1.  Capital Commitments
 
 Estimated amount of contracts remaining to be executed on capital
 account and not provided for (Net of advances) is Rs 88.63 Million
 (Previous year Rs 168.45 Million).
 
 2.  Contingent Liabilities
 
 2.1 As at December 31, 2011, the Company has given corporate guarantees
 upto Rs 4,572.94 Million (Previous year Rs 3,516.27 Million) to financial
 institutions and other parties, on behalf of its subsidiaries. At
 December 31, 2011, the subsidiaries had availed facilities from such
 financial institutions / were obligated to the parties referred above
 for an aggregate amount of Rs 3,672.54 Million (Previous year Rs 3,143.66
 Million). The Company''s fixed assets (paripassu second charge) and
 certain investments in the respective subsidiaries have been offered as
 security in respect of some of these facilities.
 
 2.2 As at December 31, 2011, the Company has disputed tax liabilities
 arising from assessment proceedings relating to earlier years from the
 income tax authorities amounting to Rs 741.27 Million (Previous year Rs
 Nil)
 
 2.3 The Company preferred appeal with the CESTAT against the order of
 the Commissioner of Central Excise for disallowing transfer of CENVAT
 credit of Rs 3.86 Million (Previous year Rs 3.86 Million) as on the date
 of conversion of one of the units of the Company into a 100% EOU.
 
 3.  Foreign currency convertible bonds
 
 (a) During the accounting year ending December 31, 2007, the Company
 had issued Foreign Currency Convertible Bonds (FCCB), listed in the
 Singapore Stock Exchange, amounting to USD 100 Million (Rs 4,070
 Million) (FCCB 100 Million) on June 26, 2007. These bonds carry zero
 coupon and are to be redeemed on June 27, 2012 (unless converted into
 Equity Shares) at 145.058 per cent of the Principal amount.
 
 The bonds may be redeemed in whole, but not in part at the option of
 the Company at any time on or after July 18, 2010 and on and prior to
 June 20, 2012 with a redemption premium of 7.575 per cent (which is
 identical to the gross yield in case of redemption at maturity)
 calculated on a semi-annual basis. Any tax cost that may arise on the
 bond-holder on redemption is determinable on redemption and would need
 to be absorbed by the Company.
 
 The Bonds are convertible at any time on or after August 6, 2007 and up
 to the close of business on June 20, 2012 by the holders of the Bonds
 into shares at the option of the Bondholder, at an initial conversion
 price of Rs 461.553 per share with a fixed rate of exchange of Rs 40.70
 per USD on conversion. The bonds are listed on Singapore Exchange
 Securities Trading Limited, Singapore.
 
 As permitted by the Reserve Bank of India (RBI), during the year 2009,
 the Company bought back FCCB''s with a face value aggregating to USD 20
 Million from the outstanding bonds issued under FCCB 100 Million, at a
 discount.
 
 As at December 31, 2011, none of the outstanding bonds had been offered
 for conversion.
 
 (b) The Company had issued FCCB''s (listed in the Singapore Exchange
 Securities Trading Limited, Singapore) to the extent of USD 40 Million
 (FCCB 40 Million) during the year ended December 31, 2005. In the year
 2009, as permitted by RBI, the Company had bought back FCCB''s with a
 face value aggregating to USD 6 Million out of the FCCB''s face value of
 USD 40 Million. In the year 2010, as per the term and conditions agreed
 with the holders of FCCB 40 Million, the Company had redeemed the
 balance outstanding FCCB''s aggregating to USD 34 Million. The Company
 had paid in total USD 46.51 Million (Rs 2,062.50 Million) including USD
 12.51 Million towards redemption premium. An amount of Rs 61.60 Million
 paid towards withholding taxes on redemption premium had been debited
 to Securities Premium Account in 2010.
 
 4.  Cumulative Redeemable Preference Shares
 
 In May 2005, the Company had issued 491,606 6% Cumulative Redeemable
 Preference Shares (CRPS) of Rs 1,000 each fully paid to K V
 Pharmaceuticals, USA (''KV Pharma'')(approximately USD 10.95 Million).
 The Preference shares were redeemable at par along with accrued unpaid
 dividend on or before December 31, 2012.
 
 The Company, Strides Inc. (a step-subsidiary of the Company) and KV
 Pharma had also entered into a License and Supply agreement (''LSA'')
 pursuant to which the Company and Strides Inc. had agreed to undertake
 certain development work for developing certain pharmaceutical
 products, subject to certain terms and conditions mentioned in LSA. In
 March 2009 due to certain adverse developments at KV Pharma, the
 Company terminated the said LSA. KV Pharma had approached the
 International Court of Arbitration disputing the termination of the
 LSA.
 
