1 Accounting Convention
 
 The accounts have been prepared on historical cost convention as a
 going concern on accrual basis, in accordance with the requirements of
 the Companies Act, 1956 and in accordance with the accounting
 principles generally accepted in India, and comply with the accounting
 standards referred to in Section 211 (3C) of the Companies Act,1956, to
 the extent applicable. Accounting policies have been consistently
 applied and where a newly issued accounting standard is initially
 adopted or a revision to an existing accounting standard requires a
 change in the accounting policy hitherto in use, such changes are
 suitably incorporated. The management evaluates all recently issued or
 revised accounting standards on an ongoing basis.
 
 2 Use of Estimates
 
 The preparation of financial statements under generally accepted
 accounting principles (GAAP) requires management to make estimates and
 assumptions that effect the reported statements of assets and
 liabilities and the disclosure of contingent liabilities on the date of
 financial statements and the reported amounts of revenue and expenses
 during the year. The actual results could differ from these estimates.
 Any revision to accounting estimates is recognised prospectively in
 current and future periods.
 
 3 Fixed Assets, Capital work-in-progress and Depreciation
 
 a) Fixed assets are stated at their original cost of acquisition
 including taxes, duties, freight, and other incidental expenses related
 to acquisition and installation of the concerned assets less
 accumulated depreciation and impairment losses, if any. Fixed assets
 are further adjusted by the amount of CENVAT credit and VAT credit
 wherever applicable and subsidy directly attributable to the cost of
 fixed assets. Interest and other borrowing costs during construction
 period on borrowings to finance fixed assets is capitalised.
 
 b) Capital work-in-progress comprises cost of fixed assets that are not
 yet ready for their intended use at the balance sheet date.
 
 c) Depreciation has been provided on straight line method at the rates
 and in the manner as prescribed in Schedule XIV of the Companies Act,
 1956 over their useful life. Depreciation on fixed assets
 added/disposed off during the year is provided on pro-rata basis.
 Depreciation on assets for a value not exceeding Rs.5000/- acquired
 during the year is provided at the rate of 100%.
 
 d) The cost and the accumulated depreciation on fixed assets sold or
 otherwise disposed off are removed from the stated values and resulting
 gain and losses are recognised in profit and loss account.
 
 e) Project under commissioning/ installations and other capital work in
 progress are carried at cost comprising direct cost, related incidental
 expenses and interest on borrowings there against.
 
 f) Preoperative expenditure and trial run expenditure accumulated as
 capital work in progress is allocated on the basis of prime cost of
 fixed assets in the year of commercial production.
 
 4 Intangible assets
 
 Intangible assets are recognised if it is probable that the future
 economic benefits that are attributable to the asset will flow to the
 Company and cost of the assets can be measured reliably. Intangible
 assets are amortised on a straight line basis over six years being
 estimated useful life of the assets.
 
 5 Investments
 
 Investments are long term and are stated at cost less provision, if
 any, for diminution in value which is other than temporary. Cost of
 investments includes acquisition charges such as brokerage, fees,
 duties and other incidental charges related to the acquisition.
 
 6 Inventories
 
 a) Raw materials and components, semi finished goods, finished goods,
 stores and spare parts and packing materials have been taken at lower
 of cost and net realisable value after providing for obsolescence
 wherever appropriate. Excise duty has been added in the value of
 inventory of finished goods and scrap material, except at Baddi
 (Domestic) and Haridwar Units of the Company which are exempted from
 payment of excise duty.
 
 b) The inventories are valued on the basis of moving weighted average
 method.
 
 c) Cost of inventories comprises all costs of purchase, conversion and
 other costs incurred in bringing the inventories to their present
 location and condition excluding duties and taxes subsequently
 recoverable from the taxing authorities in case of input materials.
 
 d) The stocks of scrap materials have been taken at net realisable
 value.
 
 e) The stocks of dies and fixtures have been taken at the residual
 effective life as certified by the respective factory heads.
 
