annual-report-FY2020

348 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS Trade advances Rupees crores 2020 2019 Loss allowance provision......................................................................................................................... 82.19 65.64 Impairment loss on financial services receivable for the year ended 31 st March, 2020 recognised in profit or loss of Rs. 1,721.94 crores (2019: Rs. 66.20 crores) includes bad debt written off of Rs. 289.60 crores (2019: Rs. 1,170.79 crores), changes in provision for expected credit loss of Rs. 1,433.99 crores (2019: (1,107.38) crores) and changes in provision for loan commitments of Rs. (1.65) crores (2019: 2.79 crores). ‘12 months ECL’ and ‘lifetime ECL not credit impaired’ are collectively assessed. ‘Lifetime ECL credit impaired’ are individually assessed. Loan which are written off continue to be subject of enforcement activity. Significant changes in the gross carrying value that contributed to change in loss allowance The financial services business mostly provides loans to retail individual customers in Rural and Semi urban area which are of small ticket size. Change in any single customer repayment will not impact significantly to Financial Services business provisioning. All customers are being monitored based on past due status of outstanding loan and corrective actions are taken accordingly to limit the financial services businesses risk. Concentration of Credit Risk Financial services business’s loan portfolio is predominantly to finance retail automobile and allied equipment loans, housing loans and other business loans. The financial services business manages concentration of risk primarily by geographical region in India. The following table shows the geographical concentrations of financial loans as at year end: Rupees crores 2020 2019 Carrying Value ......................................................................................................................................... 76,514.71 71,155.99 Concentration by Geographical region in India: North ........................................................................................................................................................ 20,051.06 18,126.29 East ........................................................................................................................................................... 17,437.44 15,612.87 West ......................................................................................................................................................... 22,372.69 22,236.29 South ........................................................................................................................................................ 16,653.52 15,180.54 Total Loans as at reporting period ........................................................................................................ 76,514.71 71,155.99 Maximum Exposure to credit Risk The maximum exposure to credit risk of loans is their carrying amount. The maximum exposure is before considering the effect of mitigation through collateral. Narrative Description of Collateral The amount of collateral obtained, if deemed necessary by the financial services business upon extension of credit, is based on management’s credit evaluation of the counterparty. Collateral primarily include vehicles and residential units purchased by retail loan customers. Quantitative Information of Collateral - Credit Impaired assets (Collateral Coverage - Value of collateral available to mitigate the credit exposure) Rupees crores Loan To Value (LTV) Range Gross Value of loans in stage 3 2020 2019 Upto 50% coverage......................................................................................................................... 643.83 463.52 51 - 70% coverage........................................................................................................................... 730.07 422.05 71 - 100% coverage......................................................................................................................... 685.43 704.79 Above 100% coverage..................................................................................................................... 4,891.67 3,469.47 6,951.00 5,059.83 33. Financial Instruments (contd.): (c) Credit risk related to financial services business (contd.)