1 Basis of preparation of Financial Statements:
 
 The Financial Statements have been prepared on historical cost
 convention. The Company follows the accrual basis of accounting. The
 Financial Statements are prepared in accordance with the accounting
 standards specified in the Companies (Accounting Standards) Rules, 2006
 notified by the Central Government in terms of Section 211(3C) of the
 Companies Act, 1956.
 
 2 Revenue Recognition:
 
 a) Sales of Products and Services are recognised on delivery. Sales and
 services exclude sales tax/value added tax and service tax charged to
 the customers.
 
 b) Revenue from long-term contracts is recognised based on the stage of
 completion determined with reference to the costs incurred on contracts
 and their estimated total costs.
 
 When it is probable that the total contract cost will exceed total
 contract revenue, expected loss is recognised as an expense
 immediately. Total contract cost is determined based on technical and
 other assessment of cost to be incurred. Liquidated damages/penalties
 are accounted as per the contract terms wherever there is a delayed
 delivery attributable to the Company.
 
 c) Revenue from long- term contracts awarded to Jointly Controlled
 Entity at Saudi Arabia but executed by the Company under the
 arrangement with the Joint Venture Partner [being in substance in the
 nature of Jointly Controlled Operations, in terms of Accounting
 Standard (AS) 27 “Financial Reporting of Interests in Joint Ventures”],
 is recognised on the same basis as similar long-term contracts
 independently executed by the Company.
 
 d) Share in profit/loss of the projects undertaken by the jointly
 controlled entities, is accounted on its appropriation to the venturers
 as per the terms of the respective joint venture contracts.
 
 e) Subsidy is accounted on accrual basis.
 
 f) Dividend declared by subsidiary company after the date of the
 balance sheet is recognised as income during the year if it relates to
 the period which closes on or before the date of the balance sheet. In
 respect of investment in other companies dividend income is accounted
 as and when right to receive dividend is established.
 
 g) Interest income is accounted on time proportion basis.
 
 3 Inventories:
 
 a) Raw materials, work-in-process, finished goods and stores and
 erection materials are valued at the lower of cost and net realisable
 value (NRV). Cost of purchased material is determined on the weighted
 average basis. Cost of Tools and Dies is amortised over its estimated
 useful life of five years. Scrap is valued at net realisable value.
 
 b) Cost of work-in-process and finished goods includes material cost,
 labour cost, and manufacturing overheads absorbed on the basis of
 normal capacity of production.
 
 4 Fixed Assets:
 
 Fixed assets are stated at cost of acquisition or construction net of
 impairment loss, if any less accumulated depreciation/ amortisation.
 Cost comprises of purchase/acquisition price, non-refundable taxes and
 any directly attributed cost of bringing the asset to its working
 condition for its intended use. Financing cost on borrowings for
 acquisition or construction of fixed assets, for the period upto the
 date of acquisition of fixed assets or when the assets are ready to be
 put in use/ the date of commencement of commercial production, is
 included in the cost of fixed assets. Assessment of indication of
 impairment of an asset is made at the year end and impairment loss, if
 any, is recognised.
 
 5 Depreciation/Amortisation: 
 
 a) Tangible Assets:
 
 (i) Leasehold land is amortised over the remaining period of the lease.
 
 (ii) Cost of buildings of semi-permanent nature is amortised over 3
 years.
 
 (iii) Depreciation on other tangible fixed assets is provided on
 straight line method at the rates so as to reduce
 
 them to their estimated salvage value at the end of their useful lives
 or at the rates prescribed in Schedule XIV to the Companies Act, 1956
 whichever is higher.
 
 The estimated useful lives of assets which are different from the
 principal rates specified in Schedule XIV to the Companies Act, 1956
 are as follows:
 
 Plant and Machinery – 1 to 19 years, Furniture and Fixtures – 10 years,
 Vehicles – 7 years and Computers – 4 years.
 
 b) Intangible Assets:
 
 (i) Brand is amortised over twenty years being the useful life
 certified by the independent valuer and goodwill is amortised over five
 years.
 
 In terms of the Scheme of Arrangement sanctioned in the year 2007-08,
 out of the balance in ‘Reserve for Amortisation of Brand Account’ an
 amount equal to annual amortisation of brand is credited to the Profit
 and Loss Account each year so that overall depreciation/amortisation
 gets reduced to that extent. Accordingly, Rs. 1,200 lacs being the
 amortisation of brand during the year (previous year Rs. 1,200 lacs)
 has been credited to the Profit and Loss Account by netting it with
 Depreciation/Amortisation.
 
 (ii) Computer softwares are amortised on straight line method over the
 estimated useful life ranging between 4-6 years.
 
 6.  Investments:
 
 Long-term investments are stated at cost. Provision is made for
 diminution, other than temporary, in the value of investments.
 
 7.  Sundry debtors as at the year end under the contract are disclosed
 net of advances relating to the respective contracts received and
 outstanding at the year end.
 
 8.  Foreign Currency Transactions:
 
 a) Foreign branches (Integral):
 
 (i) Fixed assets are translated at the rates on the date of
 purchase/acquisition of assets and inventories are translated at the
 rates that existed when costs were incurred.
 
