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Accounting Policy	Year : Mar '11

1 Accounting Standards (a) AS - 1 Disclosure of accounting policies The accounts are maintained on accrual basis. The revenue and expenditure are accounted on a going concern basis. (b) AS - 2 Valuation of inventories Inventories are valued in accordance with the method of valuation prescribed by The Institute of Chartered Accountants of India at weighted average cost or net realisable value, whichever is less. (c) AS - 3 Cash flow statements The cash flow statement is prepared under indirect method and the same is annexed. (d) AS - 4 Contingencies and events occuring after Balance Sheet date An amount of Rs.22.52 crores was invested in PT. TVS Motor Company Indonesia, Jakarta, on 8th March 2011. The share certificate was issued on 9th April 2011 by the investee company, after completing the local formalities. (f) AS - 6 Depreciation accounting Depreciation has been provided under the straight line method at the rates prescribed under Schedule XIV of the Companies Act,1956 with the applicable shift allowance. In respect of assets added / assets sold during the year, pro-rata depreciation has been provided at the rates prescribed under Schedule XIV. (f) AS - 6 Depreciation accounting (continued) Depreciation in respect of computers and vehicles has been provided at 30% and 18% respectively, which is higher than the rates prescribed under Schedule XIV. Depreciation in respect of tools and dies has been provided based on the quantity of components manufactured and the life of tools and dies. Tools and dies relating to three wheeler operations have been capitalised and applicable depreciation provided thereon, considering the lower volume as compared to two wheelers. Depreciation in respect of assets acquired during the year whose cost does not exceed Rs. 5,000/- has been provided at 100%. (g) AS - 7 Construction contracts This Accounting Standard is not applicable. (h) AS - 8 Research & Development This Accounting Standard is withdrawn. (i) AS - 9 Revenue recognition The income of the Company is derived from sale (net of trade discounts) of automotive vehicles, parts thereof, lubricant oil, machinery and equipment and provision of technical know-how, and includes realised exchange gain on exports of Rs.1.65 crores (last year gain of Rs.0.55 crores). Sale of goods is recognised on despatch of goods to customers. Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend from investments in shares / units is recognised when the Company / Mutual Fund, in which they are held, declares the dividend and the right to receive the same is established. The interim dividend declared in July 2011 by the wholly owned subsidiary of the Company viz., Sundaram Auto Components Limited, Chennai for the year ended 31st March 2011 is recognised as revenue only in the year 2011-12. (k) AS - 11 Accounting for effects of changes in foreign exchange rates Purchase of imported raw materials, components, spare parts and capital goods are accounted based on retirement memos from banks. In respect of liabilities on import of raw materials, components, spare parts and capital goods which are in transit and where invoices / bills are yet to be received, the liability is accounted based on the advance copies of documents at the market exchange rate prevailing on the date of the Balance Sheet. Sales include realised exchange fluctuation on exports. In terms of the Companies (Accounting Standards) Amendment Rules, 2009, on Accounting Standard - 11, notified by the Government of India on 31st March 2009, the Company has opted to adjust the changes in foreign exchange rates relating to long term foreign currency monetary items to the carrying cost of fixed assets and to Foreign Currency Monetary Item Translation Difference Account. The impact is set out below: Derivative Instruments Derivative contracts are entered into by the Company only based on underlying transactions. The