft Red Herring Prospectus. We may, however, need additional cash resources in the future if we experience changes in business condition or other developments, or if we find and wish to pursue opportunities for investments, acquisitions, capital expenditures or similar actions. If we determine that our cash requirements exceed the amount of cash and bank balances we have on hand at the time or that at any given time, we may seek to issue equity or debt securities, or obtain credit facilities.
Cash flows
The table below summarizes the statement of cash flows, as per our restated consolidated statement of cash flows, for the years indicated:
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Net cash flow generated from/(used in) operating activities | 3,970 | 1,595 | (306) |
| Fiscal | |||
| 2025 | 2024 | 2023 | |
| Net cash flow (used in)/generated from investing activities | (1,810) | (1,501) | 1,249 |
| Net cash flow used in financing activities | (224) | (1,450) | (574) |
Net increase / (decrease) in cash and cash equivalents |
1,936 | (1,356) | 369 |
| Cash and cash equivalents at the beginning of the year | 812 | 2,132 | 1,832 |
| Derecognition of cash and cash equivalents of subsidiary | - | - | (159) |
| Effect of exchange rate changes | (99) | 36 | 90 |
| Cash and cash equivalents at the end of the year | 2,649 | 812 | 2,132 |
Operating activities
Net cash flow generated from operating activities in Fiscal 2025 was 3,970 million which primarily consisted of (a) operating cash flow before working capital changes of 4,431 million, (b) increase in trade receivables and other current assets of 587 million, (c) increase in trade payables, other non current financial liabilities, other current financial liabilities and other current liabilities of 754 million and (d) tax paid (net of refunds) of 557 million.
Net cash flow generated from operating activities in Fiscal 2024 was 1,595 million which primarily consisted of (a) operating cash flow before working capital changes of 1,865 million, (b) increase in trade receivables and other current assets of 655 million, (c) increase in other non current financial liabilities, other current financial liabilities, provisions and other current liabilities of 759 million and (d) tax paid (net of refunds) of 323 million.
Net cash flow used in operating activities in Fiscal 2023 was 306 million which primarily consisted of (a) operating cash flow before working capital changes of 945 million, (b) increase in trade receivables and other current assets of 1,606 million, (c) net increase in trade payables, other non current financial liabilities, other current financial liabilities, provisions and other current liabilities of 567 million and (d) tax paid (net of refunds) of 212 million.
Investing activities
Net cash flow used in investing activities in Fiscal 2025 was 1,810 million, which primarily included purchase of mutual fund units of 7,308 million. This was partially offset by maturity proceeds on redemption of mutual fund units of 6,482 million and purchase of property, plant and equipment and intangible assets of 828 million.
Net cash flow used in investing activities in Fiscal 2024 was 1,501 million, which primarily included purchase of mutual fund units of 8,203 million. This was partially offset by maturity proceeds on redemption of mutual fund units of 6,866 million and purchase of property, plant and equipment and intangible assets of 245 million.
Net cash flow generated from investing activities in Fiscal 2023 was 1,249 million, which primarily included maturity proceeds on redemption of mutual fund units of 7,939 million. This was partially offset by purchase of mutual fund units of 6,651 million and purchase of property, plant and equipment and intangible assets of 339 million.
Financing activities
Net cash flow used in financing activities in Fiscal 2025 was 224 million which primarily included repayment of lease liabilities amounting to 371 million and interest paid during the year of 314 million. This was partially offset by proceeds from issue of equity shares and share application money pending allotment of 501 million.
Net cash flow used in financing activities in Fiscal 2024 was 1,450 million, which primarily included repayment of borrowings amounting to 836 million, interest paid during the year of 401 million and repayment of lease liabilities of 313 million. This was partially offset by proceeds from issue of equity shares and share application money pending allotment of 100 million.
Net cash flow used in financing activities in Fiscal 2023 was 574 million, primarily included interest paid during the year of 389 million and repayment of lease liabilities amounting to 325 million. This was partially offset by proceeds from issue of equity shares and share application money pending allotment of 151 million.
Indebtedness
As of March 31, 2025, we had secured borrowings consisting of a term loan of 2,577 million of non-current borrowings and 85 million of current-borrowings from banks. Our borrowings comprises a floating interest term loan from banks. The last instalment of loan is repayable on December 15, 2026. The loan is secured by a pledge over 100% of the equity shares held by the Company in Fractal Analytics Inc. This borrowing is guaranteed by the Company. The loan was taken to refinance existing borrowings which were taken for acquisitions and other investments. For further information, see "Financial Indebtedness" on page 490.
