7. Financial Risk Management
The Company is primarily exposed to fluctuation in Market risk, Credit risk and Liquidity risk. The Company has a risk management policy which addresses the risk associated with the financial asset and liabilities.
7.1 Market Risk
Market risk is the risk of fluctuation in future cash flow of financial instruments due to change in market prices arising on account of currency risk and Interest rate risk.
7.1.1 Foreign Currency Exchange Rate Risk
The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss, other comprehensive income and equity.
The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. Currently the Company follows a policy of hedging 100% of its trade payables. On an overall basis, the Company has hedged 57.05% of its foreign exchange exposure thus minimising the currency risk.
7.1.2 Interest Rate Risk
Company is exposed to short term and long term borrowings. Long term borrowing's interest rates are fixed and not subject to any interest rate risk. Short term borrowings being working capital loans are subject to interest rate fluctuation based on the performance and external credit rating of the Company.
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. It principally arises from the Company's Trade Receivables.
Trade Receivables:
The Company has outstanding trade receivables amounting to ' 9,276.74 lakhs and ' 7,436.05 lakhs as of March 31, 2022 and March 31, 2021, respectively. Trade receivables are unsecured in nature, except to the extent of security deposits received from the distributors. Company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. Default on account of Trade Receivables happens when the counterparty fails to make contractual payment when they fall due.
Credit risk is managed by the Company by continuous monitoring of overdue receivables and also by making adequate provision towards expected credit loss in the books of account as per the simplified approach stated in the accounting policy. With respect to retention money no credit risk is estimated as per terms of the arrangement and accordingly management has not provided for credit loss for the retention money.
7.3 Liquidity Risk
Liquidity needs of the Company are monitored on the basis of monthly and yearly projections. The company's principal sources of liquidity are cash and cash equivalents, cash generated from the operations and bank borrowings.
The Company manages the liquidity needs by continuously monitoring cash inflows and by maintaining adequate cash and cash equivalents. Net cash requirements are compared to available cash in order to determine any shortfalls.
Short term liquidity requirements consist mainly of sundry creditors, expense payable, employee dues and repayment of loans arising during the normal course of business as of each reporting date. The Company meets its short term liquidity requirements primarily through efficient working capital management and by accessing additional and alternative credit facilities available in the financial market. The Company has acceptances in line with supplier's financing arrangements which might invoke liquidity risk as a result of liabilities being concentrated with few financial institutions instead of a diverse group of suppliers. The Company has established an appropriate liquidity risk management framework for the management of the Company's short, medium and long-term funding and liquidity management requirements.
The Company assesses long term liquidity requirements on a periodical basis and manage them through internal accruals and bank borrowings.
8. Capital Management
The Company's capital comprises equity share capital, retained earnings and other equity attributable to equity holders. The primary objective of Company's capital management is to maximize shareholders value. The Company manages its capital and makes adjustment to it in light of the changes in economic and market conditions. The company does so by adjusting dividend paid to shareholders. The total capital as on March 31, 2022 is ' 23,500.61 Lakhs. (Previous Year: ' 22,399.48 Lakhs).
d) The Company has committed to leases of Plant & Machinery which will commence in financial year 2022-23 having monthly lease payments of ' 10.44 Lakhs and security deposit & advance rentals made for such leases is ' 102.10 Lakhs.
e) The lease agreements do not impose any restrictions or covenants other than the security interests in the leased assets that are held by the lessor
12. Disclosure in respect of Indian Accounting Standard (Ind AS)-19 "Employee Benefits"
12.1 General description of various defined employee's benefits schemes are as under:
a) Provident Fund:
The Company's Provident Fund (defined contribution fund) is managed by Regional Provident Fund Commissioner. The Company pays fixed contribution to provident fund at pre-determined rate.
b) Gratuity:
Gratuity is a defined benefit plan, in respect of past services provided by the employees is quantified based on the actuarial valuation.
The scheme is funded by the Company and the liability is recognized on the basis of contribution payable to the insurer. Disclosure of information as required under Ind AS-19 have been made in accordance with the actuarial valuation.
21. Code of Social Security, 2020
The date on which the Code of Social Security, 2020 ("the code") relating to employee benefits during the employment and post-employment benefit will come into effect is yet to be notified and the related rules are yet to be finalized. The company will evaluate the code and its rules, assess the impact, if any on account of the same once they become effective
22. Figures for the comparative period have been regrouped wherever necessary in conformity with current period classification.
23. The Financial statements were reviewed and recommended by the Audit Committee and has been approved by the Board of Directors at their meeting held on 11th May 2022.
|