(b) Terms/rights and restrictions attached to equity shares
The Company has only one class of equity shares having a par value of ' 10 per share. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders at the ensuing Annual General Meeting, except interim dividend.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.
Dividend on equity shares paid during the year ended 31 March 2026
The Board of Directors, at its meeting held on 24 April 2025 had proposed the final dividend of ' 57 per share for the year ended 31 March 2025 which was approved by the shareholders at the Annual General meeting held on 24 July 2025. This resulted in a cash outflow of ' 10,845.34 million.
Dividend on equity shares paid during the year ended 31 March 2025
The Board of Directors, at its meeting held on 25 April 2024 had proposed the final dividend of ' 55 per share for the year ended 31 March 2024 which was approved by the shareholders at the Annual General meeting held on 25 July 2024. This resulted in a cash outflow of ' 10,400.91 million.
Employee Stock Option Plans - Equity settled.
Employees Stock Option Plan - 1998 (the 1998 Plan)
The Company instituted the 1998 Plan for all eligible employees in pursuance of the special resolution approved by the shareholders in the Annual General Meeting held on 31 July 1998. The 1998 Plan provides for the issuance of 3,720,000 options to eligible employees as recommended by the ESOP Committee constituted for this purpose. In accordance with the 1998 Plan, the Committee has formulated 1998 Plan - (Version I) and 1998 Plan - (Version II) during the years 1998-1999 and 1999-2000 respectively.
1998 Plan - (Version I): Each option granted under the 1998 Plan - (Version I), entitles the holder thereof with an option to apply for and be issued one equity share of the Company at an exercise price of ' 34.38 per share. The equity shares covered under these options vest at various dates over a period ranging from six to sixty-six months from the date of grant based on the length of service completed by the employee to the date of grant. The options are exercisable any time after their vesting period irrespective of continued employment with the Company and its subsidiaries.
Employees Stock Option Plan - 2016 (the 2016 Plan)
Effective 4 November 2016, the Company instituted the 2016 Plan. The Board of Directors of the Company and shareholders approved the 2016 Plan at its meeting held on 27 September 2016 and 4 November 2016 respectively. The 2016 plan provides for the issue of options to certain employees of the Company and its subsidiaries.
The 2016 Plan is administered by the Mphasis Employees Equity Reward Trust. As per the ESOP 2016 Plan, the stock options are granted at the market price subject to a discount up to twenty per cent (20%) as may be determined by the Compensation Committee at the time of Grant. The equity shares covered under these options vest over 60 months from the date of grant. The exercise period is sixty months from the respective date of vesting or within six months from the resignation of employee whichever is earlier.
The weighted average share price as at the date of exercise of stock option was ' 2,531.31 (31 March 2025: ' 2,822.03) The options outstanding as at 31 March 2026 have an exercise price ranging from ' 500.00 to ' 3,397.00 (31 March 2025: ' 500.00 to ' 3,397.00) and the weighted average remaining contractual life is of 3.92 years (31 March 2025: 4.63 years).
The weighted average fair value of stock options granted during the year was ' 1,092.83 (31 March 2025: ' 1,132.39). The Black-Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:
Expected volatility has been based on an evaluation of the historical volatility of the Company’s share price. The expected term of the instruments has been based on historical experience and general option holder behaviour.
Total employee compensation cost pertaining to 2016 Plan during the year is ' 52.26 million, (31 March 2025: ' 47.64 million) net of cross charge to subsidiaries.
During the current year, the Company granted 6,000 options (31 March 2025: 20,000) to key management personnel under 2016 plan. Restricted Stock Unit Plan-2021 (“RSU Plan-2021”)
Effective 22 October 2021, the Company instituted the Restricted Stock Unit Plan-2021. The Board and the shareholders of the Company approved RSU Plan-2021 on 22 October 2021. The RSU Plan-2021 provides for the issue of restricted units to employees and directors of the Company and its subsidiaries.
