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Atul Ltd | Annual Report 2015-16
Note 28.9 Derivatives
The use of Derivative instruments is governed by the policies of the Company approved by the Board, 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:
*Fc in cr
No.
Particulars
Purpose
As at
March 31,
2016
As at
March 31,
2015
1 Forward exchange contracts
to sell US$
Hedge of firm commitment and highly
probable foreign currency sales
–
0.07
2 Forward exchange contracts
to buy US$
Hedge of firm commitment and highly
probable foreign currency purchases
0.80
0.20
3 Forward exchange contracts
to buy US$
Hedge of foreign currency loans
0.10
–
4 Currency options contracts -
Range options to sell US$
Hedge of firm commitment and highly
probable foreign currency sales
1.26
2.60
5 Currency options contracts -
Vanilla option to sell US$
Hedge of firm commitment and highly
probable foreign currency sales
0.66
–
6 Interest rate swaps US$
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
0.03
0.20
7 Currency swaps US$
Hedge against fluctuations in changes in
exchange rate and interest rate
0.50
0.83
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, 2016
As at March 31, 2015
US$
€
Others
US$
€
Others
Debtors
3.08
0.12
0.01
2.98
0.24
0.01
Creditors
0.56
0.01
0.01
0.61
0.01
–
Loans Taken
0.83
–
–
0.73
–
–
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 Marked-to-Market and the loss aggregating
`
0.70 cr (Previous year gain
`
0.11 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.
d) Forward exchange contracts to buy US$ to hedge foreign currency loans are accounted for as per Para 36
of the Accounting Standard - 11 ‘The effects of changes in Foreign Exchange Rates’.
*Fc = Foreign currency