 In the year 2010, pursuant to a negotiation for an out of court
 settlement, the Company had entered into a Settlement Agreement &
 Release (Settlement Agreement) with KV Pharma. In accordance with the
 Settlement Agreement, the rights and obligations of all parties under
 the LSA and those arising out of the subscription to the CRPS were
 settled on a net basis. Pursuant to the Settlement Agreement, the
 Company had paid out KV Pharma an amount of USD 7.25 Million in full
 and final settlement. Consequent to the net settlement, the dividend on
 the CRPS that were accrued for in 2005 through 2009 along with the
 related dividend distribution taxes to the extent unpaid, had been
 reversed in the year 2010 and the same had been credited under
 appropriations in the Profit and Loss Account and an amount of Rs 165.86
 Million had been credited to the Reserve for Business Restructure
 (''BRR'') being the extent attributable to recoveries of receivables
 under the LSA that were written off to the BRR in earlier years under a
 Scheme of Arrangement approved by the Honorable High Courts of
 Judicature (refer note 5 below).
 
 Consequent to the redemption of the CRPS as referred above, the Company
 in the year 2010 had credited Capital Redemption Reserve to the extent
 of Rs 491.61 Million being the face value of CRPS redeemed.
 
 5.  Scheme of Arrangement under Section 391 - 394 of the Companies Act,
 1956
 
 5.1 During the year ending December 31, 2009, the shareholders of the
 Company, in their meeting held on April 13, 2009 approved the Scheme of
 Restructuring that envisaged interalia a Scheme of Arrangement (the
 ''Scheme'') to be filed under Sections 391 to 394 of the Companies Act,
 1956 covering the merger of some of the subsidiaries of the Company
 (Transferor companies) with itself (Transferee company), fair valuation
 of some of the assets of the Company and creation of a Reserve for
 Business Restructure (''BRR'') out of any surpluses arising from these,
 to be utilised as specified in the Scheme.
 
 5.2 The details of the Scheme are given below.
 
 The Scheme filed by the Company had been approved by the High Courts of
 Judicature with an appointed date of January 1, 2009 and an effective
 date of December 31, 2009 (''the Effective Date''), being the date on
 which the all requirements under the Companies Act had been completed.
 
 In terms of the Scheme and upon the Scheme becoming effective, amongst
 other things:
 
 expenses incurred by the Company or its subsidiaries in the nature of
 impairment, diminution, loss, amortisation and / or write-off of assets
 / investments / intangibles, interest on borrowings for acquisitions,
 employee compensation expenses, additional depreciation charged or
 suffered by the Transferee Company on account of fair valuation, scheme
 expenses and other expenses or arising in the future as may be
 determined by the Board of Directors of the Transferee Company, have
 wwbeen / shall be debited to the BRR. The maximum amount that can be
 written off against the BRR instead of being debited to the Profit and
 Loss Account on or at any time after January 1, 2009 would be
 restricted to the balance in the BRR or upto December 31, 2012 and not
 beyond that.
 
 the balance in the Securities Premium Account, as appearing in the
 books of the Transferee Company may be transferred to BRR, to such
 extent as determined by the Board.
 
 5.3 The accounting treatment effected for the Scheme was as follows:
 
 (a) The fair value of net assets acquired from the Transferor Companies
 in excess of the carrying value of investment in the subsidiaries and
 the value of equity shares issued to minority shares holders, amounting
 to Rs 146.77 Million was credited to BRR.
 
 Had the Scheme not prescribed the above accounting treatment of
 crediting the excess of fair value of assets and liabilities over the
 carrying value of the investment in the Transferor Companies and the
 equity shares of the Transferee Company issued to the minority
 shareholders of the Transferor Companies to the BRR, this surplus of
 Rs146.77 Million would have been credited to Capital Reserve as required
 under the AS 14 ''Accounting for Amalgamations''.
 
 (b) Upon the Scheme becoming effective, and based on legal advice
 received, the assets and liabilities of the Transferee Company had been
 fair valued as determined by the Board of Directors of the Company and
 the net surplus arising out of such fair valuation (over the carrying
 value of the respective assets and liabilities prior to the fair
 valuation) was credited to the BRR as follows during the year ended
 December 31, 2009.
 
 6.  Share Warrants
 
 As authorised by the shareholders of the Company in the Extra Ordinary
 General meeting held on May 13, 2009, 6,180,000 warrants were allotted
 to Net Equity Ventures Private Limited, a Promoter Group company and
 20,000 warrants to relatives of the Promoters, on preferential basis
 which were convertible into an equivalent number of fully paid up
 equity shares of Rs 10 each at a price of Rs 91.15 per warrant. In the
 year 2010, the Company completed the allotment of equity shares against
 the Warrants.
 
