Accounting Policies of Walchandnagar Industries Ltd. Company

Mar 31, 2018

1. SIGNIFICANT ACCOUNTING POLICIES :

1.1 Statement of Compliance :

The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015. These are the Company’s first financial statements prepared in accordance with Ind AS and Ind AS 101 First time adoption of Indian Accounting Standards has been applied.

An explanation and effect of transition from Indian GAAP (referred to as “Previous GAAP”) to Ind AS has been described in Note 37 to these financial statements.

1.2 Basis of preparation of financial statements :

These financial statements have been prepared on the historical cost basis, except for certain financial instruments which are measured at fair values at the end of each reporting period, as explained in the accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

In estimating the fair value of an asset or liability, the company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purpose in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of Ind AS 102 Share-based Payment, leasing transactions that are within the scope of Ind AS 17 Leases, and measurements that have some similarities to fair value but are not fair value, such as value in use in Ind AS 36 Impairment of assets.

In addition, for financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at measurement date;

Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

Level 3 Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

1.3 Use of Estimates :

The preparation of financial statements requires the management of the company to make estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements, disclosure of contingent liabilities as at the date of the financial statements, and the reported amounts of income and expenses during the reported period. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised.

Critical accounting estimates

i) Revenue Recognition

The Company applies the percentage of completion method in accounting for its fixed price contracts. Use of the percentage of completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

ii) Income taxes

Significant judgements are involved in determining the provision for income taxes, including amount expected to be paid/ recovered for uncertain tax positions.

iii) Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined by management at the time the asset is acquired and reviewed at the end of each reporting period. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology. The policy for the same has been explained under Note 2.5.

iv) Provisions

Provision is recognised when the Company 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. These are reviewed at each balance sheet date adjusted to reflect the current best estimates. The policy for the same has been explained under Note 2.19.

1.4 Current versus non-current classification :

The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.

An asset is treated as current when it is:

i. Expected to be realised or intended to be sold or consumed in normal operating cycle,

ii. Held primarily for the purpose of trading,

iii. Expected to be realised within twelve months after the reporting period, or

iv. Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as non-current.

A liability is current when:

i. It is expected to be settled in normal operating cycle,

ii. It is held primarily for the purpose of trading,

iii. It is due to be settled within twelve months after the reporting period, or

iv. There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.

Operating cycle for the business activities of the company covers the duration of the specific project/contract/project line/service including the defect liability period, wherever applicable and extends up to the realization of receivables (including retention monies) within the agreed credit period normally applicable to the respective lines of business. For non-project related assets and liabilities, operating cycle is 12 months.

1.5 Property, Plant & Equipment and Intangible assets :

Property, Plant & Equipment and intangible assets are stated at actual cost less accumulated depreciation and net of impairment. The actual cost capitalised includes material cost, freight, installation cost, duties and taxes, eligible borrowing costs and other incidental expenses incurred during the construction/installation stage.

Depreciable amount for assets is the cost of an asset, or other amount substituted for cost, less its estimated residual value. Depreciation on Property, Plant & Equipment including assets taken on lease, other than freehold land is charged based on straight line method on an estimated useful life as prescribed in Schedule II to the Companies Act, 2013.

The estimated useful lives and residual values of the Property, Plant & Equipment and Intangible assets are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

Assets costing upto Rs. 5,000 are fully depreciated in the year of purchase except when they are part of a larger capital investment programme.

The cost of software purchased for internal use is capitalized and amortized in three years.

Technical know-how is amortized in six years.

An item of Property, Plant & Equipment and intangible assets is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of Property, Plant & Equipment and intangible assets are determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the profit or loss.

1.6 Investment Property :

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are measured at cost model in accordance with Ind AS 16 Property, Plant and Equipment.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

1.7 Leases :

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

i) Finance Lease

Where the Company, as a lessor, leases assets under finance lease, such amounts are recognised as receivables at an amount equal to the net investment in the lease and the finance income is based on constant rate of return on the outstanding net investment.

Assets taken on finance lease are initially recognised as assets of the Company at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between finance costs and reduction of outstanding liability. Finance costs are recognised as an expense in the statement of profit or loss over the period of lease, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with Company’s general policy on borrowing costs.

ii) Operating Lease

Lease arrangements under which all risks and rewards of ownership are effectively retained by the lessor are classified as operating lease. Lease rental under operating lease are recognised in the Statement of Profit and Loss on a straight line basis over the lease term.

iii) Sale and Lease back transaction

In case of a sale and leaseback transaction resulting in a finance lease, any excess or deficiency of sales proceeds over the carrying amount is deferred and amortised over the lease term in proportion to the depreciation of the leased asset. Profit or Loss on Sale and Lease back arrangements resulting in finance leases are recognised, in case the transaction is established at fair value, else the excess over the fair value is deferred and amortised over the period for which the asset is expected to be used.