Contractual Obligations
The tables below set forth our financial liabilities, based on their contractual maturities on an undiscounted cash flow basis, as of March 31, 2025.
| Carrying | Undiscounted amounts | |||
| amount | Less than 12 months | 1-2 years | More than 2 years | |
Non derivative financial instruments |
||||
| Trade payables | 620 | 620 | ||
| Other financial liabilities | 3,282 | 2,852 | 430 | |
| Lease liabilities | 1,628 | 500 | 485 | 1,018 |
| Borrowings | 2,662 | 85 | 2,623 | |
Derivative financial instruments |
||||
| Other financial liabilities | 81 | 61 | 20 | |
Contingent Liabilities
As of March 31, 2025, we had contingent liabilities amounting to 139 million which related to claims against us that have not been acknowledged as debt for income tax matters and goods and service tax matters under appeal. We believe that these claims under contingent liabilities are not tenable and hence no provision has been made in this regard.
Capital Expenditures
Our capital expenditures include expenditures on property, plant and equipment and intangible assets. Property, plant and equipment include computers and accessories, leasehold improvements, furniture and fixtures and office equipment. Intangible assets primarily include computer software and internally generated intangible assets. For Fiscals 2025, 2024 and 2023, our cash outflows towards purchase of property, plant and equipment and intangible assets amounted to 828 million, 245 million and 339 million respectively.
We expect to meet our capital expenditures requirements for the next 12 months primarily from cash flows from operating activities as well as the proceeds from this Offer.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements.
Auditor Observations
Our Statutory Auditor has noted certain audit observations under "Report on Other Legal Regulatory Requirements" in their auditor report. For details, see "Restated Consolidated Financial Information - Annexure VII Part B II" on page 456.
Further, our auditor has included certain observations in their reporting under the Companies (Auditors Report) Order, 2020 (CARO 2020). For details, see "Restated Consolidated Financial Information - Annexure VII Part B III" on page 456.
For more information, see "Risk Factors - Our Statutory Auditor has noted certain observations in auditors report under "Report on Other Legal and Regulatory Requirements" and in their reporting under the Companies (Auditors Report) Order, 2020" on page 63.
Related Party Transactions
We enter into various transactions with related parties. For further information see "Restated Consolidated Financial Information Note 27- Related party disclosures" on page 424.
Quantitative and Qualitative Disclosures about Market Risk, Credit Risk and Liquidity Risk
Our risk management policies are established to identify and analyze the risks faced by us, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and our activities. We aim to maintain a disciplined and constructive control environment in which all our employees understand their respective roles and obligations.
Our Board oversees the managements implementation of our policies and reviews the adequacy of the risk management framework.
Market risk
Market risk is the risk arising from changes in market price, such as foreign exchange rates and interest rates that may affect our income or the value of our holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including foreign currency receivables and payables and long-term debt. We are exposed to market risk that primarily relates to foreign exchange rate risk, interest rate risk and the market value of the investments. Thus, the exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities in foreign currency.
Currency risk
We are exposed to currency risk resulting from foreign currency transactions including recognized assets and liabilities denominated in currencies that is not our functional currency.
Sensitivity analysis
Any change with respect to strengthening (weakening) of the Indian Rupee against various currencies as of March 31, 2025, 2024 and 2023, would have affected the measurement of financial instruments denominated in respective currencies and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignore any impact of forecast sales and purchases.