 7.  In the year 2010, the Company had received Rs 4,550 Million on issue
 of 10,742,533 equity shares of Rs 10 each at a premium of Rs 413.55 per
 equity share to Qualified Institutional Buyers (QIB) in terms of SEBI
 (Issue of Capital and Disclosure Requirements) Regulations 2009. The
 purpose of the mentioned issue was to finance overseas acquisitions,
 repayment and prepayment of debt, investments and other uses, including
 capital expenditure, as permitted by applicable rules and regulations.
 The Company had completed the allotment of equity shares on October 1,
 2010. Expense incurred in relation to QIP to the extent of Rs 108.96
 Million had been debited to Securities Premium Account in 2010.
 
 8.  Early Adoption of AS-30: Financial Instruments: Recognition and
 Measurement, issued by Institute of Chartered Accountants of India
 (ICAI).
 
 The Company had chosen to early adopt AS 30: ''Financial Instruments:
 Recognition and Measurement'' during the year ended December 31, 2008,
 with effect from January 1, 2008. Contemporaneously with this, in the
 spirit of complete adoption, the Company had also implemented the
 consequential limited revisions in view of AS 30 to AS 2, ''Valuation of
 Inventories'', AS 11''The Effect of Changes in Foreign Exchange Rates'',
 AS 19 ''Accounting for Leases'', AS 21 ''Consolidated Financial Statements
 and Accounting for Investments in Subsidiaries in Separate Financial
 Statements'', AS 23 ''Accounting for Investments in Associates in
 Consolidated Financial Statements'', AS 26 ''Intangible Assets'', AS 27
 ''Financial Reporting of Interests in Joint Ventures'', AS 28 ''Impairment
 of Assets'' and AS 29 ''Provisions, Contingent Liabilities and Contingent
 Assets'' as had been announced by the Institute of Chartered Accountants
 of India (ICAI).
 
 On February 11, 2011, the ICAI had issued a notification stating that
 AS 30 can be adopted only to the extent the Accounting Standard does
 not conflict with other mandatory standards notified under section 211
 (3C) of the Companies Act, 1956. In case of conflict, the mandatory
 standards will prevail. Consequently, in the year 2010, the Company had
 reversed an amount of Rs 695.68 Million being the cumulative gains
 recognised upto December 31, 2009, on restatement at period end rates
 of certain USD denominated investments in certain subsidiaries and a
 joint venture (including advances towards shares) that were designated
 as hedged items in a fair value hedge, since such restatement is not
 permitted under AS 13 ''Accounting for Investment'', a mandatory
 accounting standard. Such reversals have been classified under the head
 exceptional items, being the same head under which the gains on
 restatement were presented in the financial statements of earlier
 years.
 
 Consequent to adoption of AS 30 to the extent it is permitted, the
 Company had changed the designation and measurement principles for all
 its significant financial assets and liabilities. The impact on account
 of the above measurement of these is as described below:
 
 8.1 Foreign Currency Convertible Bonds (the ''FCCBs'' or the ''Bonds'')
 
 The FCCBs are split into two components comprising (a) option component
 which represents the value of the option in the hands of the
 FCCB-holders to convert the bonds into equity shares of the Company and
 (b) debt component which represents the debt to be redeemed in the
 absence of conversion option being exercised by FCCB-holder, net of
 issuance costs.
 
 The debt component is recognised and measured at amortised cost while
 the fair value of the option component is determined using a valuation
 model with the below mentioned assumptions.
 
 Assumptions used to determine fair value of the options:
 
 Valuation and amortisation method - The Company estimates the fair
 value of stock options granted using the Black Scholes Merton Model and
 the principles of the Roll-Geske-Whaley extension to the Black Scholes
 Merton model. The Black Scholes Merton model along with the extensions
 above requires the following inputs for valuation of options:
 
 Stock Price as at the date of valuation - The Company''s share prices as
 quoted in the National Stock Exchange Limited (NSE), India have been
 converted into equivalent share prices in US Dollar terms by applying
 currency rates as at valuation dates.  Further, stock prices have been
 reduced by continuously compounded stream of dividends expected over
 time to expiry as per the principles of the Black-Scholes Merton model
 with Roll Geske Whaley extensions.
 
 Strike price for the option - has been computed in dollar terms by
 computing the redemption amount in US dollars on the date of redemption
 (if not converted into equity shares) divided by the number of shares
 which shall be allotted against such FCCBs.
 