1.8 Impairment of Assets :

i) Financial assets

The Company assesses at each date of balance sheet whether a financial asset or a group of financial assets is impaired. Ind AS 109 requires expected credit losses to be measured through a loss allowance. The Company recognises lifetime expected losses for all contract assets and / or all trade receivables that do not constitute a financing transaction. For all other financial assets, expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

ii) Non-financial assets

Property, Plant & Equipment and Other Intangible assets

Property, Plant and Equipment and Other intangible assets with finite life are evaluated for recoverability when there is any indication that their carrying amounts may not be recoverable. If any such indication exists, the recoverable amount (i.e. higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs. If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is reduced to its recoverable amount. An impairment loss is recognised in the profit or loss.

1.9 Revenue recognition :

A Product Sales

a. Domestic sales of manufactured items are recognized on dispatch and are stated net of returns, discounts and rebates. Sales are recorded exclusive of applicable taxes.

b. Export sales are recognized on date of bill of lading/ airway bill and/or passing of rights to the customer, whichever is earlier and initially recorded at the relevant exchange rates prevailing on the date of transaction.

c. Income on items delivered directly by suppliers/sub-contractors to the client is recognized on dispatch and receipt of suppliers’/sub-contractors’ invoices.

d. Income on account of price variation on sale of goods is recognized when significant risks and rewards of ownership of such goods are transferred and such revenue is capable of being reliably measured.

B Contract Revenue

a. In case of certain long term contracts, revenue is recognized on ‘Percentage of Completion Method.’ Percentage of completion is determined as a proportion of costs incurred to date to the total estimated contract costs. Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity and allocable to the contract. Costs that cannot be attributed or allocable to contract activity are expensed as and when incurred.

b. When the final outcome of a contract cannot be reliably estimated, contract revenue is recognized only to the extent of costs incurred that are expected to be recovered. Expected loss is recognized immediately when it is probable that the total estimated contract costs will exceed total contract revenue.

c. Variations and claims for escalation are recognized as a part of contract revenue to the extent it is probable that they will result in revenue and are capable of being reliably measured.

d. Difference between costs incurred plus recognized profit/less recognized losses and the amount of invoiced sales is disclosed as Contracts-in-progress.

C Service Revenue

Revenue from services are recognized as and when the services are performed.

D Interest and Dividend Income

a. Interest income is recognised using effective interest rate method.

b. Dividend income is recognised when the Company’s right to receive dividend is established E Export Benefits

Export benefits in the form of Duty Drawback (All Industry Rate) and DEPB are recognized on accrual basis.

F All other incomes are recognised on accrual basis.

1.10 Foreign Currency Transactions-Non monetary Items-

Non-monetary items which are carried at historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are reported using the exchange rates at the date when the fair value is determined. The gain or loss is recognised in other comprehensive income or the statement of profit and loss is also recognised in other comprehensive income or the statement of profit and loss respectively.

1.11 Inventories :

a. Raw materials, Components, Stores and Spares are valued at lower of cost or net realizable value. The cost includes freight inward, direct expenses, duties and taxes, other than those subsequently recoverable. In case of Heavy Engineering Division, it is arrived at on “FIFO Method” and other divisions on “Weighted Average Method”.

b. Costs of Dies, Jigs, Tools and Patterns purchased/ manufactured are charged off in relevant year, at lower of cost or net realizable value, arrived at after providing for suitable diminution/ amortization.

c. Goods-in-transit are valued at costs incurred till the Balance Sheet date.

d. Work-in-progress is valued at lower of cost or net realizable value. The cost includes direct material, direct labour, and appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortized over the period of the contract on the basis of sales booked.

e. Finished goods are valued at lower of cost or net realizable value. Cost includes related overheads and wherever applicable, taxes other than those which are subsequently recoverable from taxing authorities.

1.12 Government grants :

Government grants are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants will be received.

Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the financial statements and transferred to profit or loss on a systematic and rational basis over the useful life of the related assets.

