STANDALONE ACCOUNTS 343 (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 Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure are continuously monitored. (i) Financial Guarantees In addition, the Company is exposed to credit risk in relation to financial guarantees given to banks. The Company’s maximum exposure in this respect is the maximum amount, the Company would have to pay, if the guarantee is called on. The amount recognised in Balance Sheet as other financial liabilities and maximum exposure details are as given below: Rupees crores Particulars 2024 2023 Maximum exposure................................................................................................................................................................................................... 828.51 697.33 Amount recognised as liability ........................................................................................................................................................................ 11.22 15.86 (ii) Trade Receivables The Company applies the simplified approach to provide for expected credit losses prescribed by Ind AS 109, which permits the use of the lifetime expected loss provision for all trade receivables. The Company has computed expected credit losses based on a provision matrix which uses historical credit loss experience of the Company. The Company has taken dealer deposits, bank guarantees etc. which are considered as collateral and these are considered in determination of expected credit losses, where applicable. Amounts pertaining to these collaterals are as given below: Rupees crores Particulars 2024 2023 Dealer Deposits............................................................................................................................................................................................................. 2.23 15.43 Bank Guarantees.......................................................................................................................................................................................................... 839.49 765.44 Others (including Letters of Credit)............................................................................................................................................................... 222.49 74.23 Reconciliation of loss allowance for Trade Receivables: Rupees crores Particulars 2024 2023 Balance as at the beginning of the year.............................................................................................................................................. 226.60 239.15 Additions during the year....................................................................................................................................................................................... 65.10 52.62 Amounts written off during the year............................................................................................................................................................. (9.17) (46.49) Impairment losses reversed / written back............................................................................................................................................... (27.31) (18.68) Balance as at end of the year....................................................................................................................................................................... 255.22 226.60 The Company’s maximum exposure to credit risk in respect of financial guarantee contracts are disclosed in Note 41(b)(i). 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. 41. Financial instruments (contd.)
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