Notes to the Financial Statements For the year ended 30 june 2012
The Board of Directors has overall responsibility for the establishment and oversight of Company’s risk management framework. The Board is also responsible for developing and monitoring the Company’s risk management policies.
29.1
Credit risk
Credit risk represents the accounting loss that would be recognized at the balance sheet date if counterparties fail completely to perform as contracted and arises principally from loans and advances and other receivables. Out of the total financial assets of Rs. 29,924 million (2011: Rs. 25,315.285 million), the financial assets which are subject to credit risk amounted to Rs. 1,815.445 million (2011: Rs. 761.328 million). To manage exposure to credit risk in respect of loans and advances, management performs credit reviews taking into account the borrower’s financial position, past experience and other factors. Loans terms and conditions are approved by the competent authority.
Concentration of credit risk arises when a number of counter parties are engaged in similar business activities or have similar economic features that would cause their abilities to meet contractual obligation to be similarly effected by the changes in economic, political or other conditions. The Company believes that it is not exposed to major concentration of credit risk.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the balance sheet date is:
2012 2011 Long term deposits 89,590 89,590 Loans and advances 1,050,271,362 549,121,581 Other receivables 753,909,191 203,579,717 Cash and Bank balances 11,174,923 8,537,397 Rupees 1,815,445,066 761,328,285 The Company did not hold any collateral against the above during the year.
All the loans, advances and other receivables at the balance sheet date represent domestic parties except a receivable of Rs. 108.244 million (2011: 108.244) and advance against equity of Rs. 13.621 million (2011: Nil).
The aging analysis of loans, advances and other receivables is as follows: 2012 2011 Not past due 1,695,936,262 574,457,007 Past due 1-30 days - Past due 30-180 days - Past due more than 180 days 108,244,291 178,244,291 Rupees 1,804,180,553 752,701,298 The credit quality of loans, advance and other receivable can be assessed with reference to external credit ratings as follows: