Atul Ltd 2020-21

213 Statutory Report 22 - 87 Financial Statements 88 - 229 Corporate Overview 01 - 21 Note 29.8 Financial risk management (continued) Potential impact of risk Management policy Sensitivity to risk 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 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 impact of the foreign exchange rate risk, with respect to Consolidated 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 additional ` 4.53 cr gain in other comprehensive income (2019-20: gain of ` 5.53 cr). A 2% decrease may have led to an additional ` 3.58 cr loss in other comprehensive income (2019-20: Loss of ` 3.83 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, 2021 US$ mn ` cr € mn ` cr £ mn ` cr Financial assets Cash and cash equivalents (EEFC account ) 0.16 1.17 - - - - Trade receivables 45.79 334.73 2.73 23.39 0.30 3.02 Less: Hedged through derivatives 1 Currency range options 7.70 56.29 - - - - Net exposure to foreign currency risk (assets) 38.25 279.61 2.73 23.39 0.30 3.02 Financial liabilities Trade payables 14.84 108.49 0.09 0.81 0.21 2.15 Net exposure to foreign currency risk (liabilities) 14.84 108.49 0.09 0.81 0.21 2.15 1 Includes hedges for highly probable transactions up to next 12 months Particulars As at March 31, 2020 US$ mn ` cr € mn ` cr £ mn ` cr Financial assets Cash and cash equivalents (EEFC account ) 0.60 4.55 - - - - Trade receivables 38.63 291.26 1.97 16.29 6.76 62.90 Less: Hedged through derivatives 1 Currency range options 38.34 289.07 - - - - Net exposure to foreign currency risk (assets) 0.89 6.74 1.97 16.29 6.76 62.90 Financial liabilities Trade payables 10.45 78.78 0.19 1.55 0.30 2.82 Net exposure to foreign currency risk (liabilities) 10.45 78.78 0.19 1.55 0.30 2.82 1 Includes hedges for highly probable transactions up to next 12 months