1.  The Financial Statements are prepared to comply in all material
 aspects with all the applicable accounting principles in India, the
 applicable Accounting Standards notified under section 211(3C) of the
 Companies Act, 1956 and the relevant provisions of the Companies Act,
 1956.
 
 2.1 Sales
 
 Revenue from sales/services (exclusive of Sales Tax/ Value Added Tax)
 is being recognised on accrual basis in keeping with related
 arrangements with customers and is net of credit notes on account of
 returns and allowances.
 
 2.2 Fixed Assets
 
 Fixed Assets (comprising both tangible and intangible items) are stated
 at cost except in case of certain items of Land , Buildings and Plant
 and Machinery which are stated on the basis of revaluation (with
 corresponding credit to the Revaluation Reserve Account), being
 inclusive of resultant write ups.
 
 Software are capitalised where it is expected to provide future
 enduring economic benefit. Capitalisation costs includes license fees
 and cost of implementation/system integration services. The costs are
 capitalised in the year in which the relevant software is implemented
 for use.
 
 Impairment loss, if any, is recognised wherever the carrying amount of
 fixed assets of a cash generating unit exceeds its recoverable amount
 i.e. net selling price or value in use, whichever is higher.
 
 2.3 Depreciation
 
 Depreciation (including amortisation) is calculated in the following
 manner :
 
 (a) Leasehold land is amortised over the period of lease.
 
 (b) Depreciation on revalued assets other than land is calculated on
 their respective revalued amounts at rates considered applicable by the
 valuers on the straight line method. (Also refer Note 3 below)
 
 (c) In respect of other assets, at rates prescribed in Schedule XIV to
 the Companies Act, 1956 on Straight Line Method except Plant and
 Machinery given under operating leases which are depreciated over a
 period of 3 to 6 years, being the useful life as estimated by the
 management.
 
 (d) Technical Know-how fees are amortised under straight line method
 over total useful lives ( currently 5 to 10 years), as estimated by the
 Management.
 
 (e) Software capitalised, are amortised within a period of three years
 from the date of capitalisation.
 
 2.4 Investments
 
 Long term Investments are stated at cost less provision, if any, for
 permanent diminution in value .
 
 2.5 Inventories
 
 Inventories, other than Stores are valued at lower of weighted average
 cost/actual cost (inclusive of conversion expenses and applicable
 overheads for manufacturing activities) and net realisable value.
 Stores are valued at weighted average cost less write offs.
 
 Loose Tools acquired prior to 1st September, 2008 are written off over
 a period up to 5 years, after retaining 10% residual value. Loose Tools
 acquired on or after 1st September,2008 are fully charged off.
 
 2.6 Taxation
 
 Current Tax in respect of taxable income is provided for the year based
 on applicable tax rates and laws. Deferred Tax is recognised subject to
 the consideration of prudence in respect of deferred tax assets, 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 and is measured using tax
 rates and laws that have been enacted or substantively enacted by the
 Balance Sheet date. Deferred tax assets are reviewed at each Balance
 Sheet date to re-assess realisation.
 
 2.7 Employee Benefits
 
 2.7.1 Short-term Employee benefits (i.e. benefits payable within one
 year) are recognised in the period in which the employee services are
 rendered.
 
 Contributions towards provident funds are recognised as expense.
 Provident fund contributions in respect of employees are made to common
 trust-Tractors India Employees Provident Fund ( being administered by
 the trustees of the said fund for the benefit of employees of the
 company and its subsidary company i.e. Tractors India Private Limited)
 and such Trust invest funds following a pattern of investment
 prescribed by the Government. The interest rate payable to the members
 of the Trusts is not lower than the rate of interest declared annually
 by the Central Government under the Employees Provident Funds and
 Miscellaneous Provisions Act,1952 and shortfall, if any, on account of
 interest, is made good by the Company. (Also refer note 18.2 below)
 Contributions under Employees Pension Scheme is made as per statutory
 requirements and charged as expenses for the year.
 
