205 | 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 43: Financial risk management (cont'd) C. Market risk (cont'd) Interest rate risk exposure Below is the overall exposure (*) of the Company to interest rate risk: Particulars As at March 31, 2025 As at March 31, 2024 Variable rate liabilities Debt securities - - Borrowings (other than debt securities) 3,89,548.08 4,37,343.51 Subordinated liabilities - - Fixed rate liabilities Debt securities 20,800.00 40,050.00 Borrowings (other than debt securities) 19,111.48 43,653.65 Subordinated liabilities 40,000.00 40,000.00 Liability against securitisation 935.18 41,003.55 Total 4,70,394.74 6,02,050.71 (*) Figures are presented at principal carrying value. Sensitivity The sensitivity of the statement of profit and loss is the effect of the changes in market interest rates on debt securities, other borrowings and subordinated liabilities. Below is the sensitivity of profit and loss in interest rates. Particulars Year ended March 31, 2025 Year ended March 31, 2024 Interest sensitivity* Interest rates – increase by 0.50% 2,742.14 2,530.71 Interest rates – decrease by 0.50% (2,742.14) (2,530.71) * Holding all other variables constant (ii) Assets The Company’s fixed deposits are carried at amortised cost bearing fixed rate of interest, hence sensitivity analysis is not been presented. (b) Price risk (i) Exposure The Company’s price risk exposure arises from investments held and classified in the balance sheet either as fair value through other comprehensive income or at fair value through profit and loss. To manage the price risk arising from investments, the Company diversifies its portfolio of assets. As on balance sheet date there is no material investment in their balance sheet. (ii) Legal and operational risk Legal risk Legal risk is the risk relating to losses due to legal or regulatory action that invalidates or otherwise precludes performance by the end user or its counterparty under the terms of the contract or related netting agreements. The Company has developed preventive controls and formalised procedures to identify legal risks so that potential
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