 7 Foreign currency transactions
 
 a) Initial Recognition
 
 Transactions in foreign currency are recorded at exchange rate
 prevailing on the date of transaction.  Exchange differences arising on
 the settlement of monetary items during the year are recognised as
 income or expense.
 
 b) Conversion and Exchange Differences
 
 Monetary assets and liabilities denominated in foreign currency are
 translated at the rate of exchange at the balance sheet date and
 resultant gain or loss is recognized in the Profit and Loss Account.
 Non monetary assets and liabilities denominated in foreign currency are
 carried at historical cost using the exchange rate at the date of
 transaction.
 
 c) Foreign Branches
 
 The operations of foreign branches of Company are integral in nature
 and financial statements of these branches are translated using the
 same principles and procedures as of its head office.
 
 d) Forward Exchange Contracts
 
 The Company uses forward exchange contracts to hedge against its
 foreign currency exposures relating to the underlying transactions and
 firm commitments. The Company does not enter into any derivative
 instruments for trading or speculative purposes. As at the Balance
 sheet date, all outstanding derivative contracts are fair valued at
 Mark-to-Market basis and any gain or loss arising thereon as at the
 balance sheet date is recognised in the statement of profit and loss
 account.
 
 8 Government Grants and Subsidies
 
 Subsidies towards capital costs for setting up of new industrial units
 are adjusted from the cost of fixed assets.
 
 9 Retirement Benefits
 
 a) Gratuity
 
 Gratuity liability in respect of employees of the Company is covered
 through a policy taken by a trust established under the Group Gratuity
 Scheme with Life Insurance Corporation of India. The liabilities with
 respect to the Gratuity plan are determined by actuarial valuation on
 projected unit credit method on the balance sheet date, based upon
 which the Company contributes to the Group Gratuity Scheme. The
 difference, if any, between the actuarial valuation of the gratuity of
 employees at the year end and the balance of funds with LIC is provided
 for as asset or liability in the books.
 
 b) Provident and other Fund
 
 Contribution to Provident fund and Employees State Insurance Scheme is
 made in accordance with the relevant fund/scheme and is treated as
 revenue expenditure.
 
 c) Leave Encashment
 
 Leave encashment is provided on the basis of earned leave standing to
 the credit of the employees and the same is discharged by the Company
 by the year end.
 
 10 Research and Development
 
 Intangible Assets arising from development are recognized if the asset
 is identifiable and future economic benefits from the assets are
 probable. Expenditure on research is recognized as an expense when it
 is incurred. Research and development costs include salaries and other
 related cost of personnel, cost of material and services consumed. Cost
 incurred on development projects relating to the design of new or
 improved products are recognised as an expense when incurred as the
 criteria for capitalisation is not fulfilled.
 
 11 Revenue Recognition
 
 The principles of revenue recognition are given below:
 
 a) Sale of Goods
 
 Revenue from sales are recognised when significant risks and rewards of
 ownership of the goods have passed to the buyer which coincides with
 delivery and are recorded net of returns and trade discount. Sales
 include excise duty but are exclusive of value added tax. Sales do not
 include inter-divisional transfers.
 
 b) Export Incentives
 
 Export incentives such as DEPB and Duty Drawback benefits are
 recognised on post export basis on the basis of their entitlement
 rates. DEPB Licenses in hand are carried at cost. Benefits under the
 advance licence scheme are accounted for at the time of purchase of
 imported raw materials and sale of licences.
 
 c) Interest
 
 Interest income is recognised on a time proportion basis.
 
 d) Claims
 
 Claims are recognised when there exists reasonable certainty with
 regard to the amounts to be realised and the ultimate collection
 thereof.
 
 12 Product Warranty claims
 
 Product warranty costs are accrued in the year of sales of products,
 based on past experience. The Company periodically reviews the adequacy
 of product warranties and adjust warranty percentage and warranty
 provisions for actual experience, if necessary. The timing of outflow
 is expected to be within one to two years.
 
 13 Prior period Items/Extraordinary items
 
 Prior period expenses/incomes, are shown as prior period items in the
 profit and loss account as per the provisions of AS-5 Net Profit or
 Loss for the Period, Prior Period Items and Changes in Accounting
 Policies issued by the Institute of Chartered Accountants of India.
 