Particulars |
Impact on profit after tax and equity | ||
| March 31, 2025 | March 31, 2024 | March 31, 2023 | |
USD |
|||
| - Increase by 5% | 299 | 222 | 215 |
| - Decrease by 5% | (299) | (222) | (215) |
EUR |
|||
| - Increase by 5% | 18 | 26 | 19 |
| - Decrease by 5% | (18) | (26) | (19) |
GBP |
|||
| - Increase by 5% | 1 | 1 | 5 |
| - Decrease by 5% | (1) | (1) | (5) |
Others |
|||
| - Increase by 5% | 2 | 4 | 3 |
| - Decrease by 5% | (2) | (4) | (3) |
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. Our exposure to the risk of changes in market interest rates relates primarily to our long-term debt obligations with floating interest rates. We are exposed to interest rate risks on outstanding borrowings resulting from changing SOFR/LIBOR rates. 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, our profit before tax is affected through the impact of floating rate borrowings, as follows:
Particulars |
Impact on profit after tax and equity | ||
| March 31, 2025 | March 31, 2024 | March 31, 2023 | |
Change in SOFR/LIBOR |
|||
| - Increase by 1% | (20) | (20) | (26) |
| - Decrease by 1% | 20 | 20 | 26 |
Credit risk
Credit risk is the risk of financial loss to us if a client or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from our receivables from clients. Financial instruments that are subject to concentration of credit risk principally consist of trade receivables, investments, cash and cash equivalents and other balances with banks. None of our financial instruments result in material concentration of credit risk.
Liquidity risk
Liquidity risk is the risk that we encounter when we face difficulty in meeting the obligations associated with our financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, as far as possible, that we will have sufficient liquidity to meet our liabilities when they are due. We have access to uncommitted, undrawn revolving credit facility as at March 31, 2025 amounting to 2,649 million (US$31 million), 2,333 million (US$28 million) as at March 31, 2024 and 1,479 million (US$18 million) as at March 31, 2023 which could be used for the working capital needs as and when required.
Critical Accounting Policies, Use of Judgments and Estimates
Revenue recognition
Revenue is recognized when the Group satisfies performance obligations under the terms of its contracts and control of the services is transferred to its clients, in an amount that reflects the consideration the Group expects to receive from its clients in exchange for those services. This process involves identifying the client contract, determining the performance obligations in the contract, determining the transaction price, allocating the transaction price to the distinct performance obligations in the contract and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it:
(a) provides a benefit to the client either on its own or together with other resources that are readily available to the client and;
(b) is separately identified in the contract. The Group considers a performance obligation satisfied once it has transferred control of services to the client, meaning the client has the ability to use and obtain the benefit from the services rendered.
Revenue from time and material contracts is recognized on output basis measured by efforts expended.
Revenue related to fixed price retainership contracts is recognized based on time elapsed and is recognized on a straight-line basis over the period of performance.
In respect of other fixed-price contracts, revenue is recognized using percentage-of-completion method ("POC method") with contract costs incurred determining the degree of completion of the performance obligation.
Subscription income consist of fees from clients accessing our software solutions. Revenues are generally recognized over the period when control of these services is transferred to clients, in an amount that reflects the consideration expected to be entitled to in exchange for those services. Our subscription arrangements are considered service contracts and the client does not have the right to take possession of the software.
Revenue is measured based on the transaction price, which is the consideration, adjusted for volume discounts, price concessions and incentives, if any, as specified in the contract with the client. Revenue also excludes taxes collected from clients.
Contract assets are recognized when there is excess of revenue earned over billings on contracts. Contract assets are classified as unbilled receivables (only act of invoicing is pending) when there is unconditional right to receive cash and only passage of time is required, as per contractual terms.
Unearned and deferred revenue ("contract liability") is recognized when there are billings in excess of revenues.
The billing schedules agreed with clients include periodic performance-based payments and / or milestone-based progress payments. Invoices are payable within contractually agreed credit period.
Contracts are subject to modification to account for changes in contract specification and requirements. The Group reviews modification to contract in conjunction with the original contract, basis which the transaction price could be allocated to a new performance obligation, or transaction price of an existing obligation could undergo a change.
In the event transaction price is revised for existing obligation, a cumulative adjustment is accounted for.
Intangible Assets
Intangible assets are recognized when it is probable that the future economic benefits that are attributable to the assets will flow to the Group and the cost of the asset can be measured reliably.
The intangible assets are stated at cost less accumulated amortization and impairment losses, if any. Cost comprises of the acquisition price and any cost directly attributable and allocable on a reasonable basis for making the asset ready for its intended use.
Intangible assets under development includes intellectual property under development as at the balance sheet date. Product development costs are incurred on developing/upgrading the software products to launch new service modules and functionality to provide an enhanced suite of services. These development costs are capitalized and recognized as an intangible asset when the following can be demonstrated:
a) The technical feasibility of completing the intangible asset so that it will be available for use or sale; b) Its ability and intention to use or sell the asset; c) The availability of adequate resources to complete the development and to use or sell the asset; and
d) The ability to measure reliably the expenditure attributable to the intangible assets and probability of how the same will generate future economic benefits.
