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Accounting Policies of Automobile Corporation Of Goa Ltd. Company

Mar 31, 2015

A) Basis of preparation of financial statements:

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards Specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rule 2014 and the relevant provisions of the Companies Act,2013 (" the 2013 Act") / Companies Act,1956 ("the 1956 Act"), as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year except for change in the accounting policy for depreciation as more fully described in Note no.42

b) Management estimates:

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

c) Inventories:

Items of inventory are valued on the basis given below:

i. Raw material, Boughtout Components, Stores and Spares : at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method.

ii. Work in progress and Finished goods : at cost or net realisable value, whichever is lower. Cost is determined on the basis of absorption costing.

iii. Scrap: at net realisable value.

d) Depreciation and Amortisation:

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on tangible fixed assets has been provided on the straight-line method as per the useful lives of the assets as assessed as under based on technical advice, taking into account the nature of the asset, the estimated usage of the asset, the operating conditions of the asset, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support, etc.:

The assets whose assessed useful life is different from those prescribed in Schedule II to the Companies Act, 2013 is as under :

Buildings 28 to 59 years

Plant and Equipments 10 to 20 years

Furniture and fixtures 15 years

Vehicles 8 to 10 years

Computers 6 years

Leasehold land is amortised over the duration of the lease.

Intangible assets are amortised over their estimated useful life on straight line method as follows:

Computer Software 4 years

e) Revenue recognition:

Revenue (income) is recognised when no significant uncertainty as to measurability or collectability exists.

f) Fixed Assets:

Fixed assets are carried at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation and impairment loss.

g) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realization / payments of foreign exchange are accounted as income or expense in the relevant year.

h) Government Grants:

Grants related to specific Fixed Assets are disclosed as a deduction from the value of concerned Assets. Grants related to revenue are credited to the statement of Profit and Loss Account. Grants in the nature of promoter's contribution are treated as Capital Reserve.

i) Investments :

Current investments are carried at lower of cost and fair value. Long term (Non - current) investments are carried at cost. However when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline.

j) Employee Benefits:

i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company has obtained group gratuity policy with Life Insurance Corporation of India The company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation, carried out as at the year end.

ii) Superannuation

The company has a Superannuation plan (defined contribution plan) .The Company maintains separate irrevocable trust for employees covered and entitled to benefits. The company has obtained insurance policy with Life Insurance Corporation of India. The company contributes 15% of eligible employee's salary to the trust every year. The company recognizes such contributions as an expense when incurred. The company has no further obligation beyond this contribution.

iii) Provident Fund

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employee's salary (currently 12% of employee's salary ).The contributions as specified under the law are paid to the provident fund trust. Contribution towards Pension fund is paid to the Regional Provident fund commissioner at specified percentage of the covered employee's salary on monthly basis.

iv) Compensated absences

The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation, carried out as at the year end.

v) Actuarial gains and losses

The actuarial gains and losses are recognised immediately in the statement of profit and loss.

k) Borrowing costs:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

l) Segment reporting:

The following accounting policies have been followed for segment reporting:

Segment Revenue includes Revenue from operations and other income directly identifiable with/ allocable to the segment.

Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses.

Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Cash and Bank balances. Unallocable liabilities include Deferred tax, Secured loans, Provision for tax (net of advance payment of taxes) and Other liabilities.

m) Leases:

Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Lease rentals are charged to the Statement of profit & loss account on accrual basis. Rentals received on assets given on operating leases are recognised as income in the statement of profit and loss on straight-line basis over the period of the lease as per the terms of agreement.

n) Taxes on Income:

Tax expense comprise both current tax and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable / recoverable in respect of taxable income / loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

o) Intangible Assets:

Intangible assets are stated at cost less accumulated amortisation.

p) Impairment of assets:

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from it's disposal at the end of it's useful life. Net selling price is the amount obtainable from the sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal.

q) Provisions and contingencies:

A provision is recognised where the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A Contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognised nor disclosed.

r) Product Warranty Expenses:

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

s) Accounting of Cenvat Credit:

Cenvat credit is accounted as per actual credit availed in the Excise records, on receipt of materials.


Mar 31, 2014

A) Basis of preparation of financial statements

The financial statements of the Company have been prepared on accrual basis under the historical cost convention and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act,1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 (" the 2013 Act") in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act/2013 Act, as applicable.

b) Management estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reported period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

c) Fixed Assets:

Fixed assets are carried at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation and impairment loss.

d) Depreciation/Amortisation:

1. In respect of fixed assets revalued, depreciation is provided on the basis of useful life of assets as estimated by the external values or that calculated on original cost whichever is higher.