The RSU Plan-2021 is administered by the Mphasis Employees Equity Reward Trust. Each unit, granted under the RSU Plan-2021, entitles the holder thereof with an option to apply for and be issued one equity share of the Company at an exercise price of ' 10.00 per share. A total of 3,000,000 RSUs can be granted to the eligible employees of the Company and its subsidiaries. The equity shares covered under this plan vest over a period ranging from twelve to sixty months from the date of grant. The exercise period is sixty months from the respective date of vesting or within six months from the resignation of the employee whichever is earlier.
15. other equity (Continued)
The weighted average share price as at the date of exercise of stock option was ' 2,771.13 (31 March 2025: ' 2,910.88). The options outstanding as 31 March 2026 have an exercise price of ' 10.00 (31 March 2025: ' 10.00) and the weighted average remaining contractual life is of 6.09 years (31 March 2025: 5.92 years).
The weighted average fair value of stock options granted during the year was ' 2,266.04 (31 March 2025: ' 2,377.67). The Black-Scholes valuation model has been used for computing the weighted average fair value considering the following inputs:
For periods beginning 1 April 2024
The Company has transitioned to the concessional tax rate of 22% plus surcharge and cess (totalling to 25.168%) under Section 115BAA of the Income Tax Act, 1961. Under this taxation regime, the Company is no longer entitled to the tax benefits / exemptions it previously availed.
The difference between the reported income tax expense and income tax computed at statutory tax rate is primarily attributable to reversal of tax expenses pertaining to previous years (net), tax effect on disallowances (net) and tax differentials on income from capital gains and tax expense recognised on SEZ reinvestment reserve considered improbable of being utilized.
The Company is also subject to tax on income attributable to its permanent establishment in certain foreign jurisdictions due to operation of its foreign branches .
21. TAXES (Continued)
Mphasis Limited has entered into international transactions with its associated enterprises within the meaning of Section 92B of the Income Tax Act, 1961. The regulations require maintenance of prescribed documents and/or furnishing the certificate by the management or an external accountant within the specified due date under the regulations to support the arm’s length outcome determination by the Company. Based on these guidelines, the management is of the opinion that the related party transactions are at arm’s length and does not warrant any adjustment, on the part of the management, on the amount of tax expense and tax provision reported in the Standalone Financial Statements.
Deferred tax for the year ended 31 March 2026 and 31 March 2025 relates to origination and reversal of temporary differences.
B. Remaining performance obligations
The remaining performance obligation disclosure provides the aggregate amount of the transaction price yet to be recognized as revenue as at the end of the reporting period and an explanation as to when the Company expects to recognize these amounts in revenue. Unsatisfied or partially satisfied Performance obligations are subject to variability due to several factors such as termination, changes in contract scope, re-validation of estimates and economic factors.
Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognized corresponds directly with the value transferred to the customer, typically those contracts where invoicing is on time and material, unit price basis and fixed monthly billing.
The aggregate value of performance obligations that are completely or partially unsatisfied as of 31 March 2026 is ' 11,647.00 million (31 March 2025: ' 9,458.00 million). Out of this, the Company expects to recognize revenue of around 44% (31 March 2025: 38%) within the next one year and the remaining thereafter. This includes contracts that can be terminated for convenience without a substantive penalty since, based on current assessment, the occurrence of the same is expected to be remote.
Invoices are usually payable within 30-60 days. Certain contracts contain provision for volume discounts and cash discounts on account of early payment of invoices.
29. CONTINGENT LIABILITIES AND COMMITMENTS
a. The Company has disputes with income tax authorities in India and other jurisdictions where they operate. The ongoing disputes pertain to various assessment years from 2005-06 to 2023-24. The matters under dispute pertain to transfer pricing, tax treatment of certain expenses claimed as deductions, or allowances, characterization of fees for services paid and applicability of withholding taxes. Claims against the Company in relation to direct taxes, transfer pricing matters not acknowledged as debts amount to ' 34,043.06 million (31 March 2025: ' 24,623.14 million). Claims against the Company in relation to indirect tax matters not acknowledged as debts amount to ' 260.56 million (31 March 2025: ' 203.17 million).
