Atul Ltd 2020-21

214 Atul Ltd | Annual Report 2020-21 Note 29.8 Financial risk management (continued) c) Management of credit risk Credit risk is the risk of financial loss to the Group 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. A portion of trade receivables are secured by insurance policies or Export Credit Guarantee Corporation schemes. All trade receivables are reviewed and assessed for default on a quarterly basis. Reconciliation of loss allowance provision – trade receivables ( ` cr) Particulars Loss allowance on trade receivables Loss allowance as on March 31, 2019 7.61 Changes in loss allowance 2.70 Loss allowance as on March 31, 2020 10.31 Changes in loss allowance 1.85 Loss allowance as on March 31, 2021 12.16 Other financial assets The Group maintains exposure in cash and cash equivalents, term deposits with banks, investments in government securities, preference shares, mutual funds, bonds and loans to subsidiary companies. The Group has 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 Group. Impact of hedging activities a) Disclosure of effects of hedge accounting on financial position As at March 31, 2021 ( ` 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 Changes 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 Currency range options 56.29 - 0.60 - 1-12 74.26-77.80 0.60 (0.60)