Atul Ltd 2008-09

| Annual Report 2008-09 Investments that are intended to be held for more than a year, from the date of acquisition, are classified as long term investments and are carried at cost. However, provision for diminution in value of investments is made to recognise a decline, other than temporary, in the value of the investments. 6 Inventories: 6.1 Raw materials are valued at cost or net realisable value whichever is lower. Cost is arrived at on annual average basis for Atul Unit and P P Site, on FIFO basis for Aromatics Unit and on monthly average basis for Colors (West) Unit. 6.2 Stores and spares other than specific spares for machinery are valued at cost or net realisable value whichever is lower basis. Cost is arrived at on Moving Weighted Average basis except for Colors (West) Unit which is on a monthly average basis. However cost of fuel and packing materials of Aromatic Unit is valued at on yearly average basis and FIFO basis respectively. 6.3 Materials - in - Process are valued at cost or net realisable value whichever is lower. 6.4 Finished goods: Finished goods stocks are valued at full absorption cost or net realisable value whichever is lower (including excise duty). 6.5 Stock of goods traded in is valued at annual average cost or net realisable value whichever is lower. 6.6 Materials in transit and in bonded warehouse are stated at the cost to the date of Balance Sheet. 7 Foreign currency transaction: 7.1 Initial recognition: Transactions denominated in foreign currencies are recorded at the rate prevailing on the date of the transaction. 7.2 Conversion: At the year-end, monetary items denominated in foreign currencies remaining unsettled are converted into Re equivalents at the year-end exchange rates. Non monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. 7.3 Exchange differences: All exchange differences arising on settlement and conversion of foreign currency transactions are included in the Profit and Loss Account, except in cases where they relate to the acquisition of fixed assets, acquired out of India in which case they are adjusted in the cost of the corresponding asset. 7.4 Forward exchange contracts not intended for trading or speculation purposes: The premium or discount arising at the inception of forward exchange contract is amortised as expenses or income over the life of the contract. Exchange differences on such contract is being recognised in the statement of profit and loss for the year. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or expense for the year. 7.5 Derivatives: The Company enters into derivative contracts such as interest rate swaps, currency swaps, forward contracts and currency options to hedge against the risk of adverse movements in interest rates, foreign currencies of values of the hedged items. All outstanding derivative instruments at close are marked to-market by type of risk and the resultant losses relating to the year, if any, are recognised in the Profit and Loss Account, gains are ignored. However, in respect of foreign currency contracts for hedging future highly probable forecast transactions | firm commitments, (being cases not covered by AS11) for which, mark-to-market losses are not provided in the Profit and Loss Account and the same will be recognised when underlying transactions occurs. 8 Revenue Recognition: 8.1 Sales: 8.1.1 Domestic sales are accounted on despatch of products to customers. 8.1.2 Export sales are accounted on the basis of dates of bill of lading and | or air way bill. 8.1.3 Sales are disclosed net of Sales tax, discounts and returns, as applicable but including Excise duty. 8.1.4 Sales exclude self consumption. 8.2 Benefit on account of entitlement to import goods free of duty under the "Duty Entitlement Pass Book under Duty Exemption Scheme" is accounted in the year of export. 8.3 Lease rental income is recognised on accrual basis. 8.4 Dividend income is accounted for in the year in which the right to receive the same is established. 83