Grants related to revenue are accounted for as other income in the period in which the related costs which Government intend to compensate are accounted for to the extent there is no uncertainty in receiving the same Incentives which are in the nature of subsidies given by the Government which are based on the performance of the Company are recognised in the year of performance/ eligibility in accordance with the related scheme. Government grants in the form of non-monetary assets, given at a concessional rate, are accounted for at their fair value.

1.13 Foreign currency transactions :

The functional currency of the company is Indian Rupees (INR).

Foreign currency transactions are recorded at exchange rates prevailing on the date of the transaction. Foreign currency denominated monetary assets and liabilities are restated into the functional currency using exchange rates prevailing on the dates of Balance Sheet. Gains and losses arising on settlement and restatement of foreign currency denominated monetary assets and liabilities are recognized in the profit or loss.

1.14 Financial Instruments :

Financial assets and liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value measured on initial recognition of financial asset or financial liability.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised in profit or loss.

i) Non-derivative financial instruments Cash and cash equivalents

The Company considers all highly liquid financial instruments, which are readily convertible into known amounts of cash that are subject to an insignificant risk of change in value and having original maturities of three months or less from the date of purchase, to be cash equivalents.

Financial assets at amortised cost

Financial assets are subsequently measured at amortised cost if these financial assets are held within a business whose objective is to hold these assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at fair value

Financial asset not measured at amortised cost is carried at fair value through profit or loss (FVTPL) on initial recognition, unless the company irrevocably elects on initial recognition to present subsequent changes in fair value in other comprehensive income for investment in equity instruments which are not held for trading.

The Company, on initial application of IND AS 109 Financial Instruments, has made an irrevocable election to present in other comprehensive income subsequent changes in fair value of equity instruments not held for trading.

Financial asset at FVTPL are measured at fair values at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss.

Financial liabilities

Financial liabilities are subsequently carried at amortised cost using the effective interest rate method or at FVTPL. Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in profit and loss.

For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

ii) Derecognition of financial instruments

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party.

The Company derecognises financial liabilities when, and only when, the Company’s obligation are discharged, cancelled or have expired.

1.15 Employee benefits :

i) Gratuity

The Company accounts for its gratuity liability, a defined retirement benefit plan covering eligible employees. The gratuity plan provides for a lump sum payment to employees at retirement, death, incapacitation or termination of the employment based on the respective employee’s salary and the tenure of the employment. Liabilities with regard to a Gratuity plan are determined based on the actuarial valuation carried out by an independent actuary as at the Balance Sheet date using the Projected Unit Credit method.

Actuarial gains and losses are recognised in full in other comprehensive income and accumulated in equity in the period in which they occur. Past service cost is recognised in profit or loss in the period of a plan amendment.

ii) Provident Fund

The eligible employees of the Company are entitled to receive the benefits of 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 at 12% of the basic salary) which are charged to the Statement of Profit and Loss on accrual basis. The provident fund contributions are paid to the Regional Provident Fund Commissioner by the Company. The Company has no further obligations for future provident fund.

iii) Superannuation and ESIC

Superannuation fund and Employees’ State insurance scheme (ESI), which are defined contribution schemes, are charged to the Statement of Profit and Loss on accrual basis.

The Company has no further obligations for future superannuation fund benefits other than its annual contributions.

iv) Compensated advances

The Company provides for the compensated absences subject to Company’s certain rules. The employees are entitled to accumulate leave subject to certain limits, for future encashment or availment. The liability is provided based on the number of days of unavailed leave at each Balance Sheet date on the basis of an independent actuarial valuation using the Projected Unit Credit method.

The liability which is not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised based on actuarial valuation as at the Balance Sheet date.

Actuarial gains and losses are recognised in full in the Statement of Profit and Loss in the period in which they occur.

The company also offers a short term benefit in the form of encashment of unavailed accumulated compensated absence above certain limit for all of its employees and same is being provided for in the books at actual cost.

v) Other short term employee benefits

Other short-term employee benefits such as overseas social security contributions and performance incentives expected to be paid in exchange for the services rendered by employees, are recognised in the statement of profit and loss during the period when the employee renders the service.

1.16 Borrowing costs :

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of the asset. A qualifying asset is one that necessarily takes a substantial period of time to get ready for its intended use or sale. All other borrowing costs are charged to the Statement of Profit and Loss.

1.17 Taxation :

Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to / recovered from the tax authorities, based on estimated tax liability computed after taking credit for allowances and exemption in accordance with the local tax laws existing in the respective countries.

Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the income taxes are recognised in other comprehensive income or directly in equity, respectively.

Advance taxes and provisions for current income taxes are presented in the statement of financial position after off-setting advance tax paid and income tax provision arising in the same tax jurisdiction and where the relevant tax paying units intends to settle the asset and liability on a net basis.

Deferred income taxes

Deferred income tax is recognised using the balance sheet approach. Deferred income tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

Deferred income tax asset are recognised to the extent it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred tax assets and liabilities are measured using substantively enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be received or settled.

Deferred tax assets include Minimum Alternative Tax (MAT) paid in accordance with the tax laws in India, which gives rise to future economic benefits in the form of adjustment of future income tax liability, is considered as an asset if there is probable evidence that the Company will pay normal income tax after the tax holiday period.

Deferred tax assets and liabilities are offset when it relates to income taxes levied by the same taxation authority and the relevant entity intends to settle its current tax assets and liabilities on a net basis.

The Company recognises interest levied and penalties related to income tax assessments in interest expenses.

1.18 Earnings per Share :

Basic earnings/ (loss) per share are calculated by dividing the net profit / (loss) for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period are adjusted for any bonus shares issued during the period and also after the Balance Sheet date but before the date the financial statements are approved by the Board of Directors.

For the purpose of calculating diluted earnings / (loss) per share, the net profit / (loss) for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

The number of equity shares and potentially dilutive equity shares are adjusted for bonus shares as appropriate. The dilutive potential equity shares are adjusted for the proceeds receivable, had the shares been issued at fair value. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date.

1.19 Provision, Contingent Liabilities and Contingent Assets :

A provision is recognized when the Company 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 reliable estimate can be made. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance costs. Contingent liabilities and Contingent assets are not recognized in the financial statements.

1.20 Segment Accounting :

The Chief Operational Decision Maker identifies and monitors the operating results of its business segments separately for purpose of making decision about resource allocation and performance assessment. Segment performance is evaluated based on profit or loss and is measured consistently with profit or loss in the financial statements. The Operating segments have been identified on the basis of the nature of products/services.

1.21 Assets Held For Sale :

Non-current assets held for sale are measured at the lower of their carrying value and fair value of the assets less costs to sale. Assets and liabilities classified as held for sale are presented separately in the balance sheet. Property, plant and equipment once classified as held for sale are not depreciated/ amortised.

1.22 New Accounting Standards, Amendments to Existing Standards, Annual Improvements and Interpretations Effective Subsequent to March 31, 2018 :

Appendix B to Ind AS 21, Foreign currency transactions and advance consideration: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Companies (Indian Accounting Standards) Amendment Rules, 2018 containing Appendix B to Ind AS 21, Foreign currency transactions and advance consideration which clarifies the date of the transaction for the purpose of determining the exchange rate to use on initial recognition of the related asset, expense or income, when an entity has received or paid advance consideration in a foreign currency. The amendment will come into force from April 1, 2018. The Company is in process of evaluating the impact on the financial statements.

Ind AS 115- Revenue from Contract with Customers: On March 28, 2018, Ministry of Corporate Affairs (“MCA”) has notified the Ind AS 115, Revenue from Contract with Customers. The core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard permits two possible methods of transition:Rs. Retrospective approach - Under this approach the standard will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8- Accounting Policies, Changes in Accounting Estimates and Errors - Retrospectively with cumulative effect of initially applying the standard recognized at the date of initial application (Cumulative catch - up approach)The effective date for adoption of Ind AS 115 is financial periods beginning on or after April 1, 2018. The Company will adopt the standard on April 1, 2018 by using the cumulative catch-up transition method and accordingly comparaatives for the year ending or ended March 31, 2018 will not be retrospectively adjusted. The Company is in process of evaluating the impact on the financial statements.

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Mar 31, 2017

1 SIGNIFICANT ACCOUNTING POLICIES

1.1 METHOD OF ACCOUNTING

The Company maintains its accounts under the historical cost convention, except for certain fixed assets which are revalued, on an accrual basis and complies in all material respects with Generally Accepted Accounting Principles in India. The Company has prepared these financial statements to comply in all material respects with Accounting Standards notified under the Companies (Accounting Standards) Rules, read with rule 7 to the Companies (Accounts) Rules, 2014 in respect of Section 133 to the Companies Act, 2013.