Company has not entered into any derivative contracts of a speculative nature. Currency swaps - The Company had earlier entered into seven currency swap contracts covering the total external commercial borrowings of USD 100 mn. (last year seven contracts covering USD 100 mn.), fixing the repayment liability of the Company in Indian Rupees. Consequent to repayment of part of the above loans, currency swap contracts outstanding at year end are only to the extent of USD 13 mn. (last year USD 45 mn.) Interest Rate Swap (IRS) - The Company had earlier entered into seven derivative contracts in respect of total external commercial borrowings amounting to USD 100 mn. (last year seven contracts in respect of USD 100 mn.) to convert floating interest rate to fixed interest. Consequent to repayment of part of the above loans, interest rate swap contracts outstanding at the end of the year are only to the extent of USD 13 mn. (last year USD 45 mn.) (I) AS - 12 Accounting for Government Grants The Company has not received any grant. (m) AS - 13 Accounting for Investments Investments are valued at cost. Provision for diminution in the carrying cost of investments is made if such diminution is other than temporary in nature in the opinion of the management. Accordingly, a sum of Rs.3.36 crores has been provided during the year. (n) AS - 14 Accounting for amalgamations During the year, there was no amalgamation. (o) AS - 15 Accounting for Employee benefits Disclosure is made as per the requirements of the standard and the same is furnished below: A Defined contribution plan Contribution to provident fund is in the nature of defined contribution plan and is made to a recognised trust. B Defined benefit plans (i) The Company extends defined benefit plan in the form of leave salary to employees. In addition, the Company also extends defined benefit plan in the form of pension to senior managers of the Company. Provision for leave salary and pension is made on actuarial valuation basis. (ii) The Company also extends defined benefit plan in the form of gratuity to employees. Contribution to gratuity is made to Life Insurance Corporation of India in accordance with the scheme framed by the Corporation. (p) AS - 16 Borrowing costs The borrowing costs have been treated in accordance with Accounting Standard on borrowing costs issued by The Institute of Chartered Accountants of India. (q) AS - 17 Segment reporting The Company operates in only one segment viz., automotive vehicles. Hence the Accounting Standard on segment reporting is not applicable. (r) AS - 18 Related party disclosures Disclosure is made as per the requirements of the standard and the same is furnished below: List of Related Parties as per clause 3(a) of the standard where control exists. Reporting entity : TVS Motor Company Limited, Chennai Period From To Holding company Sundaram-Clayton Limited, Chennai 01-04-2010 31-03-2011 Ultimate holding company T V Sundram Iyengar & Sons Limited, Madurai 01-04-2010 31-03-2011 Subsidiaries Sundaram Auto Components Limited, Chennai 01-04-2010 31-03-2011 TVS Motor Company (Europe) B.V, Amsterdam 01-04-2010 31-03-2011 TVS Motor (Singapore) Pte. Limited, Singapore 01-04-2010 31-03-2011 PT. TVS Motor Company Indonesia, Jakarta 01-04-2010 31-03-2011 TVS Energy Limited, Chennai 01-04-2010 31-03-2011 TVS Housing Limited, Chennai 21-06-2010 31-03-2011 TVS Wind Power Limited, Chennai 16-02-2011 31-03-2011 TVS Wind Energy Limited, Chennai 16-02-2011 31-03-2011 Fellow subsidiaries Anusha Investments Limited, Chennai 01-04-2010 31-03-2011 TVS Investments Limited, Chennai 01-04-2010 31-03-2011 Sundaram Investment Limited, Chennai 01-04-2010 31-03-2011 TVS Electronics Limited,Chennai 01-04-2010 31-03-2011 Tumkur Property Holdings Limited, Chennai 01-04-2010 31-03-2011 Prime Property Holdings Limited, Chennai 01-04-2010 31-03-2011 TVS-E Access (India) Limited, Chennai 01-04-2010 31-03-2011 TVS-E Servicetec Limited, Chennai 01-04-2010 31-03-2011 