1.  Basis of preparation
 
 The financial statements of KDDL Limited (the Company) have been
 prepared on accrual basis under the historical cost convention, in
 accordance with the generally accepted accounting principles in India
 and to comply with the Accounting Standards referred to in sub section
 (3C) of section 211 of the Companies Act, 1956 (the Act) and the
 Rules framed there under. The accounting policies have been
 consistently applied by the Company unless otherwise stated.
 
 2.  Use of estimates
 
 In preparing the financial statements in conformity with accounting
 principles generally accepted in India, management is required to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities, the disclosure of contingent liabilities at the date
 of the financial statements and the reported amounts of revenues and
 expenses during the reporting period. Actual results could differ from
 those estimates. Any revisions to accounting estimates are recognised
 in the current and future periods.
 
 3.  Revenue recognition
 
 a) Revenue from sale of goods is recognised when the significant risks
 and rewards in respect of ownership of the goods are transferred to the
 customer and is stated inclusive of excise duty and net of trade
 discounts, sales returns and sales tax wherever applicable.
 
 b) Duty Entitlements Pass Book (DEPB) and any other scheme are
 recognized in the profit and loss account when the right to receive
 credit as per the terms of the scheme is established in respect of the
 exports made.
 
 c) Revenue in respect of tool development and job charges is recognized
 as per the terms of the contract with the customers.
 
 d) Interest income is recognized on a time proportion basis, taking
 into account the amount outstanding and the rates applicable.
 
 e) Dividend income is recognized when the Company''s right to receive
 the same is established.
 
 4.  Fixed assets
 
 Fixed assets are stated at cost (gross block) less accumulated
 depreciation and impairment losses, if any. Cost comprises the purchase
 price (net of Cenvat credit availed) and any attributable cost of
 bringing the asset to its working condition for its intended use.
 
 Expenditure on account of modification / alteration in plant and
 machinery / building, which increases the future benefit from the
 existing asset beyond its previous assessed standard of performance, is
 capitalised.
 
 Borrowing costs directly attributable to acquisition or construction of
 fixed assets, which necessarily takes a substantial period of time to
 get ready for their intended use are capitalized.
 
 Assets acquired on hire purchase are capitalized at the inception of
 the hire purchase agreement. Interest cost is charged to profit and
 loss account on accrual basis.
 
 5.  Depreciation and amortisation
 
 Depreciation is provided on straight line method as per the rates
 specified in Schedule XIV to the Act, as applicable at the time of
 addition of the respective fixed assets, on pro-rata basis from the
 month of addition, except for the following:
 
 Depreciation on improvements carried out on buildings taken on lease
 (included under buildings) is provided over the period of the lease.
 
 Depreciation on a particular class of dies and tools manufactured by
 the Company and put to use after 01 April 2003 is provided over a
 period of 3 years.
 
 The rates of depreciation are indicative of the useful lives of the
 assets.
 
 The cost of leasehold land is not amortised as these are perpetual
 leases.
 
 Know-how is amortised over a period of four years.
 
 Software is amortised over a period not exceeding six years.
 
 6.  Inventories
 
 Inventories are valued as follows:
 
 1.  Raw materials & components, stores and spares, finished goods and
 stock in process: At lower of cost and net realisable value.
 
 2.  Scrap: At estimated realisable value.
 
 3.  Cost of inventories is ascertained on the following basis:
 
 a) Raw materials and components and stores & spares - on moving
 weighted average basis.
 
 b) Cost of finished goods and stock in process comprise material cost
 on moving weighted average. Finished goods are stated inclusive of
 excise duty, labour and related estimated overheads including
 depreciation.
 
 7.  Investments
 
 Investments that are readily realisable and intended to be held for not
 more than a year are classified as current investments.  All other
 investments are classified as long-term investments.
 
 Long-term investments are stated at cost. Provision is made for
 diminution in the value of long-term investments to recognise decline,
 if any, other than temporary in nature.
 
 8.  Foreign currency transactions
 
 Investments in foreign entities are recorded at the exchange rate
 prevailing on the date of making the investment. Transactions in
 foreign currencies are recorded at the rates prevailing on the date of
 the transaction and monetary items denominated in foreign currency are
 restated at the rate prevailing on the balance sheet date.
 
