193 Corporate Overview Performance Overview Financial Statements Governance Overview Statutory Reports This note explains the risks which the Group is exposed to and how the Group manages the risks in the Consolidated 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 investments in mutual fund and credit limits Liquidity risk Borrowings and other liabilities Rolling cash flow forecasts Availability of committed credit lines and borrowing facilities Market risk Investments in mutual funds Analysis of returns Portfolio management in accordance with risk management policy a) Credit risk Credit risk is the risk of financial loss to the Group, 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 Group provides for expected credit loss based on the following: Trade receivables Trade receivables consist of few customers, for which ongoing credit evaluation is performed on the financial condition of the account receivables. Historical experience of collecting receivables of the Group is supported by low level of past default and hence the credit risk is perceived to be low. Of the trade receivables balance at the end of the year, ` 383.06 lakh (March 31, 2024: ` 268.05 lakh) is due from related parties and ` 152.10 lakh (March 31, 2024: ` 38.52 lakh) is due from Lupin Ltd, one of the Group’s major customer. Apart from this, the Company does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Company defines counterparties as having similar characteristics if they are related entities. 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 Group. The Management monitors rolling forecasts of the liquidity position of the Group 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. Note 28.7 Financial risk management (continued)
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