ASCENDAS india trust ANNUAL REPORT 2014/15
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For the financial year ended 31 March 2015
27.
Financial risk management
Financial risk factors
The Group’s activities expose it to market risk (including currency risk and interest rate risk), credit risk and liquidity risk in
the normal course of its business. The Group’s overall risk management strategy seeks to minimise adverse effects from the
unpredictability of financial markets on the Group’s financial performance. The Group uses financial instruments such as
currency forwards, interest rate and foreign currency swaps to hedge certain financial risk exposures.
The Trustee-Manager is responsible for setting the objectives and underlying principles of financial risk management for the
Group. This is supported by comprehensive internal processes and procedures which are formalised in the Trustee-Manager’s
organisational and reporting structure, operating manuals and delegation of authority guidelines.
The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and
procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The
Audit Committee is assisted in its oversight role by the internal auditors. The internal auditors undertake both regular and
ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.
(a)
Market risk
(i)
Currency risk
The Group is exposed to foreign currency risk on purchases and borrowings that are denominated in a
currency other than the functional currency of the Trust and its subsidiaries. The currency giving rise to this
risk is primarily the SGD.
The Group’s distribution to unitholders is in SGD. To enhance the stability of distribution to unitholders, the
Group entered into forward contracts to hedge a substantial portion of the cash flow it expects to receive.
The hedging of INR cash flows receivable from the subsidiaries is effected through a forward sale of INR and
purchase of SGD.
In respect of other monetary assets and liabilities held in currencies other than the INR, the Group ensures that
the net exposure is kept to an acceptable level by buying and selling foreign currencies at spot rates, where
necessary, to address short term imbalances.