2. Depreciation on other fixed assets has been provided in the accounts at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 as under:

i. Sheet Metal Divisions (Honda, Bhuimpal, Jejuri) : On Written Down Value Method in respect of buildings/furniture and fixtures vehicles and on Straight Line Method in respect of plant and machinery.

ii. Bus Body Division: On straight line method.

3. Cost of leasehold land is amortised over the period of lease.

e) Impairment Loss:

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from it''s disposal at the end of it''s useful life. Net selling price is the amount obtainable from the sale of the asset in an arm''s length transaction between knowledgeable, willing parties, less the cost of disposal.

f) Intangible Assets

Intangible assets are stated at cost less accumulated amortisation. Computer software is amortised over a period of four years.

g) Investments:

Current investments are carried at lower of cost and fair value. Long term (Non - current) investments are carried at cost. However when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline.

h) Inventories:

Items of inventory are valued on the basis given below:

i. Raw material, Bought out Components, Stores and Spares : at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method.

ii. Work in progress and Finished goods : at cost or net realisable value, whichever is lower. Cost is determined on the basis of absorption costing.

iii. Scrap: at net realisable value.

i) Employee Benefits:

i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company has obtained group gratuity policy with Life Insurance Corporation of India The company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation, carried out as at the year end.

ii) Superannuation

The company has a Superannuation plan (defined contribution plan) .The Company maintains separate irrevocable trust for employees covered and entitled to benefits. The company has obtained insurance policy with Life Insurance Corporation of India. The company contributes 15% of eligible employee''s salary to the trust every year. The company recognizes such contributions as an expense when incurred. The company has no further obligation beyond this contribution.

iii) Provident Fund

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employee''s salary (currently 12% of employee''s salary ).The contributions as specified under the law are paid to the provident fund trust. Contribution towards Pension fund is paid to the Regional Provident fund commissioner at specified percentage of the covered employee''s salary on monthly basis.

iv) Compensated absences

The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation, carried out as at the year end.

v) Actuarial gains and losses

The actuarial gains and losses are recognised immediately in the statement of profit and loss.

j) Accounting of Convert Credit:

Convert credit is accounted as per actual credit availed in the Excise records, on receipt of materials.

k) Foreign Currency Transactions:

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are affected. At the year-end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realisation / payments of foreign exchange are accounted as income or expense in the relevant year.

I) Revenue recognition:

Revenue (income) is recognised when no significant uncertainty as to measurability or collectability exists.

m) Borrowing costs:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

n) Leases

Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Lease rentals are charged to the Statement of profit & loss account on accrual basis. Rentals received on assets given on operating leases are recognised as income in the statement of profit and loss on straight-line basis over the period of the lease as per the terms of agreement.

o) Segment accounting

The following accounting policies have been followed for segment reporting:

Segment Revenue includes Revenue from operations and other income directly identifiable with/ allocable to the segment. Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses. Segment assets and liabilities include those directly identifiable with the respective segments. Unallowable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Cash and Bank balances. Unallowable liabilities include Deferred tax, Secured loans, Provision for tax (net of advance payment of taxes) and Other liabilities.

p) Taxes on Income:

Tax expense comprise both current tax and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable / recoverable in respect of taxable income / loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recongnised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

q) Product Warranty Expenses

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

r) Provisions and contingencies:

A provision is recognised where the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A Contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognised nor disclosed.

s) Government Grants:

Grants related to specific Fixed Assets are disclosed as a deduction from the value of concerned Assets. Grants related to revenue are credited to the statement of Profit and Loss Account. Grants in the nature of promoter''s contribution are treated as Capital Reserve.


Mar 31, 2013

A) Basis of preparation of financial statements:

The financial statements have been prepared on accrual basis under the historical cost convention and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

b) Management estimates:

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reported period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

c) Fixed Assets:

Fixed assets are carried at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation and impairment loss.

d) Depreciation/Amortisation:

1. In respect of fixed assets revalued, depreciation is provided on the basis of useful life of assets as estimated by the external valuers or that calculated on original cost whichever is higher.

2. Depreciation on other fixed assets has been provided in the accounts at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 as under:

i. Sheet Metal Divisions (Honda, Bhuimpal, Jejuri) : On Written Down Value Method in respect of buildings,

furniture and fixtures and vehicles and on Straight Line Method in respect of plant and machinery. ii. Bus Body Division: On straight line method.