In relation to other tax demands not included above, the Company has furnished bank guarantees amounting to ' 7,222.65 million (31 March 2025: ' 6,180.63 million). These demands are being contested by the Company based on management evaluation, advice of tax consultants and legal advice obtained. No provision has been made in the books of accounts. The Company has filed appeals against such orders with the appropriate authorities.
The above amounts are quantified based on orders received from statutory authorities.
The Company has received notices and inquiries from income tax authorities related to the Company’s operations in the jurisdictions it operates in. The Company has evaluated these notices, responded appropriately, and believes there are no financial statement implications as on date.
b. Other outstanding bank guarantees as at 31 March 2026: ' 2.50 million (31 March 2025: ' 25.48 million) pertains to guarantees issued on behalf of the Company to regulatory authorities.
c. The Company has given a financial guarantee amounting to ' 8,830.70 million (31 March 2025: ' 10,304.55 million) in relation to a working capital loan availed by a wholly owned subsidiary.
d. The Company has given letters of comfort to banks for credit facilities availed by its wholly owned subsidiary. As per the terms of the letters of comfort, the Company has undertaken to a) maintain its ownership interests in the wholly owned subsidiary, and not permit any lien or other encumbrance to be placed or imposed on such ownership interest b) to ensure that the wholly owned subsidiary will pay or perform, as applicable, all of its obligations when due under each Facility Document c) not to take any action which could result in the wholly owned subsidiary being unable to fulfill its obligations under any Facility Document.
e. In addition to the above matters, the Company has other claims not acknowledged as debts amounting to ' Nil (31 March 2025: ' 64.56 million).
f. Estimated amounts of contracts remaining to be executed on capital account (net of advances) and not provided for as at 31 March 2026: ' 86.96 million (31 March 2025: ' 70.31 million).
34. EMPLOYEE BENEFITS
a. Gratuity
In accordance with Indian laws, the Company and its subsidiaries in India operate a scheme of Gratuity which is a defined benefit plan. The gratuity plan provides for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment, in accordance with the provisions under the Code on Social Security, 2020 and the Payment of Gratuity Act, 1972, as amended from time to time and to the extent these laws were applicable during the reporting period. Vesting occurs upon completion of five continuous years of service as defined in the Code on Social Security, 2020 and the Payment of Gratuity Act, 1972, as amended from time to time. The Company manages the plan through trusts. The trusts are governed by the Board of Trustees, which consists of an equal number of employer and employee representatives.
b. Provident Fund
In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the provident fund plan in which both the employee and employer (at a determined rate) contribute monthly to a Trust set up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet the interest rate declared by Government administered provident fund. A part of the Company’s contribution is transferred to Government administered pension fund. The contributions made by the Company and the shortfall of interest, if any, are recognised as an expense in the statement of profit or loss under employee benefit expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the assumptions as mentioned below, there is no shortfall in the interest obligations as the present value of the expected future earnings of the fund is greater than the expected amount to be credited to the individual members based on the guaranteed rate of interest of Government administered provident fund.
The Company has carried out actuarial valuation for its defined benefit plan as at 31 March 2026. The actuary has provided a valuation for provident fund liabilities and based on the assumptions mentioned below, there is no shortfall in plan assets as at 31 March 2026 and 31 March 2025.
* The yield on plan assets has been computed excluding returns from the investments in equity instruments, as these returns are market linked and do not represent assured returns. If returns from such equity investments are considered, there was no shortfall in meeting the Guaranteed Rate of Return under the Provident Fund plan during the current year and management does not anticipate a shortfall in the future either.
