1.  Accounting convention
 
 1.1.  Financial statements are prepared in accordance with the
 generally accepted accounting principles including accounting standards
 in India under historical cost convention except so far as they relate
 to revaluation of certain land and buildings.
 
 1.2.  Use of estimates
 
 The preparation of the financial statements in conformity with the
 generally accepted accounting principles requires management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities on the date of the financial statements, disclosure of
 contingent liabilities and reported amounts of revenues and expenses
 for the year. Estimates are based on historical experience, where
 applicable and other assumptions that management believes are
 reasonable under the circumstances. Actual results could vary from
 these estimates and any such differences are dealt within the period in
 which the results are known / materialize.
 
 2.  Fixed assets and depreciation / amortisation
 
 2.1.  Cost of all civil works (including electrification and fittings)
 is capitalised with the exception of alterations and modifications of a
 capital nature to existing structures where the cost of such alteration
 or modification is Rs. 1,00,000 and below. Other fixed assets,
 including intangible assets and assets given on lease, where the cost
 exceeds Rs. 10,000 and the estimated useful life is two years or more,
 is capitalised. Cost of initial spares and tools is capitalised along
 with the respective assets. Cost of fixed assets is net of eligible
 credits under CENVAT / VAT Scheme. Expenditure directly related and
 incidental to construction are capitalised upto the date of attainment
 of commercial production.  Interest and other related costs, including
 amortised cost of borrowings attributable only to major projects are
 capitalised as part of the cost of the respective assets. Exchange
 differences are capitalised to the extent dealt with in para 5.2 below.
 
 2.2.  Assets are depreciated / amortised, as below, on straight line
 basis:
 
 a) Leasehold land, over 40 years or the period of the lease, whichever
 is less;
 
 b) Leasehold land and buildings subject to revaluation, is calculated
 on the respective revalued amounts, over the balance useful life as
 determined by the valuers in the case of buildings and as per (a) above
 in the case of land;
 
 c) Buildings, plant and machinery (except assets subject to impairment)
 and other assets, including assets given on lease and assets in leased
 premises / customer premises, over their estimated useful lives or
 lives derived from the rates prescribed in Schedule XIV to the
 Companies Act, 1956, whichever is lower and in the case of intangible
 assets, over their estimated useful life;
 
 d) Assets subject to impairment, on the assets revised carrying
 amount, over its remaining useful life.
 
 2.3.  Depreciation / amortisation is provided on a pro-rata basis from
 the month the assets are put to use during the financial year. In
 respect of assets sold or disposed off during the year, depreciation /
 amortisation is provided till the month of sale or disposal of the
 assets.
 
 3.  Investments
 
 Long term investments are stated at cost less provision for diminution
 other than temporary, if any. Current investments are valued at lower
 of cost and fair value.
 
 4.  Inventories
 
 4.1.  Inventories are valued at lower of cost and net realisable value;
 cost being ascertained on the following basis:
 
 - Stores, spares, consumable tools, raw materials and components: on
 monthly moving weighted average basis. In respect of works-made
 components, cost includes applicable production overheads.
 
 - Work-in-progress, finished / trading goods: under absorption costing
 method.
 
 4.2.  Cost includes taxes and duties and is net of eligible credits
 under CENVAT / VAT Schemes.
 
 4.3.  Cost of patterns and dies is amortised equally over five years.
 
 4.4.  Surplus / obsolete / slow moving inventories are adequately
 provided for.
 
 5.  Foreign currency transactions and derivatives
 
 5.1.  Foreign currency transactions are recorded at the rates
 prevailing on the date of the transaction. Monetary assets and
 liabilities in foreign currency are translated at closing rate.
 Exchange differences arising on settlement or translation of monetary
 items other than those mentioned in para 5.2 below are recognized as
 income or expense in the Profit and Loss Account.
 
 5.2.  Exchange differences on translation or settlement of long term
 foreign currency monetary items (i.e. whose term of settlement exceeds
 twelve months from date of its origination) at rates different from
 those at which they were initially recorded or reported in the previous
 financial statements, insofar as it relates to acquisition of
 depreciable assets are adjusted to the cost of the assets.  In other
 cases, these are accumulated in Foreign currency monetary item
 translation difference account and amortised by recognition as income
 or expense in each period over the balance term of such items till
 settlement occurs but not beyond March 31, 2011.
 
 5.3.  Gains and losses on certain forward contracts designated as
 effective Cash flow hedges as per Accounting Standard 30 - Financial
 Instruments are recognised in the Hedge Reserve Account till the
 underlying forecasted transaction occurs.
 
