Page 163 - Kolte Patil AR 2019-20

Notes forming part of the standalone financial statements

Interest rate risk:
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rates. The Company is not exposed to the risk of changes in market interest rates as the Company does not have any long-term debt
obligations with floating interest rates.

Other price risk:
The Company is not exposed to equity price risks arising from equity investments. Equity investments are held for strategic rather than
trading purposes. The Company does not actively trade these investments.

IV) Interest risk management
The Company’s interest rate exposure is mainly related to debt obligations. The Company obtains debt to manage the liquidity and fund
requirements for its day to day operations. The rate of interest is fixed and thus there is no risk of interest rates fluctuating.
V) Credit risk management

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations.
Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks.
Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been
granted after obtaining necessary approvals for credit.
Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, unbilled revenue, investments,
derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the
Company result in material concentration of credit risk.

VI) Liquidity risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain
sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining
adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and liabilities.
The table below provides details regarding the contractual maturities of financial liabilities, including estimated interest payments as at March
31, 2020:
(H in Lakhs)
Carrying Due after one Total contractual
Financial liabilities Due in one Year
amount Year cash flows
(a) Trade payables
-March 31, 2020 17,082 16,407 675 17,082
-March 31, 2019 16,505 15,477 1,028 16,505
(b) Borrowings and interest thereon
-March 31, 2020 38,192 17,373 20,819 38,192
-March 31, 2019 46,572 23,131 23,441 46,572
(c) Other financial liabilities
-March 31, 2020 11,221 11,154 67 11,221
-March 31, 2019 2,205 2,105 100 2,205
Total
-March 31, 2020 66,495 44,934 21,561 66,495
-March 31, 2019 65,282 40,713 24,569 65,282

Annual Report 2019-20 | 161