1, Basis of accounting
 
 The Company maintains its accounts on accrual basis following the
 historical cost convention in accordance with generally accepted
 accounting principles [GAAP] except for the revaluation of certain
 fixed assets in compliance with the provisions of the Companies Act,
 1956 and the Accounting Standards as specified in the Companies
 (Accounting Standards) Rules 2006 prescribed by the Central Government.
 
 The preparation of financial statements in conformity with GAAP
 requires that the management of the Company makes estimates and
 assumptions that affect the reported amounts of income and expenses of
 the period, the reported balances of assets and liabilities and the
 disclosures relating to contingent liabilities as of the date of the
 financial statements. Examples of such estimates include the useful
 lives of tangible and intangible fixed assets, provision for doubtful
 debts/advances, future obligations in respect of retirement benefit
 plans, etc. Difference, if any, between the actual results and
 estimates is recognised in the period in which the results are known.
 
 2.  Revenue recognition
 
 Revenue is recognised based on nature of activity when consideration
 can be reasonably measured and there exists reasonable certainty of its
 recovery.
 
 a) Sales & Service
 
 i) Sales and service include excise duty and adjustments made towards
 liquidated damages and price variation, wherever applicable. Escalation
 and other claims, which are not ascertainable/acknowledged by
 customers, are not taken into account.
 
 ii) Revenue from sale of goods is recognised when the substantial risks
 and rewards of ownership are transferred to the buyer under the terms
 of the contract.
 
 iii) Revenue from property development activity is recognised when all
 significant risks and rewards of ownership in the land and/or building
 are transferred to the customer and a reasonable expectation of
 collection of the sale consideration from the customer exists.
 
 iv) Revenue from construction /project related activity and contracts
 for supply/commissioning of complex plant and equipment is recognised
 as follows:
 
 a) Cost plus contracts: Contract revenue is determined by adding the
 aggregate cost plus proportionate margin as agreed with the customer.
 
 b) Fixed price contracts received up to March 31, 2003: Contract
 revenue is recognised by applying percentage of completion to the
 contract value. Percentage of completion is determined as follows:
 
 (i) in the case of item rate contracts, as a proportion of the progress
 billing to contract value; and
 
 (ii) in the case of other contracts, as a proportion of the cost
 incurred-to-date to the total estimated cost
 
 c) Fixed price contracts received on or after April 1, 2003: Contract
 revenue represents the cost of work performed on the contract plus
 proportionate margin, using the percentage of completion method.
 Percentage of completion is determined as a proportion of cost of work
 performed to-date to the total estimated contract costs.  Government
 subsidy related to customer contracts is recognised as revenue from
 operations in the Profit and Loss Account, on a prudent basis, in
 proportion to work completed when there is reasonable assurance that
 the conditions for the grant of subsidy will be fulfilled.
 
 Expected loss, if any, on the construction/project related activity is
 recognised as an expense in the period in which it is foreseen,
 irrespective of the stage of completion of the contract. While
 determining the amount of foreseeable loss, all elements of costs and
 related incidental income not included in contract revenue is taken
 into consideration.  Construction and project related work-in-progress
 is reflected at cost till such time the outcome of the job cannot be
 ascertained reliably and at realisable value thereafter.
 
 v) Revenues from construction/project related activity and contracts
 executed in joint ventures under work-sharing arrangement [being
 jointly controlled operations, in terms of Accounting Standard (AS) 27
 Financial Reporting of Interests in Joint Ventures], are recognised
 on the same basis as similar contracts independently executed by the
 Company.
 
 vi) Revenue from service related activities is recognised using the
 proportionate completion method.
 
 vii) Commission income is recognised as and when the terms of the
 contract are fulfilled.
 
 viii) Revenue from engineering and service fees is recognised as per
 the terms of the contract.
 
 b) Profit/loss on contracts executed by integrated joint ventures under
 profit-sharing arrangement [being jointly controlled entities, in terms
 of Accounting Standard (AS) 27 Financial Reporting of Interests in
 Joint Ventures] is accounted as and when the same is determined by the
 joint venture. Revenue from services rendered to such joint ventures is
 accounted on accrual basis.
 
