Heritage Foods Limited

FINANCIAL STATEMENTS Standalone 29 th Annual Report 2020-21 | 197 A. Credit risk Credit risk is the risk that the counterparty shall not meet its obligations under a fi nancial instrument or customer contract, leading to a fi nancial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of the creditworthiness as well as concentration of risks. Credit risk arises primarily from fi nancial assets such as trade receivables, investment in equity shares, balances with banks, loans and other receivables. Credit risk is controlled by analyzing credit limits and creditworthiness of the customers on a continuous basis to whom credits have been granted after obtaining necessary approvals. Financial instruments that are subject to concentration of credit risk principally consist of trade receivables, investments, cash and cash equivalents, bank deposits and other fi nancial assets. None of the fi nancial instruments of the Company result in material concentration of credit risk. Exposure to credit risk The carrying amount of fi nancial assets represents the maximum credit exposure. The maximum exposure to credit risk was ₹ 454.07 and ₹ 2,290.33 as of 31 March 2021 and 31 March 2020 respectively, representing carrying amount of all fi nancial assets with the Company. Financial assets that are neither past due nor impaired None of the Company’s cash equivalents, including fi xed deposits, were either past due or impaired as at 31 March 2021 and 31 March 2020. Financial assets that are past due but not impaired The Company’s credit period for customers generally ranges from 0 - 30 days. The aging of trade receivables, net of those provided for in the books of account, is given below: Particulars As at 31 March 2021 As at 31 March 2020 0-30 days 143.41 165.51 31-60 days 1.92 44.43 61-90 days - - Greater than 90 days - 1.01 145.33 210.95 Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of Balance Sheet whether a fi nancial asset or a group of fi nancial assets are impaired. Expected credit losses are measured at an amount equal to 12 months expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the fi nancial assets have increased signi fi cantly since the initial recognition. The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and is adjusted for forward-looking information. B. Liquidity risk Liquidity risk refers to the risk that the Company cannot meet its fi nancial obligations as and when they become due. The objective of liquidity risk management is to maintain su ffi cient liquidity and to ensure that funds are available for meeting due obligations of the Company. The Company manages liquidity risk by maintaining adequate reserves, banking facilities, continuously monitoring forecast and actual cash fl ows, and by matching the maturity pro fi les of the fi nancial assets and fi nancial liabilities. Summary of the signi fi cant accounting policies and other explanatory information (All amounts in ₹ millions, except share data and where otherwise stated)