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Financial instruments
 12 Months Ended
Mar. 31, 2020
Text block [abstract]  
Financial instruments
19. Financial instruments
Financial assets and liabilities (carrying value / fair value)
 
 
  
As at March 31,
 
 
  
2019
 
  
2020
 
Assets:
  
   
  
   
Cash and cash equivalents
  
₹
158,529
 
  
₹
144,499
 
Investments
  
   
  
   
Financial instruments at FVTPL
  
 
13,960
 
  
 
14,795
 
Financial instruments at FVTOCI
  
 
191,964
 
  
 
164,884
 
Financial instruments at Amortized cost
  
 
21,708
 
  
 
19,258
 
Other financial assets
  
   
  
   
Trade receivables
  
 
104,862
 
  
 
110,523
 
Unbilled receivables
  
 
22,880
 
  
 
25,209
 
Other assets
  
 
19,757
 
  
 
14,495
 
Derivative assets
  
 
5,104
 
  
 
3,025
 
 
  
 
 
 
  
 
 
 
 
  
₹
538,764
 
  
₹
496,688
 
 
  
 
 
 
  
 
 
 
Liabilities:
  
   
  
   
Trade payables and other payables
  
   
  
   
Trade payables and accrued expenses
  
₹
88,304
 
  
₹
78,129
 
Lease liabilities
  
 
—  
 
  
 
19,198
 
Other liabilities
  
 
644
 
  
 
1,050
 
Loans, borrowings and bank overdrafts
  
 
99,467
 
  
 
78,042
 
Derivative liabilities
  
 
1,310
 
  
 
7,369
 
 
  
 
 
 
  
 
 
 
 
  
₹
189,725
 
  
₹
183,788
 
 
  
 
 
 
  
 
 
 
Offsetting financial assets and liabilities
The following table contains information on other financial assets and trade payable and other liabilities subject to offsetting:
 
 
  
Financial assets
 
 
  
Gross amounts of
recognized other
financial assets
 
  
Gross amounts of

recognized

financial liabilities

set off in the

balance sheet
 
  
Net amounts of

recognized other

financial assets

presented in the

balance sheet
 
As at March 31, 2019
  
 
154,129
 
  
 
(6,630
) 
  
 
147,499
 
As at March 31, 2020
  
 
157,304
 
  
 
(7,077
) 
  
 
150,227
 
 
 
  
Financial liabilities
 
 
  
Gross amounts of

recognized trade

payables and other

payables
 
  
Gross amounts of

recognized

financial
liabilities

set off in the

balance sheet
 
  
Net amounts of

recognized trade

payables and other

payables presented

in the balance

sheet
 
As at March 31, 2019
  
 
95,578
 
  
 
(6,630
) 
  
 
88,948
 
As at March 31, 2020
  
 
86,256
 
  
 
(7,077
) 
  
 
79,179
 
 
For the financial assets and liabilities subject to offsetting or similar arrangements, each agreement between the Company and the
counterparty
allows for net settlement of the relevant financial assets and liabilities when both elect to settle on a net basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis and hence are not offset.
Fair value
Financial assets and liabilities include cash and cash equivalents, trade receivables, unbilled receivables, finance lease receivables, employee and other advances, eligible current and
non-current
assets, loans, borrowings and bank overdrafts, trade payable and accrued expenses, and eligible current liabilities and
non-current
liabilities.
The fair value of cash and cash equivalents, trade receivables, unbilled receivables, loans, borrowings and bank overdrafts, trade payables and accrued expenses, other current financial assets and liabilities approximate their carrying amount largely due to the short-term nature of these instruments. The Company’s long-term debt has been contracted at market rates of interest. Accordingly, the carrying value of such long-term debt approximates fair value. Further, finance lease receivables are periodically evaluated based on individual credit worthiness of customers. Based on this evaluation, the Company records allowance for estimated losses on these receivables. As at March 31, 2020 and 2019, the carrying value of such receivables, net of allowances approximates the fair value.
Investments in liquid and short-term mutual funds, which are classified as FVTPL are measured using net asset values at the reporting date multiplied by the quantity held. Fair value of investments in commercial papers, certificate of deposits and bonds classified as FVTOCI is determined based on the indicative quotes of price and yields prevailing in the market at the reporting date. Fair value of investments in equity instruments classified as FVTOCI is determined using market and income approaches.
The fair value of derivative financial instruments is determined based on observable market inputs including currency spot and forward rates, yield curves, currency volatility etc.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
Level
 1
– Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level
 2
– Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level
 3
– Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).
 
