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Accounting Policies of Taneja Aerospace & Aviation Ltd. Company

Mar 31, 2016

Taneja Aerospace & Aviation Limited (TAAL) is a public limited company incorporated in India under the Companies Act, 956. TAAL is engaged in the business of manufacture and sale of various parts and components to aviation industry, providing service related to Airfield & MRO and allied services.

NOTE 1: SIGNIFICANT ACCOUNTING POLICIES 1.1 Basis of Accounting

The financial statements have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP) on an accrual basis under the historical cost convention, except for certain fixed assets which are being carried at revalue amounts, in compliance with all material aspects of the Accounting Standards (AS) notified under section 133 of the Companies Act, 20B, read together with Rule 7 of the Companies (Accounts) Rules, 204 and other provisions of the Act, to the extent applicable. The accounting policies adopted in the preparation of financial statements have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy until now (hitherto) in use with those of previous year.

Accounting policies not stated explicitly otherwise are consistent with generally accepted accounting principles in India.

1.2 Use of Estimates

The preparation of financial statements requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and disclosure of contingent liabilities, at the end of the repo period. Although, these estimates are based on the managements best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

1.3 Operating Cycle

All assets and liabilities have been classified as current or non-current as per the Company’s normal operating cycle, and other criteria set out in the Schedule III to the Companies Act, 20B. Based on the nature of business and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has as operate cycle as 12 months for the purpose of current or non-current classification of assets and liabilities.

1.4 Fixed Assets

a) Fixed assets are stated at their original cost of acquisition or construction except in case of certain assets which have been revalue, at its revalue amount, less accumulated depreciation and impairment loss, if any. The cost of fixed assets comprises of its purchase price including duties, taxes, freight and any other directly attributable cost of bringing the asset to its working condition for its intended use. However, cost excludes Excise Duty, VAT and Service Tax, wherever credit of the duty or tax is availed of.

b) All indirect expenses incurred during acquisition/ construction of fixed assets including interest cost on funds deployed for the fixed assets are treated as incidental expenditure and are capitalised for the period until the asset is ready for its intended use.

c) Fixed assets under construction and not ready for intended use, as on the balance sheet date, are disclosed as Capital Work-in-Progress.

d) Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

e) Considering the nature of business activity, Runway has been treated as Plant and Equipment and depreciation has been provided accordingly.

f) Assets received on amalgamation are recorded at its fair value.

g) Where a significant component (in terms of cost) of an asset has an economic useful life shorter than that of its corresponding asset, the component is depreciated over its shorter life.

1.5 Depreciation

Depreciation is provided on Straight Line Method on Building, Plant and Equipment and Computer Hardware and on Written Down Value Method on all other assets, based on the useful lives of assets as prescribed under Part C of Schedule II of the Companies Act, 2013. Depreciation on addition to fixed assets is provided on pro-rata basis from the date the assets are ready for intended use. Depreciation on sale/deletion of fixed assets is provided for up to the date of sale, deduction or discard of fixed assets as the case may be. In case of impairment, if any, depreciation is provided on the revised carrying amount aftie asset its remaining useful life.

1.6 Impairment of Assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment banshee/d on inter external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets ’net selling price and value in use. In assessing value in use, the unstated f cash flows are discounted to their present value at the weighted average cost of capital.

After impairment, depreciation/amortization is provided on the revised carrying amount of the asset over its remaining useful

Further, if at the Balance Sheet date there is an indication that the previously assessed impairment loss no long aroexisab the amount is reassessed and the asset is reflected at recoverable amount subject to maximum of depreciable historical cost.

1.7 Inventories

a) Stock of raw materials, stores, spares, bought out items and certain components are valued at cost less amounts written down.

b) Stock of certain aero structures, components, work in progress and finished goods are valued at lower of cost and net realisable value based on technical estimate of the percentage of work completed.

c) In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used. Cost of inventory comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

d) Cost of certain aero structures, work in progress and finished goods include material cost, labour costs and appropriate factory overheads.

e) Net realizable value is the estimated selling price in the ordinary course of business, less the estimated cost of completio and the estimated costs necessary to make the sale. The comparison of cost and net realizable value is made on item by item basis.

f) Excise duty liability, wherever applicable, is included in the valuation of closing inventory of finished goods. Excise duty payable on finished goods is accounted for upon manufacture and transfer of finished goods to the stores. Payment of excise duty is deferred till the clearance of goods from the factory premises.

1.8 Investments

a) Accounting treatment

Investments, which are readily realizable and intended to be held for not more than one year from the date on which such investments are made, are classified as current investments. All other investments are classified as long-term investments.

b) Current investments are carried in the financial statements at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. The determination for diminution is done separately for each individual investment.

c) Classification in the financial statements

Investments that are realisable within the period of twelve months from the balance sheet date are classified as current investment. All other investments are classified as non-current investments.

1.9 Trade Receivables

Trade receivables are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubt

Bad Debts previously written off and recovered during the year is credited to the Statement of Profit and Loss.

