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

363 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS (a) Market Risk Management (contd.) (ii) The movements in Cash Flow Hedge Reserve for instruments designated in a cash flow hedge are as follows: Rupees crores Particulars 2023 2022 Exchange Rate Risk hedges Interest Rate Risk hedges Total Exchange Rate Risk hedges Interest Rate Risk hedges Total Balance at the beginning of the year................. (37.25) — (37.25) (97.25) (3.51) (100.76) (Gains)/Losses transferred to Profit or Loss on occurrence of the forecast transaction.................... 6.26 — 6.26 (27.57) — (27.57) Change in Fair Value of Effective Portion of cash flow hedges............................................................... 1.66 (13.42) (11.76) 38.70 3.69 42.39 Deferred Tax on the above......................................... (5.97) 3.38 (2.59) (1.35) (0.18) (1.53) Balance at the end of the year............................... (35.30) (10.04) (45.34) (87.47) — (87.47) Add: Share of associate /joint Venture................. (67.67) — (67.67) 53.60 — 53.60 Deferred Tax on share of associates /joint ventures.................................................................................... 0.74 — 0.74 (0.08) — (0.08) Add /(Less): Non controlling interest..................... 8.22 — 8.22 (1.93) — (1.93) Other comprehensive income reclassified to profit or loss.......................................................................... — — — (1.37) — (1.37) Less: Deconsolidation of subsidiary...................... (0.44) — (0.44) — — — Total ........................................................................................... (94.45) (10.04) (104.49) (37.25) — (37.25) Of the above: Balance relating to continuing hedges............... (94.45) (10.04) (104.49) (37.25) — (37.25) (b) Credit Risk Management Credit Risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group usually deals with creditworthy counterparties and obtain sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The exposure is continuously monitored. (i) Financial Guarantees In addition, the Group is exposed to credit risk in relation to financial guarantees given to banks. The Group’s maximum exposure in this respect is the maximum amount the Group could have to pay if the guarantee is called on. The accounting of financial guarantees is as explained in Note 2(k). The amount recognised in Consolidated Balance Sheet as liabilities is as below: Rupees crores Particulars 2023 2022 Maximum exposure...................................................................................................................................................................................................... 553.66 564.23 Amount recognised as liability ........................................................................................................................................................................... 15.86 20.50 (ii) Trade Receivables The Group applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables. The Group has computed expected credit losses based on a provision matrix which uses historical credit loss experience of the Group. Forward-looking information (including macroeconomic information) has been incorporated into the determination of expected credit losses. 36. Financial Instruments (contd.)