The following table presents fair value of hierarchy of assets and liabilities measured at fair value on a recurring basis:
 
 
  
As at March 31, 2019
 
  
As at March 31, 2020
 
Particular
  
Fair value measurements at reporting

date
 
  
Fair value measurements at reporting

date
 
 
  
Total
 
 
Level 1
 
  
Level 2
 
 
Level 3
 
  
Total
 
 
Level 1
 
  
Level 2
 
 
Level 3
 
Assets
  
   
 
   
  
   
 
   
  
   
 
   
  
   
 
   
Derivative instruments:
  
   
 
   
  
   
 
   
  
   
 
   
  
   
 
   
Cash flow hedges
  
 
3,149
 
 
 
—  
 
  
 
3,149
 
 
 
—  
 
  
 
1,382
 
 
 
—  
 
  
 
1,382
 
 
 
—  
 
Others
  
 
1,955
 
 
 
—  
 
  
 
1,955
 
 
 
—  
 
  
 
1,643
 
 
 
—  
 
  
 
1,643
 
 
 
—  
 
Investments:
  
   
 
   
  
   
 
   
  
   
 
   
  
   
 
   
Investment in liquid and short-term mutual funds
  
 
13,960
 
 
 
13,960
 
  
 
—  
 
 
 
—  
 
  
 
14,795
 
 
 
14,795
 
  
 
—  
 
 
 
—  
 
Investment in equity instruments
  
 
6,916
 
 
 
—  
 
  
 
248
 
 
 
6,668
 
  
 
9,297
 
 
 
—  
 
  
 
119
 
 
 
9,178
 
Commercial paper, Certificate of deposits and bonds
  
 
185,048
 
 
 
6,865
 
  
 
178,183
 
 
 
—  
 
  
 
155,587
 
 
 
12,983
 
  
 
142,604
 
 
 
—  
 
Liabilities
  
   
 
   
  
   
 
   
  
   
 
   
  
   
 
   
Derivative instruments:
  
   
 
   
  
   
 
   
  
   
 
   
  
   
 
   
Cash flow hedges
  
 
(130
) 
 
 
—  
 
  
 
(130
) 
 
 
—  
 
  
 
(4,057
) 
 
 
—  
 
  
 
(4,057
) 
 
 
—  
 
Others
  
 
(1,180
) 
 
 
—  
 
  
 
(1,180
) 
 
 
—  
 
  
 
(3,312
) 
 
 
—  
 
  
 
(3,312
) 
 
 
—  
 
The following methods and assumptions were used to estimate the fair value of the level 2 financial instruments included in the above table.
Derivative instruments (assets and liabilities):
The Company enters derivative financial instruments with various counterparties, primarily banks with investment grade credit ratings. Derivatives valued using valuation techniques with market observable inputs are mainly interest rate swaps, foreign exchange forward contracts and foreign exchange option contracts. The most frequently applied valuation techniques include forward pricing, swap models and Black Scholes models (for option valuation), using present value calculations. The models incorporate various inputs including the credit quality of counterparties, foreign exchange spot and forward rates, interest rate curves and forward rate curves of the underlying. As at March 31, 2020, the changes in counterparty credit risk had no material effect on the hedge effectiveness assessment for derivatives designated in hedge relationships and other financial instruments recognized at fair value.
Investment in commercial papers, certificate of deposits and bonds:
Fair value of these instruments is derived based on the indicative quotes of price and yields prevailing in the market as at reporting date.
The following methods and assumptions were used to estimate the fair value of the level 3 financial instruments included in the above table.
Investment in equity instruments:
Fair value of these investments is determined using market and income approaches.
Details of assets and liabilities considered under Level 3 classification
 
 
  