1.10 Provisions, Contingent Liabilities and Contingent Assets

a) A provision is recognised when an enterprise has 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 not discounted to their present values and are determined based on management estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current management estimates.

b) Contingent liabilities are disclosed in respect of possible obligations that have arisen from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of future events not wholly within the control of the Company.

c) When there is an obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

d) Contingent Assets are neither recognised nor disclosed in the financial statements.

1.11 Revenue Recognition

a) Revenue is recognised to the extent, it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

b) Revenue from long-term fixed price contracts to manufacture aero structures, spares, etc. is recognised under proportionate completion method and the stage of completion for this purpose is determined based on technical estimate of actual work completed.

c) Rental Income from Hanger Utilisation is accounted based on agreement/ contract entered into with the third party on accrual basis.

d) Charter Income from aircraft given on charter is booked on the basis of contract with customers and on completion of actual flying hours of the aircraft. The revenue is recognised net of Service Tax.

e) Training Fees received, being non-refundable, is accounted in the year of receipt.

f) Revenue from long term fixed price contracts for supply of certain sets of components and assemblies is recognised on the basis of proportionate completion method and billed in terms of agreement with and certification by the customer. Cost of processing incurred on sets of components which are not billable is included in work in progress.

g) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognised as sale is exclusive of Sales Tax/VAT and are net of returns.

h) Interest Income is recognised on time proportion basis taking into account the amount outstanding and the interest rate applicable.

1.12 Leases

Lease arrangements where risks and rewards incident to ownership of an asset substantially vests with the lesser are classified as operating lease. Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

1.13 Borrowing Cost

Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings an exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised as oat'' fifty the c assets, up to the date the asset is ready for its intended use. All other borrowing costs are recognised as an expiate seamier the St of Profit and Loss in the year in which they are incurred.

1.14 Foreign Currency Transactions

a) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

b) Conversion: At the year end, monetary items denominated in foreign currencies are converted into rupee equivalents at the year-end exchange rates.

c) Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are recognised as income or expense in the Statement of Profit and Loss in the year in which they arise.

d) Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when such values were determined.

1.15 Employee Benefits

a) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Fund, which are recognised as an expense in the Statement of Profit and Loss on accrual basis.

The Company has no further obligations under these plans beyond its monthly contributions.

b) Defined Benefit Plan

The Company''s liabilities under Payment of Gratuity Act and Long Term Compensated Absences are determined on the basis of actuarial valuation made at the end of each financial year using the Projected Unit Credit Method, except for short

term compensated absences, which are provided on actual basis. Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss as income or expense. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

1.16 Provision for Taxation

Tax expense for the period comprises of Current Tax, Deferred Tax and Minimum Alternate Tax Credit.

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, 961

Minimum alternate tax (MAT) paid in a year is charged to the Statement of Profit and Loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay norm income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 96} the said asset is created by way of credit to the Statement of Profit and Loss and shown as “MAT Credit Entitlement.” The Company reviews the “MAT credit entitlement” asset at each reporting date and writes down the asset to the extent the company does not have convincing evidence that it will paranormal that during the specified period.

Deferred tax charge or credit reflects the tax effects of timing differences between accounting income and taxable income for the period. The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using: he tax that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are recognised only Ho the extend there is reasonable certainty that the assets can be realised in future; however, where there is unabsorbed depreciate ion or car forward of losses, deferred tax assets are recognised only if there is a virtual certainty of realisation of suchrasdiets Defer assets are reviewed at each balance sheet date and are written-down or written up to reflect the amount that is reasonably to be realised.

Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off and there is an intention to settle the asset and the liability on a net basis.

1.17 Segment Reporting

The accounting policies adopted for segment reporting are in conformity with the accounting policies adopted for the Company. The Company’s operating businesses are organized and managed separately according to the nature of products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets. Segments are identified having regard to the dominant source and nature of risks and returns and internal organization and management structure. The Company has considered business segments as the primary segments for disclosure. The business segments are Aviation i and Trading of Electrical Goods. Charter Business a has been demerged w.e.f. October t 204 being the appointed date of Scheme of Arrangement. The Company does not have any geographical segment.

1.18 Contingencies and Events Occurring after the Date of Balance Sheet

a) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

b) Material events occurring after the date of Balance Sheet up to the date of adoption of the accounts are considered in preparation and presentation of the financial statements.

1.19 Earnings Per Share

The Basic Earnings Per Share (“EPS”) is computed by dividing the net profit or loss after tax for the year attributable to equity shareholders by weighted average number of equity shares outstanding during the year.

The Company does not have any dilutive potential equity shares hence the Diluted EPS is the same as Basic EPS.

1.20 Cash and cash equivalents

Cash and cash equivalents include cash in hand, demand deposits with banks, other short term highly liquid investments with original maturities of three months or less.


Mar 31, 2014

1.1 Basis of Preparation of Financial Statements

The financial statements have been prepared on a going concern basis in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis, except for certain fixed assets which are being carried at revalued amounts. These financial statements have been prepared to comply in all material aspects with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956 / Companies Act, 2013. Accounting policies not stated explicitly otherwise are consistent with generally accepted accounting principles in India.