 Expected Term - The expected term represents time to expiry, determined
 as number of days between the date of valuation of the option and the
 date of redemption.
 
 Expected Volatility - Management establishes volatility of the stock by
 computing standard deviation of the simple exponential daily returns on
 the stock. Stock prices for this purpose have been computed by
 expressing daily closing prices as quoted on the NSE into equivalent US
 dollar terms. For the purpose of computing volatility of stock prices,
 daily prices for the last one year have been considered as on the
 respective valuation dates.
 
 Risk-Free Interest Rate - The risk-free interest rate used in the
 Black-Scholes valuation method is the risk free interest rate
 applicable to the Company.
 
 Expected Dividend - Dividends have been assumed to continue, for each
 valuation rate, at the rate at which dividends were earned by
 shareholders in the last preceding twelve months before the date of
 valuation.
 
 Measurement of Amortised cost of debt component:
 
 For the purpose of recognition and measurement of the debt component,
 the effective yield has been computed considering the amount of the
 debt component on initial recognition, origination costs of the FCCB
 and the redemption amount if not converted into Equity Shares. To the
 extent the effective yield pertains to redemption premium and the
 origination costs, the effective yield has been amortised to the
 Securities Premium Account (along with related exchange fluctuations)
 as permitted under section 78 of the Companies Act, 1956. The balance
 of the effective yield is charged to the Profit and Loss Account.
 
 Consequent to the above method of accounting of FCCBs, the following
 adjustments were made:
 
 For the year ended December 31, 2010:
 
 (a) Amortisation of interest of Rs 146.81 (net) and redemption premium
 (net) on FCCBs amounting to Rs 395.06 Million had been recorded in the
 Profit and Loss Account and in the Securities Premium Account
 respectively.
 
 (b) Change in the fair values of option component in the FCCBs, being a
 loss of Rs 15.63 Million had been recorded in the Profit & Loss Account.
 
 for the year ended December 31, 2011:
 
 (a) Amortisation of interest (net) Rs 147.48 Million and redemption
 premium (net) on FCCBs amounting to Rs 676.23 Million have been recorded
 in the Profit and Loss Account and in the Securities Premium Account
 respectively.
 
 (b) Change in the fair values of option component in the FCCBs, being a
 gain of Rs 188.85 Million has been recorded in the Profit & Loss
 Account.
 
 8.2 The financial assets and liabilities arising out of issue of
 corporate financial guarantees to third parties are accounted at fair
 values on initial recognition. Financial assets continue to be carried
 at fair values. Financial liabilities are subsequently measured at the
 higher of the amounts determined under AS 29 or the fair values on the
 measurement date.
 
 8.3 Gains / losses on fair valuation of all the open derivative
 positions as on December 31, 2011 not designated as hedging instruments
 have been recognised in the Profit and Loss Account.
 
 8.4 The Company has availed bill discounting facility from Banks which
 do not meet the de-recognition criteria for transfer of contractual
 rights to receive cash flows from the debtors since they are with
 recourse to the Company. Accordingly, as at December 31, 2011, sundry
 debtor balances include Rs 1,130.70 Million (Previous year Rs 480.35
 Million) and the corresponding financial liability to the Banks is
 included as part of short term secured loans.
 
 8.5 The Company has designated certain highly probable forecasted US
 dollar denominated sales transactions and certain forward contracts to
 sell US dollars as hedged items and hedging instruments respectively,
 in a Cash Flow Hedge (''CFH'') to hedge the foreign exchange risk arising
 out of fluctuations between the India rupee and the US dollar. The
 exchange fluctuations arising from marking to market of the hedging
 instruments, to the extent relatable to the CFH being effective has
 been recognised in a Hedge reserve in the Balance sheet. Accordingly
 exchange fluctuations losses amounting to Rs 447.10 Million for the year
 ended December 31, 2011 have been recognised in the Hedge Reserve
 account. These exchange difference would be considered in Profit and
 Loss Account as and when the forecasted transactions is estimated to
 occur (i.e., over a period from January 2012 to September 2012).
 
 9.  Employee Stock Option Scheme
 
 (a) In the extraordinary general meeting held on January 25, 2007, the
 shareholders approved the issue of 1,000,000 options under the Scheme
 titled Strides Arcolab ESOP 2006 (ESOP 2006).
 
 The ESOP 2006 allows the issue of options to employees of the Company
 and its subsidiaries (whether in India or abroad).  Each option
 comprises one underlying equity share.
 
 During the current year, the Remuneration Committee in its meeting held
 on February 24, 2011 has granted 500,000 options under the ESOP 2006 to
 few eligible employees of the Company. The options allotted under ESOP
 2006 are convertible into equal number of equity shares.
 
