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

283 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS 6. Fair Value Disclosures (a) Financial Instruments regularly measured using Fair Value - recurring items Rupees crores Financial Instruments regularly measured using Fair Value - recurring items Applicable for Level 2 and Level 3 hierarchy For Level 3 hierarchy valuation Particulars Financial assets/ financial liabilities Category Fair Value Fair value hierarchy Valuation technique(s) Key inputs (for level 2 and level 3) Significant unobservable input(s) for level 3 hierarchy Relationship of unobservable inputs to fair value and sensitivity 2023 2022 1) Foreign currency forwards, Options, Interest rate swaps & Commodity derivatives Financial Assets Financial instruments measured at FVTPL/ FVTOCI 20.80 242.30 Level 2 Discounted Cash Flow Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counter parties. — — 2) Foreign currency forwards, Options, Interest rate swaps & Commodity derivatives Financial Liabilities Financial instruments measured at FVTPL/ FVTOCI 89.23 22.37 Level 2 Discounted Cash Flow and Interest Rate Future cash flows are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counter parties. — — 3) Derivatives on Interest in Subsidiaries, Associates and Joint Ventures Financial Assets Financial instruments measured at FVTPL 28.20 91.91 Level 3 Comparable Companies Method/Discounted Cash Flow/Price of Recent Transaction/Comparable Companies Quoted multiples For Comparable Companies Method/Comparable Companies Quoted multiples - compares the price for which comparable companies are traded on the capital market. For Discounted Cash Flow - Companies Financial projections. These include forecasts of balance sheet, statement of profit and loss along with underlying assumptions. Interest Rates to discount future cash flow, market multiple used for comparable companies. Any change (increase/decrease) in the discount factor, financial projections etc. would entail corresponding change in the valuation of derivatives on interest in subsidiaries and associates and joint ventures. 4) Derivatives on Interest in Subsidiaries, Associates and Joint Ventures Financial Liabilities Financial instruments measured at FVTPL 28.51 56.61 Level 3 Comparable Companies Method/Discounted Cash Flow/Price of Recent Transaction/Comparable Companies Quoted multiples For Comparable Companies Method/Comparable Companies Quoted multiples - compares the price for which comparable companies are traded on the capital market. For Discounted Cash Flow - Companies Financial projections. These include forecasts of balance sheet, statement of profit and loss along with underlying assumptions. Interest Rates to discount future cash flow, Financial Projections Any change (increase/decrease) in the discount factor, financial projections etc. would entail corresponding change in the valuation of derivatives on interest in subsidiaries and associates and joint ventures. 5) Investment in Market Linked Debentures Financial Assets Financial instruments measured at FVTPL 100.53 — Level 1 Quoted market price — — — 6) Investment in Mutual Funds and Alternate Investment Fund Financial Assets Financial instruments measured at FVTPL 6,868.06 6,785.52 Level 1 Net Asset value — — — 7) Investment in equity instruments -Quoted Financial Assets Financial instruments designated at FVTOCI 1.30 1.23 Level 1 Quoted bid price in active market — — — 8) Equity investments-Unquoted Financial Assets Financial instruments designated at FVTOCI 0.07 35.07 Level 3 Discounted Cash Flow Income Approach For Discounted Cash Flow - Companies Financial projections. These include forecasts of balance sheet, statement of profit and loss along with underlying assumptions. Financial projections and discount rates to discount future cash flows. Any change (increase/decrease) in the discount factor, financial projections etc. would entail corresponding change in the valuation of the equity component and/or the debt component. 9) Investment in Government Securities Financial Assets Financial instruments measured at FVTOCI 10.02 4.99 Level 1 Quoted market price Not applicable as Level 1 hierarchy — — 10) Investments in Debentures/ Bonds Financial Assets Financial instruments measured at FVTOCI 24.85 31.09 Level 1 Quoted market price — — — 11) Equity investments-Quoted Financial Assets Financial instruments measured at FVTPL 172.14 — Level 1 Quoted market price — — — 12) Commercial Papers and Certificate of Deposits Financial Assets Financial instruments measured at FVTOCI 2,316.59 852.20 Level 1 Market price — — — 13) Investments in Optionally Convertible Cumulative Redeemable Preference Shares/Optionally Convertible Debentures/Bonds Financial Assets Financial instruments measured at FVTPL 92.57 38.86 Level 3 Discounted Cash Flow method For Discounted Cash Flow - Companies Financial projections. These include forecasts of balance sheet, statement of profit and loss along with underlying assumptions. Financial projections and discount rates to discount future cash flows. Any change (increase/decrease) in the discount factor, financial projections etc. would entail corresponding change in the valuation of the equity component and/or the debt component. 38. Financial instruments (contd.)