GSK_Annual_Report_2021

Notes to the Standalone Financial Statements for the year ended March 31, 2021 (contd.) Financial Statements GlaxoSmithKline Pharmaceuticals Limited 136 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 oversees howmanagement 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. Credit Risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers. Trade and other receivables The Company’s trade receivables are largely from sales made to wholesale customers and direct sales to hospitals with a smaller proportion of sales to Indian Government Institutions. The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer, demographics of the customer and the default risk of the industry. The Company manages credit risk through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. Exposures to customers outstanding at the end of each reporting period are reviewed to determine incurred and expected credit losses and the Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade receivables. Historical trends of impairment of trade receivables do not reflect any significant credit losses. Given that the macro economic indicators have undergone change, it has not affected the customers of the Company substantially, hence the Company expects the historical trend of minimal credit losses to continue. The impairment loss as at March 31, 2021 related to customers that have defaulted on their payments to the Company and are not expected to be able to pay their outstanding balances, mainly due to economic circumstances. In case of receivables from wholesale customers and hospitals, the Company has followed a provision approach consistent with expected credit loss approach as per IndAS 109. Summary of the Company’s ageing of outstanding from various customers and impairment for expected Credit Loss is as follows: ( ` in lakhs) As at March 31, 2021 Gross Carrying amount Expected Credit Losses Carrying amount of trade receivables (net of Expected Credit loss) Not due 142,11.27 5.01 142,06.26 Past due 0-180 days 68,65.75 61.26 68,04.49 Past due 181-365 days 96.79 31.93 64.86 Past due 366-730 days 5,97.67 1,56.96 4,40.71 Past due 731-1095 days 1,95.43 1,51.29 44.14 Past due more than 3 years 16,00.62 16,00.62 - Total 235,67.53 20,07.07 215,60.46