 As per the Scheme, the Compensation committee grants the options to the
 employees deemed eligible. The exercise price of each option shall not
 be less than 85 per cent of the Market Price as defined in the
 Scheme. The options granted vest over a period of 3 years from the date
 of the grant in proportions specified in the Scheme. Options may be
 exercised within 30 days of vesting.
 
 In respect of the ESOP 2006 and all the other ESOP schemes detailed in
 this note, the difference between the fair price of the share
 underlying the options granted, on the date of grant of option and the
 exercise price of the option, (being the intrinsic value of the option)
 representing Stock compensation expense, is expensed over the vesting
 period.
 
 (b) The ESOP scheme titled Strides Arcolab ESOP 2008 (ESOP 2008) was
 approved by the shareholders through postal ballot on June 18, 2008.
 1,500,000 options are covered under the scheme for 1,500,000 shares.
 
 In the previous years, the Remuneration Committee of the Company had
 granted 1,382,500 options under the ESOP 2008 to few eligible employees
 of the Company. During the current year, the Remuneration Committee in
 its meetings held on February 24, 2011 and July 25, 201 1 has granted
 180,500 and 9,000 options respectively under the ESOP 2008 to few
 eligible employees of the Company. The options allotted under ESOP 2008
 are convertible into equal number of equity shares.
 
 The vesting period of these options range over a period of three years.
 The options may be exercised with in a period of 30 days from the date
 of vesting.
 
 (c) The ESOP scheme titled Strides Arcolab ESOP 2008 (Directors)
 (ESOP 2008 Directors) was approved by the shareholders through postal
 ballot on January 12, 2009. 500,000 options are covered under the
 scheme for 500,000 equity shares.
 
 The Remuneration Committee of the Company, on March 16, 2009 had
 granted 300,000 options under the Strides Arcolab ESOP 2008 (Directors)
 scheme to few Directors of the Company. The shares covered by such
 options were 300,000 equity shares.
 
 The vesting period of these options range over a period of three years.
 The options may be exercised with in a period of 30 days from the date
 of vesting.
 
 (d) The ESOP scheme titled Strides Arcolab ESOP 2011 (ESOP 2011) was
 approved by the shareholders on May 30, 2011.
 
 1,500,000 options are covered under the scheme for 1,500,000 shares. No
 options are granted under this scheme in the current year.
 
 10.  The Company during 2009 had entered into a Subscription and
 Shareholders agreement with Aspen Group (Aspen) under which Aspen
 subscribed to 49% of the share capital of Onco Therapies Limited
 (ONCO), a subsidiary of the Company. Onco was set up to operate in the
 Oncology products line of business that the Company was in the process
 of building up.
 
 In the year 2010, the Company had entered into a binding agreement with
 Aspen for purchase of their shares in ONCO for a consideration of USD
 37.36 Million and had paid USD 36.95 Million (Rs1,649.04 Million) as
 advance towards purchase of shares in ONCO.As per the contractual terms
 the risk and economic benefit in the shares of ONCO held by Aspen has
 been transferred to the Company with effect from January 1, 2010.
 Pending completion of transfer of shares, purchase consideration paid
 was classified as advance towards purchase of shares as at December 31,
 2010. In 2011, the shares were transferred in favour of the Company.
 
 Further in the current year, as part of corporate restructuring
 initiatives of the Company, the investment in ONCO have been
 transferred to Agila Specialties Private Limited (''ASPL''), a wholly
 owned subsidiary of the Company at a consideration of Rs 2,344 Million,
 being the carrying value of investment in ONCO in the books of the
 Company.
 
 11.  In the year 2010, the Company had sold investment in equity shares
 of Strides Inc. a subsidiary of the Company, to Strides Pharma Limited
 (formerly Linkace Limited), a wholly owned step subsidiary of the
 Company and recognised a profit of Rs 6.20 Million on sale of such
 transfer.
 
 Consequent to certain developments in Strides Inc. during 2010, the
 Company reversed provision for impairment against Preference shares
 issued by Strides Inc. amounting to Rs 183.87 Million. In the year 2011,
 the preference shares have been redeemed by Strides Inc.
 
 12.  Interest in Joint ventures
 
 In the year 2010, the Company had transferred the ownership interest in
 Akorn Strides LLC, USA, a joint venture company with Akorn Inc., USA,
 to Strides Pharma Limited (''SPL'') (formerly Linkace Limited, a wholly
 owned step subsidiary of the Company) for a consideration of USD 3.41
 Million and a profit of Rs 88.20 Million on such transfer had been
 recognised in the Profit & Loss account in the same year.
 
