Carborundum Universal

(Rs. million) 
                                          31.03.2009  31.03.2008
 
 1 Contingent Liabilities:
 a) Outstanding bills discounted               16.66     156.58
 b) Outstanding guarantees                    104.46      45.57
 c) Outstanding letters of comfort /guarantee1608.30     809.96
 d) Outstanding letters of guarantee for availing -      479.64 
 non-fundlimits by subsidiary
 e) Outstanding letters of credit              59.74      60.62
 
 2 There are no dues to Micro and Small Enterprises as per Micro, Small
 and Medium Enterprises Development Act, 2006 which are outstanding for
 more than 45 days at the Balance Sheet date, which is on the basis of
 such parties having been identified by the management and relied upon
 by the auditors.
 
 3 a.  The Company has adopted the revised Accounting Standard 15
 (Revised) on Employee Benefits effective from 1 st April 2006.
 
 With respect to the Provident Fund Trust administered by the Company,
 the Company shall make good the deficiency, if any, in the interest
 rate declared by Trust below statutory limit. Having regard to the
 assets of the Fund and the return on the investments, the Company does
 not expect any deficiency in the foreseeable future.
 
 4 a. Pursuant to the approval accorded by shareholders at their Annual
 General Meeting held on 27th July 2007, the Compensation and Nomination
 Committee of the Company formulated Carborundum Universal Limited
 Employee Stock Option Scheme 2007 (ESOP 2007 or the Scheme).
 
 b- Under the Scheme, options not exceeding 46,67,700 have been reserved
 to be issued to the eligible employees, with each option conferring a
 right upon the employee to apply for one equity share. The options
 granted under the Scheme would vest in a period not less than one year
 and not more than five years from the date of grant of the options. The
 options granted to the employees would be capable of being exercised
 within a period of three years from the date of vesting.
 
 c) The exercise price of the option is equal to the latest available
 closing market price of the shares on the stock exchange where there is
 highest trading volume as on the date prior to the date of the
 Compensation and Nomination Committee resolution approving the grant.
 
 a. Pursuant to the above mentioned scheme, on the recommendation of the
 Compensation and Nomination Committee, the Company has, during the
 year, granted 82,200 options vesting over a period of four years
 commencing from the respective dates of grant. The exercise price being
 equal to the closing market price prevailing on the date prior to the
 date of grant, there is no deferred compensation cost to be amortised.
 
 5 (b) Notes to Segmental Reporting
 
 i) Business Segments
 
 The Company has considered business segment as the primary segment for
 disclosure. The business segments are : abrasives, ceramics and
 electrominerals.
 
 Abrasive segment comprise of bonded, coated, processed cloth, polymers,
 powertools and coolants.
 
 Ceramics comprise of super refractories, industrial ceramics,
 anti-corrosives and bioceramics.
 
 Electrominerals include abrasive / refractory grains, micro grits for
 the photovoltaic industry and captive power generation from hydel power
 plant.
 
 The above segments have been identified taking into account the
 organisation structure as well as the differing risks and returns of
 these segments.
 
 ii) Geographical Segments
 
 The geographical segments considered for disclosure are : India and
 Rest of the world. All the manufacturing facilities and sales offices
 are located in India. Sales to the rest of the world are also serviced
 by Indian sales offices.
 
 Geographical revenues are segregated based on the location of the
 customer who is invoiced or in relation to which the revenue is
 otherwise recognised.
 
 iii) Segmental assets includes all operating assets used by respective
 segment and consists principally of operating cash, debtors,
 inventories and fixed assets, net of allowances and provisions.
 Segmental liabilities include all operating liabilities and consist
 primarily of creditors and accrued liabilities.  Segment assets and
 liabilities do not include income tax assets and liabilities.
 
 6 Provision for dividend tax has been made considering the credit
 amounting to Rs.4.89 million available for set off in respect of
 dividend tax payable on dividends to be distributed by three subsidiary
 companies, based on the provision under subsection (1A) of Section 115
 O of the Income Tax Act.
 
 7 Disclosures in respect of Derivatives
 
 a. The Company has entered into forward contracts to hedge its risks
 associated with foreign currency fluctuations relating to certain firm
 commitments and forecast transactions. The company designates them as
 effective cash flow hedges. The company does not use derivative
 financial instruments for speculative purposes.
 
 The Institute of Chartered Accountants of India (ICAI) has issued AS 30
 Financial Instruments : Recognition and Measurement, which contains
 accounting for derivatives, recommendatory from 1.4.2009 and mandatory
 from 1.4.2011.
 
 Further ICAI has issued an announcement on 29th March 2008 dealing with
 the accounting for derivatives with emphasis on prudence. The company
 has adopted the measurement principles as laid down in the above
 standard with respect to above mentioned effective cash hedges.
 
 Pursuant to the application of the said measurement principles, the
 exchange differences arising on these transactions when marked to
 market as on 31st March 2009 aggregating to Rs.0.88 million has been
 credited to Hedging Reserve which is in accordance with AS - 30.
 (Previous year Rs.5.99 million debited)