TVS Capital Funds Limited, Chennai 01-04-2010 31-03-2011 Sravanaa Properties Limited, Chennai 01-04-2010 31-03-2011 Southern Roadways Limited, Madurai 01-04-2010 31-03-2011 Sundaram Industries Limited, Madurai 01-04-2010 31-03-2011 The Associated Auto Parts Limited, Mumbai 01-04-2010 31-03-2011 TVS Interconnect Systems Limited, Madurai 01-04-2010 31-03-2011 TVS Logistics Services Limited, Madurai 01-04-2010 31-03-2011 Lucas-TVS Limited, Chennai 01-04-2010 31-03-2011 Sundaram Textiles Limited, Madurai 01-04-2010 31-03-2011 NSM Holdings Limited, Madurai 01-04-2010 31-03-2011 TVSNet Technologies Limited, Madurai 01-04-2010 31-03-2011 TOR Projects & Services Limited, Madurai 01-04-2010 31-03-2011 NK Telecom Products Limited, Madurai 01-04-2010 31-03-2011 NK Telesystems Limited, Madurai 01-04-2010 31-03-2011 TVS Automotive Europe Limited, UK 01-04-2010 31-03-2011 TVS C J Components Limited, UK 01-04-2010 31-03-2011 TVS Logistics Iberia S.L., Spain 01-04-2010 31-03-2011 TVS Logistics Siam Limited, Thailand 01-04-2010 31-03-2011 TVS Autoserv GmbH, Germany 01-04-2010 31-03-2011 TVS Logistics Investment UK Limited, UK 01-04-2010 31-03-2011 YeleStre Holdings Limited, UK 01-04-2010 31-03-2011 Multipart (Holdings) Limited, UK 01-04-2010 31-03-2011 Multipart Solutions Limited, UK 01-04-2010 31-03-2011 Multipart Limited, UK (formerly IH Crick Property Co Limited, UK) 01-04-2010 31-03-2011 Msys Software Solutions Limited, UK 01-04-2010 31-03-2011 Globe Dynamics Limited, UK 01-04-2010 31-03-2011 Globe Transport Products Limited, UK 01-04-2010 31-03-2011 TVS Dynamic Global Freight Services Limited, Chennai 01-04-2010 31-03-2011 TVS Commutation Solutions Limited, Madurai 01-04-2010 31-03-2011 Lucas Indian Service Limited, Chennai 01-04-2010 31-03-2011 TVS Automotive Systems Limited, Chennai 01-04-2010 31-03-2011 Fellow subsidiaries (continued) Iranian Automotive Systems, Iran 01-04-2010 31-03-2011 TVS Automobile Solutions Limited, Madurai 01-04-2010 31-03-2011 Sundaram Lanka Tyres Limited, Sri Lanka 01-04-2010 31-03-2011 TVS Logistics Investments USA Inc., USA 01-04-2010 31-03-2011 TVS America Inc., USA 01-04-2010 31-03-2011 Manufacturers Equipments & Supply Co., USA 01-04-2010 31-03-2011 TVS RHR Finished Vehicles Logistics Solutions Limited, Chennai (formerly RHR Car Transportation Solutions Limited, Chennai) 01-04-2010 31-03-2011 TVS GMR Aviation Logistics Limited, Madurai 01-04-2010 31-03-2011 Associate company TVS Lanka (Private) Limited, Colombo, Sri Lanka 01-04-2010 31-10-2010 Joint venture TVS Andina S.A., Colombia 01-04-2010 28-03-2011 List of Related Parties as per clause 3(c) of the standard. Key Management Personnel Mr. Venu Srinivasan, Chairman & Managing Director Enterprise over which key management personnel and his relatives have significant influence Harita-NTI Limited, Chennai 01-04-2010 31-03-2011 (w) AS - 23 Accounting for investments in associates in consolidated financial statements There is no associate company. TVS Lanka (Private) Limited, Colombo, Sri Lanka ceased to be an associate with effect from 01-11-2010. (x) AS - 24 Discontinuing operations During the year, the Company has not discontinued any of its operations. (y) AS - 25 Interim financial reporting The Company has elected to publish quarterly financial results which were subject to limited review by the statutory auditors. (aa) AS - 27 Financial Reporting of interests in joint venture The joint venture agreement of the Company with Motor Andina S.A., by which TVS Andina S.A., Colombia, came into existence stands terminated with effect from 28th March 2011. (ab) AS - 28 Impairment of assets In respect of tools and dies meant for manufacture of certain slow moving models, accelerated depreciation amounting to Rs.10.39 crores (last year Rs.11.77 crores) has been provided during the year. (ac) AS - 29 Provisions, contingent liabilities and contingent assets

Source : Dion Global Solutions Limited

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