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Atul Ltd | Annual Report 2016-17
iii) Management of credit risk
Credit risk is the risk of financial loss to the Company 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 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
As at
March 31, 2017
Loss allowance on April 01, 2015
2.73
Changes in loss allowance
1.07
Loss allowance on March 31, 2016
3.80
Changes in loss allowance
(0.64)
Loss allowance on March 31, 2017
3.16
Other financial assets
The Company maintains exposure in cash and cash equivalents, term deposits with banks, investments in Government
securities, Preference shares and loans to subsidiary companies. The Company has a 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 Company.
Impact of hedging activities
a) Disclosure of effects of hedge accounting on financial position:
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
effectiveness
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 Financial Statements