1. Significant Accounting Policies

1.1 Basis of brparation of financial statements:

The financial statements have been brpared on an accrual basis under the historical cost convention, in accordance with the accounting principles generally accepted in India and comply with the Accounting Standards (AS) notified by the Central Government under The Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

1.2 Use of Estimates:

The brparation of financial statements requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities (including contingent liabilities) and disclosures relating to liabilities as at the date of the financial statements and reported amounts of income and expenses during the period.

1.3 Revenue Recognition:

Revenue in respect of services rendered is recognised when the service is rendered and there is a reasonable certainty of ultimate realisation. Dividend income on investments is recognised when the unconditional right to receive payment is established. Discount or brmium on debt securities / discounted Money Market Instruments is accrued over the period of remaining maturity.

Investment income in respect of Brokers' Contingency Fund (BCF) and all Trade Guarantee Funds (TGF) upto Financial Year 2010-11 is credited to the Profit and Loss Statement. In respect of TGF, upto Financial Year 2010-11, the income, net of applicable taxes, is appropriated to the respective fund account. However, with respect to other earmarked funds, the income on investments is credited to the respective fund account. Form the current year on transfer of such activities as stated in note 27 such appropriation is not made.

1.4 Fixed Assets:

1.4.1 Tangible Assets:

Fixed Assets are stated at cost, less accumulated debrciation. Cost includes cost of acquisition and other incidental expenses incurred until the asset is ready to put to use for its intended purpose. Capital work-in-progress comprises outstanding advances paid to acquire fixed assets and the cost of fixed assets that are not yet ready for its intended use.

1.4.2 Intangible Assets:

(i) Cost of development and production of internally developed or purchased software, used for the purpose of operations, is capitalised.

(ii) Any expense on software for support, maintenance, upgrades etc., payable periodically is charged to the Profit and Loss Statement.

1.5 Debrciation:

1.5.1 Tangible Assets:

Debrciation on fixed assets is provided on the 'Written Down Value' basis at the rates brscribed under Schedule XIV of the Companies Act, 1956 for the number of days the assets have been ready to put to use for their intended purposes.

1.5.2 Intangible Assets:

Intangible assets consisting of computer software are being debrciated at 40% on the 'Written Down Value' basis for the number of days the assets have been ready to put to use for their intended purposes.

1.6 Impairment of Assets:

The carrying amounts of assets are reviewed at each Balance Sheet date if there is an indication of impairment based on the internal and external factors.

An asset is treated as impaired when its carrying cost exceeds the recoverable amount. An impairment loss, if any, is charged to the Profit and Loss Statement in the period in which the asset is identified as impaired. Reversal of impairment loss recognised in prior years is recorded when there is an indication that impairment losses recognised for the assets no longer exist or have decreased.

1.7 Investments:

Long-term investments are stated at cost less provision for diminution other than temporary in value. Current investments are valued at the lower of cost and fair value.

1.8 Employee Benefits:

Employee benefits are accrued in accordance with Accounting Standard-15 (Revised) "Employee Benefits"

1.8.1 Provident Fund:

Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Aggregate contribution along with interest thereon is paid on cessation of services. Both the employee and the Exchange make monthly contributions to the Bombay Stock Exchange Employees' Provident Fund, a trust set up and administered by the Exchange. The Exchange is liable for any shortfall in the fund assets based on the minimum rate of return specified by the Government, which is recognised as an expense in the year incurred.

1.8.2 Compensated Absences:

The leave balance is classified as long-term and short-term, based on the best estimates after considering the past trends. The short-term leave encashment liability has been measured on actual components eligible for leave encashment and expected short-term leave to be availed is valued at total cost to the Exchange. Long-term leave has been valued on actuarial basis as at the year end.

1.8.3 Gratuity:

The Exchange provides for gratuity, a defined benefit plan, in respect of employees. The gratuity plan provides a lump sum payment vested to employees at the time of retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of his employment. Liability with regards to Gratuity is determined based on an actuarial valuation as per the projected unit credit method as at the Balance Sheet date and is charged to the Profit and Loss Statement. The Exchange makes annual contribution to Gratuity Fund administered by it.

Actuarial gains and losses are accounted in the Profit and Loss Statement.

