annual-report-FY2021

341 MAHINDRA & MAHINDRA LTD. INTEGRATED ANNUAL REPORT 2020-21 2. Credit Risk Management Credit Risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group usually deals with creditworthy counterparties and obtain sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The exposure is continuously monitored. (a) Financial Guarantees In addition, the Group is exposed to credit risk in relation to financial guarantees given to banks. The Group’s maximum exposure in this respect is the maximum amount the Group could have to pay if the guarantee is called on. The accounting of financial guarantees is as explained in Note 2(k). The amount recognised in Consolidated Balance Sheet as liabilities is as below. Rupees crores Particulars 2021 2020 Maximum exposure................................................................................................................................ 1,030.61 552.95 Amount recognised as liability ............................................................................................................ 368.67 29.77 (b) Trade Receivables The Group applies the simplified approach to providing for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables. The Group has computed expected credit losses based on a provision matrix which uses historical credit loss experience of the Group. Forward-looking information (including macroeconomic information) has been incorporated into the determination of expected credit losses. The loss allowance for trade receivables using expected credit losses for different ageing periods are as follows: Rupees crores Other than related to hospitality segment Not due Less than 6 months past due More than 6 months past due Total As at 31 st March, 2021 Gross carrying amount.................................................................. 2,256.45 2,485.13 775.35 5,516.93 Loss allowance provision. ............................................................. — (40.66) (364.77) (405.43) Net.................................................................................................. 2,256.45 2,444.47 410.58 5,111.50 As at 31 st March, 2020 Gross carrying amount.................................................................. 1,931.44 3,383.96 787.28 6,102.68 Loss allowance provision. ............................................................. — (22.87) (338.87) (361.74) Net.................................................................................................. 1,931.44 3,361.09 448.41 5,740.94 2021 2020 Related to hospitality segment Gross carrying amount............................................................................................................................ 1,271.43 1,754.00 Loss allowance provision ....................................................................................................................... (9.01) (10.47) Net............................................................................................................................................................ 1,262.42 1,743.53 Reconciliation of loss allowance for Trade Receivables: Other than related to hospitality segment Rupees crores Particulars 2021 2020 Balance as at beginning of the year ...................................................................................................... 361.74 248.68 Additions during the year....................................................................................................................... 149.06 191.90 Amounts written off during the year. ................................................................................................... (33.51) (45.40) Impairment losses reversed/written back............................................................................................... (57.32) (17.13) Foreign exchange translation difference............................................................................................... (1.22) 3.23 On account of deconsolidation / disposal of subsidiaries...................................................................... (13.32) (19.54) Balance as at end of the year ................................................................................................................. 405.43 361.74 33. Financial Instruments (contd.)