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific assets to which it relates and the cost of the asset can be measured reliably. All other expenditure is recognized in the Restated Consolidated Statement of Profit and Loss as incurred.
Amortization
Amortization is recognized in the Restated Consolidated Statement of Profit and Loss on a straight-line basis over the estimated useful lives of the intangible assets from the date that they are available for use.
The estimated useful lives are as follows:
Description of assets |
Useful life of assets (years) |
| Computer Software | 3 |
| Client Relationships | 3 - 10 |
| Patent | 3 |
| Brand | 5 |
| Developed Content | 10 |
| Internally generated intellectual property | 3-5 |
The amortization period and the amortization method for an intangible asset are reviewed at the end of each financial year. Changes in the expected useful life are considered to modify the amortization period and are treated as changes in accounting estimates.
Intangible assets are amortized over their expected useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
An intangible asset is de-recognized on disposal, or when no future economic benefits are expected from use or disposal. Gains and losses on disposals are determined by comparing net disposal proceeds with carrying amount. These are included in the Restated Consolidated Statement of Profit and Loss.
Impairment of non-financial assets
Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Groups each class of non-financial. If any indication exists, an assets recoverable amount is estimated. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. Intangible assets under development are tested for impairment annually.
Goodwill represents the excess of consideration transferred, together with the amount of noncontrolling interest in the acquiree, over the fair value of the Groups share of identifiable net assets acquired. Goodwill is measured at cost less accumulated impairment losses. A cash-generating unit to which goodwill has been allocated is tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.
The goodwill acquired in a business combination is, for the purpose of impairment testing, allocated to cash- generating units that are expected to benefit from the synergies of the combination. Any impairment loss for goodwill is recognized directly in Restated Consolidated Statement of Profit and Loss. They are first used to reduce the carrying amount of any goodwill allocated to CGU and then to reduce the carrying amounts of the other assets in the CGU on a pro rate basis. An impairment loss recognized for goodwill is not reversed in subsequent periods. In respect of other assets for which impairment loss has been recognized in prior periods, the Group reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized. On disposal of a cash-generating unit to which goodwill is allocated, the goodwill associated with the disposed cash-generating unit is included in the carrying amount of the cash-generating unit when determining the gain or loss on disposal.
Significant accounting estimates, judgements and assumptions
In the process of applying our accounting policies, we have made the following judgments which have significant effect on the amounts recognized in the restated consolidated financial information:
a. Useful lives of property, plant and equipment and intangible assets: we review the useful lives of property, plant and equipment and intangibles at the end of each reporting period. This reassessment may result in change in depreciation and amortization expense in future periods.
b. Defined benefit plan: the cost of the defined benefit gratuity obligation is determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and attrition rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
c. Allowances for uncollected accounts receivable and advances: Trade receivables do not carry interest and are stated at their normal value as reduced by appropriate allowances for estimated irrecoverable amounts. Individual trade receivables are written off when management deems them not collectable. Impairment is made on the expected credit loss model, which is the present value of the cash shortfall over the expected life of the financial assets. The impairment provisions for financial assets are based on assumption about the risk of default and expected loss rates. Judgment in making these assumptions and selecting the inputs to the impairment calculation are based on past history, existing market condition as well as forward looking estimates at the end of each reporting period.
d. Provisions and contingencies: We estimate the provisions that have present obligations as a result of past events and it is probable that outflow of resources will be required to settle the obligations. These provisions are reviewed at the end of each reporting period and are adjusted to reflect the current best estimates. We use significant judgments to assess contingent liabilities. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the Group or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot be made. Contingent assets are neither recognized nor disclosed in the restated consolidated financial information.
e. Share-based payments: we measure the cost of equity-settled transactions with employees using Black-Scholes and binomial model to determine the fair value of the liability incurred on the grant date. Estimating fair value for share-based payment transactions requires determination of the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determination of the most appropriate inputs to the valuation model including the expected life of the share option, volatility and dividend yield and making assumptions about them. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 31 of our Restated Consolidated Financial Information.
f. Provision for income tax and deferred assets: we use judgements based on the relevant rulings in the areas of allocation of revenue, costs, allowances and disallowances which is exercised while determining the provision for income tax. A deferred tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Accordingly, we exercise our judgement to reassess the carrying amount of deferred tax assets at the end of each reporting period.
g. Revenue recognition: We exercise judgment in determining whether the performance obligation is satisfied at a point in time or over a period of time. We consider indicators such as how client consumes benefits as services are rendered or who controls the asset as it is being created or existence of enforceable right to payment for performance to date and alternate use of such product or service, transfer of significant risks and rewards to the client, acceptance of delivery by the client, etc.
