GSK_Annual_Report_2021

Financial Statements GlaxoSmithKline Pharmaceuticals Limited 162 The amount of fair value of the above Financial assets and liabilities is considered to be insignificant in value and hence carrying value and the fair value is considered to be same. The carrying amounts of Cash and cash equivalents, other bank balance, Trade receivables, Trade payables are considered to be the same as their fair values due to their short term nature. C. Financial risk management The Company has exposure to the following risks arising from financial instruments: ▪ Liquidity risk ▪ Market risk Risk management framework The Company’s board of directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The board of directors has established the Risk Management Committee, which is responsible for developing and monitoring the Company’s risk management policies. The committee reports regularly to the board of directors on its activities The Company’s risk management policies are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations. The audit committee of the Holding company oversees how management monitors compliance with the company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The audit committee is assisted in its oversight role by internal audit. Internal audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit committee. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Company’s reputation. The Company’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Company has no outstanding bank borrowings. The Company believes that the working capital is sufficient to meet its current requirements. Any short-term surplus cash generated, over and above the amount required for working capital management and other operational requirements, are retained as Cash and Investment in short term deposits with banks. The said investments are made in instruments with appropriate maturities and sufficient liquidity. As of March 31, 2021, the Company had working capital of ` -3,82.69 Lakhs, including cash and cash equivalents of ` 28.72 Lakhs, investments in term deposits (i.e., bank certificates of deposit having original maturities of more than 3 months) of ` 1.45 Lakhs. As of March 31, 2020, the Company had working capital of ` -1,77.42 Lakhs, including cash and cash equivalents of ` 6,78.36 Lakhs, investments in term deposits (i.e., bank certificates of deposit having original maturities of more than 3 months) of ` 10,01.45 Lakhs. Exposure to liquidity risk The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements. ` in Lakhs Contractual cash flows As at March 31, 2021 Carrying amount Total 1 year or less 1-2 years 2-5 years More than 5 years Non- derivative financial liabilities Trade Payables and other payables 22,07.94 22,07.94 22,07.94 - - - Security deposits 0.63 0.63 - - 0.63 - Other non-current liabilities 0.72 0.72 - - 0.72 - ` in Lakhs Contractual cash flows As at March 31, 2020 Carrying amount Total 1 year or less 1-2 years 2-5 years More than 5 years Non- derivative financial liabilities Trade Payables and other payables 3,22.58 3,22.58 3,22.58 - - - Security deposits 0.63 0.63 - - 0.63 - Other non-current liabilities 0.72 0.72 - - 0.72 - Market risk Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and prices (such as interest rates and foreign currency exchange rates) or in the price of market risk-sensitive instruments as a result of such adverse changes in market rates and prices. Market risk is attributable to all market risk-sensitive financial instruments, all foreign currency receivables and payables. The Company is exposed to market risk primarily related to foreign exchange rate risk. Currency risk The fluctuation in foreign currency exchange rates may have potential impact on the profit and loss account, where any transaction references more than one currency or where assets/liabilities are denominated in a currency other than the functional currency of the entity. The Company is exposed to currency risk on account of its receivables and payables in foreign currency. The functional currency of the Company is Indian Rupee. The Company does not have any foreign currency exposure as at the balance sheet date. 27 CapitaL ManagEmEnt (a) Risk Management The Company’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital as well as the level of dividends to ordinary shareholders.