Risks and Concentration

12 Months Ended

Mar. 31, 2021

4.	Risks and Concentration

(a)

Foreign currency exchange rate risk

In July 2005, the PRC government changed its

decades-old

policy of pegging the value of RMB to US$, and RMB appreciated more than 20% against US$ over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between RMB and US$ remained within a narrow band. Since June 2010, the RMB has fluctuated against US$, at times significantly and unpredictably. The depreciation of RMB against US$ was approximately 5.7% in 2018. The appreciation of RMB against US$ was approximately 1.2% in 2019. It is difficult to predict how market forces or the PRC or the U.S. government policy may impact the exchange rate between RMB and US$ in the future.

(b)

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company’s interest rate risk arises primarily from long-term borrowings. Borrowings issued at variable rates and fixed rates expose the Company to cash flow interest rate risk and fair value interest rate risk respectively.

(c)

Concentration of credit risk

Financial instruments that potentially subject the Company to the concentration of credit risks consist of cash and cash equivalents, restricted cash, accounts receivable and amounts due from related parties. The maximum exposures of such assets to credit risk is their carrying amounts as of the balance sheet dates. The Company deposits its cash and cash equivalents and restricted cash with financial institutions located in jurisdictions where the subsidiaries are located. The Company believes that no significant credit risk exists as these financial institutions have high credit quality.

Accounts receivable are typically unsecured and are derived from revenue earned through third-party consumers. The Company conducts credit evaluations of third-party customers and related parties, and generally does not require collateral or other security from its third-party customers and related parties. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific third-party customers and related parties.

(d)

Concentration of customers and suppliers

Substantially all revenue was derived from customers located in China. There are no customers from whom revenues individually represent greater than 10% of the total revenues of the Company in any of the periods presented.

For the year ended March 31, 2020, Royal Canin China Co., Ltd. and Boehringer Ingelheim Animal Health (Shanghai) Co., Ltd. contributed 24% and 14% of total purchases of the Company, respectively . For the year ended March 31, 2021, Royal Canin China Co., Ltd. and Boehringer Ingelheim Animal Health (Shanghai) Co., Ltd. contributed 19% and 7% of total purchases of the Company, respectively.

The following table summarizes the supplier with greater than 10% of the accounts payable of the Company:

Year Ended

March 31, 2019

Year Ended

March 31, 2020

Year Ended

March 31, 2021

RMB

Royal Canin China Co., Ltd.

14,320

13,331

15,616