I.  System of Accounting:
 
 i) The Company generally follows the accrual basis of accounting both
 as to income and expenditure except those with significant
 uncertainties.
 
 ii) Financial statements are based on historical cost. These costs are
 not adjusted to reflect the impact of the changing value in the
 purchasing power of money.
 
 II.  Revenue Recognition:
 
 Income:
 
 The Company recognizes income on accrual basis. However, where the
 ultimate collection of the same lacks reasonable certainty, revenue
 recognition is postponed to the extent of uncertainty.
 
 (1) Sales :
 
 (a) Domestic Sales are accounted for on dispatch from the point of
 sale.
 
 (b) Export sales are recognized on the basis of the dates of the Mates
 Receipt and initially recorded at the relevant exchange rates
 prevailing on the date of transaction.
 
 (2) Interest is accrued over the period of the loan/investment.
 
 (3) Dividend is accrued in the year in which it is declared whereby a
 right to receive is established.
 
 (4) Profit/Loss on sale of investment is recognized on the contract
 date.
 
 (5) Benefit on account of entitlement to import goods free of duty
 under the Duty Entitlement Pass Book Scheme is accounted in the year
 of export.
 
 (6) Revenue from erection contracts is recognised based on the stage of
 completion determined with reference to the costs incurred on contracts
 and their estimated total costs. Provision for foreseeable losses/
 construction contingencies on erection contracts is made on the basis
 of technical assessments of costs to be incurred and revenue to be
 accounted for.
 
 III.  A) Fixed Assets:
 
 i) Freehold Land, Leasehold Land, Buildings (including Leasehold Land
 appurtenant thereto) and Premises on Ownership basis have been revalued
 as on 30.09.1994 and are accordingly carried thereafter at revalued
 figures less accumulated depreciation / amortisation thereon, except
 freehold land which are carried at their revalued figures. Additions
 thereafter are carried at their cost of acquisition less accumulated
 depreciation.
 
 ii) Capital goods manufactured by the Company for its own use are
 carried at their cost of production (including duties and other levies,
 if any) less accumulated depreciation and other fixed assets are
 carried at cost of acquisition (including cost of specific borrowings)
 less accumulated depreciation.
 
 B) Depreciation:
 
 i) a) Depreciation on all Fixed Assets (other than Leasehold Land which
 is amortized over the period of lease and those mentioned in (ii) and
 (iii) below) is being provided on Straight Line Method at the rates
 and in the manner specified in Schedule XIV to the Companies Act, 1956.
 Computer software is amortized over its useful life, which is
 determined as three years.
 
 b) Pursuant to the revision in the rates prescribed in Schedule XIV to
 the Companies Act, 1956 vide Notification No. GSR 756(E) dated
 16.12.1993 issued by the Ministry of Law, Justice and Company Affairs,
 depreciation has been calculated at new rates only on additions to
 assets made after the said date.
 
 ii) The depreciation on increased value due to revaluation of buildings
 and the premises on ownership basis is being provided on Straight Line
 Method at the rates specified considering the balance period of life of
 the assets.
 
 The additional charge of depreciation on increased value due to
 revaluation of buildings and the premises on ownership basis has been
 transferred from Revaluation Reserve to the Profit and Loss Account.
 
 iii) The Company has provided 100% depreciation on items of Plant &
 Machinery costing Rs.5,000/- or less upto 15.12.1993. Consequent to the
 amendment in the Schedule as indicated in Note (i) (b) above from
 16.12.1993, on all additions to fixed assets costing Rs.5,000/- or
 less, 100% depreciation is provided.
 
 C) Impairment of Assets:
 
 The Company, at each Balance Sheet date, assesses individual fixed
 assets and groups of assets constitutingCash Generating Units (CGU)
 for impairments, if circumstances indicate a possibility or warrant
 such assessment.  Provision is made for impairment to state the assets
 or CGUs at their realizable value or economic value, as the case may
 be.
 
