1.  BASIS OF ACCOUNTING
 
 The financial statements are prepared and presented under the
 historical cost convention, in accordance with Generally Accepted
 Accounting Principles in India (GAAP), on the accrual basis of
 accounting, except as stated herein.  GAAP comprises the mandatory
 Accounting Standards (AS) covered by the Companies (Accounting
 Standards) Rules, 2006 issued by the Central Government, to the extent
 applicable, and the provisions of the Companies Act, 1956 and these
 have been consistently applied.
 
 2.  USE OF ESTIMATES
 
 The preparation of the financial statements in conformity with GAAP,
 requires that the management make estimates and assumptions that affect
 the reported amounts of assets and liabilities, disclosure of
 contingent liability as at the date of financial statements and the
 reported amounts of revenue and expenses during the reporting period.
 Although such estimates are made on a reasonable and prudent basis
 taking into account all available information, actual results could
 differ from these estimates and such differences are recognised in the
 period in which the results are ascertained.
 
 3.  REVENUE RECOGNITION
 
 (i) Revenue from sale of goods is recognised as under :
 
 a.  In the case of FOR contracts, when the goods are handed over to the
 carrier for transmission to the buyer after prior inspection and
 acceptance, if stipulated, and in the case of FOR destination
 contracts, if there is a reasonable expectation of the goods reaching
 destination within the accounting period. Revenue is recognised even if
 goods are retained with the Company at the request of the customer.
 
 b.  In the case of ex - works contracts, when the specified goods are
 unconditionally appropriated to the contract after prior inspection and
 acceptance, if required.
 
 c.  In the case of contracts for supply of complex equipments / systems
 where the normal cycle time of completion / delivery period is more
 than 24 months and the value of the equipment / system is more than Rs.
 100 crores, revenue is recognised on the percentage completion
 method.  Percentage completion is based on the ratio of actual costs
 incurred on the contract upto the reporting date to the estimated total
 cost of the contract.
 
 Since the outcome of such a contract can be estimated reliably only on
 achieving certain progress, revenue is recognised upto 25 % progress
 only to the extent of costs. After this stage, revenue is recognised on
 proportionate basis and a contingency provision equal to 20 % of the
 surplus of revenue over costs is made while anticipated losses are
 recognised in full.
 
 d.  If the sale price is pending finalisation, revenue is recognised on
 the basis of price expected to be realised. Where break up prices of
 sub units sold are not provided for, the same are estimated.
 
 e.  Price revisions and claims for price escalations on contracts are
 accounted on admittance.
 
 f.  Where installation and commissioning is stipulated and price for
 the same agreed separately, revenue relating to installation and
 commissioning is recognised on conclusion of installation and
 commissioning activity. In case of a composite contract, where separate
 fee for installation and commissioning is not stipulated and the supply
 is effected and installation and commissioning work is pending, the
 estimated costs to be incurred on installation and commissioning
 activity is provided for and revenue is recognised as per the contract.
 
 g.  Sales exclude Sales Tax / Value Added Tax (VAT) and include Excise
 Duty.
 
 (ii) Other income is recognised on accrual.
 
 4.  FIXED ASSETS AND CAPITAL WORK-IN-PROGRESS:
 
 (i) Tangible Assets:
 
 Tangible Fixed Assets are stated at cost less accumulated depreciation
 / amortisation including where the same is acquired in full or in part
 with government grant.  Cost for this purpose includes all attributable
 costs for bringing the asset to its location and condition, cost of
 computer software which is an integral part of the related hardware,
 and also includes borrowing costs during the acquisition / construction
 phase, if it is a qualifying asset requiring substantial period of time
 to get ready for intended use. The cost of Fixed Assets acquired from a
 place outside India includes the exchange differences if any, arising
 in respect of liabilities in foreign currency incurred for acquisition
 of the same upto 31.03.2007.
 
 Capital work - in - progress comprises supply - cum - erection
 contracts, the value of capital supplies received at site and accepted,
 capital goods in transit and under inspection and outstanding advances
 paid to acquire Fixed Assets and the cost of Fixed Assets that are not
 yet ready for their intended use as at the balance sheet date.
 
 (ii) Intangible Assets :
 
 The cost of software (which is not an integral part of the related
 hardware) acquired for internal use and resulting in significant future
 economic benefits, is recognised as an intangible asset in the books of
 accounts when the same is ready for use.
 