Investment in

equity

instruments
 
Balance as at April 1, 2018
  
₹
5,685
 
Additions
  
 
2,869
 
Transfers out of level 3
  
 
(647
) 
Disposal
  
 
(1,341
) 
Gain recognized in foreign currency translation reserve
  
 
203
 
Loss recognized in other comprehensive income
  
 
(101
) 
 
  
 
 
 
Balance as at March 31, 2019
  
₹
6,668
 
 
  
 
 
 
Balance as at April 1, 2019
  
₹
6,668
 
Additions
  
 
2,124
 
Transfers out of level 3
  
 
—  
 
Disposal
  
 
(1,327
) 
Gain recognized in foreign currency translation reserve
  
 
855
 
Gain recognized in other comprehensive income
  
 
858
 
 
  
 
 
 
Balance as at March 31, 2020
  
₹
9,178
 
 
Description of significant unobservable inputs to valuation:
 
As at March 31, 2019
  
 
  
 
  
 
 
 
 
 
 
 
 
Items
  
Valuation technique
  
Significant unobservable

input
  
Movement

by
 
 
Increase

(
₹
)
 
 
Decrease

(
₹
)
 
Unquoted equity investments
  
Discounted cash
flow model
  
Long term growth rate
Discount rate
  
 
0.5
0.5
% 
% 
 
 
201
(243
 
) 
 
 
(187
256
) 
 
 
  
 
  
 
  
   
 
   
 
   
 
As at March 31, 2020
  
 
  
 
  
 
 
 
 
 
 
 
 
Items
  
Valuation technique
  
Significant unobservable

input
  
Movement

by
 
 
Increase

(
₹
)
 
 
Decrease

(
₹
)
 
Unquoted equity investments
  
Discounted cash
flow model
  
Long term growth rate
Discount rate
  
 
0.5
0.5
% 
% 
 
 
298
(388
 
) 
 
 
(273
404
) 
 
 
  
 
  
 
  
   
 
   
 
   
As at March 31, 2019 and 2020, 0.5 percentage point increase/(decrease) in the unobservable inputs used in fair valuation of other Level 3 assets does not have a significant impact in its value.
Derivative assets and liabilities:
The Company is exposed to foreign currency fluctuations on foreign currency assets / liabilities, forecasted cash flows denominated in foreign currency and net investment in foreign operations. The Company follows established risk management policies, including the use of derivatives to hedge foreign currency assets / liabilities, foreign currency forecasted cash flows and net investment in foreign operations. The counter parties in these derivative instruments are primarily banks and the Company considers the risks of
non-performance
by the counterparty as
non-material.
The following table presents the aggregate contracted principal amounts of the Company’s derivative contracts outstanding:
 
 
  
 
 
  
 
 
  
 
 
  
(in million)
 
 
  
As at March 31,
 
 
  
2019
 
  
2020
 
 
  
Notional
 
  
Fair value
 
  
Notional
 
  
Fair value
 
Designated derivative instruments
  
   
  
   
  
   
  
   
Sell: Forward contracts
  
USD
333
 
  
₹
1,410
 
  
USD
 1,011
 
  
₹
(2,902
) 
 
  
€
—  
 
  
 
—  
 
  
€
 121
 
  
₹
231
 
 
  
£
—  
 
  
 
—  
 
  
£
52
 
  
₹
240
 
 
  
AUD
97
 
  
₹
15
 
  
AUD
144
 
  
₹
741
 
Range forward option contracts
  
USD
 1,067
 
  
₹
1,149
 
  
USD
474
 
  
₹
(1,057
) 
 
  
£
191
 
  
₹
68
 
  
£
98
 
  
₹
(13
) 
 
  
€
 153
 
  
₹
349
 
  
€
 39
 
  
₹
85
 
 
  
AUD
56
 
  
₹
39
 
  
AUD
—  
 
  
 
—  
 
Interest rate swaps
  
USD
75
 
  
₹
(11
) 
  
USD
—  
 
  
 
—  
 
     
Non-designated
derivative instruments
  
   
  
   
  
   
  
   
Sell: Forward contracts *
  
USD
 1,182
 
  
₹
1,359
 
  
USD
 1,314
 
  
₹
(3,116
) 
 
  
€
 32
 
  
₹
55
 
  
€
 59
 
  
₹
34
 
 
  