1.2 Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, employee benefits, provision for income tax, proportionate completion in case of fixed price long term labour contracts, useful lives of fixed assets, etc. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

1.3 Inventories

Stock of raw materials, bought out items and certain components and finished goods are valued at cost. Stock of certain aero structures, components and work in progress are valued at lower of cost and net realizable value based on technical estimate even though in traditional basis of valuation, it may be considered as slow moving and/or obsolete. Stores and spares are stated at cost. In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used. Cost of work in progress and manufactured finished products include material cost, labour costs and factory overheads on technical estimate of percentage completed.

1.4 Depreciation

Depreciation is provided on Straight Line Method for Building, Plant Machinery and Hardware and on Written Down Value Method on all other assets at the rates prescribed in Schedule XIV of the Companies Act, 1956. Depreciation on assets added/ disposed off during the year has been provided on pro rata basis with reference to the month of addition/disposal.

1.5 Revenue Recognition

(a) Commission from agency business of sale of aircraft is accounted on proportionate basis considering completion of major service and time period of delivery.

(b) Revenue from long-term fixed price contracts to manufacture aero structures, spares, etc. is recognised under proportionate completion method and the stage of completion for this purpose is determined based on technical estimate of actual work completed.

(c) Rental Income from Hanger Utilisation is accounted based on agreement/ contract entered into with the third party.

(d) Charter Income from aircraft given on charter is booked on the basis of contracts with customers and actual flying hours of the aircraft.

(e) Training Fees received, being non-refundable, is accounted in the year of receipt.

(f) Revenue from Engineering Design Services is priced on time and material basis and is recognised when the services are rendered and related costs are incurred.

(g) Revenue on long term fixed price contracts for supply of certain sets of components and assemblies is recognised on the basis of proportionate completion method and billed in terms of agreement with and certification by the customer. Cost of processing incurred on sets of components which are not billable is included in work in progress.

(h) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognised as sale is exclusive of Sales Tax/VAT and are net of returns. (i) Interest Income is recognised on time proportion basis taking into account the amount outstanding and the interest rate applicable.

1.6 Leases

Operating Lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

1.7 Borrowing Cost

Borrowing Costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets, upto the date the asset is ready for their intended use. All other borrowing costs are recognised in the Statement of Profit and Loss in the year in which they are incurred.

1.8 Foreign Currency Transactions

(a) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

(b) Conversion: At the year end, monetary items denominated in foreign currencies are converted into rupee equivalents at the year-end exchange rates.

(c) Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are recognized as income or expense in the year in which they arise.

(d) Non monetary foreign currency items such as investments are carried at cost.

1.9 Provision for Employee Benefits

(a) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognised as an expense in the Statement of Profit and Loss on accrual basis.

(b) Defined Benefit Plan

The Company''s liabilities under Payment of Gratuity Act and Long Term Compensated Absences are determined on the basis of actuarial valuation made at the end of each financial year using the Projected Unit Credit Method, except for short term compensated absences, which are provided on actual basis. Actuarial gain and losses are recognised immediately in

the Statement of Profit and Loss as income or expense. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

1.10 Provision for Taxation

Tax expense for the period, comprising Current Tax and Deferred Tax are included in the determination of the net profit or loss for the year.

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.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset.

Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the difference between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws that have been enacted or substantively enacted as at the Balance Sheet date. 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. Other deferred tax assets are recognised only to the extent there is a reasonable certainty that the asset will be realised in future.

1.11 Fixed Assets

(a) Fixed assets are stated at cost of acquisition or construction except in case of certain assets which have been revalued, at its revalued amount, less accumulated depreciation and impairment loss, if any.

Cost comprises the purchase price including taxes, duties, freight and other incidental expenses related to acquisition & installation of the concerned assets. However, cost excludes Excise Duty, VAT & Service Tax, wherever credit of the duty or tax is availed of.

Considering the nature of business activity, Runway has been treated as Plant and Machinery and depreciation has been provided accordingly.

(b) All indirect expenses incurred on project implementation including interest cost on funds deployed for the project are treated as incidental expenditure during construction and subsequently capitalized.

(c) Assets received on amalgamation are recorded at its fair value.

1.12 Impairment Of Assets

At each Balance Sheet date, the Company ascertains whether there is any impairment of the fixed assets based on internal/ external factors. Where there is an indication that an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.

1.13 Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non-current investments.

(a) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

(b) Non-current investments are carried at cost. Provision for diminution in the value of non-current investments is made only if such a decline is other than temporary in the opinion of the management.

1.14 Trade Receivables

Trade receivables are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubtful. Bad Debts previously written off and recovered during the year is credited to the Statement of Profit and Loss.

1.15 Segment Reporting

The Company is primarily engaged in manufacturing and selling of products and services connected with Aviation and also provides Engineering Design Services.

1.16 Contingencies and Events Occurring after the Date of Balance Sheet

(a) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

(b) Material events occurring after the date of Balance Sheet up to the date of adoption of the accounts are considered in preparation and presentation of financial statements.


Mar 31, 2013

1.1 Basis of Preparation of Financial Statements

The Financial Statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis, except for certain fixed assets which are being carried at revalued amounts. These financial statements have been prepared to comply in all material aspects with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions of the Companies Act, 1956.