 5.4.  Gains and losses on all other derivatives (including forward
 contracts not designated as Cash flow hedge) are recognised in the
 Profit and Loss Account. Premium or discount on forward contracts is
 amortized over the life of the contract.
 
 5.5.  Investments in equity capital of companies registered outside
 India are carried in the Balance Sheet at the rates prevailing on the
 date of the transaction.
 
 5.6.  Income / expenditure of overseas branches are recognized at the
 average rate prevailing during the month in which transaction occurred.
 
 6.  Amortisation of deferred expenditure
 
 Expenditure incurred on issue of debentures / raising loans is
 amortised over the period of such borrowings.  Premium paid on
 prepayment of any borrowing is amortised over the unexpired period
 thereof or sixty months, whichever is less.
 
 7.  Revenue recognition
 
 Revenue from sale of products is recognised on despatch or
 appropriation of goods in accordance with the terms of sale and is
 inclusive of excise duty and export incentives, but net of incentive on
 sales including
 
 commission, rebates and discounts. Revenue arising due to price
 escalation claim is recognised in the period when such claim is made in
 accordance with terms of sale.
 
 Revenue from services is recognised in accordance with the specific
 terms of contract on performance.
 
 8.  Government grants
 
 Grants in the form of capital / investment subsidy are treated as
 Capital reserve. Export incentives and incentives in the nature of
 subsidies given by the Government are reckoned in revenue in the year
 of eligibility.
 
 9.  Research and Development Costs
 
 Expenditure on the design and production of prototypes is charged to
 revenue as incurred. Product development costs, including knowhow
 developed / acquired, incurred on new vehicle/ engine platforms,
 variants on existing platforms and aggregates are recognised as
 Intangible assets and amortised.
 
 10.  Employee benefits
 
 10.1.  Short term employee benefit obligations are estimated and
 provided for.
 
 10.2.  Post-employment benefits and other long term employee benefits
 
 Defined contribution plans:
 
 Companys contribution to provident fund, superannuation fund, employee
 state insurance and other funds are determined under the relevant
 schemes and / or statute and charged to revenue.
 
 Defined benefit plans and compensated absences:
 
 Companys liability towards gratuity, other retirement benefits and
 compensated absences are actuarially determined at each balance sheet
 date using the projected unit credit method. Actuarial gains and losses
 are recognised in revenue.
 
 10.3.  Termination benefits
 
 Compensation under voluntary retirement scheme is amortised over lesser
 of thirty six months and the period from incurrence of expenditure to
 March 31, 2011.
 
 11.  Product warranties
 
 Provision for product warranties is made for contractual obligations in
 accordance with the policy in force and is estimated for the unexpired
 period.
 
 12.  Deferred tax
 
 Deferred tax is recognised on timing differences; being the difference
 between taxable income and accounting income that originate in one
 period and are capable of reversing in one or more subsequent periods.
 
 Deferred tax assets on unabsorbed depreciation and carry forward of
 losses are recognised only to the extent there is a virtual certainty
 of its realisation.
 
 Of the above,
 
 1.  1,47,88,880 (2010: 1,47,88,880) Equity shares were allotted under
 an agreement without payment being received in cash.
 
 2.  6,23,08,110 (2010: 6,23,08,110) Equity shares were allotted as
 fully paid up by way of bonus shares by capitalisation out of General
 reserve and from Securities premium account.
 
 3.  Hinduja Automotive Limited, the holding company, holds 51,36,18,712
 (2010: 51,36,18,712) equity shares and 54,86,669 (2010: 54,86,669)
 Global depository receipts equivalent to 16,46,00,070 (2010:
 16,46,00,070) Equity shares.
 
 1.2 RESERVES AND SURPLUS
 
 1. a) D ebentures and term loans from banks aggregating Rs. 1,16,000
 lakhs (2010: Rs. 66,666.67 lakhs) are secured by a first paripassu
 charge created / to be created on certain immovable properties and
 movable assets of the company. External commercial borrowing from bank
 aggregating to Rs. 2,229.75 lakhs (2010: Rs. 4,490.01 lakhs) is secured
 by a first charge on the Aircraft of the company.
 
 b) C ash credit facility is secured by a first charge on certain
 movable assets and goods-in-transit and book debts (excluding deferred
 receivables).
 
 1.5  Fixed ASSETS
 
 1. Buildings include installations of gross value Rs. 10,582.38 lakhs
 (2010: Rs. 9,714.61 lakhs)
 
 2. Land and Buildings, other than those given on lease and
 installations, were revalued as at March 31, 2009 after considering
 depreciation / amortisation upto that date as per external valuers
 report, on the governing principles of current cost. The amount of
 increase on such revaluation was Rs. 1,36,486.44 lakhs. This valuation
 superseded the previous valuation done as at December 31, 1984.
 