£
1
 
  
₹
(1
) 
  
£
81
 
  
₹
112
 
 
  
AUD
82
 
  
₹
28
 
  
AUD
56
 
  
₹
115
 
 
  
SGD
11
 
  
₹
1
 
  
SGD
7
 
  
₹
8
 
 
  
ZAR
56
 
  
₹
14
 
  
ZAR
17
 
  
₹
1
 
 
  
CAD
56
 
  
₹
40
 
  
CAD
51
 
  
₹
153
 
 
  
SAR
 123
 
  
₹
(1
) 
  
SAR
60
 
  
₹
(1
) 
 
  
AED
9
 
  
 
^
 
  
AED
—  
 
  
 
—  
 
 
  
PLN
38
 
  
₹
15
 
  
PLN
34
 
  
₹
13
 
 
  
CHF
10
 
  
 
^
 
  
CHF
7
 
  
₹
4
 
 
  
QAR
3
 
  
₹
(1
) 
  
QAR
19
 
  
₹
(8
) 
 
  
TRY
28
 
  
₹
12
 
  
TRY
30
 
  
₹
31
 
 
  
NOK
29
 
  
₹
4
 
  
NOK
19
 
  
₹
16
 
 
  
OMR
1
 
  
₹
(1
) 
  
OMR
2
 
  
₹
1
 
 
  
SEK
35
 
  
₹
5
 
  
SEK
13
 
  
₹
4
 
 
  
MYR
—  
 
  
 
—  
 
  
MYR
20
 
  
₹
1
 
 
  
JPY
—  
 
  
 
—  
 
  
JPY
325
 
  
 
^
 
Range forward option contracts
  
USD
150
 
  
₹
161
 
  
USD
—  
 
  
 
—  
 
 
  
€
 31
 
  
₹
12
 
  
€
—  
 
  
 
—  
 
 
  
£
71
 
  
₹
57
 
  
£
—  
 
  
 
—  
 
Buy: Forward contracts
  
USD
730
 
  
₹
(971
) 
  
USD
480
 
  
₹
972
 
 
  
JPY
154
 
  
 
^
 
  
JPY
—  
 
  
 
—  
 
 
  
MXN
9
 
  
 
^
 
  
MXN
 11
 
  
₹
(9
) 
 
  
DKK
75
 
  
₹
(13
) 
  
DKK
9
 
  
 
^
 
 
  
   
  
 
 
 
  
   
  
 
 
 
 
  
   
  
₹
3,794
 
  
   
  
₹
(4,344
) 
 
  
   
  
 
 
 
  
   
  
 
 
 
 
*
USD 1,182 and USD 1,314 includes USD/PHP sell forward of USD 117 and USD 176 as at March 31, 2019 and 2020, respectively.
^
Value is less than
₹
1
 
 
The following table summarizes activity in the cash flow hedging reserve within equity related to all derivative instruments classified as cash flow hedges:
 
 
  
As at March 31,
 
 
  
2019
 
  
2020
 
Balance as at the beginning of the year
  
₹
(143
) 
  
₹
3,019
 
 
  
 
 
 
  
 
 
 
Deferred cancellation gain/ (loss), net
  
 
6
 
  
 
(201
) 
Changes in fair value of effective portion of derivatives
  
 
1,069
 
  
 
(2,312
) 
Net gain/(loss) reclassified to consolidated statement of income on occurrence of hedged transactions *
  
 
2,087
 
  
 
(3,382
) 
 
  
 
 
 
  
 
 
 
Gain/(loss) on cash flow hedging derivatives, net
  
₹
3,162
 
  
₹
(5,895
) 
 
  
 
 
 
  
 
 
 
Balance as at the end of the year
  
 
3,019
 
  
 
(2,876
) 
Deferred tax thereon
  
 
(604
) 
  
 
561
 
 
  
 
 
 
  
 
 
 
Balance as at the end of the year, net of deferred tax
  
₹
2,415
 
  
₹
(2,315
) 
 
  
 
 
 
  
 
 
 