The Company has contributed ' 1,445.96 million towards provident fund during the year ended 31 March 2026 (31 March 2025:
' 1,572.43 million).
c. Impact of change in labour laws
On 21 November 2025, the Government of India notified the four Labour Codes - the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 - consolidating 29 existing labour laws (collectively referred to as “the New Labour Codes”). The Ministry of Labour & Employment published draft Central Rules and FAQs to clarify certain aspects and enable assessment of the financial impact due to changes in regulations. Amongst other things, the New Labour Codes prescribes a uniform definition of wages based on which certain employee benefits such as gratuity, leave encashment, contributions to provident fund and statutory bonus are required to be computed. The Company has assessed and disclosed the incremental impact of these changes on the basis of the best information available, consistent with the guidance provided by the Institute of Chartered Accountants of India. Considering the materiality and the non-recurring nature of the impact of the New Labour Codes, the Company has presented the one-time impact of the New Labour Codes as an exceptional item in the standalone statement of profit and loss for the quarter ended 31 December 2025 and year ended 31 March 2026. The Company continues to monitor the developments pertaining to the New Labour Codes and will evaluate the impact, if any, on the measurement of liabilities pertaining to employee benefits.
Valuation techniques and significant unobservable inputs Level 2:
Forward exchange contracts: The fair value is determined using quoted forward exchange rates at the reporting date and present value calculations based on yield curves in the respective currencies.
Non-convertible debentures: The fair value is estimated considering quoted prices of securities with similar maturity and credit rating that are traded in active markets.
Offsetting financial assets with liabilities
The Company offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
36. FINANCIAL RISK MANAGEMENT
The Company’s activities expose it to the following risks:
> Credit risk
> Interest rate risk
> Liquidity risk
> Foreign currency exchange rate risk
The Company has a risk management policy/framework which covers risks associated with the financial assets and liabilities. The risk management policy/ framework is approved by the Treasury Committee. The focus of such framework is to assess the unpredictability of the financial environment and to mitigate potential adverse effects on the financial performance of the Company.
CREDIT RISK
Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract leading to a financial loss. Credit risk encompasses both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. The Company is exposed to credit risk from its operating activities (primarily trade receivables) and from its investing activities including deposits with banks and financial institutions, investments, derivative financial instruments and other financial instruments.
The Company is also exposed to credit risk on account of financial guarantee given on behalf on of its subsidiaries [Refer note 29(c)].
Trade receivables
Credit risk is managed by each business unit subject to the Company’s established policies, procedures and controls relating to customer credit risk management. Outstanding customer receivables are regularly monitored. One customer group individually accounted for more than 10% of the trade receivable for the years ended 31 March 2026 (31 March 2025: One customer group).
Investments, financial instruments and deposits with banks
Credit risk is limited as the Company generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investments in liquid mutual fund units, State Development Loans, deposits and bonds issued by Government owned entities and highly rated financial institutions. Counterparty credit limits are reviewed by the Company periodically and the limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential failure to make payments. Two bank individually accounted for more than 10% of the Company’s deposits and bank balances for the year ended 31 March 2026 (31 March 2025: One bank).
INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates. The Company’s exposure to the risk of changes in interest rates relates primarily to the Company’s debt obligations with floating interest rates. The Company’s borrowings are short term / working capital in nature. The Company’s investments are primarily in fixed rate interest bearing investments. Hence, the Company is not significantly exposed to interest rate risk on its investments.
A change of 100 basis points in interest rates would have increased or decreased profit after tax by ' 11.79 million (31 March 2025: ' 33.86 million). This analysis assumes that all other variables, in particular foreign currency exchange rates, remain constant.
LIQUIDITY RISK
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company’s principal sources of liquidity are cash and cash equivalents, bank balances other than cash and cash equivalents, current investments and the cash flow that is generated from operations. The Company believes that these sources are sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
FOREIGN CURRENCY EXCHANGE RATE RISK
The fluctuation in foreign currency exchange rates may have a potential impact on the standalone statement of profit and loss and other comprehensive income, where transactions are denominated in a currency other than functional currency. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries.