 13.  As of December 31, 2011, the Company has invested an amount of USD
 162.82 Million in Agila Specialties Limited, Cyprus (''Agila Cyprus'',
 formerly known as Starsmore Limited) and USD 114.41 Million in Strides
 Arcolab International Limited (SAIL), both wholly owned subsidiaries of
 the Company. The investments were in the nature of subscriptions for
 shares of these entities and as at December 31, 2011, shares were
 pending to be allotted. Out of the above, monies aggregating to USD
 99.00 Million (Rs 5,273.70 Million) invested in Agila Cyprus and USD
 93.00 Million (Rs 4,954.11 Million) invested in SAIL have been
 considered as monetary items and have been restated in accordance with
 the requirements of Accounting Standard 11 ''The Effect of Changes in
 Foreign Exchange Rates'' and have been classified under Loans and
 advances to subsidiaries in these financial statements. The resultant
 unrealised exchange gain of Rs 1,564.00 Million has been recognised
 under Exceptional items in the Profit & Loss Account.
 
 14.  Unbilled revenue includes income recognised on development
 services contracts and contracts for production of dossiers, against
 which no invoices are raised, and are net of advances received against
 the respective contracts. Development income recognised in the Profit &
 Loss Account is net of unbilled revenue written off in the current year
 against development income recognised in the previous years.
 
 15.  Particulars of materials consumed and percentage to total
 consumption of Imported and Indigenous materials.
 
 Since none of the individual items of raw materials and packing
 materials constitute more than 10% of the consumption, quantitative
 details in respect of the same have not been given.
 
 *Note:
 
 a) This includes purchases of dossiers of Rs 45 Million (Previous Year Rs
 124.85 Million)
 
 b) Consumption of Traded Items not included above is Rs 1,072.1 1
 Million (Previous Year Rs 646.06 Million)
 
 Note: Installed Capacities are as certified by the management and
 relied upon by the Auditors. The installed capacities serve multiple
 purposes and will vary according to product mix.
 
 ** Not applicable as the products have been de-licensed.
 
 Note: The details of managerial remuneration stated in the above table
 exclude leave encashment and gratuity costs (for which separate
 actuarial valuation are not available).
 
 Note:
 
 Expenditure in foreign currency includes expenditure incurred by the
 Company on behalf of and in trust to Agila Specialties Private Limited
 (formerly known as Strides Specialties Private Limited), a wholly owned
 subsidiary of the Company.
 
 16 . Taxation
 
 (a) Provision for deferred tax has been made in accordance with the
 requirements of Accounting Standard 22 Accounting for taxes on
 income.
 
 Recognition of Deferred tax assets with respect to unabsorbed
 depreciation and tax losses has been done in cases where there is
 corresponding timing differences creating deferred tax liabilities and
 the amount of such assets recognised is restricted to the extent of
 such liabilities. Deferred Tax assets in respect of business losses are
 recognised based on the criteria of virtual certainty.
 
 17.  Equity dividend accrued in 2011 includes Rs 0.42 Million being
 dividends relating to the year ended December 31, 2010 on the
 incremental number of shares that were issued between December 31, 2010
 and the date of the Annual General Meeting of the Company held on May
 30, 201 1. Divided tax accrued in 2011 is net of excess provision made
 for the 2010 to the extent of Rs 0.27 Million.
 
 As on December 31, 2011, no amount was due for transfer to the Investor
 Education and Protection Fund (IEPF) as required under Section 205(C)
 of the Companies Act, 1956.
 
 18.  Leases
 
 The Company''s significant leasing arrangements are mainly in respect of
 factory buildings, residential and office premises. The aggregate lease
 rentals payable on these leasing arrangements charged to the Profit and
 Loss Account is Rs 37.14 Million (Previous year Rs 43.73 Million).
 
 The Company has entered in to non-cancelable lease agreements for its
 facilities and office premises. The tenure of lease ranges from 3 years
 to 15 years. The said lease arrangements have an escalation clause
 wherein lease rental is subject to an increment ranging from 6% to 10%.
 Details of the lease commitment at the yearend are as follows:
 
 Note: The information regarding Micro and Small Enterprises and the
 disclosure in Schedule H.A (a) has been determined to the extent such
 parties have been identified on the basis of information available with
 the Company. This has been relied upon by the auditors.
 
 19.  Transfer Pricing
 
 The Finance Act, 2001, has introduced, with effect from assessment year
 2002-03 (effective April 1, 2001), detailed Transfer Pricing
 regulations (''regulations'') for computing the income from
 ''international transactions'' between ''associated enterprises'' on an
 ''arm''s length'' basis. These regulations, inter alia, also require the
 maintenance of prescribed documents and information including
 furnishing a report from an Accountant which is to be filed with the
 Income tax authorities.
 
