Consolidated STRATEGIC REVIEW STATUTORY REPORT FINANCIAL STATEMENTS 283 HERITAGE FOODS LTD | 32ND ANNUAL REPORT 2023-24 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 Group 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 ₹2,589.43 and ₹684.21 as of 31 March 2024 and 31 March 2023 respectively, representing carrying amount of all financial assets with the Group. Financial assets that are neither past due nor impaired None of the Group’s cash equivalents, including fixed deposits, were either past due or impaired as at 31 March 2024 and 31 March 2023. The Group 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. 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: 31 March 2024 31 March 2023 0-30 days 263.71 202.95 31-60 days 23.01 59.58 61-90 days 0.35 9.89 Greater than 90 days - 7.64 287.07 280.06 Ind AS requires expected credit losses to be measured through a loss allowance. The Group 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 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 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 Group 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 Group. The Group 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. 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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