MAHINDRA & MAHINDRA LTD. | Integrated Annual Report 2021-22

341 MAHINDRA & MAHINDRA LTD. Integrated Annual Report 2021-22 (b) 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. (i) 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 2022 2021 Maximum exposure.................................................................................................................................. 564.23 1,030.61 Amount recognised as liability .............................................................................................................. 20.50 368.67 (ii) 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. Reconciliation of loss allowance for Trade Receivables: Other than related to hospitality segment Rupees crores Particulars 2022 2021 Balance as at beginning of the year ...................................................................................................... 405.43 361.74 Additions during the year....................................................................................................................... 74.32 149.06 Amounts written off during the year. ................................................................................................... (30.46) (33.51) Impairment losses reversed/written back............................................................................................... (40.73) (57.32) Foreign exchange translation difference............................................................................................... (4.01) (1.22) On account of deconsolidation / disposal of subsidiaries...................................................................... (5.68) (13.32) Balance as at end of the year ................................................................................................................. 398.87 405.43 Related to hospitality segment Rupees crores Particulars 2022 2021 Balance as at beginning of the year ...................................................................................................... 9.01 10.47 Additions during the year....................................................................................................................... 1.57 — Amounts written off during the year. ................................................................................................... — (1.46) Balance as at end of the year ................................................................................................................. 10.58 9.01 In respect of other financial assets, the maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of financial assets. (iii) Credit risk related to financial services business Financial services business has a comprehensive framework for monitoring credit quality of its Retail and other loans based on days past due monitoring. Repayment by individual customers and portfolio is tracked regularly and required steps for recovery is taken through follow ups and legal recourse. The following tables set out information about credit quality of loan assets measured at amortised cost: Retail Loans Rupees crores Particulars 2022 2021 Gross carrying value of Retail and SME loan assets Neither Past due nor impaired. .............................................................................................................. 49,172.63 46,930.44 Past due but not impaired 30 days past due.............................................................................................................................. 4,727.01 7,212.17 31-90 days past due......................................................................................................................... 11,243.51 10,175.33 Impaired (more than 90 days)................................................................................................................. 5,788.62 6,725.02 Total Gross carrying value as at reporting date .................................................................................. 70,931.77 71,042.96 36. Financial Instruments (contd.)