 
*
Includes net gain/(loss) reclassified to revenue (March 31, 2019:
₹
2,585, March 31, 2020:
₹
(4,761)) and cost of revenues (March 31, 2019:
₹
(498), March 31, 2020:
₹
1,379).
The related hedge transactions for balance in cash flow hedging reserves as at March 31, 2020 are expected to occur and be reclassified to the consolidated statement of income over a period of three years.
As at March 31, 2019 and 2020 there were no significant gains or losses on derivative transactions or portions thereof that have become ineffective as hedges or associated with an underlying exposure that did not occur.
Sale of financial assets
From time to time, in the normal course of business, the Company transfers accounts receivables, unbilled receivables, net investment in finance lease receivables (financials assets) to banks. Under the terms of the arrangements, the Company surrenders control over the financial assets and transfer is without recourse. Accordingly, such transfers are recorded as sale of financial assets. Gains and losses on sale of financial assets without recourse are recorded at the time of sale based on the carrying value of the financial assets and fair value of servicing liability. The incremental impact of such transactions on our cash flow and liquidity for the year ended March 31, 2018, 2019 and 2020 is not material.
In certain cases, transfer of financial assets may be with recourse. Under arrangements with recourse, the Company is obligated to repurchase the uncollected financial assets, subject to limits specified in the agreement with the banks. These are reflected as part of loans and borrowings in the consolidated statement of financial position.
Financial risk management
Market Risk
Market risk is the risk of loss of future earnings, to fair values or to future cash flows that may result from a change in the price of a financial instrument. The value of a financial instrument may change as a result of changes in the interest rates, foreign currency exchange rates and other market changes that affect market risk sensitive instruments. Market risk is attributable to all market risk sensitive financial instruments including investments, foreign currency receivables, payables and loans and borrowings.
The Company’s exposure to market risk is a function of investment and borrowing activities and revenue generating activities in foreign currency. The objective of market risk management is to avoid excessive exposure of the Company’s earnings and equity to losses.
Risk Management Procedures
The Company manages market risk through a corporate treasury department, which evaluates and exercises independent control over the entire process of market risk management. The corporate treasury department recommends risk management objectives and policies, which are approved by senior management and Audit Committee. The activities of this department include management of cash resources, implementing hedging strategies for foreign currency exposures, borrowing strategies, and ensuring compliance with market risk limits and policies.
 
Foreign currency risk
The Company operates internationally, and a major portion of its business is transacted in several currencies. Consequently, the Company is exposed to foreign exchange risk through receiving payment for sales and services in the United States and elsewhere and making purchases from overseas suppliers in various foreign currencies. The exchange rate risk primarily arises from foreign exchange revenue, receivables, cash balances, forecasted cash flows, payables and foreign currency loans and borrowings. A significant portion of the Company’s revenue is in the U.S. Dollar, the United Kingdom Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar, while a large portion of costs are in Indian rupees. The exchange rate between the rupee and these currencies has fluctuated significantly in recent years and may continue to fluctuate in the future. Appreciation of the rupee against these currencies can adversely affect the Company’s results of operations.
The Company evaluates exchange rate exposure arising from these transactions and enters foreign currency derivative instruments to mitigate such exposure. The Company follows established risk management policies, including the use of derivatives like foreign exchange forward/option contracts to hedge forecasted cash flows denominated in foreign currency.
The Company has designated certain derivative instruments as cash flow hedges to mitigate the foreign exchange exposure of forecasted highly probable cash flows. The Company also designates foreign currency borrowings as hedge against respective net investments in foreign operations.
As at March 31, 2020, a
₹
1 increase in the spot exchange rate of the Indian rupee with the U.S. dollar would result in approximately
₹
1,972 (consolidated statement of income
₹
658 and other comprehensive income
₹
1,314) decrease in the fair value, and a
₹
1 decrease would result in approximately
₹
1,912 (consolidated statement of income
₹
658 and other comprehensive income
₹
1,254) increase in the fair value of foreign currency dollar denominated derivative instruments (forward and option contracts).
The below table presents foreign currency risk from
non-derivative
financial instruments as at March 31, 2019 and 2020:
 
 
  
As at March 31, 2019
 
 
  
