221 HERITAGE FOODS LTD | 32ND ANNUAL REPORT 2023-24 Standalone STRATEGIC REVIEW STATUTORY REPORT FINANCIAL STATEMENTS 38. Financial risk management objectives and policies Financial Risk Management Framework The Company’s Board of Directors has an overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board of Directors has established Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The Committee reports regularly to the Board of Directors on its activities. The Company’s principal financial liabilities, comprises of borrowings, trade and other payables. The main purpose of these financial liabilities is to finance the Company’s operations. The Company’s principal financial assets include trade and other receivables, and cash and cash equivalents that the Company derives directly from its operations. The Company is exposed primarily to Credit risk, Liquidity risk and Market risk (fluctuations in interest rates, foreign currency rates, and prices of equity instruments), which may adversely impact the fair value of its financial instruments. The Company assesses the unpredictability of the financial environment and seeks to mitigate potential adverse effects on the financial performance of the Company. A. Credit risk Credit risk is the risk that the counterparty shall not meet its obligations under a financial instrument or customer contract, leading to a financial 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 financial 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 financial assets. None of the financial instruments of the Company result in material concentration of credit risk. Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk was ₹2,489.08 and ₹678.67 as of 31 March 2024 and 31 March 2023 respectively, representing carrying amount of all financial assets with the Company. Financial assets that are neither past due nor impaired None of the Company’s cash equivalents, including fixed deposits, were either past due or impaired as at 31 March 2024 and 31 March 2023. The Company has diversified its portfolio of investment in cash and cash equivalents and term deposits with various banks which have secure credit ratings hence the risk is reduced. Concentration of exposures are actively monitored by the finance department of the Company. 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: As at Number of days 31-Mar-24 31-Mar-23 0-30 days 263.46 201.98 31-60 days 23.01 59.58 61-90 days 0.35 9.89 Greater than 90 days - 7.64 286.82 279.09 Summary of the material accounting policies and other explanatory information (All amounts in ₹ millions, except share data and where otherwise stated)
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