MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2021-22

253 MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2021-22 33. Exceptional Items (net) The Company classifies items of income and expense within profit or loss from ordinary activities as exceptional items when they are of such size, nature or incidence that their disclosure is relevant to explain the performance for the period. Exceptional Items (net) recognised in profit or loss Rupees crores Particulars 2022 2021 Profit on transfer/sale of certain long term investments...................................................................................... 524.40 345.54 Sale of certain freehold land................................................................................................................................... 29.43 — Impairment loss on certain long term investments and other exposures. .......................................................... (813.06) (3,927.13) Reversal of impairment loss on an investment. ..................................................................................................... 50.56 447.53 Gain on transfer of US Branch [Refer Note 44 (C)]................................................................................................ — 46.78 Total ............................................................................................................................................................................ (208.67) (3,087.28) Impairment loss on certain investments in subsidiaries and joint ventures has been recognised considering the performance of these companies and their future projections. The Company has long-term investments in subsidiaries, associates and joint ventures which are measured at cost less impairment or at fair value through profit or loss. The management assesses the performance of these entities including the future projections and relevant economic and market conditions in which they operate to identify if there is any indicator of impairment in the carrying value of the investments. In case indicators of impairment exist, the impairment loss is measured by estimating the recoverable amounts based on the higher of (i) ‘fair value less cost of disposal’ determined using market price information, where available, and (ii) ‘value-in-use’ estimates determined using discounted cash flow projections, where available. The fair value less costs of disposal is determined using the market approach. The future cash flow projections are specific to the entity based on its business plan and may not be the same as those of market participants. The future cash flows consider key assumptions such as volume projections, margins, terminal growth rates, etc. with due consideration for the potential risks given the current economic environment in which the entity operates. The discount rates used are pre-tax rates based on weighted average cost of capital and reflects market’s assessment of the risks specific to the asset as well as time value of money. The recoverable amount estimates are based on judgments, estimates, assumptions and market data as on reporting date and ignore subsequent changes in the economic and market conditions. During the year ended 31 st March 2022, the performance of certain subsidiaries, associates and joint ventures along with the relevant economic and market indicators including the impact of certain capital allocation changes and uncertainties arising from continued impact of Covid-19, supply chain challenges and unprecedented rise in commodity prices resulted in indicators of impairment in respect of certain entities. Accordingly, the Company determined the recoverable amounts of the long term assets and other exposures related to these entities and recorded a provision of Rs. 813.06 crores (2021: Rs. 3,927.13 crores) for the year ended 31 st March 2022. The value-in-use calculation use discount rates ranging from 11.0% - 24.0% and the terminal growth rates ranging from 2.0% - 7.0%. 34. Earning Per Share (EPS) Rupees crores Particulars 2022 2021 Profit for the year (Rupees crores).......................................................................................................................... 4,935.22 984.16 Weighted average number of Ordinary (Equity) Shares used in computing basic EPS...................................... 1,19,54,13,830 1,19,38,39,894 Effect of potential Dilutive Ordinary (Equity) Shares............................................................................................ 45,87,607 50,10,630 Weighted average number of Ordinary (Equity) Shares used in computing diluted EPS.................................. 1,20,00,01,437 1,19,88,50,524 Basic Earnings per share (Rs.) (Face value of Rs. 5 per share)............................................................................... 41.28 8.24 Diluted Earnings per share (Rs.)............................................................................................................................... 41.13 8.21