MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2022-23

272 MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2022-23 32. Corporate Social Responsibility As per section 135 of the Companies Act, 2013, the Company is required to spend 2% of its average net profit of the immediately three preceding financial years on CSR. Rupees crores Particulars 2023 2022 a) Gross amount required to be spent by the Company during the year based on 2% of average net profits.......... 91.87 96.85 b) Amount spent during the year on: i) Construction/ acquisition of assets held by the Company................................................................................................................. — — ii) On purposes other than above............................................................................................................................................................................ 92.28 97.08 c) Unspent amount at the end of the year................................................................................................................................................................... — — d) Driven by the core purpose and in line with CSR vision, your Company continued to focus on investing in girls, women, and a massive tree plantation drive through high standard projects in the domains of education, skill development, and environment. Across all programmes, the Company has ensured that majority of beneficiaries are girls and women. Amount recognised as expense in profit or loss is Rs. 92.28 crores (2022: Rs. 97.08 crores). Further, the Company does not wish to carry forward any excess amount spent during the year. 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 2023 2022 Profit on transfer / sale of certain long term investments..................................................................................................................................... 271.70 524.40 Sale of certain freehold land......................................................................................................................................................................................................... 359.32 29.43 Impairment loss on certain long term investments...................................................................................................................................................... (1,676.45) (813.06) Impairment of Property Plant and Equipment, Intangibles and certain other assets.......................................................................... (896.84) — Reversal of impairment loss on an investment................................................................................................................................................................ 512.73 50.56 Total ................................................................................................................................................................................................................................................................ (1,429.54) (208.67) 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 capital assets and 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 as well as capital assets including the future projections, 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 and capital assets. 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 with required 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, 2023, the performance of certain capital assets, subsidiaries, associates and joint ventures along with capital allocation decisions, coupled with the relevant economic and market indicators including external investors price discovery, and inflationary trends resulted in indicators of impairment in respect of certain entities and Assets. Accordingly, the Company determined the recoverable amounts of the long term assets and other exposures related to these entities, other assets and recorded a provision of Rs. 2,573.29 crores (2022 : Rs. 813.06 crores) for the year ended 31 st March, 2023. The value-in-use calculation use discount rates ranging from 11.0% - 25.0% and the terminal growth rates ranging from 2.0% -5.0%.