MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2023-24 398 6. Goodwill Rupees crores Particulars 2024 2023 Balance at the beginning of the year................................................................................................................................................................................ 2,548.90 1,340.40 Additions through business combinations ......................................................................................................................................................................... 56.91 1,365.62 Disposal of subsidiaries ................................................................................................................................................................................................................... — (42.03) Measurement period adjustment to acquired assets and liabilities ............................................................................................................... (135.04) — Impairment during the year ........................................................................................................................................................................................................ (32.52) (122.13) Foreign exchange translation difference ............................................................................................................................................................................ 10.12 7.04 Balance at the end of the year............................................................................................................................................................................................. 2,448.37 2,548.90 Segment wise allocation of goodwill The carrying amount of goodwill has been allocated to segments as below: Rupees crores Particulars 2024 2023 Automotive................................................................................................................................................................................................................................................ 31.96 31.96 Farm equipment.................................................................................................................................................................................................................................... 910.50 966.38 Services: Financial services.................................................................................................................................................................................................................................. 1.34 1.34 Industrial Businesses and Consumer Services ............................................................................................................................................................... 1,504.57 1,549.22 Total.............................................................................................................................................................................................................................................................. 2,448.37 2,548.90 The Group tests goodwill on an annual basis and whenever there is an indication that the CGU to which the goodwill has been allocated may be impaired. The goodwill impairment test is performed at the level of the CGU or group of CGUs that benefit from the synergies of the acquisition and which represents the lowest level at which goodwill is monitored for internal management purposes. The recoverable amount is determined based on higher of value‐in‐use and fair value less cost of disposal. Where there is no basis for making a reliable estimate of the price at which an orderly transaction to sell the asset would take place between market participants at the measurement date under current market conditions, the recoverable amount is determined by value-in-use. In determining the value-in-use, cash flow projections approved by appropriate level of management are considered. In circumstances where a reliable value-in-use estimate is difficult to make whereas market value of the asset or the CGU or group of CGUs is readily available, the latter is used for the determination of recoverable amount with appropriate adjustments, where applicable. Apart from the observable market information, significant management estimates and judgments are used to determine the recoverable amounts based on value-in-use. Key assumptions used for determination of value-in-use amount includes estimated growth rates (including terminal growth rates), margins and discount rates. Cash flow projections are usually considered for next 3-5 years and represent management’s best estimate about future developments with due consideration for past performance. Cash flows beyond the five‐year period are extrapolated using terminal growth rates. In certain cases, the performance of the cash generating units were below their expected levels. Accordingly, the Group assessed such cash generating units for the recoverable amounts based on fair value less cost of disposal and value-in-use estimates. The value-in-use calculation for the year used discount rates ranging from 11.60% to 18.90% (2023: 11.70% to 18.90%) and the terminal growth rates ranging from 2% to 5% (2023: 2% to 5%). The goodwill impairment recognised in the consolidated statement of profit and loss and the operating segments to which it relates are as below: (a) ‘Farm Equipment’ segment - Rs. 32.52 crores (2023: Rs. 78.73 crores). This relates to goodwill allocated to an international subsidiary. (b) ‘Financial services’ segment - Nil (2023: Rs. 43.40 crores). This relates to goodwill allocated to an international subsidiary. Goodwill impairment has been included under ‘ Depreciation, amortisation and impairment expense’ for the year ended 31st March 2024 and as ‘Exceptional items (net)’ for the year ended 31st March 2023 in the consolidated statement of profit and loss.
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