 2.7.3 The Company also contributes to the Central Government
 administered Employees State Insurance Scheme for its eligible
 employees, which is a defined contribution plan.
 
 2.7.4 Provisions for Gratuity for eligible employees is (being a
 defined benefit plan) made on the basis of year-end actuarial valuation
 using Projected unit credit method.
 
 2.7.5 In respect of certain eligible employees who have attained 45
 years of age as on 1st April 2009, provision for Superannuation under
 defined benefit plan is made on the basis of year end actuarial
 valuation (Note 18.3 below) using Projected unit credit method.
 
 In respect of certain eligible employees who have not attained 45 years
 of age as on 1st April 2009 provision for Superannuation is made :-
 
 - under defined contribution scheme in respect of services rendered
 with effect from 1st April 2009.
 
 - under defined benefit scheme in respect of services rendered up to
 31st March 2009, based on frozen pensionable salary as on 31st March
 2009 (refer Note 18.3 below) using Projected unit credit method.
 
 2.7.6 Actuarial gains/ losses arising in Defined Benefit Plans are
 recognised in the Profit and Loss Account as income or expenses in the
 year in which they occur.
 
 Accrued liability towards Leave Encashment benefits, covering eligible
 employees, evaluated on the basis of year-end actuarial valuation,
 using Projected unit credit method, is recognised as a charge.
 
 2.8 Foreign Currency Transactions
 
 Monetary assets and liabilities related to foreign currency
 transactions remaining unsettled at the year end are translated at year
 end rates or at contract rates, where covered by forward exchange
 contracts. The difference in transactions of monetary assets and
 liabilities and realised gains and losses on foreign exchange
 transactions are recognised in the Profit and Loss Account. In respect
 of transactions covered by forward exchange contracts, the difference
 between the contract rate and the spot rate on the date of transaction
 is charged to the Profit and Loss Account over the period of the
 contract. Profit/(Loss) on cancellation of forward contracts are
 recognised as income or as expenses for the year. Foreign currency
 non-monetary items carried in terms of historical cost are reported
 using the exchange rate at the date of transactions.
 
 2.9 Borrowing Cost
 
 Borrowing Cost, if any, that are attributable to the acquisition,
 construction or production of Qualifying Assets are capitalised as
 part of cost of such assets. 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
 expenses in the period in which they are incurred.
 
 2.10 Leases
 
 For assets acquired under Operating Lease, rentals payable are charged
 to Profit and Loss Account. Assets acquired under Finance Lease are
 capitalised at lower of the Fair Value and Present Value of Minimum
 Lease Payments. Assets leased out under operating leases are
 capitalised. Rental income is recognised on accrual basis over the
 lease term.
 
 3.  Based on the valuation report submitted by the valuers appointed
 for the purpose, certain items of the Companys fixed assets (viz.
 Freehold and Leasehold Land, Freehold and Leasehold Buildings and Plant
 and Machinery) were revalued on 31st March,1993 after considering the
 following factors :-
 
 - The then estimated current market value pertaining to Leasehold Land
 and Freehold Land and Buildings thereon.
 
 - Value of Plant and Machinery based on their the then current cost of
 replacement.
 
 - Adjustments for the then condition, the standard of maintenance,
 depreciation up to valuation date etc.
 
 The resultant revaluation surplus of Rs. 247,234 thousand, arising from
 the aforesaid revaluation, were transferred to Revaluation Reserve as
 reflected in the Companys annual accounts for 1992-93.
 
 Depreciation on these revalued assets as calculated in the manner
 indicated in Note 2.3(b) above includes an additional charge of Rs. 1,545
 thousand (Previous Year Rs. 1,545 thousand)and an amount equivalent to
 the additional charge has been transferred to the Profit and Loss
 Account from Revaluation Reserve; such transfer, according to an
 authoritative professional view being acceptable for the purpose of the
 Companys annual accounts. In consequence, the effective depreciation
 rates (other than leasehold land) are as per Schedule XIV to the
 Companies Act, 1956.