3. Cost of leasehold land is amortised over the period of lease.

e) Impairment Loss:

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset''s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from it''s disposal at the end of it''s useful life. Net selling price is the amount obtainable from the sale of the asset in an arm''s length transaction between knowledgeable, willing parties, less the cost of disposal.

f) Intangible Assets

Intangible assets are stated at cost less accumulated amortisation. Computer software is amortised over a period of four years.

g) Investments :

Current investments are carried at lower of cost and fair value. Long term (Non - current) investments are carried at cost. However when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline.

h) Inventories:

Items of inventory are valued on the basis given below:

i. Raw material, Boughtout Components, Stores and Spares : at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method.

ii. Work in progress and Finished goods : at cost or net realisable value, whichever is lower. Cost is determined on the basis of absorption costing.

iii. Scrap : at net realisable value.

i) Employee Benefits:

i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company has obtained group gratuity policy with Life Insurance Corporation of India. The company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation, carried out as at the year end.

ii) Superannuation

The company has a Superannuation plan (defined contribution plan) .The Company maintains separate irrevocable trust for employees covered and entitled to benefits. The company has obtained insurance policy with Life Insurance Corporation of India. The company contributes 15% of eligible employee''s salary to the trust every year. The company recognizes such contributions as an expense when incurred. The company has no further obligation beyond this contribution

iii) Provident Fund

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employee''s salary ( currently 12% of employee''s salary ).The contributions as specified under the law are paid to the provident fund trust. Contribution towards Pension fund is paid to the Regional Provident fund commissioner at specified percentage of the covered employee''s salary on monthly basis.

iv) Compensated absences

The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation, carried out as at the year end.

v) Actuarial gains and losses

The actuarial gains and losses are recognised immediately in the statement of profit and loss.

j) Accounting of Cenvat Credit:

Cenvat credit is accounted as per actual credit availed in the Excise records, on receipt of materials.

k) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realisation / payments of foreign exchange are accounted as income or expense in the relevant year.

l) Revenue recognition:

Revenue (income) is recognised when no significant uncertainty as to measurability or collectibility exists.

m) Borrowing costs:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

n) Leases:

Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Lease rentals are charged to the Statement of profit & loss on accrual basis. Rentals received on assets given on operating leases are recognised as income in the statement of profit and loss on straight-line basis over the period of the lease as per the terms of agreement.

o) Segment accounting :

The following accounting policies have been followed for segment reporting:

Segment Revenue includes Revenue from operation and other income directly identifiable with/allocable to segment.

Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Cash and Bank balances. Unallocable liabilities include Deferred tax, Secured loans, Provision for tax ( net of advance payment of taxes) and Other liabilities

p) Taxes on Income:

Tax expense comprise both current tax and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable / recoverable in respect of taxable income / loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods.

Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recongnised if there is virtual certainty that there will be sufficient future taxable income available to realise such losses.

q) Product Warranty Expenses:

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

r) Provisions and contingencies:

A provision is recognised where the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A Contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognised nor disclosed.

s) Government Grants:

Grants related to specific Fixed Assets are disclosed as a deduction from the value of concerned Assets. Grants related to revenue are credited to the statement of Profit and Loss Account. Grants in the nature of promoter''s contribution are treated as Capital Reserve.


Mar 31, 2012

A) Basis of preparation of financial statements:

The financial statements have been prepared on accrual basis under the historical cost convention and in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956.

b) Management estimates:

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reported period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

c) Fixed Assets:

Fixed assets are carried at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation and impairment loss.

d) Depreciation/ Amortisation:

1. In respect of fixed assets revalued, depreciation is provided on the basis of useful life of assets as estimated by the external valuers or that calculated on original cost whichever is higher.

2. Depreciation on other fixed assets has been provided in the accounts at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 as under:

i. Sheet Metal Divisions (Honda, Bhuimpal, Jejuri) : On Written Down Value Method in respect of buildings, furniture and fixtures and vehicles and on Straight Line Method in respect of plant and machinery.

ii. Bus Body Division: On straight line method.