 Item of income or expense that arise from events or transactions that
 are distinct from ordinary activities of the enterprise and are not
 expected to recur frequently or regularly are treated as extraordinary
 items.
 
 14 Borrowing Costs
 
 Interest and other borrowing costs directly attributable to the
 acquisition, construction or installation of qualifying capital assets
 till the date of commercial use of the assets are capitalised. Other
 borrowing costs are recognized as an expense in the period in which
 they are incurred. Borrowing cost includes exchange differences arising
 from foreign currency borrowings to the extent that they are regarded
 as an adjustment to interest costs.
 
 15 Segment Information - Basis of Information
 
 The accounting policies adopted for segment reporting are in line with
 accounting policies used in the preparation of financial statements of
 the Company. The Company identifies its business segment as primary
 reporting segment and geographical segment as a secondary reporting
 segment. Revenue, expense, assets and liabilities, which relate to the
 Company as a whole and do not relate to any segment, are not allocated.
 
 16 Earnings Per Share
 
 The earnings considered in ascertaining the Companys Earnings Per
 Share (EPS) comprises the net profit after tax. The number of shares
 used in computing Basic and diluted EPS is weighted average number of
 shares outstanding during the year. The number of shares and dilutive
 shares are adjusted on issue of bonus shares, if any.
 
 17 Taxes on Income
 
 Tax expense for the year comprises of current tax and deferred tax.
 
 a) Current tax is determined on the amount of tax payable in respect of
 taxable income for the period, using the applicable tax rates and tax
 laws in accordance with the provisions of Income Tax Act, 1961. The
 Company is eligible for deduction under section 80IC of Income Tax Act,
 1961 in respect of income of units located in Special Category of
 States.
 
 b) Deferred tax is recognised, subject to consideration of prudence, on
 timing differences, being difference between taxable and accounting
 income that originate in one period and are capable of reversal in one
 or more subsequent periods. Deferred tax is accounted for using the tax
 rates and laws that have been enacted or substantively enacted as on
 the Balance Sheet date. Deferred tax assets are recognised only to the
 extent that there is reasonable certainty that sufficient future
 taxable income will be available against which such deferred tax assets
 can be realised.
 
 c) Minimum Alternate Tax (MAT) credit is recognised as an asset only
 when and to the extent there is convincing evidence that the Company
 will pay normal Income Tax during the specified period. In the year in
 which MAT credit becomes eligible to be recognised as an asset in
 accordance with the recommendations contained in guidance note issued
 by the Institute of Chartered Accountants of India, the said asset is
 created by way of a credit to the profit and loss account and shown as
 MAT Credit entitlement. The Company reviews the same at each Balance
 Sheet date and writes down the carrying amount of MAT credit
 entitlement to the extent it is not reasonably certain that the Company
 will pay normal income tax during the specified period.
 
 18 Impairment of assets
 
 At each Balance Sheet date an assessment is made whether there is any
 indication of impairment of the carrying amount of the Companys
 assets. The recoverable amount of such assets are estimated, if any
 indication exists.  Impairment loss is recognised wherever the carrying
 amount of the assets exceeds its recoverable amount.
 
 19 Leases
 
 Assets taken on lease, under which all risks and rewards of ownership
 are effectively retained by the lessor are classified as operating
 lease. Operating lease payments are recognised as an expense in the
 Profit and loss account.
 
 20 Provisions and Contingent Liabilities
 
 Provisions
 
 Provisions are recognised as liability only when these can be measured
 by using a substantial degree of estimation and where present
 obligations of the enterprise arise from past events, the settlement of
 which is expected to result in an outflow of resources embodying
 economic benefits. Provisions are not discounted to its present value
 and are determined based on management estimate to settle the
 obligation at the balance sheet date. These are reviewed at each
 Balance Sheet date and adjusted to reflect the current best estimates.
 
 Contingent Liabilities
 
 Contingent liabilities are disclosed by way of notes and are not
 recognised as an item of expense in the profit and loss account.
 Contingent gains are not recognised.