Basis of preparation of financial statements
 
 The financial statements are prepared as of a going concern, under the
 historical cost convention, on accrual basis of accounting and in
 accordance with the provisions of the Companies Act, 1956 and comply
 with the mandatory Accounting Standards prescribed under Companies
 (Accounting Standards) Rules, 2006, to the extent applicable.
 
 Fixed Assets
 
 Fixed Assets are stated at cost of acquisition or construction, net of
 Cenvat credit, less accumulated depreciation to date. Cost includes
 direct costs and financing costs related to borrowing attributable to
 acquisition that are capitalized until the assets are ready for use.
 
 Land received free of cost from the State Governments has been
 nominally valued and incidental expenditure incurred thereon has been
 capitalized.
 
 Expenditure on development of land is included in the cost of land.
 
 Assets taken on Finance Lease are capitalised at fair value / NPV /
 contracted price. Depreciation on the same is charged at the rate
 applicable to similar type of fixed assets as per Accounting Policy on
 Depreciation. If the lease assets are returnable to the lessor on
 expiry of lease period, the same is depreciated over its useful life or
 lease period, whichever is shorter.
 
 Lease payments made are apportioned between finance charges and
 reduction of outstanding liability in relation to assets taken on
 lease.
 
 Lease payments made for assets taken on Operating Lease are recognised
 as expense over the lease period.
 
 Expenditure incurred on Reconditioning of plant, machinery and
 equipment which increases the future benefits from the existing asset
 beyond its previously assessed standard of performance is included in
 the Gross Book Value which results in:
 
 (a) Modification of an item of plant to extend its useful life,
 including increase in its capacity;
 
 (b) Upgrading machine parts to achieve a substantial improvement in the
 quality of out-put; and
 
 (c) Adoption of new production processes enabling a substantial
 reduction in previously assessed operating costs.
 
 The cost of an addition or extension to an existing asset which is of a
 capital nature and which becomes an integral part of trie existing
 asset is added to its gross block value.
 
 The expenditure on Reconditioning of plant, machinery & equipment which
 do not increase the future benefits from the existing asset beyond the
 previously assessed standard of the performance based on the technical
 assessment, is charged off to Revenue.
 
 Items of Capital Assets with WDV of Rs.1 lakh and above, which have
 been retired from active use, are disclosed at lower of book value or
 net realizable value and shown separately in the Fixed Assets Schedule.
 
 Depreciation
 
 Depreciation on fixed assets is provided on straight-line method, at
 the rates prescribed in Schedule XIV to the Companies Act, 1956,
 pro-rata with, reference to the date of addition or deletion. As and
 when assets gets fully depreciated, Rs.1/- is retained as book value of
 the asset. Assets costing less than Rs.5000/- per asset which is
 written off to Rs.1/- in the year of purchase.
 
 Depreciation on fixed assets is calculated on a pro-rata basis from the
 date of such addition or as the case may be up to the date on which
 such asset is sold, discarded or destroyed.
 
 Premium for leasehold land is amortized equally over the period of
 lease.
 
 investments
 
 Investments are either classified as current or long- term. Current
 investments are carried at lower of cost and fair value. Long-term
 investments are carried at cost and provisions recorded to recognize
 any decline, other than temporary, in the carrying value of each
 investment. Gain or loss is recognized in the year of sale.
 
 Inventories
 
 Inventories are valued at the lower of cost and net realizable value.
 The cost of materials is ascertained by adopting Weighted Average Cost
 Method.
 
 Development & Commissioning
 
 In respect of new projects, the pre-production revenue expenditure
 (including depreciation) is collated under the head Development and
 Commissioning Expenditure and charged to revenue over four financial
 years as follows:
 
 (a) In the year of commencement of commercial production, one-fourth of
 the development and commissioning expenditure on a pro-rata basis for
 the period of production in that year: and
 
 (b) The balance equally over the next three financial years immediately
 following.
 
 Deferred Revenue Expenditure
 
 Technical Assistance fees (including fees for technical documentation
 and exchange fluctuation difference) paid / payable under foreign
 collabo~ation agreements are amortized equally over the duration /
 balance duration of the relevant agreement.
 
 Gratuity, Earned Leave encashment, Settlement Allowance and Lump sum
 Compensation paid to employees under Voluntary Retirement Scheme shall
 be fully written off in the year of disbursement.
 