3. Cost of leasehold land is amortised over the period of lease.

e) Impairment Loss:

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an asset's net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from it's disposal at the end of it's useful life. Net selling price is the amount obtainable from the sale of the asset in an arm's length transaction between knowledgeable, willing parties, less the cost of disposal.

f) Intangible Assets

Intangible assets are stated at cost less accumulated amortisation. Computer software is amortised over a period of four years.

g) Investments :

Current investments are carried at lower of cost and fair value. Long term (Non - current) investments are carried at cost. However when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline.

h) Inventories:

Items of inventory are valued on the basis given below:

i. Raw material, Boughtout Components, Stores and Spares : at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method.

ii. Work in progress and Finished goods : at cost or net realisable value, whichever is lower. Cost is determined on the basis of absorption costing.

iii. Scrap : at net realisable value.

i) Employee Benefits:

i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company has obtained group gratuity policy with Life Insurance Corporation of India. The company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation, carried out as at the year end.

ii) Superannuation

The company has a Superannuation plan (defined contribution plan) .The Company maintains separate irrevocable trust for employees covered and entitled to benefits. The company has obtained insurance policy with Life Insurance Corporation of India. The company contributes 15% of eligible employee's salary to the trust every year. The company recognizes such contributions as an expense when incurred. The company has no further obligation beyond this contribution

iii) Provident Fund

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employee's salary ( currently 12% of employee's salary ).The contributions as specified under the law are paid to the provident fund trust. Contribution towards Pension fund is paid to the Regional Provident fund commissioner at specified percentage of the covered employee's salary on monthly basis.

iv) Compensated absences

The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation, carried out as at the year end.

v) Actuarial gains and losses

The actuarial gains and losses are recognised immediately in the statement of profit and loss.

j) Accounting of Cenvat Credit:

Cenvat credit is accounted as per actual credit availed in the Excise records, on receipt of materials.

k) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realisation / payments of foreign exchange are accounted as income or expense in the relevant year.

l) Revenue recognition:

Revenue (income) is recognised when no significant uncertainty as to measurability or collectibility exists.

m) Borrowing costs:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

n) Leases:

Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Lease rentals are charged to the Statement of profit & loss on accrual basis. Rentals received on assets given on operating leases are recognised as income in the statement of profit and loss on straight-line basis over the period of the lease as per the terms of agreement.

o) Segment accounting :

The following accounting policies have been followed for segment reporting:

Segment Revenue includes Revenue from operation and other income directly identifiable with/allocable to segment.

Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Cash and Bank balances. Unallocable liabilities include Deferred tax, Secured loans, Provision for tax ( net of advance payment of taxes) and Other liabilities

p) Taxes on Income:

Tax expense comprise both current tax and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable / recoverable in respect of taxable income / loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods.

q) Product Warranty Expenses:

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

r) Provisions and contingencies:

A provision is recognised where the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A Contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognised nor disclosed.

s) Government Grants:

Grants related to specific Fixed Assets are disclosed as a deduction from the value of concerned Assets. Grants related to revenue are credited to the statement of Profit and Loss. Grants in the nature of promoter's contribution are treated as Capital Reserve.


Mar 31, 2011

A) Basis of preparation of financial statements

The financial statements are prepared under historical cost convention on the accrual basis of accounting and in accordance with accounting principles generally accepted in India.

b) Management estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the M ana g ement t o make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reported period. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

c) Fixed Assets :

Fixed assets are carried at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation and impairment loss.

d) Depreciation / Amortisation :

1. In respect of fixed assets revalued, depreciation is provided on the basis of useful life of assets as estimated by the external valuers or that calculated on original cost whichever is higher.

2. Depreciation on other fixed assets has been provided in the accounts at the rates and in the manner specified in schedule XIV to the Companies Act. 1956 as under:

i. Sheet Metal Divisions (Honda, Bhuimpal, Jejuri) : On Written Down Value Method in respect of buildings, furniture and fixtures and vehicles and on Straight Line Method in respect of plant and machinery.

ii. Bus Body Division : On straight line method.

3. Cost of leasehold land is amortised over the period of lease.

e) Impairment Loss :

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of the asset in an arms length transaction between knowledgeable, willing parties, less the cost of disposal.

f) Intangible Assets

Intangible assets are stated at cost less accumulated amortisation. Computer software is amortised over a period of four years.

g) Investments :

Current investments are carried at lower of cost and fair value. Long Term investments are carried at cost. However when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline

h) Inventories :

Items of inventory are valued on the basis given below :

i) Raw material : at cost or net realisable value, whichever is lower. Cost determined by the Weighted Average Method.

ii) Components, Stores and Spares : at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method.

iii) Work in process and Finished goods : at cost or net realisable value, whichever is lower. Cost is determined on the basis of absorption costing.