 c) Other operational income represents income earned from the
 activities incidental to the business and is recognised when the right
 to receive the income is established as per the terms of the contract.
 
 d) Interest income is accrued at applicable interest rate.
 
 e) Dividend income is accounted when the right to receive the same is
 established. Dividends declared by subsidiary companies after the date
 of the Company''s Balance Sheet are also recognised if they are in
 respect of accounting periods which closed on or before the date of the
 Company''s Balance Sheet.
 
 f) Other Government grants, which are revenue in nature and are
 intended to compensate the related costs, are recognised as income in
 the profit and loss account to match such costs, as and when incurred.
 
 g) Other items of income are accounted as and when the right to receive
 arises.
 
 3.  Extraordinary and exceptional items
 
 Income or expenses that arise from events or transactions that are
 clearly distinct from the ordinary activities of the Company are
 classified as extraordinary items. Specific disclosure of such
 events/transactions is made in the financial statements. Similarly, any
 external event beyond the control of the Company, significantly
 impacting income or expense, is also treated as extraordinary item and
 disclosed as such.
 
 On certain occasions, the size, type or incidence of an item of income
 or expense, pertaining to the ordinary activities of the Company, is
 such that its disclosure improves an understanding of the performance
 of the Company. Such income or expense is classified as an exceptional
 item and accordingly disclosed in the notes to accounts [Note no.10].
 
 4.  Research and development
 
 a) Revenue expenditure on research is expensed under respective heads
 of account in the period in which it is incurred.
 
 b) Development expenditure on new products is capitalised as intangible
 asset, if all of the following can be demonstrated: i) The technical
 feasibility of completing the intangible asset so that it will be
 available for use or sale;
 
 ii) The Company has intention to complete the intangible asset and use
 or sell it;
 
 iii) The Company has ability to use or sell the intangible asset;
 
 iv) The manner in which the probable future economic benefits will be
 generated including the existence of a market for output of the
 intangible asset or intangible asset itself or if it is to be used
 internally, the usefulness of intangible assets; v) The availability of
 adequate technical, financial and other resources to complete the
 development and to use or sell the intangible asset; and
 
 vi) The Company has ability to measure the expenditure attributable to
 the intangible asset during its development reliably.  The development
 expenditure capitalised as intangible asset is amortised over its
 useful life.  Other development costs that do not meet above criteria
 are expensed in the period in which they are incurred.
 
 c) Capital expenditure on research and development is classified under
 tangible/intangible assets and depreciated on the same basis as other
 fixed assets.
 
 5.  Employee benefits
 
 a) Short term employee benefits
 
 All employee benefits falling due wholly within twelve months of
 rendering the service are classified as short term employee benefits.
 The benefits like salaries, wages, short term compensated absences etc.
 and the expected cost of bonus, ex-gratia are recognised in the period
 in which the employee renders the related service.
 
 b) Post-employment benefits
 
 i) Defined contribution plans: The Company''s superannuation scheme,
 state governed provident fund scheme, employee state insurance scheme
 and employee pension scheme are defined contribution plans. The
 contribution paid/payable under the schemes is recognised during the
 period in which the employee renders the related service.
 
 ii) Defined benefit plans: The employees gratuity fund schemes,
 post-retirement medical care scheme, pension scheme and provident fund
 scheme managed by trust are the Company''s defined benefit plans.
 Wherever applicable, the present value of the obligation under such
 defined benefit plans is determined based on actuarial valuation using
 the Projected Unit Credit Method, which recognises each period of
 service as giving rise to additional unit of employee benefit
 entitlement and measures each unit separately to build up the final
 obligation.
 
 The obligation is measured at the present value of the estimated future
 cash flows. The discount rate used for determining the present value of
 the obligation under defined benefit plans, is based on the market
 yield on government securities of a maturity period equivalent to the
 weighted average maturity profile of the related obligations at the
 balance sheet date.  Actuarial gains and losses are recognised
 immediately in the Profit & Loss Account.
 
 The interest element implicit in the actuarial valuation of defined
 benefit plans is classified under interest expense and balance charge
 is recognised as employee benefits in the Profit and Loss Account.
 
