197 | Annual Report | 2024-2025 Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2025 (Contd.) (All amounts in ` lakhs unless otherwise stated) Note 42: Financial Instruments - fair value measurements (cont'd) (C) Financial assets and liabilities measured at fair value - recurring fair value measurements (cont'd) As at March 31, 2024 Particulars Level 1 Level 2 Level 3 Financial assets: Investments 9,016.08 - - Total 9,016.08 - - There are no such financial liabilities measured at fair value. No transfers has been made for any assets and liabilities which are held between Level 1 and Level 2 of the fair value hierarchy. Valuation process and technique used to determine fair value Specific valuation techniques used to value financial instruments include: (a) Non credit impaired portfolio loans are valued by discounting the aggregate future cash flows (both principal and interest cash flows) with risk-adjusted discounting rate for the remaining portfolio tenor. The Company has considered the average valuation impact arrived using average lending rate of last quarter. (b) For unquoted equity instruments, the Company has used earning capitalisation method (fair value approach) discounted at a rate to reflect the risk involved in the business. (c) For security receipts, the Company has used the net asset value (NAV) on the basis of the statement received from the investee party. (d) All the borrowing facilities are fair valued by discounting the aggregate future cash flows (both principal and interest cash flows) with risk-adjusted discounting rate for the remaining loan tenor. (D) Fair value of instruments measured at amortised cost The financial assets such as cash and cash equivalents, bank balance other than cash and cash equivalents, trade receivables and other financial assets and financial liabilities i.e. other financial liabilities approximates their carrying value to their fair value. Fair value of loans, investments, debt securities, borrowings (other than debt securities) and subordinated liabilities measured at amortised cost for which fair value is disclosed is as follows, these fair values are calculated using Level 2 inputs. Particulars As at March 31, 2025 As at March 31, 2024 Carrying value Fair value Carrying value Fair value Financial assets Investments 36,334.60 39,235.85 9,016.08 11,016.08 Loans 5,70,510.84 5,78,286.04 6,61,573.79 6,62,101.05 Total 6,06,845.44 6,17,521.89 6,70,589.87 6,73,117.13 Financial liabilities Debt securities 21,303.69 21,272.91 40,903.81 42,261.53 Borrowings (other than debt securities) 4,09,070.54 4,09,027.73 5,20,796.16 5,18,902.83 Subordinated liabilities 39,966.14 41,409.19 39,884.29 42,250.92 Total 4,70,340.37 4,71,709.83 6,01,584.26 6,03,415.28 The respective carrying values of certain on-balance sheet financial instruments approximate their fair value. These financial instruments include cash on hand, balances with banks, trade receivables, trade payables and certain other financial assets and liabilities. Carrying values were assumed to approximate fair values for these financial instruments as they are short-term in nature and their recorded amounts approximate fair values or are receivable or payable on demand.
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