MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2023-24 428 Interest Rate sensitivity The sensitivity analysis below have been determined based on exposure to interest rate for both derivative and non-derivative instruments at the end of reporting period. For floating rate liabilities, analysis is prepared assuming the amount of liability outstanding at the end of the reporting period was outstanding for the whole year. The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of loans and borrowings affected, after the impact of hedge accounting. With all other variables held constant, the Group’s profit before tax is affected through the impact on floating rate borrowings, as follows: Rupees crores Particulars Currency Increase / decrease in basis points Effect on profit before tax Effect on pretax equity Year ended 31st March, 2024................................................................................... INR +25 bps (97.58) — EUR +25 bps (2.19) — Year ended 31st March, 2023................................................................................... INR +25 bps (63.71) — EUR +25 bps (1.63) — (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 amount recognised in Balance Sheet as liabilities and maximum exposure details are as given below: Rupees crores Particulars 2024 2023 Maximum exposure...................................................................................................................................................................................................... 557.34 553.66 Amount recognised as liability ........................................................................................................................................................................... 11.22 15.86 (ii) Trade Receivables The Group applies the simplified approach to provide 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. Reconciliation of loss allowance for Trade Receivables: Rupees crores Particulars 2024 2023 Balance as at beginning of the year........................................................................................................................................................ 359.09 409.45 Additions during the year....................................................................................................................................................................................... 131.43 93.70 Amounts written off during the year............................................................................................................................................................. (14.76) (68.85) Impairment losses reversed/written back................................................................................................................................................... (54.26) (42.23) Foreign exchange translation difference...................................................................................................................................................... (3.75) (1.79) On account of disposal of subsidiaries......................................................................................................................................................... (1.05) (31.19) Balance as at end of the year....................................................................................................................................................................... 416.70 359.09 The Group’s maximum exposure to credit risk in respect of Financial Guarantee contracts are disclosed in note 40 (b) (i). In respect of other financial assets, the maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets. 40. Financial instruments (Continued)
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