 The Company has undertaken necessary steps to comply with the Transfer
 Pricing regulations. The Management is of the opinion that the
 international transactions are at arm''s length, and hence the aforesaid
 legislation will not have any impact on the financial statements,
 particularly on the amount of tax expense and that of provision for
 taxation.
 
 20.  Since the Company prepares consolidated financial statements,
 segment information has not been provided in these financial
 statements.
 
 Note:
 
 1.  During 2011, FCCB''s outstanding were anti-dilutive and hence not
 considered for computing diluted Earnings per Share.
 
 2.  In the year 2010, the Company had reversed the preference dividend
 along with dividend tax thereon accrued in earlier years amounting to Rs
 148.54 Million, since such dividend was no longer payable consequent to
 the agreement with the preference shareholders. Consequent to reversal
 such amount is also available for distribution to the equity
 shareholders (refer Note B.4 above). The basic and diluted EPS for the
 year ended December 31, 2010 after considering the reversal of
 preference dividend and tax thereon was Rs 18.85 & Rs14.54 respectively.
 
 21. Cash flow statement
 
 (a) Cash flows are reported using the indirect method, whereby profit /
 (loss) before extraordinary items and tax is adjusted for the effects
 of transactions of non-cash nature and any deferrals or accruals of
 past or future cash receipts or payments.  The cash flows from
 operating, investing and financing activities of the Company are
 segregated based on the available information.
 
 Cash comprises of cash on hand and demand deposits with banks. Cash
 equivalents are short term (with an original maturity of three months
 or less from the date of acquisition), highly liquid investments that
 are readily convertible into known amounts of cash and which are
 subject to an insignificant risk of changes in value. Cash equivalents
 in the nature of investments are disclosed under Current investments.
 
 (b) Interest paid is inclusive of and purchase of Fixed Assets
 excludes, interest capitalised Rs 6.13 Million (Previous year Rs 12.46
 Million).
 
 (c) Direct tax paid and Others in the Cash Flow Statement includes
 outflows on account of permitted utilisation from the BRR of Rs 34.45
 Million (Previous Year Rs 69.80 Million) and Direct Taxes of Rs 189.41
 Million (Previous Year Rs 102.23 Million)
 
 (d) Reconciliation of Cash and Cash Equivalents to Cash and bank
 balances included in Schedule G.A.4.
 
 Note:
 
 1.  The estimate of future salary increases considered in actuarial
 valuation take account of inflation, seniority, promotion and other
 relevant factors such as supply and demand in the employment market.
 
 2.  In the absence of information relating to category wise breakup of
 Plan Assets, the same has not been disclosed.
 
 3.  Disclosure on actuarial valuation experience adjustment is
 disclosed to the extent the details are available with the Company.
 
 332 Details on Derivatives Instruments & Un-hedged Foreign Currency
 Exposures
 
 The following derivative positions are open as at December 31, 2011.
 These transactions have been undertaken to act as economic hedges for
 the Company''s exposures to various risks in foreign exchange markets.
 These instruments are therefore classified as held for trading and
 gains / losses recognised in the Profit and Loss Account except to the
 extent they qualified as Cash flow hedges in the context of the rigour
 of such classification under Accounting Standard 30.
 
 I. The Company has entered into the following derivative instruments:
 
 (a) Forward Exchange Contracts [being a derivative instrument], which
 are not intended for trading or speculative purposes, but for hedge
 purposes, to establish the amount of reporting currency required or
 available at the settlement date of certain payables and receivables.
 
 (b) Interest Rate Swaps to hedge against fluctuations in interest rate
 changes: No. of contracts: Nil (Previous year : Nil)
 
 (c) Currency Swaps (other than forward exchange contracts stated above)
 to hedge against fluctuations in changes in exchange rate. No. of
 contracts: Nil (Previous Year: Nil)
 
 III. There were no outstanding option contracts as at December 31,
 2011.
 
 IV.  Loss on Forward Exchange Derivative contracts (Net) included in
 the Profit and Loss Account for year ended December 31, 2011 amounts to
 Rs 27.83 Million (Previous Year: Loss (Net) Rs 72.12 Million).
 
 33.3 Categories of Financial Instruments (a) Loans and Receivables:
 
 The following financial assets in the Balance Sheet have been
 classified as Loans and Receivables as defined in Accounting Standard
 30. These are carried at amortised cost less impairment if any.
 