 (iii) Impairment of Assets :
 
 The Company assesses the impairment of assets with reference to each
 Cash Generating Unit (CGU) at each Balance Sheet date if events or
 changes in circumstances, based on internal and external factors,
 indicate that the carrying value may not be recoverable in full. The
 loss on account of impairment, which is the difference between the
 carrying amount and recoverable amount, is accounted accordingly.
 Recoverable amount of a CGU is its Net Selling Price or Value in Use
 whichever is higher. The Value in Use is arrived at on the basis of
 estimated future cash flows discounted at Company''s pre-tax borrowing
 rates.
 
 Reversal of impairment provision is made when there is an increase in
 the estimated service potential of an asset, either from use or sale,
 on reassessment after the date when impairment loss for that asset was
 last recognised.
 
 5.  DEPRECIATION / AMORTISATION
 
 Tangible depreciable Fixed Assets are generally depreciated on
 straight-line method at the rates (or higher rates as disclosed) and in
 the manner prescribed in Schedule XIV to the Companies Act, 1956.
 Special instruments are amortised over related production. Intangible
 Assets are amortised over a period of three years on straight - line
 method.  Prorata depreciation / amortisation is charged from / upto the
 date on which the assets are ready to be put to use / are deleted or
 discarded. Leasehold land is amortised over the period of lease.
 
 6.  BORROWING COSTS
 
 Borrowing costs that are specifically attributable to qualifying assets
 as defined in Accounting Standard AS 16 are added to the cost of such
 assets until use or sale and the balance expensed in the year in which
 the same is incurred.
 
 7.  RESEARCH & DEVELOPMENT EXPENDITURE
 
 Research and Development expenditure other than on specific development
 - cum - sales contracts is charged off as expenditure when incurred.
 R&D expenditure on development - cum sale contracts is treated at par
 with other sales contracts. Such expenditure on Fixed Assets is
 capitalised.
 
 8.  GOVERNMENT GRANTS
 
 All Grants from Government are initially recognised as Deferred Income.
 
 The amount lying in Deferred Income on account of acquisition of Fixed
 Assets is transferred to the credit of Profit and Loss Account in
 proportion to the depreciation charged on the respective assets to the
 extent attributable to Government Grants utilised for the acquisition.
 
 The amount lying in Deferred Income on account of Revenue Expenses is
 transferred to the credit of Profit and Loss Account to the extent of
 expenditure incurred in the ratio of the funding to the total
 sanctioned cost, limited to the grant received.
 
 Grants in the nature of promoter''s contribution are credited to Capital
 Reserve.
 
 9.  INVESTMENTS
 
 (i) Investments are categorised as Trade or Non - Trade.  Trade
 investments are the investments made to enhance the Company''s business
 interests.
 
 (ii) Investments are further classified either as long - term or
 current based on the Management''s intention at the time of purchase.
 Long term investments are valued at acquisition cost. Any diminution in
 the value other than of temporary nature is provided for. Current
 investments are carried at lower of cost or fair value.
 
 10.  INVENTORY VALUATION
 
 All inventories of the Company other than disposable scrap are valued
 at lower of cost or net realisable value. Disposable scrap is valued at
 estimated net realisable value. Cost of materials is ascertained by
 using the weighted average cost formula. Cost of work in progress and
 finished goods include Materials, Direct Labour and appropriate
 overheads. Finished goods at factories include applicable excise duty.
 Adequate provision is made for inventory which are more than five years
 old which may not be required for further use.
 
 11.  SUNDRY DEBTORS
 
 (i) Full provision is made for all debts considered doubtful of
 recovery having regard to the following considerations :
 
 a.  Time barred debts from the government / government departments /
 government companies are generally not treated as doubtful debts.
 
 b.  Where debts are disputed in legal proceedings, provision is made if
 any decision is given against the Company even if the same is taken up
 on appeal to higher authorities / courts.
 
 (ii) Provision for bad and doubtful debts is generally made for debts
 outstanding for more than three years, excepting those which are
 contractually not due as per the terms of the contract or those which
 are considered realisable based on a case to case review.
 
 12.  INCOME TAX
 
 Tax expense comprising current tax after considering deferred tax and
 fringe benefit tax as determined under the prevailing tax laws are
 recognised in the Profit and Loss Account for the period.
 
 Certain items of income and expenditure are not considered in tax
 returns and financial statements in the same period.  The net tax
 effect calculated at the current enacted tax rates of this timing
 difference is reported as deferred income tax asset / liability. The
 effect on deferred tax assets and liabilities due to change in such
 assets / liabilities as at the end of the accounting period as compared
 to the beginning of the period and due to a change in tax rates are
 recognised in the Profit and Loss Account for the period.
 
