| 156 Annual Report | 2023-2024 Financials Conversion Terms: 1. Upon occurrence of Scenario 1, the CCPS shall be compulsorily converted into such number of equity shares of the Company so as to provide an extended internal rate of return (XIRR) of 25% per annum (twenty five percent per annum) calculated in ` from the date of the infusion of the investment amount and until the Scenario 1 trigger date (“Scenario 1 Conversion Price”). Provided that, the conversion of the CCPS shall be subject to a minimum pre-money valuation floor of ` 1,500 crores and a maximum pre-money valuation cap of ` 2,000 crores. 2. Upon occurrence of Scenario 2, the CCPS shall be compulsorily converted into equity shares at the higher of: (i) pre-money valuation of ` 1,500 crores; or (ii) 1.8 times of the book value of the Company as of March 31, 2023 (which shall be calculated by excluding any equity raise undertaken by the Company during financial year 2022-23, but including the impact from proceeds received pursuant to ‘Assam write-back until September 30, 2023, tax affected’ minus adjustments required pursuant to ‘Deloitte’s analysis’ as of March 31, 2023), subject to a maximum pre-money valuation cap of ` 2,000 crores (“Scenario 2 conversion price”). 3. Upon occurrence of Scenario 3, subject to applicable law, the CCPS shall be compulsorily converted into equity shares of the Company at the floor price of 1 time of the book value of the Company as of September 30, 2022, as certified by the statutory auditor of the Company (including a confirmation on the ECL amount by the statutory auditor) (“Scenario 3 conversion price”). Note 25: Other equity As at 31 March 2024 As at 31 March 2023 Securities premium 1,20,226.78 93,917.23 Statutory reserves 15,715.55 9,439.12 Retained earnings 45,670.93 20,935.40 General reserves 80.27 80.27 Share option outstanding account 1,940.55 1,433.07 Treasury shares (7,899.62) (7,041.43) Total 1,75,734.46 1,18,763.66 Nature and purpose of reserves: Securities premium The securities premium represents premium received on issue of shares. This amount can be utilised in accordance with the provision of the Companies Act, 2013. Statutory reserves This reserve is created as per the provision of section 45(IC) of the Reserve Bank of India ('RBI) Act, 1934. An amount equal to 20% of profits after tax is transferred to this reserve every year. This is a restricted reserve and any appropriation from this reserve can only be made after prior approval from Reserve Bank of India (RBI). Retained earnings The amount that can be distributed by the Company as dividends to its equity shareholders is determined based on the financial statements of the Company and also considering the requirements of the Companies Act, 2013. Thus, the amounts reported above are not distributable in entirety. Retained earnings is a free reserve, retained from company’s profits to meet future obligations. General reserves The Company has transferred a portion of the net profit to general reserve before declaring dividend pursuant to the provision of erstwhile Companies Act. Share option outstanding account The reserve is used to recognised the fair value of the options issued to the employees of the Company under its stock option plan. Treasury shares The Company has created ESOP trust for providing ESOP to its employees. The Company treats ESOP trust as its extension and share held by ESOP trust are treated as treasury shares. Own equity instrument that are re-acquired (treasury shares) are recognised at cost and deducted from equity. Note 24: Share capital (cont'd) Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2024 (Contd.) (All amounts in ` lakhs unless otherwise stated)
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