| 180 Annual Report | 2025-2026 Financials Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2026 (cont’d) (All amounts in ₹ lakhs unless otherwise stated) (B) Fair value hierarchy Financial assets and financial liabilities are measured at fair value in the financial statements and are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows: Level 1: Quoted prices (unadjusted) for identical instruments in an active market. Level 2: Directly (i.e. as prices) or indirectly (i.e. derived from prices) observable market inputs, other than Level 1 input; and Level 3: inputs that are not based on observable market data (unobservable inputs). (C) Financial assets and liabilities measured at fair value - recurring fair value measurements As at March 31, 2026 Particulars Level 1 Level 2 Level 3 Financial assets: Investments in mutual funds 20,715.64 - - Investments in security receipts - - 446.65 Total 20,715.64 - 446.65 As at March 31, 2025 Particulars Level 1 Level 2 Level 3 Financial assets: Investments in security receipts - - 1,881.20 Total - - 1,881.20 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 Government securities, security receipts and mutual funds 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. Note 43: Financial Instruments - fair value measurements (cont’d)
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