iv) Scrap : at net realisable value.

i) Employee Benefits :

i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company has obtained insurance policy with Life Insurance Corporation of India. The company accounts for the liability for gratuity benefits payable in future based on an independent actuarial valuation, carried out as at the year end.

ii) Superannuation

The company has a Superannuation plan (defined contribution plan). The company maintains separate irrevocable trust for employees covered and entitled to benefits. The company has obtained insurance policy with Life Insurance Corporation of India. The company contribute 15% eligible employees salary to the trust every year. The company recognizes such contributions as an expense when incurred. The company has no further obligation beyond this contribution.

iii) Provident Fund

The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions at a specified percentage of the covered employees salary (currently 12% of employees salary). The contributions as specified under the law are paid to the provident fund trust.

Contribution towards Pension fund is paid to the Regional Provident fund commissioner at specified percentage of the covered employees salary on monthly basis.

iv) Compensated absences

The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate

leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation, carried out as at the year end.

v) Actuarial gains and losses

The actuarial gains and losses are recognised immediately in the statement of profit and loss.

j) Accounting of Cenvat Credit :

Cenvat credit is accounted as per actual credit availed in the Excise records, on receipt of materials.

k) Foreign Currency Transactions :

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realisation / payments of foreign exchange are accounted as income or expense in the relevant year.

l) Revenue recognition :

Revenue (income) is recognised when no significant uncertainly as to measurability or collectibility exists.

m) Borrowing costs :

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

n) Leases

Assets acquired on leases where significant portions of the risk and reward incidental to ownership are retained by the lessors are classified as operating leases. Lease rentals are charged to the profit & loss account on accrual basis. Rentals received on assets given on operating leases are recognised as income in the profit and loss account on straight-line basis over the period of the lease as per the terms of agreement.

o) SEGMENTAL ACCOUNTING

The following accounting polices have been followed for segment reporting :

Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment.

Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses. Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Cash and Bank balances. Unallocable liabilities include Deferred tax. Secured loans, Provision for tax (net of advance payment of taxes) and Other

p) Fringe Benefit Tax :

Provision for Fringe Benefit Tax is made in accordance with Chapter XII-H of the Income Tax Act, 1961.

q) Taxes on Income :

Tax expense comprise both current tax and deferred tax at the applicable enacted / substantively enacted rates. Current tax represents the amount of income tax payable / recoverable in respect of taxable income / loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods.

r) Product Warranty Expenses

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

s) Provisions and contingencies :

A provision is recognised where the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A Contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an out flow of resources will be required to settle it. Contingent assets are neither recognised nor disclosed.

t) Government Grants :

Grants related to specific Fixed Assets are disclosed as a deduction from the value of concerned Assets. Grants related to revenue are credited to the Profit and Loss Account. Grants in the nature of promoters contribution are treated as Capital Reserve.


Mar 31, 2010

A) Basis of preparation of financial statements

The financial statements are prepared under historical cost convention on the accrual basis of accounting and in accordance with accounting principles generally accepted in India.

b> Management estimates

The preparation of financial statements in conformity with generally accepted accounting principles in India requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reported period.The Management believes that the estimates used in preparation of the financialstatements are prudent and reasonable. Future results could differ from these estimates.

c) Fixed Assets:

Fixed assets are carried at cost of acquisition or construction and include amounts added on revaluation, less accumulated depreciation and impairment loss.

d) Depreciation/Amortisation:

1. In respect of fixed assets revalued, depreciation is provided on the basis of useful life of assets as estimated by the external valuers or that calculated on original cost whichever is higher.

2. Depreciation on other fixed assets has been provided in the accounts at the rates and in the manner specified in Schedule XIV to the Companies Act, 1956 as under:

i. Sheet Metal Divisions (Honda, Bhuimpal, Jejuri) : On Written Down Value Method in respect of buildings, furniture and fixtures and vehicles and on Straight Line Method in respect of plant and machinery.

ii. Bus Body Division: On straight line method.

