Page 152 - Annual Report 2019-20

notes forming part of the financial statements notes forming part of the financial statements 151

47 Financial Instruments (E) Foreign currency risk management
The carrying amounts of the Company’s foreign currency denominated monetary assets and monetary liabilities at the end of
(A) Capital Management the reporting period are as follows: PIDILITE ANNUAL REPORT 2019-20
The Company manages its capital to ensure that entities in the Company will be able to continue as going concerns while Foreign Currency Exposure Foreign Currency Exposure
maximising the return to stakeholders through the optimum utilisation of the equity balance. The capital structure of the (in FC) ( in crores)
Company consists of only equity of the Company. The Company is not subject to any externally imposed capital requirements. 31 March 31 March 31 March 31 March
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2020 2019 2020 2019
(B) Categories of financial instruments
( in crores) Amounts recoverable/ (advance) in foreign currency on account of the following:
EuR 7,99,474.10 14,88,215.92 6.65 11.56
As at As at
31 March 31 March uSD 1,18,56,074.29 1,49,08,116.35 89.42 103.13
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2020 2019
AuD 38,745.00 - 0.18 -
Financial Assets Amounts (payable)/ advance in foreign currency on account of the following:
Measured at fair value through profit or loss (FVTPL) AED 2,36,491.04 41,460.00 0.49 0.08
Investments in Mutual funds, Preference Shares, Debentures and Bonds 1,025.81 1,515.91 AuD 1,820.00 1,820.00 0.01 0.01
Derivative assets towards Foreign Exchange Forward Contracts 1.70 0.03 BDT* 50,000.00 50,000.00 0.00 0.00
Derivative Asset towards call option to buy subsidiary shares 0.24 7.61 ChF (5,212.31) 27,261.36 (0.04) 0.19
Measured at amortised cost EuR (2,86,454.95) 3,70,602.70 (2.38) 2.88
Trade Receivables 806.63 774.98 GBP (1,65,553.39) (4,75,406.00) (1.54) (4.30)
JPy (75,78,800.00) (60,58,500.00) (0.53) (0.38)
Cash and Cash Equivalents 564.17 60.24
SGD - (89,517.00) - (0.46)
Other Bank balances 4.67 56.94
uSD (1,42,44,907.61) (1,27,67,358.70) (107.44) (88.32)
Loans 29.42 18.32
ZAR 64,255.58 83,679.60 0.03 0.04
Other Financial Assets 19.41 20.12
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* BDT exposure is 44,400 as at 31 March 2020 ( 41,110 as at 31 March 2019).
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Total Financial Assets 2,452.05 2,454.15
(i) Foreign currency sensitivity analysis
Financial Liabilities
The Company is mainly exposed to the uSD, EuR and JPy. The following table demonstrates the sensitivity to a 2%
Measured at fair value through profit or loss (FVTPL) increase or decrease in the uSD, EuR and JPy against InR with all other variables held constant. The sensitivity analysis is
prepared on the net unhedged exposure of the Company as at the reporting date. 2% represents management assessment
Derivative liabilities towards Foreign Exchange Forward Contracts 0.42 0.96 of reasonably possible changes in foreign exchange rates.
Derivative liability towards put option to buy subsidiary shares 34.83 42.20 ( in crores)
Measured at amortised cost (including trade payables) USD impact
Trade Payables 494.81 449.15 For the For the
year ended year ended
Lease Liabilities 73.34 - 31 March 2020 31 March 2019
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Other Financial Liabilities 524.42 443.70 Impact on profit or loss for the year (a) (0.36) 0.30
Total Financial Liabilities 1,127.82 936.01
EUR impact
(C) Financial risk management objectives
For the For the
The Company’s Corporate Treasury function provides services to the business, co-ordinates access to domestic and year ended year ended
international financial markets, monitors and manages the financial risks relating to the operations of the Company through 31 March 2020 31 March 2019
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internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk, credit risk
and liquidity risk. The Company undertakes transactions denominated in foreign currencies; consequently, exposures to Impact on profit or loss for the year (b) 0.09 0.06
exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters utilising foreign
exchange forward contracts. Compliance with policies and exposure limits is a part of Internal Financial Controls. The
JPY impact
Company does not enter into or trade in financial instruments, including derivative financial instruments, for speculative 31 March 2020 31 March 2019
PIDILITE ANNUAL REPORT 2019-20 (D) Market risk Impact on profit or loss for the year (c) (0.01) (0.01)
purposes. The Corporate Treasury function reports quarterly to the Company’s risk management committee, an independent
For the
For the
body that monitors risks and policies implemented to mitigate risk exposures.
year ended
year ended
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The Company’s activities expose it primarily to the financial risk of changes in foreign currency exchange rates (see note E
below). The Company enters into foreign exchange forward contracts to manage its exposure to foreign currency risk of
net imports.
(a) This is mainly attributable to the exposure of outstanding uSD receivables and payables at the end of the
reporting period.
(b) This is mainly attributable to the exposure of outstanding EuR receivables and payables at the end of the
reporting period.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk because the exposure
at the end of the reporting period does not reflect the exposure during the year.
150 (c) This is mainly attributable to the exposure of outstanding JPy payables at the end of the reporting period.