 13.  PROVISION FOR WARRANTIES
 
 Provision for expenditure on account of performance guarantee &
 replacement / repair of goods sold is made on the basis of trend based
 estimates.
 
 14.  FOREIGN CURRENCY TRANSACTIONS
 
 Foreign exchange transactions including that of integral foreign
 branches are recorded using the exchange rates prevailing on the dates
 of the respective transactions.  Monetary assets and liabilities
 denominated in foreign currencies as at the balance sheet date are
 translated at period-end rates. The resultant exchange difference
 arising from settlement of transactions during the period and
 translations at the period end, except those upto 31.03.2007 relating
 to acquisition of Fixed Assets from a place outside India, is
 recognised in the Profit and Loss Account. Exchange differences
 relating to the acquisition of Fixed Assets were adjusted in the
 carrying cost of the Fixed Assets till 31.03.2007.
 
 Premium or discount arising at the inception of the forward exchange
 contract is amortised as income / expenditure over the life of the
 contract.
 
 The exchange rate differences on the amount of forward exchange
 contracts between the rate on the last reporting date / the rate at the
 time of entering into a contract during the period and the rate on the
 settlement date are recognised in the statement of Profit and Loss in
 the reporting period in which the exchange rates change. The exchange
 differences arising from the rates prevailing at the time of entering
 into the contract and the reporting date are also accrued and adjusted
 in the Profit and Loss Account.
 
 Any profit or loss arising on cancellation or renewal of a forward
 exchange contract is recognised as income or as expense in the period
 when the cancellation or renewal occurs.
 
 15.  EMPLOYEE BENEFITS
 
 (i) All employee benefits payable wholly within twelve months of
 rendering the related services are classified as short term employee
 benefits and they mainly include (a) Wages & Salaries; (b) Short-term
 compensated absences; (c) Profit-sharing, incentives and bonuses and
 (d) Non-monetary benefits such as medical care, subsidised transport,
 canteen facilities etc., which are valued on undiscounted basis and
 recognised during the period in which the related services are
 rendered.
 
 Incremental liability for payment of long term compensated absences
 such as Annual and Sick Leave is determined as the difference between
 present value of the obligation determined annually on actuarial basis
 using Projected Unit Credit method and the carrying value of the
 provision contained in the balance sheet and provided for.
 
 (ii) Defined contribution to Employee Pension Scheme is made on monthly
 accrual basis at the applicable rates.
 
 (iii) Incremental liability for payment of Gratuity and Employee
 Provident fund to employees is determined as the difference between
 present value of the
 
 obligation determined annually on actuarial basis using Projected Unit
 Credit Method and the Fair Value of Plan Assets funded in an approved
 trust set up for the purpose for which monthly contributions are made
 in the case of provident fund and lump sum contributions in the case of
 gratuity.
 
 (iv) Incremental liability under BEL Retired Employees Contributory
 Health Scheme (BERECHS) is determined annually on actuarial basis using
 Projected Unit Credit Method and provided for.
 
 (v) Actuarial liability for the year is determined with reference to
 employees at the end of January of each year.
 
 (vi) Payments of voluntary retirement benefits are charged off to
 revenue on incurrence.
 
 16.  PRIOR PERIOD ADJUSTMENTS AND
 
 EXTRAORDINARY ITEMS
 
 Prior period adjustments and extraordinary items having material impact
 on the financial affairs of the Company are disclosed.
 
 17.  TECHNICAL KNOW - HOW
 
 Revenue Expenditure incurred on technical know - how is charged off to
 Profit and Loss Account on incurrence.
 
 18.  PROVISIONS AND CONTINGENT LIABILITIES
 
 Provisions for losses and contingencies arising as a result of a past
 event where the Management considers it probable that a liability may
 be incurred, are made on the basis of the best reliable estimate of the
 expenditure required to settle the present obligation on the Balance
 Sheet date, and are not discounted to its present value.  Provisions
 are reviewed at each Balance Sheet date and adjusted to reflect the
 current best estimate. Significant variations thereof are disclosed.
 
 Contingent liabilities to the extent the Management is aware, are
 disclosed by way of notes to the accounts.
 
 19.  CASH FLOW STATEMENT
 
 Cash flow statement has been prepared in accordance with the indirect
 method prescribed in Accounting Standard - 3 on Cash Flow Statements.