 Note: Interest expense calculated using effective interest rate method
 as prescribed in AS 30 for financial liabilities that are carried at
 amortised cost is Rs 555.18 Million (Previous Year Rs 773.89 Million)
 
 (a) Financial Liabilities Held for Trading
 
 The option component of FCCBs has been classified as held for trading,
 being a derivative under AS 30. The carrying amount of the option
 component was Rs 2.09 Million as at December 31, 2011 and Rs190.95
 Million as at December 31, 2010. The difference in carrying value
 between the two dates, amounting to Rs188.85 Million is considered as a
 gain in the Profit and Loss Account of the year in accordance with
 provisions of AS 30.
 
 The fair value of the option component has been determined using a
 valuation model. Refer to Note B.8.1 above on FCCBs for detailed
 disclosure on the valuation method.
 
 (b) There are no other financial assets / liabilities in the following
 categories:
 
 Financial assets:
 
 Carried at fair value through profit and loss designated as such at
 initial recognition.
 
 Held to maturity
 
 Available for sale (other than investment in Subsidiaries & Joint
 Venture)
 
 Financial liabilities:
 
 Carried at fair value through profit and loss designated as such at
 initial recognition.
 
 33.5 Nature and extent of risks arising from financial instrument
 
 The main financial risks faced by the Company relate to fluctuations in
 interest and foreign exchange rates, the risk of default by
 counterparties to financial transactions, and the availability of funds
 to meet business needs. The Balance Sheet as at December 31, 2011 is
 representative of the position through the year. Risk management is
 carried out by a central treasury department under the guidance of the
 Management.
 
 Interest rate risk
 
 Interest rate risk arises from long term borrowings. Debt issued at
 variable rates exposes the Company to cash flow risk.  Debt issued at
 fixed rate exposes the Company to fair value risk. In the opinion of
 the management, interest rate risk during the year under report was not
 substantial enough to require intervention or hedging through
 derivatives or other financial instruments. For the purposes of
 exposure to interest risk, the Company considers its net debt position
 evaluated as the difference between financial assets and financial
 liabilities held at fixed rates and floating rates respectively as the
 measure of exposure of notional amounts to interest rate risk. This net
 debt position is quantified as under:
 
 Credit risk
 
 Credit risk arises from cash and cash equivalents, financial
 instruments and deposits with banks and financial institutions.  Credit
 risk also arises from trade receivables and other financial assets.
 
 The credit risk arising from receivables is subject to concentration
 risk in that the receivables are predominantly denominated in USD and
 any appreciation in the INR will affect the credit risk. Further, the
 Company is not significantly exposed to geographical distribution risk
 as the counterparties operate across various countries across the
 Globe.
 
 Liquidity risk
 
 Liquidity risk is the risk that the Company will not be able to meet
 its financial obligations as they fall due. The Company''s approach to
 managing liquidity is to ensure, as far as possible, that it will
 always have sufficient liquidity to meet its liabilities when due,
 under both normal and stressed conditions, without incurring
 unacceptable losses or risking damage to Company''s reputation.
 Liquidity risk is managed using short term and long term cash flow
 forecasts.
 
 Foreign exchange risk
 
 The Company is exposed to foreign exchange risk principally via:
 
 Debt availed in foreign currency
 
 Net investments in subsidiaries and joint ventures in foreign
 currencies
 
 Exposure arising from transactions relating to purchases, revenues,
 expenses etc. to be settled in currencies other than Indian Rupees, the
 functional currency of the respective entities.
 
 33.6 Sensitivity analysis as at December 31, 2011
 
 Financial instruments affected by interest rate changes include Secured
 Long term loans from banks, Secured Long term loans from others,
 Secured Short term loans from banks and Unsecured Short term loans from
 banks. The impact of a 1% change in interest rates on the profit of an
 annual period will be Rs 99.55 Million (Previous year Rs 76.53 Million)
 assuming the loans as of December 31, 2011 continue to be constant
 during the annual period. This computation does not involve a
 revaluation of the fair value of loans as a consequence of changes in
 interest rates. The computation also assumes that an increase in
 interest rates on floating rate liabilities will not necessarily
 involve an increase in interest rates on floating rate financial
 assets.
 
 Financial instruments affected by changes in foreign exchange rates
 include FCCBs, External Commercial Borrowings (ECBs), investments in
 subsidiaries, and loans to subsidiaries and joint ventures. The Company
 considers US Dollar and the Euro to be principal currencies which
 require monitoring and risk mitigation. The Company is exposed to
 volatility in other currencies including the Great Britain Pounds (GBP)
 and the Australian Dollar (AUD).
 
 22. The previous year''s figures have been regrouped in line with the
 current year.