 D) Assets given on Lease:
 
 The Company has given Plant and Machinery on an operating lease basis.
 Lease rentals are accounted on accrual basis in accordance with the
 respective lease agreements.
 
 IV.  Foreign Currency Transactions:
 
 The export sales in the first instance are recognised with reference to
 the Mates Receipt at the exchange rates prevailing on the transaction
 date. Foreign exchange gains or losses on realisation are dealt with,
 as such, in the Profit and Loss account. At the close of the year, all
 foreign currency loans, liabilities and current assets are stated at
 the relevant exchange rate prevailing at the close of the year. The
 exchange difference arising from foreign currency transactions are
 dealt with, as such, in the Profit & Loss Account.
 
 Foreign Exchange Contracts:
 
 i) Premium/Discounts are recognized over the life of the contract.
 
 ii) Profits and losses arising from either cancellation or utilization
 of the contract and revalorizing the contract at the close of the year
 are recognized in the Profit and Loss account as detailed in Note No.
 13 (e) in Schedule 15 to the accounts.
 
 V.  Investments:
 
 Investments are valued at cost of acquisition less provision made for
 diminution in the value of investments, which, in the judgment of the
 management are necessary.
 
 VI.  Inventory Valuation:
 
 Costs of inventories have been computed to include all costs of
 purchases, cost of conversion and other costs incurred in bringing the
 inventories to their present location and condition.
 
 A.  Finished Goods and Work-in-Process :
 
 a) Finished Goods
 
 (i) Traded finished goods and spares are valued at cost, determined on
 First In First Out basis or net realisable value, whichever is lower.
 
 (ii) Finished goods manufactured by the Company are valued at lower of
 cost, determined on First In First Out basis or net realizable value.
 Galvanized structures / products manufactured by the Company are valued
 at cost, determined on Specific Identification method or net realizable
 value, whichever is lower.
 
 b) Work-in-Process is valued at cost unless circumstances require the
 cost to be written down to realizable value.
 
 B.  Raw Materials:
 
 Raw materials are valued at weighted average cost unless circumstances
 require the cost to be written down to realizable value.
 
 C.  Stores, Spares and Packing Material:
 
 Stores, spares and packing material are valued at monthly weighted
 average cost unless circumstances require the cost to be written down
 to realizable value.
 
 D.  Obsolete and non-moving inventory of raw material, stores and
 spares is carried at cost or market value, whichever is lower. Obsolete
 and non-moving inventory of galvanized structures are valued at scrap
 rate.
 
 VII.  Employee Benefits:
 
 i.  Short Term Employee Benefits:
 
 All employee benefits payable within twelve months of rendering the
 service are classified as short term benefits.  Such benefits include
 salaries, wages, bonus, short term compensated absences, awards,
 exgratia etc. are recognised in the period in which the employee
 renders the related service.
 
 ii.  Post Employment Benefits:
 
 Defined Benefit Plans:
 
 A.  Gratuity:
 
 The Company is making contributions on an actuarial basis as determined
 by the Life Insurance Corporation of India (LIC), through Bajaj
 Electricals Limited Employees Group Gratuity Trust, to the Group
 Gratuity- cum-Life Assurance Scheme under the Cash Accumulation
 Policy, which also covers employees who are entitled to gratuity after
 attainment of retirement age. However, any deficit in plan assets
 managed by LIC as compared to the acturial liability, is recognized as
 a liability immediately.
 
 B.  Provident Fund:
 
 Employees own and Employers contribution (after paying Family Pension
 Scheme portion to Provident Fund Authority) are paid to Bajaj
 Electricals Limited Employees Provident Fund Trust / Concerned
 Authorities.  Deficits in the assets, as compared to the obligations
 outstanding, are contributed by the Company, as and when they arise.
 
 Defined Contributions Plans:
 
 C.  Superannuation:
 
 Defined contribution to Superannuation Fund is being made to Life
 Insurance Corporation of India as per the Scheme of the Company.
 
