1.  Accounting Convention
 
 The financial statements have been prepared under the historical cost
 convention on accrual basis in accordance with generally accepted
 accounting principles (GAAP) and the Accounting Standards notified by
 the Companies (Accounting Standards) Rules, 2006 and the relevant
 provisions of the Companies Act, 1956.
 
 The preparation of financial statements in conformity with GAAP
 requires the management to make estimates and assumptions that affect
 the reported amounts of income and expenses, assets and liabilities and
 the disclosures relating to contingent liabilities as of the date of
 the financial statements. The difference between the actual results and
 the estimates are recognised in the period in which the results are
 known and/or materialised.
 
 2.  Fixed Assets and Depreciation & Amortisation
 
 i) Tangible
 
 Fixed assets are stated at cost or at replacement cost in case of
 revaluation, less accumulated depreciation/amortisation and impairment
 losses, if any. Cost of acquisition is inclusive of all incidentals and
 other attributable costs of bringing the asset to its working condition
 for its intended use and is net of available duty/tax credits.
 
 Depreciation & Amortisation
 
 a.  Depreciation on Plant and Machinery is provided on Straight Line
 Method.
 
 b.  Depreciation on all other Fixed Assets is calculated on the basis
 of Diminishing Balance Method at the rates prescribed in Schedule XIV
 of the Companies Act, 1956 except Leasehold Land, which is amortised
 over the lease period.
 
 c.  The depreciation on assets acquired/sold/discarded/demolished
 during the year is provided from/up to the month the asset is
 commissioned/sold or discarded.
 
 d.  Assets costing up to Rs. 5,000 are depreciated fully in the year of
 purchase.
 
 e.  Leasehold Improvements are written off over a period of six years
 or lease period whichever is less.
 
 ii) Intangible
 
 In accordance with AS-26 Intangible Assets are valued at cost less
 accumulated amortisation and any impairment losses.
 
 a.  Prototypes including work-in-progress developed during Research &
 Development, tractors and parts thereof used for carrying R&D
 activities and advances given for tooling are written off over a period
 of four years.
 
 b.  Technical know-how fee and expenditure on major Software products
 are written off over a period of six years.
 
 Impairment in fixed assets, if any, is recognised in books of accounts
 in the financial year concerned as per AS- 28 Impairment of Assets
 issued by Institute of Chartered Accountants of India.
 
 3.  Inventory Valuation
 
 a.  Raw Material and Components, Stores and Machinery Spares are stated
 at lower of cost and net realisable value.
 
 b.  Loose Tools are stated at cost or under.
 
 c.  Work in Progress, Finished and Trading Goods/Spare Parts are stated
 at lower of cost and net realisable value.
 
 d.  In determining the cost of Raw Materials and Components, Tools,
 Jigs and Dies, Stores and Machinery Spares Weighted Average Cost Method
 is used while in the case of Trading goods FIFO Method is used.
 
 e.  Work in Progress and Finished Goods include cost of conversion and
 other costs incurred in bringing the Inventories to their present
 location and condition.
 
 4.  Employee Benefits
 
 i) Defined Contribution Plan
 
 Employees benefits in the form of ESIC, Provident Fund and Labour
 welfare Fund are considered as defined contribution plan and the
 contributions are charged to the Profit and Loss Account of the year
 when the contribution to the respective funds are due.
 
 ii) Defined Benefit Plan
 
 Retirement benefits in the form of Gratuity is considered as defined
 benefit obligations and are provided for on the basis of an actuarial
 valuation, using the projected unit credit method, as at the date of
 the Balance Sheet.
 
 iii) Other Long Term Benefits
 
 Long term compensated absences are provided for on the basis of an
 actuarial valuation, using the projected unit credit method, as at the
 date of the Balance Sheet.
 
 Actuarial gain/losses, if any, are immediately recognised in the Profit
 and Loss Account.
 
 5.  Foreign Exchange Fluctuation
 
 Transactions in foreign currency are recorded at the exchange rates
 prevailing at the dates of the transactions. Gains/losses arising out
 of fluctuation in exchange rates on settlement are recognised in the
 Profit & Loss account.
 
 Foreign currency monetary assets & liabilities are restated at the
 Exchange Rate prevailing at the year-end and the overall net gain/loss
 is adjusted to the Profit & Loss Account.
 
 In case of Forward Exchange Contracts, the difference between the
 forward rate and the exchange rate at the date of transaction is
 recognised in the Profit & Loss account over the life of the contract.
 
 6.  Investments
 
 Investments intended to be held for less than one year are classified
 as current investments and are carried at lower of cost or market
 value. All other investments are classified as long-term investments
 and are carried at cost. Investments in foreign companies are stated at
 the exchange rates prevailing on the date of investment.
 
 A provision for diminution is made to recognise a decline other than
 temporary in the value of long term investments.
 
 7.  Revenue Recognition
 
 Dividend is taken on accrual basis, if declared/received by the time of
 finalisation of the accounts.
 
 8.  Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition, construction
 of qualifying assets are capitalised as part of cost of such assets up
 to the date the assets are ready for its intended use. All other
 borrowing costs are recognised as an expense in the year in which they
 are incurred.
 
 9.  Deferred Revenue Expenditure
 
 i.  Development expenditure represents Project related development
 expenditure/business process re-engineering consultancy and market
 research. Such expenditure is written off over a period of six years.
 
 ii.  upfront & Structuring fees are written off during the term of the
 respective loan.
 
 10.  Deferred Tax
 
 Deferred Tax is recognised, subject to consideration of prudence, on
 timing differences, representing the difference between the taxable
 income and accounting income that originated in one period and are
 capable of reversal in one or more subsequent periods. Deferred Tax
 assets and liabilities are measured using tax rates and the tax laws
 that have been enacted or substantively enacted by the Balance Sheet
 date.
 
 11.  Employee Stock Option Scheme
 
 In respect of stock options granted pursuant to Employees Stock Option
 Scheme, the intrinsic value of the options (Excess of market price of
 the share over the exercise price of the options) is accounted as
 employee compensation cost over the vesting period.
 
 12.  Leases
 
 i. Asset acquired under leases where the Company has substantially all
 the risks and rewards of ownership are classified as finance leases.
 Such assets are capitalised at the inception of the lease at the lower
 of the fair value or the present value of minimum lease payments and a
 liability is created for an equivalent amount. Each lease rental paid
 is allocated between the liability and the interest cost, so as to
 obtain a constant periodic rate of interest on the outstanding
 liability for each period.
 
 ii. Assets acquired on leases where a significant portion of the risks
 and rewards of ownership are retained by the lesser are classified as
 operating leases. Lease rentals are charged to the Profit & Loss
 Account on accrual basis.
 
 13.  Government Grants
 
 Government Grants are recognised when there is a reasonable assurance
 that the same will be received. Cash Subsidies and Capital Grants
 relating to specific assets are reduced from the gross value of the
 respective assets, other capital grants & cash subsidies are credited
 to Capital Reserve.
 
 14.  Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions are recognised for liabilities that can be measured only by
 using a substantial degree of estimation, if
 
 a) the Company has a present obligation as a result of past event,
 
 b) a probable outflow of resources is expected to settle the obligation
 and
 
 c) the amount of obligation can be reliably estimated.
 
 Reimbursements expected in respect of expenditure required to settle a
 provision is recognised only when it is virtually certain that the
 reimbursement will be received.