(A) Basis of Accounting :
 
 The financial statements are prepared in accordance with the generally
 accepted accounting principles in India and comply with the Accounting
 Standards notifed under sub-section (3C) of Section 211 of the
 Companies Act, 1956 and the relevant provisions thereof.
 
 (B) Fixed Assets :
 
 (a) (i) Fixed Assets are carried at cost less depreciation except as
 stated in (ii) below. Cost includes fnancing cost relating to borrowed
 funds attributable to the construction or acquisition of qualifying
 fixed assets upto the date the assets are ready for use. Where the
 acquisition of fixed assets are fnanced through long term foreign
 currency loans (having a term of 12 months or more at the time of their
 origination) the exchange diferences on such loans are added to or
 subtracted from the cost of such fixed assets.
 
 When an asset is scrapped or otherwise disposed of, the cost and
 related depreciation are removed from the books of account and
 resultant Profit (including capital Profit) or loss, if any, is
 refected in the Profit and Loss Account.
 
 (ii) Land and Buildings, had been revalued as at 31st October, 1984 at
 depreciated replacement values on the basis of a valuation made by a
 frm of Chartered Surveyors and Valuers. The indices, if any, used are
 not stated in the valuation.
 
 (b) (i) Leasehold land is amortised over the period of the lease.
 
 (ii) Depreciation on assets is calculated on Straight Line Method at
 the rates and in the manner prescribed in Schedule XIV to the Companies
 Act, 1956, except for :
 
 (1) certain items of Plant and Machinery individually costing more than
 Rs. 5,000 - over their useful lives (2 years, 3 years, 5 years or 7
 years, as the case may be) as determined by the Company.
 
 (2) Cars and Vehicles - at 15% of cost.
 
 (iii) Depreciation charge for each year is after deducting the amount
 representing the depreciation on the increase due to revaluation of
 Land and Buildings, transferred from the Revaluation Reserve.
 
 (C) Intangible Assets :
 
 Intangible Assets are initially measured at cost and amortised so as to
 refect the pattern in which the assets economic Benefits are consumed.
 
 (a) Technical Knowhow :
 
 The expenditure incurred is amortised over the estimated period of
 Benefit, not exceeding six years commencing with the year of purchase
 of the technology.
 
 (b) Development Expenditure :
 
 The expenditure incurred on technical services and other
 project/product related expenses are amortised over the estimated
 period of Benefit, not exceeding fve years.
 
 (c) Software Expenditure :
 
 The expenditure incurred is amortised over three financial years equally
 commencing from the year in which the expenditure is incurred.
 
 (D) Investments :
 
 Long term investments are valued at cost. However, provision for
 diminution in value is made to recognise a decline other than temporary
 in the value of investments. Current investments are valued at the
 lower of cost and fair value, determined by category of investment.
 
 (E) Inventories :
 
 Inventories comprise all costs of purchase, conversion and other costs
 incurred in bringing the inventories to their present location and
 condition.
 
 Raw materials and bought out components are valued at the lower of cost
 or net realisable value. Cost is determined on the basis of the
 weighted average method.
 
 Finished goods produced and purchased for sale, manufactured components
 and work in progress are carried at cost or net realisable value
 whichever is lower.  Excise duty is included in the value of fnished
 goods inventory.
 
 Stores, spares and tools other than obsolete and slow moving items are
 carried at cost. Obsolete and slow moving items are valued at cost or
 estimated realisable value, whichever is lower.
 
 Long term contracts in progress are valued at cost.
 
 (F) Foreign Exchange Transactions :
 
 Transactions in foreign currencies (other than frm commitments and
 highly probable forecast transactions) are recorded at the exchange
 rates prevailing on the date of transaction. Monetary items are
 translated at the year-end rates. The exchange diference between the
 rate prevailing on the date of transaction and on the date of
 settlement as also on translation of monetary items at the end of the
 year (other than those relating to long term foreign currency monetary
 items) is recognised as income or expense, as the case may be.
 
 Exchange diferences relating to long term foreign currency monetary
 items, to the extent they are used for fnancing the acquisition of
 fixed assets are added to or subtracted from the cost of such fixed
 assets and the balance accumulated in Foreign Currency Monetary Item
 Translation Diference Account and amortised over the balance term of
 the long term monetary item or 31st March, 2011 whichever was earlier.
 
