Heritage Foods Limited

FINANCIAL STATEMENTS Consolidated 29 th Annual Report 2020-21 | 259 Summary of the signi fi cant accounting policies and other explanatory information (All amounts in ₹ millions, except share data and where otherwise stated) 37. Financial risk management objectives and policies Financial Risk Management Framework The Group's Board of Directors has an overall responsibility for the establishment and oversight of the Group's risk management framework. The Holding Company's Board of Directors has established Risk Management Committee, which is responsible for developing and monitoring the risk management policies. The Committee reports regularly to the Holding Company's Board of Directors on its activities. The Group’s principal fi nancial liabilities, other than derivatives, comprises of borrowings, trade and other payables. The main purpose of these fi nancial liabilities is to fi nance the Group’s operations. The Group’s principal fi nancial assets include investments in equity shares, loans, trade and other receivables, and cash and cash equivalents that the Group derives directly from its operations. The Group also holds FVTOCI/FVTPL investments and enters into derivative transactions. The Group is exposed primarily to Credit risk, Liquidity risk and Market risk ( fl uctuations in interest rates, foreign currency rates, and prices of equity instruments), which may adversely impact the fair value of its fi nancial instruments. The Group assesses the unpredictability of the fi nancial environment and seeks to mitigate potential adverse e ff ects on the fi nancial performance of the Group. 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 Group 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 ₹ 486.40 and ₹ 2,334.32 as of 31 March 2021 and 31 March 2020 respectively, representing carrying amount of all fi nancial assets with the Group. Financial assets that are neither past due nor impaired None of the Group’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 Group’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 149.38 173.02 31-60 days 2.82 44.67 61-90 days - 0.03 Greater than 90 days - 1.20 152.20 218.92 Ind AS requires expected credit losses to be measured through a loss allowance. The Group 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 Group 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 expe- rience and is adjusted for forward-looking information.