a) Basis of accounting
 
 (i) The financial statements have been prepared to comply in all
 material aspects with all the applicable accounting principles in
 India, the applicable accounting standards notified under section 211
 (3C) of the Companies Act, 1956 and the relevant provisions of the
 Companies Act, 1956.
 
 (ii) 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,
 liabilities, revenue and expenses and disclosure of contingent assets
 and liabilities. The estimates and assumptions used in the accompanying
 financial statements are based upon managements evaluation of the
 relevant facts and circumstances as of the date of the financial
 statements. Actual results may differ from the estimates and
 assumptions used in preparing the accompanying financial statements.
 Any revisions to accounting estimates are recognised prospectively in
 current and future periods.
 
 b) Fixed assets and depreciation
 
 (i) Fixed assets are stated at cost of acquisition or construction less
 accumulated depreciation. All significant costs relating to the
 acquisition and installation of fixed assets are capitalised. Assets
 acquired under finance lease are recognised at the inception of the
 lease at lower of the fair value or the present value of minimum lease
 payments. The initial direct costs incurred in connection with finance
 leases are recognised as an asset under the lease.
 
 (ii) Depreciation is provided using the straight-line method in the
 manner specified in Schedule XIV to the Companies Act, 1956 and at
 rates prescribed therein or based on the useful life of assets,
 whichever is higher. Leasehold land is amortised over the period of
 lease. Computers and related assets are depreciated over a period of
 four years.
 
 Intangible assets are amortized over a period of their respective
 useful lives ranging between three years to seven years.
 
 c) Investments
 
 Long term investments are stated at cost. A provision for diminution is
 made to recognize a decline, other than temporary, in the value of long
 term investments. Current investments are stated at the lower of cost
 and fair value.  Fixed Income Securities (Bonds) are stated at their
 cost of acquisition and held till maturity.
 
 d) Inventories
 
 Inventories are stated at lower of cost and net realisable value after
 providing for obsolescence. The material costs are determined on
 weighted average basis and the valuation of manufactured goods
 represents the combined cost of material, labour and all manufacturing
 overheads. Material in transit is valued at cost incurred till date.
 
 e) Foreign currency transactions
 
 Transactions in foreign currencies are accounted at the exchange rates
 prevailing on the date of transactions.  Monetary foreign currency
 current assets and current liabilities are translated at the year-end
 exchange rates. The resulting profits and losses are appropriately
 recognised in the Profit and Loss Account.
 
 The Company uses foreign exchange forward contracts to cover its
 foreign currency cash flow risks, arising from exposures from exports
 and imports, against movements in foreign exchange rates. Foreign
 exchange forward contracts are not used for trading or speculation
 purpose. Premium/Discounts are recognized over the life of the
 contracts. Gains and Losses at the end of each accounting period are
 recognized in the profit and loss account and correspondingly in the
 Balance sheet against the respective line items covered.
 
 f) Revenue recognition
 
 i) Sale of goods is recognised as per the terms of sale. Sales exclude
 amounts recovered towards excise duty and sales tax.
 
 ii) Revenue from Long Term Service Contracts is recognized using the
 percentage completion method. Percentage of completion is determined as
 a proportion of cost incurred to date to the total estimated contract
 cost.  Provision is made for any loss in the period in which it is
 foreseen. Billing in excess of contract revenue has been reflected as
 Advance Income under Current Liabilities in the Balance Sheet. In
 case of other Service contracts, revenue is recognized on a straight
 line basis.
 
 iii) Dividend income from investments is recognised when the right to
 receive payment is established.
 
 g) Lease charges under operating leases
 
 Lease charges under operating leases are recognised as expense on
 straight-line basis over the lease term.
 
 h) Product warranty and New Engine Performance Inspection fees
 
 Product warranty costs and New Engine Performance Inspection fees are
 accrued in the year of sale of products, based on past experience.
 
 The Company periodically reviews the adequacy of its product warranties
 and adjusts, if necessary, the accrued warranty provision, for actual
 experience.
 
