Atul Ltd 2008-09

Schedules forming part of the Consolidated Account s | Annual Report 2008-09 (ii) Currency swaps to hedge against fluctuations in changes in exchange rate and interest rate: As at No of US$ equivalent Euro equivalent contracts (lacs) (lacs) March 31, 2008 4 60.76 23.37 March 31, 2009 2 36.01 - (b) Company has outstanding currency option contracts (hedging instruments) which are bought by the Company, in addition to forward contracts, to hedge a part of its highly probable forecasted export transactions. As at No of US$ equivalent contracts (lacs) March 31, 2008 7 540.00 March 31, 2009 8 515.00 (c) The Company also uses derivative contracts other than forward contracts to hedge the interest rate and currency risk on its capital account. (i) Interest rate swaps to hedge against fluctuations in interest rate changes: As at No of US$ equivalent contracts (lacs) March 31, 2008 3 70.00 March 31, 2009 3 27.50 SCHEDULE 16 NOTES FORMING PART OF THE ACCOUNTS (Contd.) Financial Derivatives Hedging Transactions: (3) (a) The Company has entered into currency option contracts to the tune of US$54 million for hedging its future US$ revenue for a period upto three years based on highly probable forecast | firm commitment transactions. These range forward contracts are covered under “Forex risk management policy” of the company and meets the test of hedge effectiveness. Under the said options, the rate of US$ - INR has been fixed for the entire period of the option. The outstanding currency option contracts as at March 31, 2009 was US$51.5 million. The MTM loss valuation of Rs5,484.09 lacs in respect of these range forward contracts as at March 31, 2009 provided by the bank indicates the amount, the Company will have to pay to bankers, if it wishes to rescind the options contract as at the date of Balance Sheet. The MTM valuation also assumes that the Company has no US$ inflows that would arise to it during the tenure of the option contracts and it therefore assumes that Company would be meeting this obligation by acquiring the relevant foreign exchange from the open market. Based on the past history of the operations of the Company as well as the projected plans in the future, the Company will have robust inflow in US$ during the tenure of the said options. The Company believes that the options would safeguard it from US$ fluctuation in future. 107 US$ Euro Others Others US$Euro Others Others equivalent equivalent equivalent equivalent equivalent equivalent (lacs) (lacs) (lacs) (lacs) (lacs) (lacs) Debtors - 34.41 0.65 324.56 67.09 0.75 Creditors - 1.18 0.01 70.36 11.33 - Loans taken - - - 555.26 - - (2) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below: (a) Amounts receivable in foreign currency on account of the following: Particulars As at March 31, 2009 As at March 31, 2008