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Note 29.8 Financial risk management (continued)
¹ĺĚ îċūDŽĚ ƑĿƙŒƙ ŞîNj îljljĚČƥ ĿŠČūŞĚ îŠē ĚNJƎĚŠƙĚƙȡ ūƑ ƥĺĚ DŽîŕƭĚ ūlj Ŀƥƙ ǛŠîŠČĿîŕ ĿŠƙƥƑƭŞĚŠƥƙ ūlj ƥĺĚ HƑūƭƎȦ ¹ĺĚ ūċŏĚČƥĿDŽĚ ūlj ƥĺĚ
Management of the Group for market risk is to maintain this risk within acceptable parameters, while optimising returns.
¹ĺĚ ĚNJƎūƙƭƑĚ ūlj ƥĺĚ HƑūƭƎ ƥū ƥĺĚƙĚ ƑĿƙŒƙ îŠē ƥĺĚ ŞîŠîijĚŞĚŠƥ ūlj ƥĺĚƙĚ ƑĿƙŒƙ îƑĚ ĚNJƎŕîĿŠĚē ċĚŕūDžȠ
Potential impact of risk
Management policy
Sensitivity to risk
i) Price risk
¹ĺĚ HƑūƭƎ Ŀƙ ŞîĿŠŕNj ĚNJƎūƙĚē ƥū ƥĺĚ
price risk due to its investments in
equity instruments and mutual funds.
The price risk arises due to uncertainties
about the future market values of these
investments.
Equity price risk is related to the
change in market reference price of the
investments in equity securities.
In general, these securities are not
held for trading purposes. These
ĿŠDŽĚƙƥŞĚŠƥƙ îƑĚ ƙƭċŏĚČƥ ƥū ČĺîŠijĚƙ ĿŠ
the market price of securities. The fair
value of quoted equity instruments
ČŕîƙƙĿǛĚē îƥ ljîĿƑ DŽîŕƭĚ ƥĺƑūƭijĺ ~ƥĺĚƑ
Comprehensive Income as at March 31,
2019 is
`
ǫǨǭȦǪǬ ČƑ ȳqîƑČĺ ǩǧȡ ǨǦǧǮȠ
`
ǪǫǨȦǫǦ ČƑȴȦ
The fair value of mutual fund
ČŕîƙƙĿǛĚē îƥ ljîĿƑ DŽîŕƭĚ ƥĺƑūƭijĺ ƎƑūǛƥ
and loss as at March 31, 2019 is
`
212.31 cr (March 31, 2018:
`
5.70 cr).
In order to manage its price risk
arising from investments in equity
instruments, the Group maintains
its portfolio in accordance with
the framework set by the Risk
Management policies.
Any new investment or divestment
must be approved by the Board of
'ĿƑĚČƥūƑƙȡ ĺĿĚlj GĿŠîŠČĿîŕ ~ljǛČĚƑ îŠē
Risk Management Committee.
ƙ îŠ ĚƙƥĿŞîƥĿūŠ ūlj ƥĺĚ îƎƎƑūNJĿŞîƥĚ
impact of price risk, with respect to
investments in equity instruments, the
Group has calculated the impact as
follows:
GūƑ ĚƐƭĿƥNj ĿŠƙƥƑƭŞĚŠƥƙȡ
î ǯȦǧǪɼ
increase in Nifty 50 prices would have
ŕĚē ƥū îƎƎƑūNJĿŞîƥĚŕNj îŠ îēēĿƥĿūŠîŕ
`
25.67
cr
gain
in
other
comprehensive
income
(2017-18:
`
ǪǦȦǮǯ ČƑȴȦ
ǯȦǧǪɼ ēĚČƑĚîƙĚ ĿŠ sĿljƥNj
50 prices would have led to an equal but
opposite effect.
ii) Interest rate risk
Financial liabilities:
¹ĺĚ HƑūƭƎ Ŀƙ ŞîĿŠŕNj ĚNJƎūƙĚē ƥū ĿŠƥĚƑĚƙƥ
rate risk due to its variable interest
rate borrowings. The interest rate risk
arises due to uncertainties about the
future market interest rate of these
borrowings.
ƙ îƥ qîƑČĺ ǩǧȡ ǨǦǧǯȡ ƥĺĚ ĚNJƎūƙƭƑĚ ƥū
interest rate risk due to variable interest
rate borrowings amounted to
`
ǮȦǪǯ ČƑ
(March 31, 2018:
`
Nil)
In order to manage its interest rate
risk arising from variable interest
rate borrowings, the Group uses
interest rate swaps to hedge its
ĚNJƎūƙƭƑĚ ƥū ljƭƥƭƑĚ ŞîƑŒĚƥ ĿŠƥĚƑĚƙƥ
rates whenever appropriate. The
hedging activity is undertaken in
accordance with the framework set
by the Risk Management Committee
and supported by the treasury
department.
ƙ îŠ ĚƙƥĿŞîƥĿūŠ ūlj ƥĺĚ îƎƎƑūNJĿŞîƥĚ
impact of the interest rate risk, with
ƑĚƙƎĚČƥ ƥū ǛŠîŠČĿîŕ ĿŠƙƥƑƭŞĚŠƥƙȡ ƥĺĚ
Group has calculated the impact of a
25 bps change in interest rates. A 25
bps increase in interest rates would
ĺîDŽĚ ŕĚē ƥū îƎƎƑūNJĿŞîƥĚŕNj îŠ îēēĿƥĿūŠîŕ
`
0.02 cr (2017-18:
`
Nil) gain in other
comprehensive income. A 25 bps
decrease in interest rates would have led
to an equal but opposite effect.
Consolidated
|
Notes to the Financial Statements
233