Atul Ltd 2017-18

143 b) Financial assets: The Company holds variable interest rate financial assets and fixed interest rate financial assets. However, it does not designate fixed interest rate financial assets at fair value through profit and loss. Therefore, changes in interest rates of fixed rate instruments may not affect profit or loss | equity. As at March 31, 2018, the exposure to interest rate risk due to variable interest rate loans amounted to ` Nil (March 31, 2017: ` 4.30 cr). In order to manage its interest rate risk on variable interest rate financial assets, any new loan is as per the Policy of the Company. The Company has calculated the impact of a 25 bps change in interest rates. A 25 bps increase in interest rates may have led to approximately an additional ` Nil (2016-17: ` 0.01 cr) gain inOther Comprehensive Income. A 25 bps decrease in interest rates may have led to an equal, but opposite effect. iii) Foreign exchange risk The Company has international operations and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised Financial assets and liabilities denominated in a currency that is not the functional currency ( ` ) of the Company. The risk also includes highly probable foreign currency cash flows. The objective of the cash flow hedges is to minimise the volatility of the ` cash flows of highly probable forecast transactions. The Company has exposure arising out of export, import, loans and other transactions other than functional risk. The Company hedges its foreign exchange risk using foreign exchange forward contracts and currency options after considering the natural hedge. The same is within the guidelines laid down by Risk Management Policy of the Company. As an estimation of the approximate impact of the foreign exchange rate risk, with respect to Financial Statements, the Company has calculated the impact as follows: For derivative and non-derivative financial instruments, a 2% increase in the spot price as on the reporting date may have led to an increase in additional ` 5.48 cr gain in Other Comprehensive Income (2016-17: gain of ` 3.76 cr). A 2% decrease may have led to an increase in additional ` 5.01 cr loss in Other Comprehensive Income (2016-17: loss of ` 2.36 cr). Foreign currency risk exposure: The exposure to foreign currency risk of the Company at the end of the reporting period expressed is as follows: Particulars As at March 31, 2018 US$ mn ` cr € mn ` cr £ mn ` cr Financial assets Trade receivables 54.80 356.43 2.75 22.17 0.03 0.27 Dividends receivable 0.16 1.04 – – 0.57 5.21 Less: Hedged through derivatives 1 Foreign exchange forward contracts 0.92 6.01 – – – – Net exposure to foreign currency risk (assets) 54.04 351.46 2.75 22.17 0.60 5.48 Financial liabilities Borrowings – – – – – – Trade payables 16.09 104.64 0.14 1.09 0.03 0.24 Less: Hedged through derivatives 1 Currency range option 3.72 24.22 – – – – Net exposure to foreign currency risk (liabilities) 12.37 80.42 0.14 1.09 0.03 0.24 1 Includes hedges for highly probable transactions up to next 12 months Notes to the Financial Statements Note 27.8 Financial Risk Management (continued)