 D.  Employees Pension Scheme:
 
 Defined contribution to Employees Pension Scheme 1995 is made to the
 Government Provident Fund Authority.
 
 iii.  Leave Entitlement:
 
 Encashable leave entitlements are recognized as a liability, in the
 calendar year of rendering of service, as per the rules of the Company.
 Being in the nature of long term benefits, the liability is recognized
 on the basis of the present value of the future benefit obligations as
 determined by the actuarial valuation.
 
 iv.  Employee Stock Option Scheme:
 
 The Company has granted Stock Options to its employees under the Growth
 Option as well as Loyalty Option. In respect of the Options granted
 under the Employees Stock Options Plan, in accordance with guidelines
 issued by the SEBI and in compliance with the Guidance Note on
 Accounting for Employee Share-based Payments issued by the Institute of
 Chartered Accountants of India in the year 2005 and applicable for the
 period on or after 1st April 2005, the cost of stock options granted to
 employees are accounted by the Company using the intrinsic value method
 and the cost based on excess of market value over the exercise price is
 recognized in the Profit & Loss Account over vesting period on time
 proportion basis and included in the ‘Salaries, wages, bonus etc. in
 Schedule 11 of the Financial Statements. Should any employee leave in
 the subsequent year, before exercise of the Options, the value of
 Options accrued in his/her favour is written back to the General
 Reserve.
 
 VIII.  Export Incentives:
 
 Export incentives are accounted for on export of goods; if entitlement
 can be estimated with reasonable accuracy and conditions precedent to
 claim are fulfilled.
 
 IX.  Borrowing Costs:
 
 Borrowing costs are recognised in the financial statements except in
 respect of specific borrowing raised for acquisition of capital asset
 until such time the asset is ready to be put to use for its intended
 purpose, which are added to carrying cost of such asset.
 
 X.  Taxation:
 
 i) Deferred tax assets and liabilities are recognised for the future
 tax liability arising on account of timing difference between the
 taxable income and the profits as per the financial statements.
 
 ii) Deferred tax assets representing carried forward business losses
 and unabsorbed depreciation are recognised to the extent the management
 is virtually certain that they are going to be realised in future.
 
 iii) Deferred tax assets and Liabilities have been recognised by
 considering the tax rate, which has been enacted or substantively
 enacted by the Balance Sheet date.
 
 iv) Deferred tax assets and liabilities, as the case may be, arising on
 adjustments to Reserves are netted off against the respective
 adjustments.
 
 XI.  Discontinued Operations:
 
 Assets and Liabilities of discontinued operations are assessed at each
 Balance Sheet date. Impacts of any impairments and write backs are
 dealt with in the Profit and Loss Account.
 
 Impacts of discontinued operations are distinguished from the ongoing
 operations of the Company, so that their impact on the Profit and Loss
 Account for the year can be perceived.
 
 XII.  Provisions, Contingent Liabilites and Contingent Assets:
 
 Provisions are recognised for current obligations, which are likely to
 entail outflow of economic resources in the future periods consequent
 to obligating events prior to the close of the year.
 
 However, obligations not likely to entail outflows in future periods
 and contingent on the future outcome of events, are disclosed as a
 matter of information as Contingent Liabilities. Contingent Assets
 are neither recognized nor disclosed in the financial statements.
 
 XIII.  Use of Estimates:
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires management to make estimates
 and assumptions that affect the reported amounts of assets and
 liabilities at the date of the financial statements and the reported
 amounts of revenues and expenses during reporting period. Differences
 between actual results and estimates are recognized in the period in
 which the results are known.
 
 XIV.  Impairment of Assets:
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 if there is any indication of impairment based on internal/external
 factors. An asset is impaired when the carrying amount of the asset
 exceeds the recoverable amount. An impairment loss is charged to the
 Profit and Loss Account in the year in which an asset is identified as
 impaired. An impairment loss recognized in prior accounting periods is
 reversed if there has been change in the estimate of the recoverable
 amount.