 New Engine Performance Inspection fee is included under Other
 expenses.
 
 i) Employee benefits
 
 i) Post-employment Benefits
 
 a) Defined Contribution Plans:
 
 The Company has Defined Contribution Plans for Post employment benefits
 in the form of Superannuation Fund for management employees and
 Provident Fund for non management employees which is administered by
 Life Insurance Corporation / Regional Provident Fund Commissioner. In
 case of Superannuation Fund for management employees and Provident Fund
 for non management employees the Company has no further obligation
 beyond making the contributions.
 
 b) Defined Benefit Plans:
 
 Funded Plan: The Company has defined benefit plans for Post-employment
 benefits in the form of Gratuity for all employees, pension for non
 management employees and Provident Fund for management employees which
 are administered through Company managed Trust / Life Insurance
 Corporation (LIC).
 
 Unfunded Plan: The Company has unfunded Defined Benefit plans in the
 form of Post Retirement Medical Benefits and Ex-gratia benefits as per
 the policy of the company.
 
 Liability for above defined benefit plans is provided on the basis of
 valuation, as at the Balance Sheet date, carried out by independent
 actuary. The actuarial method used for measuring the liability is the
 Projected Unit Credit method. In case of Provident Fund for management
 employees, the Company has an obligation to make good the shortfall, if
 any, between the return from the investments of the trust and the
 notified interest rate. The Companys contributions and such shortfall
 are charged to the Profit and Loss Account as and when incurred.
 
 ii) Other Long-term Employee Benefit:
 
 Liability for Compensated Absences is provided on the basis of
 valuation, as at the Balance Sheet date, carried out by independent
 actuary. The Actuarial valuation method used for measuring the
 liability is the Projected Unit
 
 Credit method. Under this method, projected accrued benefit is
 calculated at the beginning of the year and again at the end of the
 year for each benefit that will accrue for active members of the Plan.
 The  projected accrued benefit is based on the Plans accrual formula
 and upon service as of the beginning or end of the year, but using a
 members final compensation, projected to the age at which the employee
 is assumed to leave active service. The Plan liability is the actuarial
 present value of the projected accrued benefits as at the end of the
 year for active members.
 
 iii) Termination benefits are recognized as an expense as and when
 incurred.
 
 iv) The Actuarial gains and losses arising during the year are
 recognized in the Profit and Loss Account of the year without resorting
 to any amortization.
 
 j) Research and development costs
 
 Research and development expenditure of a capital nature is added to
 Fixed Assets. All other research and development expenditure is written
 off in the year in which it is incurred.
 
 k) Income Tax
 
 Provision for current income tax is made on the assessable income at
 the tax rate applicable to the relevant assessment year.
 
 Deferred income taxes are recognised for the future tax consequences
 attributable to timing differences between the financial statement
 carrying amounts of existing assets and liabilities and their
 respective tax bases. The effect on deferred tax assets and liabilities
 of a change in the tax rates is recognised using the tax rates and tax
 laws that have been enacted or substantively enacted by the balance
 sheet date. Deferred tax assets arising from unabsorbed depreciation or
 carry forward of losses under tax laws are recognised only to the
 extent that there is virtual certainty of realization. Other deferred
 tax assets are recognised and carried forward to the extent that there
 is reasonable certainty of realization.
 
 I) Provisions
 
 A provision is recognised when there is a present obligation as a
 result of past event; it is probable that an outflow of resources will
 be required to settle the obligation, in respect of which a reliable
 estimate can be made. These are reviewed at each balance sheet date and
 adjusted to reflect the current best estimates.
 
 m) Impairment of Asset
 
 The company tests for impairments at the close of the accounting period
 if and only if there are indications that suggest a possible reduction
 in the recoverable value of an asset. If the recoverable value of an
 Asset, i.e. the net realizable value or the economic value in use of a
 cash generating unit, is lower than the carrying amount of the asset
 the difference is provided for as impairment. However, if subsequently
 the position reverses and the recoverable amount becomes higher than
 the then carrying value the provision to the extent of the then
 difference is reversed, but not higher than the amount provided for.