1.2 Use of Estimates

The preparation of Financial Statements in conformity with generally accepted accounting principles (GAAP) in India requires the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) as on the date of Financial Statements and the reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, employee benefits, provision for income tax, proportionate completion in case of fixed price long term labour contracts, useful lives of fixed assets, etc. The Management believes that the estimates used in preparation of the Financial Statements are prudent and reasonable. Future results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

1.3 Fixed Assets

(a) Fixed Assets are stated at cost of acquisition or construction except in case of certain assets which have been revalued, at its revalued amount, less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price including taxes, duties, freight and other incidental expenses related to acquisitions & installation of the concerned assets but excluding CENVAT benefit. Considering the nature of business activity the Runway has been treated as Plant and Machinery and depreciation has been provided accordingly.

(b) All indirect expenses incurred on project implementation including interest cost on funds deployed for the project are treated as incidental expenditure during construction and subsequently capitalized.

(c) Assets received on amalgamation are recorded at its fair value.

1.4 Depreciation

Depreciation is provided on Straight Line Method for Building, Plant Machinery and Hardware and on Written Down Value Method on all other assets at the rates prescribed under Schedule XIV of the Companies Act, 1956. Depreciation on assets added/disposed off during the year has been provided on prorata basis with reference to the month of addition/disposal.

1.5 Leases

Operating lease payments are recognised as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term.

1.6 Impairment of Assets

Where there is an indication that an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognised to the extent carrying amount exceeds recoverable amount.

1.7 Foreign Currency Transactions

(a) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

(b) Conversion: At the year end, monetary items denominated in foreign currencies are converted into rupee equivalents at the year-end exchange rates.

(c) Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are charged to the Statement of Profit and Loss.

1.8 Provision for Employee Benefits

(a) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognised in the Statement of Profit and Loss on accrual basis.

(b) Defined Benefit Plan

The Company''s liabilities under Payment of Gratuity Act and Long Term Compensated Absences are determined on the basis of actuarial valuation made at the end of each financial year using the Projected Unit Credit Method except for short term compensated absences, which are provided on actual basis. Actuarial gain and losses are recognised immediately in the statement of Profit and Loss as income or expense. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

1.9 Investments

Investments that are readily realisable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non-current investments.

(a) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

(b) Non-current investments are carried at cost. Provision for diminution in the value of non-current investments is made only if such a decline is other than temporary in the opinion of the management.

1.10 Revenue Recognition

(a) Commission from agency business of sale of aircraft is accounted on proportionate basis considering completion of major service and time period of delivery.

(b) Revenue from long-term fixed price contracts to manufacture aero structures, spares, etc. is recognised under proportionate completion method and the stage of completion for this purpose is determined based on technical estimate of actual work completed.

(c) Income from Hanger Utilisation is accounted based on agreement/ contract entered into with the third party.

(d) Income from aircraft given on charter is booked on the basis of contracts with customers and actual flying hours of the aircraft.

(e) Training fees received, being non-refundable, is accounted in the year of receipt.

(f) Engineering Design Service fees are accounted based on terms of contract with the customers.

(g) Revenue on long term fixed price contracts for supply of certain sets of components and assemblies is recognized on the basis of proportionate completion method and billed in terms of agreement with and certification by the customer. Cost of processing incurred on sets of components which are not billable is included in work in process.

(h) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognised as sale is exclusive of Sales Tax / VAT and are net of returns.

(i) Interest income is recogised on time proportion basis taking into account the amount outstanding and the rate applicable.

1.11 Inventories

Stock of raw materials, bought out items and certain components and finished goods are valued at cost. Stock of certain aero structures, components and work in progress are valued at lower of the cost and net realizable value based on technical estimate even though in traditional basis of valuation, it may be considered as slow moving and/or obsolete. Stores and Spares are stated at cost. In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used. Cost of work in progress and manufactured finished products include material cost, labour and factory overheads on technical estimate of percentage completed.

1.12 Provision for Taxation

Tax expense for the period, comprising Current Tax and Deferred Tax are included in the determination of the net profit or loss for the year.

Current Tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in India.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company. Deferred tax resulting from timing difference between book and taxable profit is accounted for using tax rates and tax laws that have been enacted or substantively enacted as at the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent there is a reasonable certainty that the asset will be realized in the future.

1.13 Segment Reporting

The Company is primarily engaged in manufacturing, selling of products and services connected with aviation and also in Engineering Design Services.

1.14 Contingencies and Events Occurring after the Date of Balance Sheet

(a) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

(b) Material events occurring after the date of Balance Sheet up to the date of adoption of the accounts are considered in preparation and presentation of Financial Statements.

1.15 Provisions, Contingent Liabilities and Contingent Assets

(a) Provisions are recognised when the Company has a legal and constrictive obligation as a result of past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of obligation.

(b) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.

(c) Contingent Assets are neither recognised nor disclosed in the Financial Statements.

1.16 Trade Receivables

Trade receivables are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubtful. Bad Debts previously written off and recovered during the year is credited to the Statement of Profit and Loss.

