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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