Page 268 - Hitachi IR 2025

NOTES TO THE FINANCIAL STATEMENTS
a) Trade receivables, financial assets and other current assets
The Company’s customer profile consists of a large number of customers spread across diverse
industries include public sector enterprises, state owned companies and large private corporates.
Accordingly, the Company’s customer credit risk is low. The Company’s projects business comprises
long-term contracts which have an execution period exceeding one year. General payment terms
include mobilisation advance, monthly progress payments with a credit period ranging from 0 to 90
days and certain retention money to be released at the end of the project. In some cases, retentions
are substituted with bank/corporate guarantees.
The Company follows ‘simplified approach’ for recognition of impairment allowance on trade receivable.
Under the simplified approach, the Company tracks changes in credit risk. Further, it recognizes
impairment allowance based on lifetime ECLs at each reporting date, right from initial recognition.
The Company uses a provision matrix to determine impairment allowance on the portfolio of trade
receivables. The provision matrix is based on its historically observed default rates over the expected
life of the trade receivable and is adjusted for forward looking estimates. At year end, the historical
observed default rates are updated and changes in the forward-looking estimates are analyzed.
Individual receivables which are known to be uncollectible are written off by reducing the carrying
amount of trade receivable and the amount of the loss is recognised in the statement of profit and loss
within other expenses.
Specific allowance for loss has also been provided by the management based on expected recovery
on individual parties.
The provision provided in books for trade receivables, financial assets and other current assets overdue:
Reconciliation of impairment allowance
All amount in Indian Rupees in Crores, except as stated otherwise
Particulars March 31, 2025 March 31, 2024
Balance at the beginning of the year 225.81 225.92
Add: Additional ECL/ specific provision 53.48 13.80
Less: Utilisation/ reversal of ECL/ specific provision 12.42 13.91
Balance at the end of the year 266.87 225.81
Management does not expect any significant loss from non-performance by counterparties on credit
granted that has not been provided for.
b) Credit risk from balances with bank and financial institutions is managed by the Company’s treasury
department in accordance with the Company’s policy.
(v) Liquidity Risk
Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of
liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per
requirements. The Company’s objective is to maintain a balance between continuity of funding and flexibility
through the use of bank overdrafts. Prudent liquidity risk management implies maintaining sufficient cash
and marketable securities and the availability of funding through an adequate amount of committed credit
facilities to meet obligations when due and to close out market positions. Due to the dynamic nature of the
underlying businesses, Company maintains flexibility in funding by maintaining availability under committed
credit lines.
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments.
266 Hitachi Energy India Limited