1.17 Borrowing Cost

Borrowing Costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets, upto the date the asset is ready for their intended use. All other borrowing costs are recognised in Statement of Profit and Loss in the year in which they are incurred.

1.18 Earnings Per Share

The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the net profit after tax for the year by weighted average number of Equity Shares outstanding during the year.


Mar 31, 2012

1.1 Basis of Preparation of Financial Statements

(a) The financial statements have been prepared in accordance with the generally accepted accounting principles in India under the historical cost convention on an accrual basis, except for certain fixed assets which are being carried at revalued amounts. These financial statements have been prepared to comply in all material aspects with the accounting standards prescribed in the Companies (Accounting Standards) Rules, 2006 and with the relevant provisions ofthe Companies Act, 1956.

(b) For the year ended March 31, 2012, the revised Schedule VI notified under the Companies Act, 1956, is applicable to the Company, for presentation and disclosures in financial statements. The Company has reclassified the previous year's figures in accordance with the revised Schedule VI as applicable in the current year.

1.2 Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) in India requires the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities (including contingent liabilities) as on the date of financial statements and the reported amounts of income and expenses during the period. Examples of such estimates include provision for doubtful debts, employee benefits, provision for income tax, proportionate completion in case of fixed price long term labour contracts, useful lives of fixed assets, etc. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

1.3 Fixed Assets

(a) Fixed assets are stated at cost of acquisition or construction except in case of certain assets which have been revalued, at its revalued amount, less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price including taxes, duties, freight and other incidental expenses related to acquisitions & installation of the concerned assets but excluding CENVAT benefit. Considering the nature of business activity the Runway has been treated as Plant and Machinery and depreciation has been provided accordingly.

(b) All indirect expenses incurred on project implementation including interest cost on funds deployed for the project are treated as incidental expenditure during construction and subsequently capitalized.

(c) Assets received on amalgamation are recorded at its fair value.

1.4 Depreciation

Depreciation is provided on Straight Line Method for Building, Plant Machinery and Hardware and on Written Down Value Method on all other assets at the rates prescribed under Schedule XIV of the Companies Act, 1956. Depreciation on assets added/disposed off during the year has been provided on prorata basis with reference to the month of addition/disposal.

1.5 Leases

Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

1.6 Impairment Of Assets

Where there is an indication that an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.

1.7 Foreign Currency Transactions

(a) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date ofthe transaction.

(b) Conversion: At the year end, monetary items denominated in foreign currencies are converted into rupee equivalents at the year-end exchange rates.

(c) Exchange Differences: All exchange differences arising on settlement/conversion of foreign currency transactions are charged to the Profit and Loss Account.

1.8 Provision for Employee Benefits

(a) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognised in the Profit and Loss Account on accrual basis.

(b) Defined Benefit Plan

The Company's liabilities under Payment of Gratuity Act and Long Term Compensated Absences are determined on the basis of actuarial valuation made at the end of each financial year using the Projected Unit Credit Method except for short term compensated absences, which are provided on actual basis. Actuarial gain and losses are recognised immediately in the statement of Profit and Loss as income or expense. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

1.9 Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as non- current investments.

(a) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

(b) Non-current investments are carried at cost. Provision for diminution in the value of non-current investments is made only if such a decline is other than temporary in the opinion ofthe management.

1.10 Revenue Recognition

(a) Commission from agency business of sale of aircraft is accounted on proportionate basis considering completion of major service and time period of delivery.

(b) Revenue from long-term fixed price contracts to manufacture aero structures, spares, etc. is recognised under proportionate completion method and the stage of completion for this purpose is determined based on technical estimate of actual work completed.

(c) Income from Hanger Utlisation is accounted based on agreement/ contract entered into with the third party.

(d) Income from aircraft given on charter is booked on the basis of contracts with customers and actual flying hours ofthe aircraft.

(e) Training fees received, being non-refundable, is accounted in the year of receipt.

(f) Engineering design service fees are accounted based on terms of contract with the customers.

(g) Revenue on long term fixed price contracts for supply of certain sets of components and assemblies is recognized on the basis of proportionate completion method and billed in terms of agreement with and certification by the customer. Cost of processing incurred on sets of components which are not billable is included in work in process.

(h) Revenue from sale of goods is recognised on transfer of all significant risks and rewards of ownership to the buyer. The amounts recognised as sale is exclusive of sales tax/VAT and are net ofreturns.

(i) Interest income is recogised on time proportion basis taking into account the amount outstanding and the rate applicable.

1.11 Inventories

Stock of raw materials, bought out items and certain components and finished goods are valued at cost. Stock of certain aero structures, components and work in progress are valued at lower of the cost and net realizable value based on technical estimate even though in traditional basis of valuation, it may be considered as slow moving and/or obsolete. Stores and Spares are stated at cost. In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used. Cost of work in progress and manufactured finished products include material cost, labour and factory overheads on estimated basis.

1.12 Provision for Taxation

Tax expense for the period, comprising Current Tax and Deferred Tax are included in the determination of the net profit or loss for the year.

Current Tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in India.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax resulting from timing difference between book and taxable profit is accounted for using tax rates and tax laws that have been enacted or substantively enacted as at the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent there is a reasonable certainty that the asset will be realized in the future.