US $
 
 
Euro
 
 
Pound
Sterling
 
 
Australian
Dollar
 
 
Canadian
Dollar
 
 
Other
currencies #
 
 
Total
 
Trade receivables
  
₹
39,896
 
 
₹
8,030
 
 
₹
5,212
 
 
₹
3,542
 
 
₹
1,528
 
 
₹
3,880
 
 
₹
62,088
 
Unbilled receivables
  
 
8,038
 
 
 
1,609
 
 
 
3,146
 
 
 
1,225
 
 
 
204
 
 
 
743
 
 
 
14,965
 
Contract assets
  
 
4,706
 
 
 
1,445
 
 
 
2,270
 
 
 
836
 
 
 
150
 
 
 
598
 
 
 
10,005
 
Cash and cash equivalents
  
 
21,997
 
 
 
2,884
 
 
 
1,573
 
 
 
1,003
 
 
 
1,928
 
 
 
2,204
 
 
 
31,589
 
Other assets
  
 
8,553
 
 
 
1,173
 
 
 
4,056
 
 
 
1,038
 
 
 
1,033
 
 
 
4,544
 
 
 
20,397
 
Loans, borrowings and bank overdrafts
  
 
(50,516
) 
 
 
(20
) 
 
 
(21
) 
 
 
(33
) 
 
 
—  
 
 
 
(21
) 
 
 
(50,611
) 
Trade payables, accrued expenses and other liabilities
  
 
(27,202
) 
 
 
(5,779
) 
 
 
(4,646
) 
 
 
(1,526
) 
 
 
(806
) 
 
 
(2,787
) 
 
 
(42,746
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets/ (liabilities)
  
₹
5,472
 
 
₹
9,342
 
 
₹
11,590
 
 
₹
6,085
 
 
₹
4,037
 
 
₹
9,161
 
 
₹
45,687
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
As at March 31, 2020
 
 
  
US $
 
 
Euro
 
 
Pound
Sterling
 
 
Australian
Dollar
 
 
Canadian
Dollar
 
 
Other
currencies #
 
 
Total
 
Trade receivables
  
₹
42,329
 
 
₹
8,860
 
 
₹
7,735
 
 
₹
3,044
 
 
₹
1,388
 
 
₹
4,522
 
 
₹
67,878
 
Unbilled receivables
  
 
11,127
 
 
 
1,030
 
 
 
2,221
 
 
 
784
 
 
 
291
 
 
 
1,126
 
 
 
16,579
 
Contract assets
  
 
5,517
 
 
 
1,559
 
 
 
2,850
 
 
 
654
 
 
 
146
 
 
 
790
 
 
 
11,516
 
Cash and cash equivalents
  
 
13,481
 
 
 
3,978
 
 
 
1,697
 
 
 
586
 
 
 
1,292
 
 
 
1,733
 
 
 
22,767
 
Other assets
  
 
49,835
 
 
 
4,314
 
 
 
3,283
 
 
 
413
 
 
 
1,447
 
 
 
1,805
 
 
 
61,097
 
Loans, borrowings and bank overdrafts
  
 
(36,578
) 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
—  
 
 
 
(36,578
) 
Lease Liabilities
  
 
(3,393
) 
 
 
(2,606
) 
 
 
(373
) 
 
 
(214
) 
 
 
(16
) 
 
 
(1,412
) 
 
 
(8,014
) 
Trade payables, accrued expenses and other liabilities
  
 
(27,457
) 
 
 
(3,419
) 
 
 
(3,718
) 
 
 
(1,228
) 
 
 
(605
) 
 
 
(3,087
) 
 
 
(39,514
) 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets/ (liabilities)
  
₹
54,861
 
 
₹
13,716
 
 
₹
13,695
 
 
₹
4,039
 
 
₹
3,943
 
 
₹
5,477
 
 
₹
95,731
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
#
Other currencies reflect currencies such as Swiss Franc, UAE Dirham, Saudi Riyal, Singapore Dollar, etc.
 