 Expenses incurred in respect of Bonds issued for raising funds to meet
 payments made under the Voluntary Retirement Scheme are fully written
 off in the year of disbursement.
 
 Revenue recognition
 
 Sales are set up based on:
 
 Physical delivery of goods to the customer / customer''s carrier /common
 carrier, duly supported by invoice, excise duty paid challan, gate
 pass, delivery voucher and LR / GR, in case of ex-works contracts.
 
 LR/GR obtained and endorsed in favour of customer (consignee ''self''),
 in case of FOR destination contracts.
 
 Despatches to dealers/customers in respect of Machines & Tractors
 
 Sales include Excise Duty but are net of trade discount and exclude
 sales tax.
 
 Foreign currency transactions
 
 Transactions in foreign currency are recorded at the exchange rate(s)
 prevailing on the date of transaction or at the forward contract
 rate(s) wherever applicable.  Current assets and liabilities are
 restated at the rates prevailing at the yearend or at the forward
 contract rate(s) wherever applicable, and the difference is recognized
 as income or expenditure in the profit and loss account.
 
 Exchange difference arising on restatement of liabilities in foreign
 currency relating to fixed assets is recognised as Income or
 Expenditure in the statement of Profit & Loss account.
 
 Borrowing costs
 
 Borrowing costs are charged to revenue except those which are incurred
 on acquisition or construction of a qualifying asset that necessarily
 takes substantial time to be ready and until intended use of the said
 asset, such costs are capitalized.
 
 Employee Benefits
 
 Provident Fund is provided for, under a defined benefit scheme. The
 contributions are made to the Trust administered by the company.
 
 Leave encashment is provided for under a defined benefit scheme based
 on actuarial valuation.
 
 Gratuity is provided for, under a defined benefit scheme, to cover the
 eligible employees, liability being determined on actuarial valuation.
 Annual contributions are made, to the extent required, to a trust
 constituted and administered by the Life Insurance Corporation of India
 under which the coverage is limited to Rs.50,000/- per eligible
 employee. The balance provision is being retained in the books to meet
 any additional liability accruing thereon for payment of Gratuity.
 
 Settlement allowance is provided for, under a defined benefit scheme,
 to cover the eligible employees, liability being determined on
 actuarial valuation.
 
 Pension is provided for under a defined benefit scheme, contributions
 are made to the Pension Fund administered by the Government.
 
 Warranty
 
 Warranty provision for contractual obligations in respect of machines/
 tractors sold is set up based on the past experience and is provided in
 the year of sale.
 
 Special Tools
 
 Expenditure on manufactured and bought out special tools are amortized
 equally over a five year period or earlier, if scrapped. Individual
 items costing less thai\ Rs.7507- are written off fully in the initial
 year of acquisition / manufacture.
 
 Research and Development Costs
 
 Revenue expenditure is charged to profit and loss account under natural
 heads. Capital expenditure is recorded as addition to fixed assets and
 depreciated over the estimated life of the related assets.
 
 Prototypes developed are carried as items of inventory at the lower of
 cost or net realizable value until sale / transfer / scrapping.
 Prototypes remaining undisposed off for a period of five financial
 years are provisioned for obsolescence in the sixth year.
 
 Contribution to sponsored Research and Development are amortised
 equally over the duration / balance duration of the programme.
 
 Income Tax
 
 Taxes are determined following the tax effect accounting method and a
 provision therefore is recognized. A deferred tax asset or deferred tax
 liability is recorded to recognize the tax effect on timing differences
 arising on reconciliation of profit / loss as per financial statements
 * arid profit / loss as per taxation.
 
 Earnings per share
 
 Basic earnings per share is determined by considering the net profit
 after tax, inclusive of the post tax effect on extraordinary items, if
 any, and the number of shares outstanding on a weighted average basis.
 
 Others
 
 The amount of Rs.50,000/- per head received /receivable from LIC on
 account of gratuity claims in respect of employees separated under
 Voluntary Retirement Scheme during the year is accounted as Other
 Income.
 
 In respect of employees who are separated other than under Voluntary
 Retirement Scheme, the Gratuity paid in excess of Rs.50,000/-, Earned
 Leave Encashment (ELE), Settlement Allowance (SA) is debited to the
 respective provision accounts. The provision at the year end for ELE
 and SA is restated as per the actuarial valuation done at the year end.
 In case of ELE and SA, any short or excess provision is charged as
 expenditure or treated as provision no longer required.