 3. A portion of buildings in Bhandara revalued at Rs. 950.00 lakhs is
 on a land, title for which is yet to be transferred to the company.
 
 4. Additions to Land - Freehold include Rs. 0.42 lakhs (2010: Rs. Nil),
 title for which is yet to be transferred to the company.
 
 5. Cost of Buildings as at March 31, 2011 includes:
 
 a) Rs. 3.42 lakhs (2010: Rs. 3.42 lakhs) being cost of shares in
 Housing Co-operative Society representing ownership rights in
 residential flats and furniture and fittings thereat.
 
 b) Rs.132.38 lakhs (2010: Rs. 132.38 lakhs) representing cost of
 residential flats including undivided interest in land.
 
 6. Depreciation / amortisation / impairment for the year is disclosed
 in Schedules 2.3(C) and 2.4 to the Profit and Loss account.
 
 7. Additions to fixed assets and capital work in progress include:
 
 a) Exchange gain of Rs. 879.51 lakhs (2010: Rs. 14,934.34 lakhs)
 
 b) Borrowing cost of Rs. 175.34 lakhs (2010: Rs. 3,613.27 lakhs) and
 
 c) Other expenses capitalised Rs. 2,178.10 lakhs (2010: Rs. 1,499.93
 lakhs).
 
 8. Consequent to the cancellation of lease in respect of windmills
 during the year, Rs. 5,703.70 lakhs has been reclassified from assets
 given on lease to Plant and Machinery.
 
 3. Other financial information
 
 b) depreciation for the year computed on assets revalued as on March
 31, 2009 over the balance useful life on straight line method includes
 a net charge of Rs. 2,685.06 lakhs (2010: Rs. 2,982.47 lakhs) [Rs.
 1,514.71 lakhs (2010: Rs. 1,658.93 lakhs) in schedule 2.3 and Rs.
 1,170.35 lakhs (2010: Rs. 1,323.53 lakhs) in schedule 2.4] respectively
 being the excess over the depreciation computed by the method followed
 by the company prior to revaluation and the same has been transferred
 from Revaluation reserve to the profit and Loss Account.
 
 6.  Segment information
 
 The companys primary segment is identified as business segment based
 on nature of products, risks, returns and the internal business
 reporting system and secondary segment is identified based on the
 geographical location of the customers as per Accounting standard 17.
 the company is principally engaged in a single business segment viz.,
 commercial vehicles and related components.
 
 7. Related party disclosure
 
 a) List of parties where control exists
 
 Holding company
 
 Hinduja Automotive Limited, united Kingdom
 
 Machen Holdings SA (Holding company of Hinduja Automotive Limited,
 united Kingdom)
 
 Machen development corporation, panama (Holding company of Machen
 Holdings SA)
 
 Amas Holdings SA (Holding company of Machen development corporation,
 Panama)
 
 b) Other related parties
 
 Fellow subsidiary
 
 Hinduja foundries Limited, a company under the same management
 
 Hinduja Auto components Limited
 
 Hinduja Automotive (UK) Limited 
 
 Associates
 
 Albonair GmbH, Germany
 
 Albonair India private Limited
 
 Ashley Airways Limited (under liquidation)
 
 Ashley Bio-fuels Limited
 
 Ashley Holdings Limited
 
 Ashley investments Limited
 
 Ashley transport services Limited
 
 Ashok Leyland defence systems Limited
 
 Ashok Leyland (UAE) LLC, Ras Al Khaimah, UAE
 
 Automotive coaches and components Limited
 
 Avia Ashok Leyland Motors s.r.o, czech Republic
 
 Defiance technologies Limited
 
 Defiance testing and engineering services, inc. USA
 
 Gulf Ashley Motor Limited
 
 Hinduja Leyland finance Limited
 
 Irizar TVS Limited
 
 Lanka Ashok Leyland Limited, Sri Lanka
 
 Mangalam Retail services Limited
 
 Optare plc, UK 
 
 Joint Ventures
 
 Ashley Alteams India Limited
 
 Automotive Infotronics private Limited
 
 Ashok Leyland John Deere construction equipment company private Limited
 
 Ashok Leyland Nissan Vehicles Limited
 
 Nissan Ashok Leyland Powertrain Limited
 
 Nissan Ashok Leyland Technologies Limited 
 
 Key management personnel
 
 Mr. R Seshasayee, Managing director
 
 Mr. Vinod K Dasari, Managing director (Designate)