Company Overview Financial Statements Notice Statutory Reports 69 Rudolf Atul Chemicals Ltd | Annual Report 2019-20 ii) Fair value of financial assets and liabilities measured at amortised cost (` lakhs) Particulars As at March 31, 2020 As at March 31, 2019 Carrying amount | Fair value Carrying amount | Fair value Financial liabilities Other financial liabilities 120.24 128.20 Total financial liabilities 120.24 128.20 The carrying amounts of trade receivables, short-term loan, trade payables, interest accrued but not due, borrowings, creditors for capital goods, security deposits, other short-term financial liabilities and cash and cash equivalents including bank balances other than cash and cash equivalents are considered to be the same as their fair values due to the current and short-term nature of such balances. The fair values of non-current borrowings are based on discounted cash flows using a current borrowing rate. They are classified as level 3 fair values in the fair value hierarchy due to the use of unobservable inputs, including own credit risk. Note 26.7 Financial Risk Management Risk management is an integral part of the business practices of the Company. The framework of risk management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. The Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following: i) Risk identification and definition – Focused on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors. ii) Risk classification – Focused on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes generating the root causes and clear understanding of risk interrelationships. iii) Risk assessment and prioritisation – Focused on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and existing mitigation controls. iv) Risk mitigation – Focused on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones. v) Risk reporting and monitoring – Focused on providing to the Board and the Audit Committee periodic information on risk profile evolution and mitigation plans. This note explains the sources of risk which the entity is exposed to and how the entity manages the risk. (a) Credit risk The Company is exposed to credit risk , which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Credit risk arises from cash and cash equivalents, investments carried at amortised cost and deposits with banks and inter corporate deposits given, as well as credit exposures to trade I non-trade customers including outstanding receivables.
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