Atul Ltd 2016-17

Atul Ltd | Annual Report 2016-17 iii) Management of credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations. Trade receivables Concentrations of credit risk with respect to trade receivables are limited, due to the customer base being large, diverse and across sectors and countries. All trade receivables are reviewed and assessed for default on a quarterly basis. Historical experience of collecting receivables of the Company is supported by low level of past default and hence the credit risk is perceived to be low. Reconciliation of loss allowance provision – Trade receivables ( ` cr) Particulars As at March 31, 2017 Loss allowance on April 01, 2015 2.73 Changes in loss allowance 1.07 Loss allowance on March 31, 2016 3.80 Changes in loss allowance (0.64) Loss allowance on March 31, 2017 3.16 Other financial assets The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in Government securities, Preference shares and loans to subsidiary companies. The Company has a diversified portfolio of investment with various number of counterparties which have secure credit ratings, hence the risk is reduced. Individual risk limits are set for each counterparty based on financial position, credit rating and past experience. Credit limits and concentration of exposures are actively monitored by the treasury department of the Company. Impact of hedging activities a) Disclosure of effects of hedge accounting on financial position: As at March 31, 2017 ( ` cr) Type of hedge and risks Notional value Carrying amount of hedging instrument Maturity (months) Weighted average strike price | interest rate Changes in fair value of hedging instrument Change in the value of hedged item used as the basis for recognising hedge effectiveness Assets Liabilities Assets Liabilities Cash flow hedge ` : US$ Foreign exchange risk Foreign exchange forward contracts – 58.35 – (2.43) 1-12 68.06 (2.43) (2.43) Currency range options 49.60 – 1.70 – 1-12 67.98-73.20 1.70 1.70 Notes to the Financial Statements