222 32ND ANNUAL REPORT 2023-24 | HERITAGE FOODS LTD Standalone STRATEGIC REVIEW STATUTORY REPORT FINANCIAL STATEMENTS Ind AS requires expected credit losses to be measured through a loss allowance. The Company assesses at each date of Balance Sheet whether a financial asset or a group of financial 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 financial assets have increased significantly 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. Based on such data, loss on collection of receivable is not material. B. Liquidity risk Liquidity risk refers to the risk that the Company cannot meet its financial obligations as and when they become due. The objective of liquidity risk management is to maintain sufficient 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 flows, and by matching the maturity profiles of the financial assets and financial liabilities. The table below summarises the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments: Particulars As at 31 March 2024 As at 31 March 2023 On demand Up to 1 year More than 1 year Total On demand Up to 1 year More than 1 year Total Financial guarantees # 63.55 - - 63.55 189.03 - - 189.03 Borrowings - 155.51 735.53 891.04 1,243.58 13.33 7.77 1,264.68 Lease liabilities - 79.10 560.41 639.51 - 59.80 521.82 581.62 Trade payables - 1,380.48 - 1,380.48 - 737.52 - 737.52 Other financial liabilities - 1,016.99 - 1,016.99 - 703.52 - 703.52 63.55 2,632.08 1,295.94 3,991.57 1,432.61 1,514.17 529.59 3,476.37 # Represents loan amount outstanding to the bankers by the entities, against which financial guarantees were extended by the Company as at 31 March 2024 and 31 March 2023. C. Market risk Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in the market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables and all short-term and long-term borrowings. Market risk comprises three types of risk: interest rate risk, currency risk and other price risks such as equity price risk. i. Interest risk: Interest rate risk is the risk that the fair value or future cash flows of a financial instrument shall fluctuate because of changes in the market interest rates. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s short-term obligations with floating interest rates. The impact on account of change in interest rate on the Company’s long-term obligations is not considered as significant. ii. Foreign currency risk: Foreign currency risk is the risk that the fair value or future cash flows of an exposure shall fluctuate because of changes in foreign exchange rates. The Company’s exposure to the risk of changes in foreign exchange rates relates primarily to the Company’s operating and investing activities (when revenue or expense including capital expenditure is denominated in a foreign currency). The exposure of foreign currency risk to the entity is low as it enters very limited transactions in foreign currencies and accordingly any impact on account of change in the exchange rate is not considered as significant. 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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