1.13 Segment Reporting

The Company is primarily engaged in manufacturing, selling of products and services connected with aviation and also in Engineering Design Services.

1.14 Contingencies and Events Occurring after the Date of Balance Sheet

(a) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

(b) Material events occurring after the date of Balance Sheet up to the date of adoption of the accounts are considered in preparation and presentation of financial statements.

1.15 Provisions, Contingent Liabilities and Contingent Assets

(a) Provisions are recognized when the company has a legal and constrictive obligation as a result of past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of obligation.

(b) A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.

(c) Contingent Assets are neither recognized nor disclosed in the financial statements.

1.16 Trade Receivables

Trade receivables are stated after writing off debts considered as bad. Adequate provision is made for debts considered doubtful. Bad Debts previously written off and recovered during the year is credited to the Profit and Loss Account.

1.17 Borrowing Cost

Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of the assets, upto the date the asset is ready for their intended use. All other borrowing costs are recognised in Statement of Profit and Loss in the year in which they are incurred.

1.18 Earnings Per Share

The Basic and Diluted Earnings Per Share ("EPS") is computed by dividing the net profit after tax for the year by weighted average number of equity shares outstanding during the year.


Mar 31, 2011

1. Basis for preparation of financial statements

i) The financial statements have been prepared to comply in all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

ii) The financial statements have been prepared under the historical cost convention on an accrual basis, except land which was revalued in accordance with the generally accepted accounting principles in India.

2. Use of estimates

The preparation of financial statements are in conformity with generally accepted accounting policies in India which 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 financial statements and the reported income and expenses during the reported period. Example of such estimates includes provision for doubtful debts, employee benefits, provision for income tax, proportionate completion in case of fixed price long term labour estimates, useful lives of fixed assets, etc. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/ materialized.

3. Fixed Assets

i) Fixed assets are stated at cost and amounts added on revaluation, less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price including taxes, duties, freight and other incidental expenses related to acquisitions & installation of the concerned assets but excluding CENVAT benefit. Considering the nature of business activity the Runway has been treated as Plant and depreciation has been provided accordingly.

ii) All indirect expenses incurred on project implementation including interest cost on funds deployed for the project (net of income earned) are treated as incidental expenditure during construction and subsequently capitalized.

iii) Assets received on amalgamation are recorded at its fair value.

4. Depreciation

Depreciation on all assets is provided on pro-rata basis from the date of addition / deduction on straight line method for Building, Plant Machinery and Hardware and on written down value method on all other assets at rates prescribed under Schedule XIV of the Companies Act, 1956.

5. Leases

Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

6. Impairment Of Assets

Where there is an indication that an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.

7. Foreign Currency Transactions

i) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii) Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.

iii) Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the life of the contract.

iv) Exchange Differences: All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Profit and Loss Account.

v) Foreign entities: Assets and liabilities of foreign entities are translated into rupee equivalents using year-end spot foreign exchange rates. Revenues and expenses are translated monthly at average exchange rates. Exchange difference arising on the consolidation of non-integral foreign operations is credited/ debited to “Foreign Currency Translation Reserve Account”.

8. Provision for employee benefits

(i) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognised in the Profit and Loss Account on accrual basis.

(ii) Defined Benefit Plan

The Company's liabilities under Payment of Gratuity Act, long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short term compensated absences, which are provided on actual basis. Actuarial gain and losses are recognised immediately in the statement of the Profit and Loss Account as income or expenses. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

9. Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

i) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

ii) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

10. Revenue Recognition

i) Commission from agency business of sale of aircraft is accounted on proportionate basis considering completion of major service and time period of delivery.

ii) Revenue from long-term fixed price contracts to manufacture aero structures, spares, etc. is recognised under proportionate completion method and the stage of completion for this purpose is determined based on technical estimate of actual work completed.

iii) Income from Hanger Utlisation is accounted based on agreement/ contract entered into with the third party.

iv) Income from aircraft given on charter is booked on the basis of contracts with customers and actual flying hours of the aircraft.

v) Training fees received, being non-refundable, is accounted in the year of receipt.

vi) Engineering design service fees are accounted based on terms of contract with the customers.

vii) Revenue on long term fixed price contracts for supply of certain sets of components and assemblies is recognized on the basis of proportionate completion method and billed in terms of agreement with and certification by the customer. Cost of processing incurred on sets of components which are not billable is included in work in process.

11. Inventories

Stock of raw materials, bought out items and certain components and finished goods are valued at cost. Stock of certain aero structures, components and work in progress are valued at lower of the cost and net realizable value based on technical estimate even though in traditional basis of valuation, it may be considered as slow moving and/or obsolete. Stores and Spares are stated at cost. In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used. Cost of work in progress and manufactured finished products include material cost, labour and factory overheads on estimated basis.

12. Taxation

The deferred tax resulting from timing difference between book and taxable profit is accounted for using tax rates and tax laws that have been enacted or substantively enacted as at the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent there is a reasonable certainty that the asset will be realized in the future.

13. Segment Reporting

The Company is primarily engaged in manufacturing, selling of products and services connected with aviation and also in Engineering Design Services.

