Atul Ltd 2011-12

93 Notes to financial statements NOTE 27.10 DERIVATIVES The use of Derivative instruments is governed by the policies of the Company approved by the Board of Directors, which provide written principles on the use of such financial derivatives consistent with risk management strategy of the Company. (a) Derivatives outstanding as at Balance Sheet date (b) The year end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below. *Fc in cr Particulars As at March 31, 2012 As at March 31, 2011 US$ € Other Fcs US$ € Other FCs Debtors 1.21 0.39 - 1.96 0.55 - Creditors 0.57 0.01 - 0.57 - 0.13 Loans taken 2.78 - - 2.51 - - (c) Financial Derivatives Hedging Transactions: Pursuant to the announcement issued by The Institute of Chartered Accountants of India dated March 29, 2008 in respect of derivatives, the Company has applied the Hedge Accounting Principles set out in the Accounting Standard-30 ‘Financial Instruments : Recognition and Measurement’. Accordingly, Derivatives are mark-to-market and the Loss aggregating ` 0.78 cr (Previous year ` 5.09 cr) arising consequently on contracts that were designated and effective as hedges of future cash flows has been recognised directly in the Hedging Reserve Account. Actual gain or loss on exercise of these Derivatives or any part thereof is recognised in the Statement of Profit and Loss. Hedge accounting will be discontinued if the hedging instrument is sold, terminated or no longer qualifies for hedge accounting. *Fc = Foreign currency. *Fc in cr Sr No Particulars Purpose As at March 31, 2012 As at March 31, 2011 1 Forward Contracts to Sell US$ Hedge of firm commitment and highly probable foreign currency receivables 0.07 - 2 Forward Contracts to Buy US$ Hedge of foreign currency loans 0.11 - 3 Currency Options Contracts -Range Options to Sell US$ Hedge of firm commitment and highly probable foreign currency receivables 1.62 1.60 4 Currency Options Contracts -Vanilla Option to Sell US$ Hedge of firm commitment and highly probable foreign currency receivables 0.55 - 5 Interest Rate Swaps Hedge against exposure to variable interest outflow on foreign currency loans. Swap to pay fixed interest and receive a variable interest based on LIBOR on the notional amount 0.75 - 6 Currency swaps Hedge against fluctuations in changes on account of exchange rate and interest rate - 0.06