174 Annual Report 2023-24 Atul Ltd Particulars As at March 31, 2023 CN¥ mn ` cr AED mn ` cr JPY mn ` cr Financial assets Trade receivables - - - - - Less: Hedged through derivatives1: Currency range options - - - - - - Net exposure to foreign currency risk (assets) - - - - - - Financial liabilities Trade payables - - - - 3.24 0.20 Net exposure to foreign currency risk (liabilities) - - - - 3.24 0.20 c) Management of credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty fails tomeet 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. 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 Loss allowance on trade receivables Loss allowance as on March 31, 2022 12.22 Changes in loss allowance 1.45 Loss allowance as on March 31, 2023 13.67 Changes in loss allowance (0.31) Loss allowance as on March 31, 2024 13.36 Other financial assets The Company 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. It has a diversified portfolio of investments 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 its treasury department. Note 29.8 Financial risk management (continued)
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