14. Contingencies and events occurring after the date of Balance Sheet

i) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

ii) Material events occurring after the date of Balance Sheet up to the date of adoption of the accounts are considered in preparation and presentation of financial statements.

15. Provisions and Contingencies

Provisions are recognized when the company has a legal and constrictive obligation as a result of past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of obligation. Contingent Liabilities are not recognized but disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.


Mar 31, 2010

1. Basis for preparation of financial statements

i) The financial statements have been prepared to comply in all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

ii) The financial statements have been prepared under the historical cost convention on an accrual basis, except for certain fixed assets which are revalued in accordance with the generally accepted accounting principles in India.

2. Use of estimates

The preparation of financial statements are in conformity with generally accepted accounting policies in India which 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 financial statements and the reported income and expenses during the reported period. Example of such estimates includes provision for doubtful debts, employee benefits, provision for income tax, proportionate completion in case of fixed price long term labour estimates, useful lives of fixed assets, etc. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates. Difference between the actual results and estimates are recognized in the period in which the results are known/materialized.

3. Fixed Assets

i) Fixed assets are stated at cost and amounts added on revaluation, less accumulated depreciation and impairment loss, if any. Cost comprises the purchase price including taxes, duties, freight and other incidental expenses related to acquisitions & installation of the concerned assets but excluding CENVAT benefit. Considering the nature of business activity the Runway has been treated as Plant and depreciation has been provided accordingly.

ii) All indirect expenses incurred on project implementation including interest cost on funds deployed for the project (net of income earned) are treated as incidental expenditure during construction and subsequently capitalized.

iii) Assets received on amalgamation are recorded at its fair value.

4. Depreciation

Depreciation on all assets is provided on pro-rata basis from the month of addition / deduction on straight line method for Building, Plant Machinery and Hardware and on written down value method on all other assets at rates prescribed under Schedule XIV of the Companies Act, 1956.

5. Leases

Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

6. Impairment Of Assets

Where there is an indication that an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.

7. Foreign Currency Transactions

i) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii) Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.

iii) Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the life of the contract.

iv) Exchange Differences: All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Profit and Loss Account.

v) Foreign entities: Assets and liabilities of foreign entities are translated into rupee equivalents using year-end spot foreign exchange rates. Revenues and expenses are translated monthly at average exchange rates. Exchange difference arising on the consolidation of non-integral foreign operations is credited/debited to “Foreign Currency Translation Reserve Account”.

8. Provision for employee benefits

i) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognised in the Profit and Loss Account on accrual basis.

ii) Defined Benefit Plan

The Companys liabilities under Payment of Gratuity Act, long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short term compensated absences, which are provided on actual basis. Actuarial gains and losses are recognised immediately in the statement of the Profit and Loss Account as income or expenses. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

9. Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

i) Current investments are carried at lower of cost and fair value determined on an individual investment basis.

ii) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

10. Revenue Recognition

i) Commission from agency business of sale of aircraft is accounted on proportionate basis considering completion of major service and time period of delivery.

ii) Revenue from long-term fixed price contracts to manufacture aero structures, spares, etc. is recognised under proportionate completion method and the stage of completion for this purpose is determined based on technical estimate of actual work completed.

iii) Income from Hanger Utlisation is accounted based on agreement /contract entered into with the third party and usage by them.

iv) Income from aircraft given on charter is booked on the basis of contracts with customers and actual flying hours of the aircraft.

v) Training fees received, being non-refundable, is accounted in the year of receipt.

vi) Engineering design service fees are accounted based on terms of contract with the customers.

11. Inventories

Stock of raw materials, bought out items and certain components and finished goods are valued at cost. Stock of certain aero structures, components and work in progress are valued at lower of the cost and net realizable value based on technical estimate even though in traditional basis of valuation, it may be considered as slow moving and/or obsolete. Stores and Spares are stated at cost and loose tools are stated at cost or depreciated value. In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used at weighted average cost. Cost of work in progress and manufactured finished products include material cost, labour and factory overheads on estimated basis.

12. Taxation

The deferred tax resulting from timing difference between book and taxable profit is accounted for using tax rates and tax laws that have been enacted or substantively enacted as at the Balance Sheet date. The deferred tax asset is recognized and carried forward only to the extent there is a reasonable certainty that the asset will be realized in the future.

13. Segment Reporting

The Company is primarily engaged in manufacturing, selling of products and services connected with aviation and also in design and engineering activities.

14. Contingencies and events occurring after the date of Balance Sheet

i) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

ii) Material events occurring after the date of Balance Sheet upto the date of adoption of the accounts, are considered in preparation and presentation of financial statements.

15. Provisions and Contingencies

Provisions are recognized when the company has a legal and constrictive obligation as a result of past event, for which it is probable that a cash outflow will be required and a reliable estimate can be made of the amount of obligation. Contingent Liabilities are not recognized but disclosed in the notes. Contingent Assets are neither recognized nor disclosed in the financial statements.


