Atul Ltd 2017-18

Atul Ltd | Annual Report 2017-18 Note 29.8 Financial Risk Management (continued) iii) Foreign exchange risk The Group 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 are denominated in a currency that is not the functional currency ( ` ) of the Group. The risk also includes highly probable foreign currency cash flows. The objective of the cash flows hedges is to minimise the volatility of the ` cash flows of highly probable forecast transactions. The Group has exposure arising out of export, import, loans and other transactions other than functional risk. The Group 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 the Risk Management Policy of the Group. As an estimation of the approximate impac t of the foreign exchange rate risk, with respect to the Financial Statements, the Group 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 ` 2.78 cr gain in Other Comprehensive Income (2016-17: gain of ` 2.05 cr). A 2% decrease may have led to an increase in additional ` 2.30 cr loss in Other Comprehensive Income (2016-17: Gain of ` 0.65 cr). Foreign currency risk exposure: The exposure to foreign currency risk of the Group at the end of the reporting period expressed are as follows: Particulars As at March 31, 2018 US$ mn ` cr € mn ` cr Financial assets Trade receivables 37.07 241.10 1.21 9.78 Less: Hedged through derivatives 1 Foreign exchange forward contracts 0.92 6.01 – – Net exposure to foreign currency risk (assets) 36.15 235.09 1.21 9.78 Financial liabilities Trade payables 16.39 106.55 0.06 0.48 Less: Hedged through derivatives 1 Currency range options 3.72 24.22 – – Net exposure to foreign currency risk (liabilities) 12.67 82.33 0.06 0.48 1 Includes hedges for highly probable transactions up to next 12 months Particulars As at March 31, 2017 US$ mn ` cr € mn ` cr Financial assets Trade receivables 27.00 175.07 0.85 5.89 Less: Hedged through derivatives 1 Currency range options 7.65 49.60 – – Net exposure to foreign currency risk (assets) 19.35 125.47 0.85 5.89 Financial liabilities Borrowings 10.67 69.15 – – Trade payables 7.87 51.06 0.22 1.50 Capital creditors 0.03 0.16 – – Less: Hedged through derivatives 1 Foreign exchange forward contracts 9.00 58.35 – – Currency swaps 1.67 10.80 – – Net exposure to foreign currency risk (liabilities) 7.90 51.22 0.22 1.50 1 Includes hedges for highly probable transactions up to the next 12 months Notes to the Consolidated Financial Statements