Revenue for fixed-price contracts is recognized using percentage-of-completion method. We estimate the future cost-to-completion of the contracts which is used to determine the degree of the completion of the performance obligation.
h. Leases: We evaluate if an arrangement qualifies to be a lease as per the requirements of Ind AS 116.
Identification of a lease requires significant judgment. The Group uses significant judgement in assessing the lease term (including anticipated renewals) and the applicable discount rate. We determine the lease term as the non-cancellable period of a lease, together with both periods covered by an option to extend the lease if we are reasonably certain to exercise that option; and periods covered by an option to terminate the lease if we are reasonably certain not to exercise that option. In assessing whether we are reasonably certain to exercise an option to extend a lease, or not to exercise an option to terminate a lease, we consider all relevant facts and circumstances that create an economic incentive for us to exercise the option to extend the lease, or not to exercise the option to terminate the lease. We revise the lease term if there is a change in the non-cancellable period of a lease. The discount rate is generally based on the incremental borrowing rate specific to the lease being evaluated.
Change in Accounting Policies
Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under
Companies (Indian Accounting Standards) Rules as issued from time to time. For Fiscal 2025, MCA has notified Ind AS 117 Insurance Contracts and amendments to Ind AS 116 Leases, relating to sale and leaseback transactions, applicable to us with effect from April 1, 2024. We have reviewed the new pronouncements and based on our evaluation have determined that it does not have any significant impact in our restated financial statements. Except as described in the Draft Red Herring Prospectus, there have been no changes in our accounting policies in the last three Fiscals.
Significant Economic Changes That Materially Affect Or Are Likely To Affect Revenue From Operations
Other than as described above under the heading titled " Principal Factors Affecting Our Financial Condition and Results of Operations", to the knowledge of our management, there are no other significant economic changes that materially affect or are likely to affect revenue from operations.
Unusual or Infrequent Events of Transactions
Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent".
Known Trends or Uncertainties
Our business has been affected and we expect will continue to be affected by the trends identified above in the heading titled " Principal Factors Affecting Our Financial Condition and Results of Operations" on page 464 and the uncertainties described in the section titled "Risk Factors" on page 36. To our knowledge, except as described or anticipated in this Draft Red Herring Prospectus, there are no known factors which we expect will have a material adverse impact on our revenue from operations.
Significant Dependence on Clients
Please see "Risk Factors Our success depends on our ability to attract, retain and expand relationships with our clients. We derived 53.8% of our revenue from operations in our Fractal.ai segment from our top-10 clients, of which one client contributed 9.8% of our revenue, in Fiscal 2025. We also derived 80.8% of our revenue from operations in our Fractal.ai segment from our existing "Must Win Clients" ("MWC") in Fiscal 2025. If we cannot maintain and expand our relationships with our existing client base or add new clients, our business, financial condition, cash flows and results of operations may be adversely affected" on page 37.
Seasonality of Business
Our business and results of operations do not generally exhibit seasonality.
New Products or Business Segments Expected
Except as disclosed in "Our Business" on page 267 and products that we announce in the ordinary course of business, we have not announced and do not expect to announce in the near future any new products or business segments.
Future Relationship Between Cost and Income
Other than as described elsewhere in this Draft Red Herring Prospectus, to the knowledge of our management, there are no known factors that might affect the future relationship between costs and revenues.
Competitive Conditions
We operate in a competitive environment. Please refer to the sections "Industry Overview", "Our Business" and
" Risk Factors" on pages 211, 267 and 36, respectively, for further information on our industry and competition.
Significant Developments After March 31, 2025 That May Affect our Future Results of Operations
Except stated below and elsewhere in this Draft Red Herring Prospectus, to our knowledge, no circumstances have arisen since the date of the Restated Consolidated Financial Information as disclosed in this Draft Red Herring Prospectus which materially and adversely affect or are likely to affect our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months:
? the Board of Directors and shareholders in their meeting dated July 22, 2025 and July 29, 2025, respectively approved issue of four bonus shares for every one existing fully paid up equity share of face value of 1 each.
