a) Basis of Preparation of Financial statements:
 
 The financial statements are prepared under the historical cost
 convention in accordance with generally accepted accounting principles
 and the provisions of the Companies Act, 1956.
 
 b) Revenue Recognition:
 
 i) Income and Expenditure are recognized on accrual basis.
 
 ii) Sales are accounted on dispatch of products and sales value
 includes excise duty.
 
 iii) Export sales are accounted on the basis of date of bill of lading.
 
 iv) Dividend income is recognised when the right to receive the
 dividend is established.
 
 c) Fixed Assets :
 
 Fixed assets except leasehold land are stated at cost less accumulated
 depreciation. The cost includes freight, duties, taxes and other
 incidental expenses related to acquisition and installation. CENVAT
 claim, if any, on capital goods is reduced from the cost.
 
 d) Depreciation:
 
 I) Depreciation on fixed assets is provided on straight-line basis at
 the rates prescribed in schedule XIV to the Companies Act, 1956.
 
 ii) Depreciation on assets added during the year, is calculated on
 pro-rata basis with reference to the date of
 
 installation.
 
 e) Inventory Valuation:
 
 i) Raw materials and consumables are valued at cost as per the First in
 First Out (FIFO) method and include(s) customs duty wherever paid, and
 are net of credit availed under CENVAT scheme.
 
 ii) Stock in process is valued at direct cost, i.e., cost of materials
 and variable manufacturing expenses.
 
 iii) Finished goods are valued at lower of cost or net realizable
 value.
 
 iv) Stock in transit lying in customs warehouse is valued at cost but
 does not include custom duty payable, however, non-provision of duty
 does not affect the profit for the year.
 
 f) Investments:
 
 Long term Investments are stated at cost. Investments in subsidiary
 company are of long-term and strategic nature . The diminution if any
 in the value of these investments is temporary in nature.
 
 g) Foreign currency transactions:
 
 - Income and Expenses in foreign exchange are accounted at the
 transaction rate prevailing at the time of transaction.
 
 - Assets purchased are capitalized at rates prevailing on the date of
 purchase
 
 - Balances in foreign bank accounts, Exchange Earners Foreign Currency
 Account are translated into Indian Rupees at rates prevailing at the
 year-end.
 
 h) Retirement Benefits:
 
 Provident Fund:-
 
 Retirement benefit in form of provident fund is a defined contribution
 scheme and the contributions are charged to the profit and Loss account
 of the year when the contributions to the respective funds are due.
 
 Gratuity:-
 
 The company''s liability in respect of payment of gratuity is provided
 on accrual basis and actuarial valuation is subject to management.
 
 Leave Encashment:-
 
 Leave Encashment are valued at cost to company basis without
 considering any discounting and salary increase and provided on the
 basis of actual valuation.
 
 i) Borrowing Cost:
 
 Cost in connection with the borrowing of funds to the extent not
 directly related to the acquisition of fixed assets are amortized and
 charged to the Profit and Loss Account, over the tenure of the loan.
 Borrowing cost to the extent directly attributable to acquisition of
 fixed assets are added to the cost of fixed assets.
 
 j) Taxation:
 
 Current Tax:
 
 Current Tax is the amount of tax payable on the taxable income for the
 year as determined in accordance with the provisions of the Income Tax
 Act 1961, except for the overseas subsidiaries and joint ventures where
 current tax provisions is determined based on the local tax laws.
 Deferred tax is recognized for all timing differences, subject to the
 consideration of prudence applying the tax rates that have been
 substantively enacted by the Balance Sheet date.
 
 Deferred Tax:
 
 Deferred tax liabilities represent the tax effect of temporary
 differences substantially on account of differences in the written down
 value of Fixed Assets on account of differing depreciation methods and
 rates and other timing differences.
 
 k) Capital Work-in-Progress
 
 Projects under commissioning and other Capital Work-in-Progress are
 carried at cost, comprising direct cost, related incidental expenses
 and attributable interest.
 
 I) Use of Estimation:
 
 The financial statements are prepared in conformity with generally
 accepted accounting principles and applicable accounting standards,
 which may require management to make estimates and assumptions. These
 may affect the reported amount of assets and liabilities and
 disclosures of contingent liabilities on the date of financial
 statements and the reported amount of the revenue and expenses during
 the reporting period. Actual report later could differ from these
 estimates.
 
 m) Impairment of Assets:
 
 The carrying values of assets/cash generating units at each Balance
 Sheet date are reviewed for impairment of assets. If any indication of
 such impairment exists, the recoverable amount of such assets is
 estimated and impairment is recognized, if the carrying amount of these
 assets exceeds their recoverable amount.The recoverable amount is the
 greater of the net selling price and their value in use.Value in use is
 arrived at by discounting the future cash flows to their present value
 based on an appropriate discount factor. When there is indication that
 an impairment loss recognized for an asset in prior accounting periods
 no longer exists or may have decreased such reversal of impairment loss
 is recognized.
 
 n) Segment Reporting:
 
 The Company''s operations predominantly comprise of manufacturing and
 sale of Air-conditioning and parts thereof.The geographical
 segmentations are insignificant.
 
 o) Earning Per Share:
 
 The earnings considered in ascertaining the Company''s Earnings per
 Share (EPS) comprise the net profits after tax.The number of shares
 used in computing basic EPS is the weighted average number of shares
 outstanding during the year.
 
 The diluted EPS is calculated on the same basis as basic EPS, after
 adjusting for the effects of potential dilutive equity shares.
 
 p) Cash Flow Statement:
 
 The Cash Flow statement is prepared by the indirect method set out in
 Accounting Standard -3 issued by the Institute of Chartered Accountants
 of India as required by the SEBI on Cash Flow Statement and presents
 cash flows by operating, investing and financing activities of the
 Company. Cash and cash equivalents presented in the cash flow statement
 consists of cash in hand and demand deposits with banks as on the
 Balance Sheet date.
 
 q) Sundry Debtors/Loans & Advances:
 
 Sundry Debtors,Creditors and other advances are subject to
 confirmation.The effect of the same, if any which is not likely to be
 material will be adjusted at the time of confirmation.
 
 r) Provisions/Contingencies:
 
 A provision is recognized when there is a present obligation as a
 result of past event and it is probable that an outflow of resources
 will be required to settle the obligation, in respect of which a
 reliable estimate can be made. Provisions are determined based on best
 estimate of the amount required to settle the obligation at the Balance
 Sheet date.
 
 Contingent liabilitiesare not recognized and are disclosed in the Notes
 on Accounts.
 
 s) Derivative Instruments:
 
 The Company has entered into derivative contracts in the nature of
 interest rate swaps and forward contracts with intention to hedge its
 requirements and firm commitments.The contracts are markto market and
 losses are recognized in the profit and loss account.Gains arising on
 the same are not recognized on ground of prudence.
 
 t) Deferred Revenue Expenditure:
 
 Cost of traveling, Consultancy fees and other expenses related to
 International Certification are considered as deferred revenue
 expenditure. 1 /5 of the expenditures have been charged to Profit and
 Loss account.
 
 u) Debenture issue Expenses:
 
 Debenture issue expenses are adjusted against the Securities Premium
 Account as permissible under Section 78 (2) of theCompaniesAct1956.