1.9 Provision for Current and Deferred Tax:

Provision for Current Tax is made on the basis of the estimated taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961. Deferred Tax, resulting from "timing differences" between the book and the taxable profits for the year is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets are recognised and carried forward only to the extent that there is reasonable certainty, except for carried forwards losses and unabsorbed debrciation which are recognised based on virtual certainty that the difference will reverse in future.

1.10 Provisions, Contingent Liabilities and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a brsent obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognised but are disclosed in Notes to Accounts, while contingent assets are neither recognised nor disclosed in the financial statements.

1.11 Foreign Currency Transactions:

Foreign currency transactions are recorded at the exchange rate brvailing on the date of transaction. All foreign currency current assets/liabilities are translated at the rates brvailing on the date of the Balance Sheet. Foreign Exchange rate differences arising on settlement(s) / conversion(s) are recognised in the Profit and Loss Statement.

NOTES

1. In December 2011, the Company acquired an equity interest in Institutional Investor Advisory Services India Limited (IIASIL) for a total consideration of Rs. 400 Lakh.

2. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 4,234 lakh as on 31st March, 2012 (Rs. 736 lakh as on 31st March, 2011).

3. Pursuant to BSE (Corporatisation and Demutualisation) Scheme, 2005 notified on May 20, 2005, BSE Ltd. (BSE) and in accordance to a scheme of arrangement under Section 391 to 394 of the Companies Act, 1956 between BSE and ICCL ("Scheme"), BSE has transferred assets and liabilities relating to its Clearing and Settlement (C&S) division to ICCL at book value. The scheme was approved by the Hon'ble High Court, Bombay on January 20, 2012 and the date on which the transfer became effective was after the close of business hours on February 24, 2012. As per the approved scheme the appointed date of transfer was April 1, 2011. Further, balances in Trade Guarantee funds and brokers' contingency fund has been transferred to General reserve as specified in the Scheme. Subsequently, on 16th April 2012, BSE has also subscribed to 30,400 lakh Equity Shares of Rs. 1 each of ICCL amounting to Rs. 30,400 Lakh.

4. As per the definitions of 'business segment' and 'geographical segment', contained in Accounting Standard-17 "Segment Reporting", the Management is of the opinion that as the Exchange's operations comprise of only facilitating trading in securities and the activities incidental thereto, there is neither more than one reportable business segment nor more than one reportable geographical segment, and, therefore, segment information as per Accounting Standard-17 is not required to be disclosed.

5. The Exchange offers Deposit Based Membership. Trading Members are required to deposit a specified amount with the Exchange. As at March 31, 2012 the deposit amount of Rs.11,951 Lakh (Rs.13,779 Lakh as at 31st March, 2011) have a lock in period of more than a year and have been disclosed as Non Current Liabilities. Other deposits from Trading Members amounting to Rs. 19,343 Lakh (Rs. 16,657 Lakh as at 31st March 2011) have been disclosed as Other Current Liabilities.

6. Pursuant to SEBI Circular CIR/DNPD/5/2011 dated June 2, 2011 (BSE Notice No. 20110602-18, dated June 02, 2011), permitting stock exchanges to introduce Liquidity Enhancement Schemes (LES) for illiquid securities in their equity derivatives segment, the Exchange has launched a series of Liquidity Enhancement Incentive Programmes (LEIPS) to enhance liquidity in BSE's Futures & Options Segment. The programme was launched on 28th September, 2011 and an expense of Rs. 6,049 lakh has been incurred towards the same in financial year 2011-12. Considering the special nature of this expense and its impact on the profit of the Exchange, the same has been recognised as an exceptional item.

7. Due to the "Scheme of Arrangement", during the current year, with ICCL brvious years' figures are not strictly comparable. The Revised Schedule VI has become effective from 1 April, 2011 for the brparation of financial statements. This has significantly impacted the disclosure and brsentation made in the financial statement. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

For and on behalf of the Board of Directors

S. Ramadorai

Chairman

Madhu Kannan

Managing Director & CEO

Nayan Mehta

Chief Financial Officer

Neena Jindal

Company Secretary

Place : Mumbai,

Date : 27th April, 2012