 Differences arising on foreign currency translations of transactions
 settled during the year are recognised in the profit and loss account.
 
 The exchange differences arising on forward contracts other than those
 entered into to hedge the foreign currency risk of firm commitments or
 highly probable forecast transactions are recognised in the year in
 which they arise based on the difference between i) foreign currency
 amount of the contract translated at the exchange rate on the reporting
 date and ii) the same foreign currency amount translated at the later
 of the date of inception of the forward exchange contract or the last
 reporting date.
 
 The premium or discount arising at the inception of the forward
 contracts other than those entered into to hedge the foreign currency
 risk of firm commitments or highly probable forecast transactions is
 amortised as expense or income over the life of the contract.
 
 Any profit or loss arising on cancellation or renewal of forward
 exchange contracts is recognised as income or expense for the year.
 
 9.  Employee benefits
 
 The Company''s contribution to provident fund, being a defined
 contribution plan, is recognised in the profit and loss account.
 Compensated absences which are not expected to occur within twelve
 months after the end of the period in which the employee renders the
 related services are recognized as a liability determined based on
 actuarial valuation using the Projected Unit Credit Method at the
 Balance Sheet date. Actuarial gains and losses arising from experience
 adjustments and changes in actuarial assumptions are charged or
 credited to the Profit and Loss Account in the year in which such gains
 or losses arise.
 
 Gratuity is a post employment defined benefit plan. The present value
 of obligation for gratuity is determined based on actuarial valuation
 using the Projected Unit Credit Method, less the fair value of plan
 assets, together with adjustments for unrecognized actuarial gains or
 losses and past service costs. Gratuity and superannuation funds are
 administered by trustees of independently constituted trusts. Actuarial
 gains and losses arising from experience adjustments and changes in
 actuarial assumptions are charged or credited to the Profit and Loss
 Account in the year in which such gains or losses arise.  In respect of
 superannuation, the Company makes contribution to Life Insurance
 Corporation of India (LIC) of an amount payable by the trusts to LIC,
 which is charged to the profit and loss account.
 
 10.  Taxes on income
 
 Tax expense comprises current tax and deferred income tax.
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the year.
 
 Deferred income taxes reflects the impact of current year timing
 differences between taxable income and accounting income for the year
 and reversal of timing differences of earlier years. Deferred tax is
 measured based on the tax rates and the tax laws enacted or
 substantively enacted at the balance sheet date. In respect of carry
 forward losses and unabsorbed depreciation, deferred tax assets are
 recognized only to the extent there is virtual certainty that
 sufficient future taxable income will be available against which such
 losses can be realised.
 
 Minimum alternate tax (''MAT1) 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 there is no longer convincing evidence to the
 effect that the company will pay normal income tax during the specified
 period.
 
 11.  Earnings per share
 
 The earnings considered in ascertaining the Company''s earnings per
 share comprise the net profit or loss for the year attributable to the
 equity shareholders. Earnings per share are computed using the weighted
 average number of shares outstanding during the year.
 
 For the purpose of calculating diluted earning per share, the net
 profit or loss for the period attributable to equity share holders and
 the weighted average number of shares outstanding during the period are
 adjusted for the effect of all dilutive potential equity shares.
 
 12.  Leases
 
 Lease of assets under which significant risks and rewards of ownership
 are effectively retained by the lessor are classified as operating
 leases. Lease rentals in respect of assets taken under an operating
 lease are charged to the profit and loss account on a straight line
 basis over the term of the lease.  In respect of assets given on
 operating lease, income is being recognised on a straight line basis
 over the term of the lease.
 
 13.  Contingent liabilities and provisions
 
 The Company makes a provision when there is a present obligation as a
 result of a past event where the outflow of economic resources is
 probable and a reliable estimate of the amount of obligation can be
 made. A disclosure is made for possible or present obligations that may
 but probably will not require outflow of resources or where a reliable
 estimate cannot be made, as a contingent liability in the financial
 statements.
 
 14.  Impairment of assets
 
 The Company on an annual basis makes an assessment of any indicator
 that may lead to impairment of assets. If any such indication exists,
 the Company estimates the recoverable amount of the assets. If such
 recoverable amount is less than the carrying amount, then the carrying
 amount is reduced to its recoverable amount by treating the difference
 as impairment loss and is charged to the profit and loss account.