3. Cost of leasehold land is amortised over the period of lease.

e> Impairment Loss:

Impairment loss is provided to the extent the carrying amount of assets exceeds their recoverable amount. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from the sale of the asset in an arms length transaction between knowledgeable, willing parties, less the cost of disposal.

f) Intangible Assets

Intangible assets are stated ar cost less accumulated amortisation. Computer software is amortised over a period of four years.

g) Investments:

Current investments are carried at lower of cost and fair value. Long Term investments are carried at cost However when there is a decline, other than temporary, the carrying amount is reduced to recognise the decline.

h) Inventories:

Items of inventory are valued on the basis given below: •

i. Raw material :at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method.

ii. Components, Stores and Spares: at cost or net realisable value, whichever is lower. Cost is determined by the Weighted Average Method (Refer note 27 of Schedule 14)

iii. Work in process and Finished goods: at cost or net realisable value, whichever is lower. Cost is determined on the basis of absorption costing.

iv. Scrap: at net realisable value.

i) Employee Benefits:

i) Gratuity

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of five years of service. The company has obtained insurance policy with Life Insurance Corporation of India The company accounts for the Bability for gratuity benefits payable in future based on an independent actuarial valuation, carried out as at the year end.

ii) Superannuation

The company has a Superannuation plan (defined contribution plan) .The Company maintains separate irrevocable trust for employees covered and entitled to benefits. The company has obtained insurance policy with Life Insurance Corporation of India. The company contributes 15% of eligible employees salary to the trust every year. The company recognizes such contributions as an expense when incurred. The company has no further obligation beyond this contribution

iii) Provident Fund

The eligible, employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan, in which both employees and the company make monthly contributions ai a specified percentage of the covered employees salary ( currently 12% of employees salary ).The contributions as specified under the law are paid to the provident fund trust. Contribution towards Pension fund is paid to the Regional Provident fund commissioner at specified percentage of the covered employees salary on monthly basis.

iv) Compensated absences

The company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilized leave at each balance sheet date on the basis of an independent actuarial valuation, carried out as at the year end.

v) Actuarial gains and tosses

The actuarial gains ond losses are recognised immediately in the statement of profit and loss.

j> Accounting of Cenvat Credit:

Cenvat credit is accounted as per actual credit availed in the Excise records, on receipt of materials.

k) Foreign Currency Transactions:

Transactions in foreign currency are recorded at the original rates of exchange in force at the time the transactions are effected. At the year-end, monetary items denominated in foreign currency are reported using the closing rates of exchange. Exchange differences arising thereon and on realisation / payments of foreign exchange are accounted as income or expense in the relevant year.

l> Revenue recognition:

Revenue (income) is recognised when no significant uncertainty as to measurability or collectibility exists.

m) Borrowing costs:

Borrowing costs that are attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use. All other borrowing costs are charged to revenue.

n) Leases

Assets acquired on leases where significant portions of the risks and rewards incidental to ownership are retained by the lessors are classified as operating leases. Lease rentals are charged to the profit & loss account on accrual basis.

Rentals received on assets given on operating leases are recognised as income in the profit and loss account on straight-line basis over the period of the lease as per the terms of agreement.

o> SEGMENTAL ACCOUNTING

The following accounting policies have been followed for segment reporting:

Segment Revenue includes Sales and other income directly identifiable with / allocable to the segment.

Expenses that are directly identifiable with / allocable to segments are considered for determining the Segment Results. The expenses which relate to the Company as a whole and not allocable to segments are included under Unallocable expenses.

Segment assets and liabilities include those directly identifiable with the respective segments. Unallocable corporate assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment. Unallocated assets mainly comprise Cash and Bank balances.

Unallocable liabilities include Deferred tax. Secured loans. Provision for tax (net of advance payment of taxes) and Other liabilities.

o) Fringe Benefit Tax:

Provision for Fringe Benefit Tax is made in accordance with Chapter Xll-H of the Income Tax Act, 1961.

p) Taxes on Income:

Tax expense comprise both current tax and deferred tax at the applicable enacted/ substantively enacted rates. Current tax represents the amount of income tax payable / recoverable in respect of taxable income / loss for the reporting period. Deferred tax represents the effect of timing differences between taxable income and accounting income for the reporting period that originate in one period and are capable of reversal in one or more subsequent periods.

q) Product Warranty Expenses

The estimated liability for product warranties is recorded when products are sold. These estimates are established using historical information on the nature, frequency and average cost of warranty claims.

r) Provisions and contingencies:

A provision is recognised where the Company has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation. A Contingent liability is disclosed when the Company has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are neither recognised nor disclosed.

s) Government Grants:

Grants related to specific Fixed Assets are disclosed as a deduction from the value of concerned Assets. Grants related to revenue are credited to the Profit and Loss Account. Grants in the nature of promoters contribution are treated as Capital Reserve.