Jun 30, 2009

1. Basis for preparation of financial statements:

i) The financial statements have been prepared to comply in all material aspects with the mandatory Accounting Standards issued by the Institute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

ii) The financial statements have been prepared under the historical cost convention on an accrual basis

2. Use of estimates

The preparation of financial statements are in conformity with generally accepted accounting policies in India which 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 financial statements and the reported income and expenses during the reported period. Example of such estimates includes provision for doubtful debts, employee benefits, provision for income tax, proportionate completion in case of fixed price long term labour estimates, useful lives of fixed assets, etc. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.

3. Fixed Assets

i) Fixed assets are stated at cost less accumulated depreciation. Cost comprises the purchase price including taxes, duties, freight and other incidental expenses related to acquisitions & installation of the concerned assets but excluding CENVAT benefit. Considering the nature of business activity the Runway has been treated as Plant and depreciation has been provided accordingly.

ii) All indirect expenses incurred on project implementation including interest cost on funds deployed for the project (net of income earned) are treated as incidental expenditure during construction and subsequently capitalized.

4. Depreciation

Depreciation on all assets is provided on pro-rata basis from the month of addition / deduction on straight line method for Building and Plant Machinery and on written down value method on all other assets at rates prescribed under Schedule XIV of the Companies Act, 1956.

5. Foreign Currency Transactions

i) Initial Recognition: Transactions denominated in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction.

ii) Conversion: At the year end, monetary items denominated in foreign currencies other than those covered by forward contracts are converted into rupee equivalents at the year-end exchange rates.

iii) Forward Exchange Contracts: In respect of transactions covered by forward exchange contracts, the difference between the forward rate and the exchange rate at the date of the transaction is recognized as income or expense over the life of the contract.

iv) Exchange Differences: All exchange differences arising on settlement/conversion on foreign currency transactions are included in the Profit and Loss Account.

v) Foreign entities: Assets and liabilities of foreign entities are translated into rupee equivalents using year-end spot foreign exchange rates. Revenues and expenses are translated monthly at average exchange rates.

Exchange difference

arising on the consolidation of non-integral foreign operations is credited/debited to "Foreign Currency Translation

Reserve Account".

6. Provision for employee benefits

(i) Defined Contribution Plan

The Company makes defined contribution to Provident Fund and Superannuation Schemes, which are recognised in the Profit and Loss Account on accrual basis.

(ii) Defined Benefit Plan

The Companys liabilities under Payment of Gratuity Act (funded), long term compensated absences are determined on the basis of actuarial valuation made at the end of each financial year using the projected unit credit method except for short term compensated absences, which are provided on actual basis. Actuarial gain and losses are recognised immediately in the statement of the Profit and Loss Account as income of expenses. Obligations are measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to 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 defined benefit obligation.

7. Leases

Operating lease payments are recognized as an expense in the profit and loss account on a straight-line basis over the lease term.

8. Investments

Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments.

i) Current investments are carried at lower of cost and fair value determined on an individual investment basis. ii) Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments.

9. Revenue Recognition

i) Commission from agency business of sale of aircraft is accounted on proportionate basis considering completion of major service and time period of delivery.

ii) Revenue from long-term fixed price contracts to manufacture aero structures, spares etc is recognised under proportionate completion method and the stage of completion for this purpose is determined on technical estimate of actual work completed.

iii) Income from Hanger utilisation is accounted based on agreement / contract entered in to with the third party and usage by them.

iv) Income from Aircraft given on charter is booked on the basis of contract with customers and actual usage of Aircraft by third parties.

v) Training fees received, being non-refundable, is accounted in the year of receipt.

10. Inventories

i) Stock of raw materials, bought out items and certain components and finished goods are valued at cost. Stock of certain aero structures, components, work in progress are valued at lower of the cost and net realizable value based on technical estimate even though in traditional basis of valuation, it may be considered as slow moving and / or obsolete. Stores and Spares are stated at cost and loose tools are stated at cost or depreciated value. In determining the cost of raw materials, components, stores, spares and loose tools, the first in first out (FIFO) method is used at weighted average cost. Cost of work in progress and manufactured finished products include material cost, labour and factory overheads on estimated basis.

11. Taxation

Provision for current tax including fringe benefit tax is made on the basis of relevant provisions of the Income tax Act, 1961. The deferred tax resulting from timing difference between book and taxable profit is accounted for using tax rates and tax laws that have been enacted or substantively enacted as at the Balance Sheet date. The deferred tax asset is recognised and carried forward only to the extent there is a reasonable certainty that the asset will be realised in the future.

12. Segment Reporting

The Company is primarily engaged in manufacturing, selling of products and services connected with aviation and therefore have only one business segment. Further the economic environment in which the Company operates is significantly similar as is not subject to materially different risks and returns.

13. Contingencies and events occurring after the date of Balance Sheet

i) Accounting for contingencies arising out of contractual obligation, are made only on the basis of mutual acceptances.

ii) Material events occurring after the date of Balance Sheet upto the date of adoption of the accounts, are considered in preparation and presentation of financial statements.

14. Impairment of Assets

Where there is an indication an asset is impaired, the recoverable amount if any, is estimated and the impairment loss is recognized to the extent carrying amount exceeds recoverable amount.

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