187 | Annual Report | 2025-2026 C. Market risk a) Interest rate risk (i) Liabilities The Company’s policy is to minimise interest rate cash flow risk exposures on long-term financing. As at March 31, 2026; the Company is exposed to changes in market interest rates through debt securities, other borrowings and subordinated liabilities at variable interest rates. Interest rate risk exposure Below is the overall exposure (*) of the Company to interest rate risk: Particulars As at March 31, 2026 As at March 31, 2025 Variable rate liabilities Debt securities - - Borrowings (other than debt securities) 4,89,919.43 3,89,548.08 Subordinated liabilities - - Fixed rate liabilities Debt securities 15,600.00 20,800.00 Borrowings (other than debt securities) 12,724.68 19,111.48 Subordinated liabilities 25,000.00 40,000.00 Liability against securitisation 47,151.41 935.18 Total 5,90,395.52 4,70,394.74 (*) 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, 2026 Year ended March 31, 2025 Interest sensitivity* Interest rates – increase by 0.50% 2,477.92 2,742.14 Interest rates – decrease by 0.50% (2,477.92) (2,742.14) * 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. (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. Arohan Financial Services Limited Notes to financial statements for the year ended March 31, 2026 (cont’d) (All amounts in ₹ lakhs unless otherwise stated) Note 44: Financial risk management (cont’d)
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