As at March 31, 2019 and 2020, respectiv
ely, every 1% increase/decrease in the respective foreign curren
cies compared to functional currency of the Company would impact results by approximately
₹
457 and
₹
957, respectively.
Interest rate risk
Interest rate risk primarily arises from floating rate borrowing, including various revolving and other lines of credit. The Company’s investments are primarily in short-term investments, which do not expose it to significant interest rate risk. From time to time, the Company manages its net exposure to interest rate risk relating to borrowings by entering into interest rate swap agreements, which allows it to exchange periodic payments based on a notional amount and agreed upon fixed and floating interest rates. Certain borrowings are also transacted at fixed interest rates. If interest rates were to increase by 100 bps as on March 31, 2020, additional net annual interest expense on floating rate borrowing would amount to approximately
₹
773.
 
Credit risk
Credit risk arises from the possibility that customers may not be able to settle their obligations as agreed. To manage this, the Company periodically assesses the financial reliability of customers, taking into account the financial condition, current economic trends, forward looking macroeconomic information, analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly. No single customer accounted for more than 10% of the accounts receivable as at March 31, 2019 and 2020, or revenues for the year ended March 31, 2018, 2019 and 2020. There is no significant concentration of credit risk.
Counterparty risk
Counterparty risk encompasses issuer risk on marketable securities, settlement risk on derivative and money market contracts and credit risk on cash and time deposits. Issuer risk is minimized by only buying securities which are at least AA rated in India based on Indian rating agencies. Settlement and credit risk is reduced by the policy of entering transactions with counterparties that are usually banks or financial institutions with acceptable credit ratings. Exposure to these risks are closely monitored and maintained within predetermined parameters. There are limits on credit exposure to any financial institution. The limits are regularly assessed and determined based upon credit analysis including financial statements and capital adequacy ratio reviews.
Liquidity risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price. The Company’s corporate treasury department is responsible for liquidity and funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Company’s net liquidity position through rolling forecasts on the basis of expected cash flows. As at March 31, 2020, cash and cash equivalents are held with major banks and financial institutions.
The table below provides details regarding the remaining contractual maturities of significant financial liabilities at the reporting date. The amounts include estimated interest payments and exclude the impact of netting agreements, if any.
 
 
  
As at March 31, 2019
 
 
  
Carrying

value
 
  
Less than 1

year
 
  
1-2
years
 
  
2-4 years
 
  
Beyond

4 years
 
  
Total
 
Loans, borrowings and bank overdrafts *
  
₹
99,467
 
  
₹
73,559
 
  
₹
24,887
 
  
₹
4,309
 
  
₹
—  
 
  
₹
102,755
 
Trade payables and accrued expenses
  
 
88,304
 
  
 
88,304
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
88,304
 
Derivative liabilities
  
 
1,310
 
  
 
1,310
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
1,310
 
Other liabilities
  
 
644
 
  
 
644
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
644
 
 
 
  
As at March 31, 2020
 
 
  
Carrying

value
 
  
Less than 1

year
 
  
1-2 years
 
  
2-4 years
 
  
Beyond

4 years
 
  
Total
 
Loans, borrowings and bank overdrafts *
  
₹
78,042
 
  
₹
74,663
 
  
₹
4,761
 
  
₹
119
 
  
₹
—  
 
  
₹
79,543
 
Lease Liabilities *
  
 
19,198
 
  
 
7,322
 
  
 
6,128
 
  
 
5,425
 
  
 
2,192
 
  
 
21,067
 
Trade payables and accrued expenses
  
 
78,129
 
  
 
78,129
 
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
78,129
 
Derivative liabilities
  
 
7,369
 
  
 
7,231
 
  
 
90
 
  
 
48
 
  
 
—  
 
  
 
7,369
 
Other liabilities
  
 
1,050
 
  
 
899
 
  
 
88
 
  
 
63
 
  
 
—  
 
  
 
1,050
 
 
*
Includes future cash outflow toward
s
estimated interest on borrowings and lease liabilities
The balanced view of liquidity and financial indebtedness is stated in the table below. This calculation of the net cash position is used by the management for external communication with investors, analysts and rating agencies:
 
 
  
As at March 31,
 
 
  
2019
 
  
2020
 
Cash and cash equivalents
  
₹
158,529
 
  
₹
144,499
 
Investments
  
 
220,716
 
  
 
189,635
 
Loans, borrowings and bank overdrafts
  
 
(99,467
) 
  
 
(78,042
) 
 
  
 
 
 
  
 
 
 
 
  
₹
279,778
 
  
₹
256,092