Atul Ltd 2016-17

Atul Ltd | Annual Report 2016-17 Note 27.7 Fair value measurements (continued) Level 1: Level 1 hierarchy includes financial instruments measured using quoted prices. This includes listed equity instruments and mutual fund units that have a quoted price. The fair value of all equity instruments which are traded on the Stock Exchanges is valued using the closing price as at the reporting period. The mutual fund units are valued using the closing net assets value. Level 2: The fair value of financial instruments that are not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2. Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. Financial assets valued using Level 3 valuation techniques comprise of unquoted Preference shares in subsidiary company with a fair value amount of ` 2.40 cr as on April 01, 2015. These Preference shares have been redeemed in the financial year ended March 31, 2016. These investments are collectively not material and hence disclosures regarding significant unobservable inputs used in Level 3 fair values have not been made. b) Valuation technique used to determine fair value Specific valuation techniques used to value financial instruments include: i) the use of quoted market prices or dealer quotes for similar instruments ii) the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves iii) the fair value of forward foreign exchange contracts are determined using forward exchange rates at the Balance Sheet date iv) the fair value of foreign currency option contracts is determined using the Black Scholes valuation model v) the fair value of the remaining financial instruments is determined using discounted cash flow analysis. All of the resulting fair value estimates are included in level 1 and 2. c) Valuation processes The finance department of the Company includes a team that performs the valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair values. d) Fair value of financial assets and liabilities measured at amortised cost ( ` cr) Particulars As at March 31, 2017 As at March 31, 2016 As at April 01, 2015 Carrying amount Fair value Carrying amount Fair value Carrying amount Fair value Financial assets Investments: Preference shares 7.10 7.04 6.43 7.37 5.81 6.54 Government securities 0.01 0.01 0.01 0.01 0.01 0.01 Loans for utilities and premises 12.19 13.78 13.67 12.93 12.18 15.24 Security deposits 3.27 3.27 3.46 3.46 3.59 3.59 Finance lease receivable 1.38 1.38 1.29 1.29 1.42 1.42 Total financial assets 23.95 25.48 24.86 25.06 23.01 26.80 Financial Liabilities Borrowings 155.23 154.80 301.67 300.05 278.66 275.14 Security deposits 19.30 19.30 18.51 18.51 14.93 14.93 Total financial liabilities 174.53 174.10 320.18 318.56 293.59 290.07 Notes to the Financial Statements