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201
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. All trade receivables are reviewed and assessed for default on a
monthly basis.
Historical experience of collecting receivables of the Group 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
As at
March 31, 2018
Loss allowance as on March 31, 2016
3.80
Changes in loss allowance
(0.64)
Loss allowance as on March 31, 2017
3.16
Changes in loss allowance
(0.56)
Loss allowance as on March 31, 2018
2.60
Other financial assets
The Group maintains exposure in cash and cash equivalents, term deposits with banks, investments in Government securities,
preference shares 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 counter-
party 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, 2018
(
`
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
Change 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
Foreign exchange forward
contracts
6.01
–
0.07
–
1-12
66.18
0.07
(0.07)
Currency range options
–
24.22
–
(0.02)
1-12 64.90-68.90
(0.02)
0.02
As at March 31, 2017
(
`
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
Change in the
value of hedged
item used as
the basis for
recognising
hedge
effectivenes
Assets Liabilities Assets Liabilities
Cash flow hedge
` :
US $
Foreign exchange risk
Foreign exchange forward
contracts
–
58.35
–
(2.43)
1-12
68.06
(2.43)
2.43
Currency range options
49.60
–
1.70
–
1-12 67.98-73.20
1.70
(1.70)
Notes
to the Consolidated Financial Statements