 Any premium or discount arising at the inception of a forward exchange
 contract is recognised as income or expense over the life of the
 contract, except in the case where the contract is designated as a cash
 fow hedge.
 
 (G) Derivative Instruments and Hedge Accounting :
 
 The Company uses foreign currency forward contracts and currency
 options to hedge its risks associated with foreign currency fuctuations
 relating to cer tain frm commitments and highly probable forecast
 transactions. The Company does not hold derivative financial instruments
 for speculative purposes. The Company has applied to such contracts the
 hedge accounting principles set out in Accounting Standard 30
 Financial Instruments : Recognition and Measurement (AS 30) by
 marking them to market.
 
 Changes in the fair value of the contracts that are designated and
 efective as hedges of future cash flows are recognised directly in
 Hedging Reserve Account and the inefective portion is recognised
 immediately in the Profit and Loss Account.
 
 (H) Revenue Recognition :
 
 Sales of products and services are recognised when the products are
 shipped or services rendered including export Benefits thereon.
 
 Dividend from investments are recognised in the Profit and Loss Account
 when the right to receive payment is established.
 
 (I) Government Grants :
 
 The Company, directly or indirectly through a consortium of Mahindra
 Group Companies, is entitled to various incentives from government
 authorities in respect of manufacturing units located in developing
 regions. The Company accounts for its entitlement on accrual basis.
 
 (J) Employee Benefits :
 
 Defned Contribution Plan/Defned Benefit Plan/Long term Compensated
 Absences :
 
 Companys contributions paid/payable during the year to Superannuation
 Fund, ESIC and Labour Welfare Fund are recognised in the Profit and
 Loss Account.
 
 Contributions to Provident Fund are made to a Trust administered by the
 Company and are charged to Profit and Loss Account as incurred. The
 Company is liable for the contribution and any shortfall in interest
 between the amount of interest realised by the investment and the
 interest payable to members at the rate declared by the Government of
 India.
 
 Companys liability towards gratuity, long term compensated absences,
 post retirement medical Benefit and post retirement housing allowance
 schemes are determined by independent actuaries, using the projected
 unit credit method. Past services are recognised on a straight line
 basis over the average period until the Benefits become vested.
 Actuarial gains and losses are recognised immediately in the statement
 of Profit and Loss Account as income or expense. Obligation is measured
 at the present value of estimated future cash flows using a discounted
 rate that is determined by reference to the market yields at the
 Balance Sheet date on Government Bonds where the currency and terms of
 the Government Bonds are consistent with the currency and estimated
 terms of the defned Benefit obligation.
 
 (K) Borrowing Costs :
 
 All borrowing costs are charged to the Profit and Loss Account except :
 
 (a) Borrowing costs that are attributable to the acquisition or
 construction of assets that necessarily take a substantial period of
 time to get ready for their intended use, which are capitalised as part
 of the cost of such assets.
 
 (b) Expenses incurred on raising long term borrowings are amortised
 over the period of borrowings. On early buyback, conversion or
 repayment of borrowings, any unamortised expenditure is fully written
 of in that year.
 
 (L) Redemption Premium :
 
 Premium payable on redemption of Bonds/Debentures is fully provided and
 charged to Securities Premium Account (Net of Tax) in the year of
 issue.
 
 (M) Product Warranty :
 
 In respect of warranties given by the Company on sale of certain
 products, the estimated costs of these warranties are accrued at the
 time of sale. The estimates for accounting of warranties are reviewed
 and revisions are made as required.
 
 (N) Leases :
 
 The Companys signifcant leasing arrangements are in respect of
 operating leases for premises (residential, ofce, stores, godowns,
 computer hardware etc.).  The leasing arrangements, which are not
 non-cancellable, range between eleven months and fve years generally,
 and are usually renewable by mutual consent on agreed terms. The
 aggregate lease rentals payable are charged as rent.
 
 (O) Taxes on Income :
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the year. Deferred tax is recognised, subject to
 consideration of prudence, on timing diferences, being the diference
 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 arising on account of unabsorbed depreciation or
 carry forward of tax losses are recognised only to the extent that
 there is virtual certainty supported by convincing evidence that
 sufcient future tax income will be available against which such
 deferred tax assets can be realised.
 
 (P) Excise duty recovered on sales is included in Sales – Traded and
 Manufactured Goods. Excise duty in respect of Finished Goods
 manufactured is shown separately as an item of expense and included in
 valuation of fnished goods produced.