CAPITALISATION STATEMENT
The following table sets forth our Companys capitalisation as at March 31, 2025, on the basis of the amounts derived from the Restated Consolidated Financial Information, and as adjusted for the Offer. This table should be read in conjunction with "Risk Factors", "Restated Consolidated Financial Information" and "Managements Discussion and Analysis of Financial Condition and Results of Operations", on pages 36, 375, and 463, respectively.
Particulars |
Pre-Offer as at March 31, 2025^ | As adjusted for the Offer* |
Borrowings |
||
| Non-current borrowings (I) | 2,577 | [?] |
| Current borrowings (II) | 85 | [?] |
Total borrowings (III = I + II) |
2,662 | [?] |
Equity |
||
| Share capital (IV) | 31 | [?] |
| Other equity (V) | 17,501 | [?] |
| Non-controlling interest (VI) | 122 | [?] |
Total equity (VII = IV + V+VI) |
17,654 | [?] |
Total borrowings / Total equity (VIII = III / VII) |
15.1% | [?] |
Non-current borrowings /Total equity (IX = I / VII) |
14.6% | [?] |
* The corresponding post Offer capitalization data is not determinable at this stage pending the completion of the book building process and hence has not been furnished. To be updated upon finalization of the Offer Price. ^Subsequent to March 31, 2025, our Company has completed a bonus issuance of Equity Shares to the eligible shareholders of our Company in the ratio of 1:4. For further details, please see "Capital Structure - Notes to Capital Structure- Share capital history of our Company " on page 96.
FINANCIAL INDEBTEDNESS
Our Company and its Subsidiaries have credit facilities available, which are utilised in their ordinary course of business for meeting their respective working capital requirements and refinancing term loans.
Our Board is empowered to borrow money in accordance with Sections 179 and 180 of the Companies Act and our Articles of Association. For details of the borrowing powers of our Board, see "Our Management Borrowing Powers of our Board" on page 357.
As on July 31, 2025, the aggregate outstanding borrowings of our Company and Subsidiaries, amounted to 2,767 million on a consolidated basis, and a brief summary of such borrowings is set forth below:
Particulars |
Sanctioned amount as on July 31, 2025 | Outstanding amount as on July 31, 2025* |
( in million) |
( in million) |
|
Fund based |
||
Secured |
||
| Term loan | 2,798 | 2,767 |
| Line of Credit | 1,749 | - |
| Cash Credit | 180 | - |
| Working Capital | 100 | - |
Total (A) |
4,827 | 2,767 |
Non-fund based |
||
Secured |
||
| Bank Guarantee | 20 | - |
Total (B) |
20 | - |
Combined Facility |
||
Secured |
||
| Citibank Combined Facility (1) | 220 | - |
Total (C) |
220 | - |
Unsecured |
||
| Standard Chartered Bank - Combined Facility(2) | 185 | - |
| HSBC Bank - Combined Facility(3) | 200 | - |
Total (D) |
385 | - |
Total (A+B+C+D) |
5,452 | 2,767 |
*As certified by Nikunj Raichura & Associates, Chartered Accountants, by way of their certificate dated August 12, 2025.
(1) The combined facility from Citibank includes working capital, pre-shipment finance, bills discounted, post-shipment finance, cash credit (CC), working capital demand loan, and commercial card facilities, with an overall sanctioned limit of 220 million. (2) The combined facility from Standard Chartered Bank includes short-term loan facilities, with an overall sanctioned limit of 185 million (3) The combined facility from HSBC comprises overdraft, working capital demand -loan, export/seller facilities including pre/post shipment seller loans (both export and domestic) and import/buyer facilities including trade pay (both import and domestic) with an overall sanctioned limit of 200 million.
Principal terms of the facilities available to or utilized by (borrowings) our Company and our Subsidiaries
The details provided below are indicative and there may be additional terms, conditions and requirements under the various borrowing arrangements entered into by us:
1. Interest: The interest rate for the working capital facilities available with our Company and our Subsidiaries are typically tied to benchmark rates such as Marginal Cost of Funds based Lending Rate
("MCLR") or T-bill rate, which currently ranges from 9.2% to 10.3% per annum, and are mutually agreed by the lender and our Company and Subsidiaries. The term loan and revolving credit line facilities carries interest at a floating rate comprising Secured Overnight Financing Rate ("SOFR") plus a margin of 1.5% per annum to 3.0% per annum.
