"Borrowing from different sources instead of depending on a single source is slowly gaining momentum," remarked Bharath. "This strategy increases the interest rate risk and the responsibility is on CFOs to adopt appropriate risk management and mitigation practices, such as interest rate swaps and forward rate agreements."
Also, other risks involved with regular operations such as credit risk, liquidity risk, foreign exchange risk and interest rate risk need to be addressed using suitable risk management practices, such as bank guarantees and interest rate swaps.
"Maintenance of fixed assets, including land, buildings, civil works and other infrastructure facilities also play a key role in ensuring smooth operations, which in turn directly impacts profitability," concluded Bharath. "Effective cash flow management and a strong focus on free cash flow generation are critical to achieving excellence in financial and risk management."
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