180 Atul Ltd | Annual Report 2022-23 Atul Ltd | Annual Report 2022-23 Atul Ltd Atul House G I Patel Marg Ahmedabad 380 014, Gujarat India Atul Ltd | Annual Report 2022-23 Reconnect | Reimagine | Regrow Corporate Overview Statutory Reports Financial Statements Potential impact of risk Management policy Sensitivity to risk ii) Foreign exchange risk The Company has international operations and is exposed to foreign exchange risk arising fromforeign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised financial assets and liabilities denominated in a currency that is not the functional currency (`) of the Company. The risk also includes highly probable foreign currency cash flows. The objective of the cash flow hedges is to minimise the volatility of the ` cash flows of highly probable forecast transactions. The Company has exposure arising out of export, import and other transactions other than functional risks. It hedges its foreign exchange risk using foreign exchange forward contracts and currency options after considering the natural hedge. The same is as per the guidelines laid down in its Risk Management Policy. As an estimation of the approximate impact of the foreign exchange rate risk, with respect to the Standalone Financial Statements, the Company has calculated the impact as follows: For derivative and non-derivative financial instruments, a 2% increase in the spot price as on the reporting date may have led to an additional ` 7.97 cr gain in other comprehensive income (2021-22: gain of ` 9.60 cr). A 2% decrease may have led to an additional ` 6.95 cr loss in other comprehensive income (2021-22: loss of ` 6.37 cr). Foreign currency risk exposure The exposure to foreign currency risk of the Company at the end of the reporting period expressed is as follows: Particulars As at March 31, 2023 US$ mn ` cr € mn ` cr £ mn ` cr Financial assets Cash and cash equivalents (EEFC account ) - - - - - - Trade receivables 59.00 484.82 2.39 21.39 0.23 2.31 Less: Hedged through derivatives1: Currency range options 15.10 124.08 - - - - Net exposure to foreign currency risk (assets) 43.90 360.74 2.39 21.39 0.23 2.31 Financial liabilities Trade payables 11.93 98.00 0.06 0.54 (0.00) (0.00) Net exposure to foreign currency risk (liabilities) 11.93 98.00 0.06 0.54 (0.00) (0.00) Particulars As at March 31, 2022 US$ mn ` cr € mn ` cr £ mn ` cr Financial assets Cash and cash equivalents (EEFC account ) 2.06 15.60 - - - - Trade receivables 75.32 570.77 3.40 28.59 0.23 2.30 Less: Hedged through derivatives1: Currency range options 29.25 221.66 - - - - Net exposure to foreign currency risk (assets) 48.13 364.71 3.40 28.59 0.23 2.30 Financial liabilities Trade payables 14.75 111.78 0.07 0.60 - 0.04 Net exposure to foreign currency risk (liabilities) 14.75 111.78 0.07 0.60 - 0.04 1Includes hedges for highly probable transactions up to next 12 months Note 29.8 Financial risk management (continued)
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