Amal Ltd 2018-19

Amal Ltd | Annual Report 2018-2019 Notes to the Financial Statements Note 33: Financial risk management The business activities of the Company are exposed to a variety of financial risks, namely liquidity risk, market risk and credit risk. Responsibility for the establishment and oversight of the risk management framework lies with the senior management of the Company. The Company has constituted a Risk Management Committee, which is responsible for developing and monitoring the risk management policies of the Company. The key risks and mitigating actions are also placed before the Audit Committee of the Company. The risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. risk management policies and systems are reviewed regularly to reflect changes in market conditions and the activities of the Company. The Risk Management Committee of the Company is supported by the Finance team and experts who provides assurance that the financial risk activities of the Company are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with the policies and risk objectives of the Company. The activities are designed to protect the financial results and position from financial risks, maintain market risks within acceptable parameters, while optimising returns and protect the financial investments, while maximising returns. This note explains the risks which the Company is exposed to and how the Company manages the risk in the Financial Statements. Risk Exposure arising from Measurement Management Credit risk Cash and cash equivalents, trade receivables, financial assets measured at amortised cost Aging analysis and credit rating Diversification of bank deposits, credit limits and letters of credit Liquidity risk Borrowings and other liabilities Rolling cash flow forecasts Availability of committed credit lines and borrowing facilities A) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty fails to meet its contractual obligations. Credit risk arises from cash and cash equivalents, financial assets measured at amortised cost or fair value through profit and loss and deposits with banks and financial institutions, as well as credit exposures to trade | non-trade customers including outstanding receivables. i) Credit risk management Credit risk is managed through the policy surrounding Credit Risk Management. ii) Provision for expected credit losses The Company provides for expected credit loss based on the following: Trade receivables Trade receivables consist of few customers, majorly of amount receivable fromAtul Ltd, the Holding Company, for which ongoing credit evaluation is performed on the finanical condition of the account receivables. B) Liquidity risk Ultimate responsibility for liquidity risk management rests with the Board of Directors, who has approved an appropriate liquidity risk management framework for short, medium and long term funding and liquidity management requirements of the company. The Management monitors rolling forecasts of the liquidity position of the Company and cash and cash equivalents on the basis of expected cash flows and manages liquidity risk by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.