2. Tenor: The tenor of our working capital facilities and refinancing term loans ranges from 90 days to 27 months, respectively.
3. Security: The term loan is secured by a pledge of the receivables and deposit accounts owned by Fractal USA and a pledge of 100% of the equity shares of Fractal USA held by our Company. Additionally, the term loan is secured by a corporate guarantee issued by our Company. The working capital facilities are typically secured by a first ranking pari passu charge through hypothecation of the current assets or are backed by fixed deposits.
4. Repayment: The working capital facilities available with our Company and our Subsidiaries are either repayable on the respective due dates advised by lenders at the time of utilization or are repayable on demand. The term loan facility is repayable in quarterly instalments.
5. Prepayment Penalty: There is no prepayment penalty on the term loan and the uncommitted credit line facilities availed by Fractal USA. The other facilities available to our Company and Subsidiaries typically have prepayment provisions which allow for prepayment of the outstanding loan amount on obtaining prior approval from the relevant lender subject to such prepayment penalties as set out in the facility agreements. The prepayment penalty is generally nil to 2.0% on the principal amount of the loan being prepaid, or such other additional cost as may be levied at the discretion of the lender.
6. Penalty: The terms of the facilities available or utilized by our Company and our Subsidiaries prescribe penalties for delayed payment or default in the repayment obligations, delay in creation/perfection of the stipulated security, breach of sanction terms or certain other specified obligations, which is typically 2.0% per annum over and above the applicable interest rate on the sanctioned limits or the outstanding/overdue amounts or the irregular portions.
7. Key Covenants: The borrowing arrangements entered into by us with our lenders entail various restrictive covenants and conditions restricting certain corporate actions, and we are required to take the prior approval of, or provide prior intimation to, the respective lender before carrying out such actions, including for:
(a) any change or modification in our ownership and/or control;
(b) any change in our management;
(c) any change in the general nature or scope of our business or undertaking of any new project or expansion;
(d) investment in shares, debentures, advances and inter-corporate loans/ deposits to other companies;
(e) the repayment of subordinated loans availed from directors or group companies, if any; (f) sell, assign, mortgage or otherwise dispose of any fixed assets; (g) entering into any scheme of amalgamation or reconstruction; and (h) any change in the shareholding pattern.
8. Events of Default: In terms of borrowing arrangements for the facilities available to us or utilized by us, the occurrence of any of the following events, among others, constitute an event of default:
(a) non-payment or defaults of any amount including the principal, interest or other charges;
(b) breach of the terms and conditions, covenants or undertakings under or in connection with the facility documents;
(c) cross default;
(d) change in control without prior consent of the lender;
(e) use of facilities for a purpose other than for which they were sanctioned;
(f) any representation or undertaking made by our Company being proven incorrect or misleading in any material respect as at the time it was made; and
(g) occurrence of a material adverse change or upon happening of any circumstance which would or may prejudicially or adversely affect in any manner our capacity to repay the loan.
9. Consequences of Occurrence of Events of Default: In terms of the borrowing arrangements entered into by us with various lenders, for the facilities available to us or utilized by us, upon the occurrence of events of default, the concerned lenders may:
(a) suspend or cancel any of the obligations for any advance under the facility documentation;
(b) enforce security provided by us;
(c) review the management set up or organisation of our Company and require it to be restructured as considered necessary by the lender; and
(d) require us to obtain their prior written consent to undertake any new project, amend or modify the constitution documents and issue further capital declare or pay any dividend to the shareholders if there is any default in servicing the lenders dues.
In connection with the Offer, we have obtained the necessary consents required under the relevant loan documentation for undertaking activities, such as, among others, change in equity, change in the composition of our Board, change in our constitutional documents and change in shareholding pattern. For details of the restrictive covenants required to be complied with, by us, in relation to our loan obligations, see "Risk Factors - We are required to comply with certain restrictive covenants under our financing agreements. Any non-compliance under these agreements may lead to, amongst others, accelerated repayment schedules and suspension of further drawdowns, which may adversely affect our business, results of operations, financial condition and cash flows" beginning on page 60.
For details of the borrowings as reported in the Restated Consolidated Financial Information, see "Financial Information - Restated Consolidated Financial Information Annexure VI - Note 14" on page 416.
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