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company’s exchange risk arises from its foreign operations, foreign currency revenues and expenses, (primarily in United States Dollars (‘USD’). The Company also has exposures to Great Britain Pound (‘GBP’) and Euros (‘EUR”)). The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating activities and financing activities (when revenue or expense is denominated in a foreign currency).
The Company uses derivative financial instruments, such as foreign exchange forward contracts, to mitigate the risk of changes in foreign currency exchange rates in respect of its forecasted cash flows and trade receivables.
b. OTHERS
During the year ended 31 March 2025, the Company invested ' 6,664.09 million into a wholly owned subsidiary as consideration for equity shares issued to the Company. The subsidiary used such amounts received from the Company to repay outstanding loans to a bank.
During the year ended 31 March 2026, there are no funds that have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other persons or entities, including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
There have been no funds that have been received by the Company from any persons or entities, including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the Company shall directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
38. FAIR VALUES
Financial instruments carried at amortised cost such as cash and cash equivalents, other bank balances, trade receivables, loans, other financial assets, unbilled revenue, borrowings, trade payables and other financial liabilities are considered to be same as their fair values, due to the short-term nature of these instruments.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the fair values.
The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The following methods and assumptions were used to estimate the fair values:
• The fair values of the quoted investments are based on price quotations at the reporting date.
• The Company holds derivative financial instruments such as foreign exchange forward to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. Foreign exchange forward contracts & non-convertible debentures are valued using valuation techniques, which employs the use of market observable inputs. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates. The changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.
39. hedging activities and derivatives
The Company’s revenue is denominated in various foreign currencies Given the nature of business, a large part of the costs are denominated in INR. This exposes the Company to currency fluctuations. The counterparty, for all derivative financial instruments is a bank.
During the years ended 31 March 2026 and 31 March 2025, the Company has designated certain foreign exchange forward as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable cashflow forecast transactions. The related hedge transactions for balance in cash flow hedge reserve as at 31 March 2026 are expected to occur and reclassified to statement of profit and loss within 2 years.
The Company determines the existence of an economic relationship between the hedging instrument and hedged item based on the currency, amount and timing of its forecasted cash flows. While determining the appropriate hedge ratio, the company takes into consideration the prevailing macroeconomic conditions, the availability and liquidity of the hedging instruments, tolerance levels for hedge ineffectiveness and the costs of hedging. Hedge effectiveness is determined at the inception of hedge relationship, and through periodic prospective effectiveness assessments to ensure than an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items. Designated cash flow hedges are measured at FVTOCI. Other derivatives which are not designated as hedge are measured at FVTPL.
The Company has entered into derivative instruments not in hedging relationships by way of foreign exchange forwards. As at 31 March 2026 and 31 March 2025, the notional amount of outstanding contracts (sell) aggregated to ' 32,001.30 million and ' 22,155.59 million, respectively and the notional amount of outstanding contracts (buy) aggregated to ' 3,265.55 million and ' 6,260.11 million respectively. The fair value of these contracts have a net (loss)/gain of ' (584.35) million and ' 15.30 million respectively.
40. corporate social responsibility (‘CSR')
Pursuant to the requirement of Section 135 of the Companies Act, 2013, CSR committee has been formed by the Company. The primary function of the CSR Committee is to assist the Board of Directors in formulating a CSR Policy and review the implementation and progress of the same from time to time. The CSR Policy focuses on creating opportunities for the disadvantaged with emphasis on persons with disabilities and technology driven community development.
41. subsequent events
The Board of Directors in their meeting held on 29 April 2026 have proposed a final dividend of ' 62 per equity share for the year ended 31 March 2026 which is subject to the approval of shareholders at the ensuing Annual General Meeting and if approved, would result in a cash outflow of approximately ' 11,831.99 million.
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