 (ii) All foreign currency monetary items outstanding at the year end
 are translated at the year end exchange rates. Income and expenses are
 translated at average rates of exchange and depreciation/amortisation
 is translated at the rates referred to in (a) (i) above for fixed
 assets.
 
 The resulting exchange gains and losses are recognised in the Profit
 and Loss Account.
 
 b) Jointly Controlled Operations (Non Integral):
 
 Assets and liabilities, both monetary and non monetary are translated
 at the year end exchange rates, income and expense items are translated
 at the average rate of exchange and all resulting exchange differences
 are accumulated in a foreign currency translation reserve.
 
 c) Other foreign currency transactions:
 
 (i) Foreign currency transactions during the year are recorded at the
 rates of exchange prevailing at the date of transaction. Exchange gains
 or losses realised and arising due to translation of the foreign
 currency monetary items outstanding at the year end are accounted in
 the Profit and Loss Account.
 
 (ii) Forward Exchange Contracts:
 
 In case of transactions covered by forward exchange contracts, which
 are not intended for trading or speculation purposes, premium or
 discounts are amortised as expense or income over the life of the
 contract.
 
 Exchange differences on such contracts are recognised in the Profit and
 Loss Account in the year in which the exchange rate changes.
 
 Profit or loss arising on cancellation or renewal of such forward
 exchange contracts are recognised as income or as expense for the year.
 
 9.  Excise duty payable is accounted on production of finished goods.
 
 10.  Employee Benefits:
 
 (i) Defned Contribution Plans:
 
 The Company’s contributions to the Provident Fund and the
 Superannuation Fund are charged to the Profit and Loss Account.
 
 (ii) Defned Benefit Plan/Long Term Compensated Absences:
 
 The Company’s liability towards gratuity and compensated absences is
 determined on the basis of year end actuarial valuation done by an
 independent actuary. The actuarial gains or losses determined by the
 actuary are recognised in the Profit and Loss Account as income or
 expense.
 
 11.  Taxation:
 
 Current tax is determined as the amount of tax payable in respect of
 estimated taxable income for the period.
 
 Deferred tax is calculated at current statutory income tax rate and is
 recognised, subject to the consideration of prudence, on timing
 differences, being the difference between taxable income and accounting
 income that originate in one period and are capable of reversal in one
 or more subsequent periods.
 
 Deferred tax assets are recognised on unabsorbed depreciation and carry
 forward of the losses only to the extent that there are timing
 differences, the reversal of which will result in sufficient income or
 there is virtual certainty that sufficient taxable income will be
 available against which such deferred tax assets can be realised. The
 carrying amount of deferred tax assets is reviewed at each Balance
 Sheet date.
 
 Minimum Alternative Tax (MAT) credit asset is recognised only when and
 to the extent there is convincing evidence that the Company will pay
 normal Income Tax during the specified period. The carrying amount of
 MAT credit asset is reviewed at each Balance Sheet date.
 
 12.  Debts and loans and advances identified as doubtful of recovery
 are provided for.
 
 13.  Contingencies/Provisions:
 
 Provision is recognised when the Company has a present obligation as a
 result of past event; it is probable that an outf low of resources
 embodying economic benefit will be required to settle the obligation,
 in respect of which a reliable estimate can be made. Provisions are not
 discounted to its present value and are determined based on best
 estimates of the expenditure required to settle the obligation at the
 Balance Sheet date. These are reviewed at each Balance Sheet date and
 adjusted to refect the current best estimates. A contingent liability
 is disclosed, unless the possibility of an outflow of resources
 embodying economic benefits is remote.
 
 14.  Uses of Estimates:
 
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of financial statements and the reported amount
 of revenue and expenses during the reporting period. Difference between
 the actual results and estimates are recognised in the period in which
 results are known/materialised.
 
 15.  Derivative Contracts:
 
 The Company enters into derivative contracts in the nature of full
 currency swaps, interest rate swaps, currency options, forward
 contracts and commodity hedges with an intention to hedge its existing
 assets, liabilities, raw material requirements and firm commitments.
 Derivative contracts which are closely linked to the underlying
 transactions are recognised in accordance with the contract terms. All
 contracts are marked-to-market and losses are recognised in the Profit
 and Loss Account. Gains arising on the same are not recognised on
 grounds of prudence.
 
 16.  Basis of Incorporation of integral foreign operations:
 
 Figures in respect of the Company’s overseas branches in Afghanistan,
 Algeria, Bangladesh, Egypt, Ethiopia, Georgia, Ghana, Kazakhstan,
 Kenya, Lebanon, Libya (for the nine months ended December 31, 2010),
 Malaysia, Mali, Namibia, Nigeria, Oman, Philippines, South Africa,
 Tajikistan, Tunisia and United Arab Emirates have been incorporated on
 the basis of Financial Statements audited by the auditors of the
 respective branches. The Company has incorporated figures in respect of
 Libya for the period January 1, 2011 to March 31, 2011 based on the
 management accounts.  Further, in respect of overseas branches in
 Bhutan, Cameroon, Kuwait, Nepal and Srilanka the accounts have been
 prepared and audited in India.