 In case of funded plans, the fair value of the plan assets is reduced
 from the gross obligation under the defined benefit plans to recognise
 the obligation on the net basis.
 
 Gains or losses on the curtailment or settlement of any defined benefit
 plan are recognised when the curtailment or settlement occurs. Past
 service cost is recognised as expense on a straight-line basis over the
 average period until the benefits become vested.
 
 c) Long term employee benefits
 
 The obligation for long term employee benefits such as long term
 compensated absences, long service award etc is recognised in the
 similar manner as in the case of defined benefit plans as mentioned in
 (b)(ii) above.
 
 d) Termination benefits
 
 Termination benefits such as compensation under voluntary retirement
 cum pension scheme is amortised over a defined period.  The defined
 period of amortisation is five years or the period till March 31, 2010,
 whichever is earlier.
 
 6.  Fixed assets
 
 Fixed assets are stated at original cost net of tax/duty credits
 availed, if any, less accumulated depreciation, accumulated
 amortisation and cumulative impairment and those which were revalued as
 on October 1,1984 are stated at the values determined by the valuers
 less accumulated depreciation, accumulated amortisation and cumulative
 impairment. Assets acquired on hire purchase basis are stated at their
 cash values. Specific know-how fees paid, if any, relating to plant and
 machinery is treated as part of cost thereof.  Administrative and other
 general overhead expenses that are specifically attributable to
 construction or acquisition of fixed assets or bringing the fixed
 assets to working condition are allocated and capitalised as a part of
 the cost of the fixed assets.  Own manufactured assets are capitalised
 at cost including an appropriate share of overheads.  (Also refer to
 policy on leases, borrowing costs, impairment of assets and foreign
 currency transactions infra.)
 
 7.  Leases
 
 a) Lease transactions entered into prior to April 1, 2001:
 
 Assets leased out are stated at original cost. Lease equalisation
 adjustment is the difference between capital recovery included in the
 lease rentals and depreciation provided in the books.
 
 Lease rentals in respect of assets acquired under leases are charged to
 Profit and Loss Account.
 
 b) Lease transactions entered into on or after April 1, 2001: Finance
 leases:
 
 i) Assets 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 given under a finance lease are recognised as a receivable
 at an amount equal to the net investment in the lease.  Lease income is
 recognised over the period of the lease so as to yield a constant rate
 of return on the net investment in the lease.
 
 iii) Initial direct costs relating to assets given on finance leases
 are charged to Profit and Loss Account.
 
 Operating leases:
 
 i) Assets acquired on leases where a significant portion of the risks
 and rewards of ownership are retained by the lessor are classified as
 operating leases. Lease rentals are charged to the Profit and Loss
 Account on accrual basis.
 
 ii) Assets leased out under operating leases are capitalised. Rental
 income is recognised on accrual basis over the lease term.
 
 (Also refer to policy on depreciation, infra)
 
 8.  Depreciation
 
 a) Owned assets
 
 i) Revalued Assets:
 
 Depreciation is provided on straight line method on the values and at
 the rates given by the valuers. The difference between depreciation
 provided on revalued amount and on historical cost is transferred from
 revaluation reserve to Profit and Loss Account.  ii) Assets carried at
 historical cost:
 
 Depreciation on assets carried at historical cost is provided on the
 written down value basis on assets acquired up to March 31, 1968 (at
 the rates prescribed under Schedule XIV to the Companies Act, 1956) and
 on straight line method on assets acquired subsequently (at the rates
 prevailing at the time of their acquisition on assets acquired up to
 September 30, 1987
 
 b) Leased assets
 
 i) Lease transactions entered into prior to April 1, 2001:
 
 Lease charge comprising statutory depreciation and lease equalisation
 charge is provided for assets given on lease over the primary period of
 the lease equal to recovery of net investment in the lease.
 Accordingly, while the statutory depreciation on such assets is
 provided for on straight line method as per Schedule XIV to the
 Companies Act, 1956, the difference is adjusted through lease
 equalisation and lease adjustment account.
 
 ii) Lease transactions entered into on or after April 1, 2001:
 
 Assets acquired under finance leases are depreciated on a straight line
 basis over the lease term. Where there is reasonable certainty that the
 Company shall obtain ownership of the assets at the end of the lease
 term, such assets are depreciated at the rates prescribed under
 Schedule XIV to the Companies Act, 1956 or at the higher rates adopted
 by the Company for similar assets.
 
 9.  Intangible assets and amortisation
 
 Intangible assets are recognised when it is probable that the future
 economic benefits that are attributable to the asset will flow to the
 enterprise and the cost of the asset can be measured reliably.
 Intangible assets are amortised as follows:
 
 a) Leasehold land: over the period of lease.
 
 b) Specialised software: over a period of six years.
 
 c) Lump sum fees for technical know-how: over a period of six years in
 case of foreign technology and three years in the case of indigenous
 technology.
 
 d) Development costs for new products: over a period of five years.
 
 Administrative and other general overhead expenses that are
 specifically attributable to acquisition of intangible assets are
 allocated and capitalised as a part of the cost of the intangible
 assets.
 
 Amortisation on impaired assets is provided by adjusting the
 amortisation charges in the remaining periods so as to allocate the
 asset''s revised carrying amount over its remaining useful life.
 
 10.  Impairment of assets
 
 As at each Balance Sheet date, the carrying amount of assets is tested
 for impairment so as to determine:
 
 a) the provision for impairment loss, if any; and
 
 b) the reversal of impairment loss recognised in previous periods, if
 any,
 
 Impairment loss is recognised when the carrying amount of an asset
 exceeds its recoverable amount.  Recoverable amount is determined:
 
 a) in the case of an individual asset, at the higher of the net selling
 price and the value in use;
 
 b) in the case of a cash generating unit (a group of assets that
 generates identified, independent cash flows), at the higher of the
 cash generating unit''s net selling price and the value in use.
 
 (Value in use is determined as the present value of estimated future
 cash flows from the continuing use of an asset and from its disposal at
 the end of its useful life.)
 
 11.  Investments
 
 Long term investments including interests in incorporated jointly
 controlled entities, are carried at cost, after providing for any
 diminution in value, if such diminution is other than temporary in
 nature. Current investments are carried at lower of cost and fair
 value. The determination of carrying amount of such investments is done
 on the basis of weighted average cost of each individual investment.
 Investments in integrated joint ventures are carried at cost net of
 adjustments for Company''s share in profits or losses as recognised
 
 12.  Inventories
 
 Inventories are valued after providing for obsolescence, as under:
 
 a) Raw materials, components, construction materials, stores, spares
 and loose tools at lower of weighted average cost or net realisable
 value.
 
 b) Manufacturing work-in-progress at lower of cost including related
 overheads or net realisable value.
 
 In the case of qualifying assets, cost also includes applicable
 borrowing costs vide policy relating to borrowing costs.
 
 c) Finished goods at lower of weighted average cost or net realisable
 value. Cost includes related overheads and excise duty paid/ payable on
 such goods.
 
 d) Property development iand at lower of cost or net realisable value.
 
 13.  Securities premium account
 
 a) Securities premium includes:
 
 i) The difference between the market value and the consideration
 received in respect of shares issued pursuant to Stock Appreciation
 Rights Scheme.
 
 ii) The discount allowed, if any, in respect of shares allotted
 pursuant to Stock Options Scheme.
 
 b) The following expenses are written off against securities premium
 account:
 
 i) Expenses incurred on issue of shares.
 
 ii) Expenses (net of tax) incurred on issue of debentures/bonds.  iii)
 Premium (net of tax) on redemption of debentures/bonds.
 
 14.  Borrowing costs
 
 Borrowing costs that are attributable to the acquisition, construction
 or production of a qualifying asset are capitalised as part of cost of
 such asset till such time as the asset is ready for its intended use or
 sale. A qualifying asset is an asset that necessarily requires a
 substantial period of time to get ready for its intended use or sale.
 All other borrowing costs are recognised as an expense in the period in
 which they are incurred.
 
 15.  Employee stock ownership schemes
 
 In respect of stock options granted pursuant to the Company''s Stock
 Options Scheme, the intrinsic value of the options (excess of market
 price of the share over the exercise price of the option) is treated as
 discount and accounted as employee compensation cost over the vesting
 period.
 
 16.  Foreign currency transactions, foreign operations, forward
 contracts and derivatives
 
 a) The reporting currency of the Company is Indian rupee.
 
 b) Foreign currency transactions are recorded on initial recognition in
 the reporting currency, using the exchange rate at the date of the
 transaction. At each Balance Sheet date, foreign currency monetary
 items are reported using the closing rate. Non-monetary items, carried
 at historical cost denominated in a foreign currency, are reported
 using the exchange rate at the date of the transaction.
 
 Exchange differences that arise on settlement of monetary items or on
 reporting of monetary items at each Balance Sheet date at the closing
 rate are:
 
 i) adjusted in the cost of fixed assets specifically financed by the
 borrowings contracted up to March 31, 2004 to which the exchange
 differences relate ii) adjusted in the cost of fixed assets
 specifically financed by borrowings contracted between the period April
 1, 2004 to March 31, 2007 and to which the exchange differences relate,
 provided the assets are acquired from outside India
 
 iii) recognised as income or expense in the period in which they arise,
 in cases other than (i) and (ii) above.
 
 c) Financial statements of foreign operations comprising jobs
 contracted prior to April 1, 2004, are translated as follows: i)
 Closing inventories at rates prevailing at the end of the year
 
 ii) Fixed assets as at April 1, 1991 at rates prevailing at the end of
 the year in which the additions were made. Subsequent additions are at
 rates prevailing on the dates of the additions. Depreciation is
 accounted at the same rate at which the assets are translated.
 
 iii) Other assets and liabilities at rates prevailing at the end of the
 year.
 
 iv) Net revenues at the average rate for the year.
 
 d) Financial statements of foreign operations comprising jobs
 contracted on or after April 1, 2004, are treated as integral
 operations and translated as in the same manner as foreign currency
 transactions, as described above. Exchange differences arising on such
 translation are recognised as income or expense of the period in which
 they arise.
 
 e) Forward contracts, other than those entered into to hedge foreign
 currency risk on unexecuted firm commitments or highly probable
 forecast transactions, are treated as foreign currency transactions and
 accounted accordingly as per Accounting Standard (AS) 11[The Effects
 of Changes in Foreign Exchange Rates]. Exchange differences arising on
 such contracts are recognised in the period in which they arise.
 
 Gains and losses arising on account of roll over/cancellation of
 forward contracts are recognised as income/expense of the period in
 which such roll over/cancellation takes place.
 
 f) All the other derivative contracts, including forward contracts
 entered into to hedge foreign currency risks on unexecuted firm
 commitments and highly probable forecast transactions, are recognised
 in the financial statements at fair value as on the Balance Sheet date,
 in pursuance of the announcement of the Institute of Chartered
 Accountants of India (ICAI) dated March 29, 2008 on accounting of
 derivatives. The Company has adopted Accounting Standard (AS) 30
 [Financial Instruments: Recognition and Measurement] for accounting
 of such derivative contracts, not covered under Accounting Standard
 (AS) 11 [The Effects of Changes in Foreign Exchange Rates], as
 mandated by the ICAI in the aforesaid announcement.
 
 Accordingly, the resultant gains or losses on fair valuation/settlement
 of the derivative contracts covered under Accounting Standard (AS) 30
 [Financial Instruments: Recognition and Measurement] are recognised
 in the Profit and Loss Account or Balance Sheet as the case may be
 after applying the test of hedge effectiveness. Where the hedge is
 effective, the gains or losses are recognised in the Hedging Reserve
 which forms part of Reserves and Surplus in the Balance Sheet, while
 the same is recognised in the Profit and Loss Account where the hedge
 is ineffective.The amount recognised in the Hedging Reserve is
 transferred to Profit and Loss Account in the period in which the
 underlying hedged item affects the Profit and Loss Account.
 
 g) The premium paid/received on a foreign currency forward contract is
 accounted as expense/income over the period of the contract.