1.2 USE OF ESTIMATES

The presentation of the financial statements, in conformity with the Generally Accepted Accounting Principles, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management''s evaluation of relevant facts and circumstances as on the date of the financial statements. The actual outcome may diverge from these estimates.

1.3 REVENUE RECOGNITION A -Product Sales

(a) Domestic sales of manufactured items are recognized on dispatch and are stated net of returns, discounts and rebates. Sales are recorded exclusive of sales tax.

(b) Export sales are recognized on date of bill of lading/ airway bill and/or passing of rights to the customer, whichever is earlier and initially recorded at the relevant exchange rates prevailing on the date of transaction.

(c) Income on items delivered directly by suppliers/sub-contractors to the client is recognized on dispatch and receipt of suppliers''/sub-contractors'' invoices.

(d) Income on account of price variation is recognized on the acceptance of the claim by the client and on certainty of its realization.

B - Contract Revenue

(a) In case of certain long term contracts, revenue is recognized on ''Percentage of Completion Method.'' Percentage of completion is determined as a proportion of costs incurred to date to the total estimated contract costs. Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity and allocable to the contract. Costs that cannot be attributed or allocable to contract activity are expensed as and when incurred.

(b) When the final outcome of a contract cannot be reliably estimated, contract revenue is recognized only to the extent of costs incurred that are expected to be recovered. Expected loss is recognized immediately when it is probable that the total estimated contract costs will exceed total contract revenue.

(c) Variations and claims for escalation are recognized as a part of contract revenue to the extent it is probable that they will result in revenue and are capable of being reliably measured.

(d) Difference between costs incurred plus recognized profit/less recognized losses and the amount of invoiced sales is disclosed as Contracts-in-progress.

C - Service Revenue

Revenue from services are recognized as and when the services are performed.

D - Interest and Dividend Income

(a) Interest Income on deployment of surplus funds is recognized using the time proportion method, based on the underlying interest rates.

(b) Dividend is accrued in the year in which it is declared whereby the right to receive is established.

E - Export Benefits

Export benefits in the form of Duty Drawback (All Industry Rate) and DEPB are recognized on accrual basis.

1.4 TANGIBLE FIXED ASSETS

Fixed Assets are stated at cost, net of tax/duty credits availed less depreciation/amortization to date and impairment, if any, except in the case of certain items of land, buildings, plant and machinery and roads, water works and drainage, which are stated on the basis of revalued cost less depreciation/ amortization to date and impairment, if any.

1.5 INTANGIBLE ASSETS

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

1.6 DEPRECIATION/AMORTIZATION

(a) Depreciation is computed on Straight Line Method on certain Buildings and Plant and Machinery, of Heavy Engineering Division and Foundry Division and all the fixed assets of Instrumentation Division, in the manner prescribed in Schedule II to the Companies Act, 2013 based on useful life of the asset.

Depreciation on the value written-up on revaluation, is calculated on straight line method over the residual technical life assessed by the valuer. Premium on leasehold land is amortized over the period of lease.

Depreciation on all other fixed assets is computed on Written Down Value method in the manner prescribed in Schedule II to the Companies Act, 2013 based on useful life of the asset.

In respect of sites, which are integral foreign operations, depreciation is provided in the manner prescribed by local laws so as to write off the assets over their useful life.

(b) Intangible assets are amortized on a Straight Line Method over the estimated useful economic life and in particular:

i) Patents are amortized on the basis of life of Patents as specified in the Patent Documents;

ii) Technical Know-how is amortized over a period of six years; and

iii) Computer Software, included in intangible assets, is amortized over a period of three years.

(c) Depreciation on additions to/ deletions from the fixed assets during the year is calculated on pro-rata basis from/ to the date of addition/ deletion.

1.7 CAPITAL WORK-IN-PROGRESS (INCLUDING INTANGIBLE ASSETS UNDER DEVELOPMENT)

Projects under commissioning and other Capital Work-in-Progress (Including Intangible Assets under Development) are carried at cost, comprising direct costs and related incidental expenses.

1.8 IMPAIRMENT OF ASSETS

Impairment is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discounting factor.

1.9 INVESTMENTS

Investments of long term nature are stated at cost less provision for diminution in value, if such decline is other than temporary. Current investments are stated at lower of cost or fair value.

1.10 EMPLOYEE BENEFITS

(a) Short term employee benefits are those which are payable within twelve months of rendering service and are recognized as expense in the period in which the employee renders the related service.

(b) Contributions to Provident Fund and Superannuation Fund, ESIC and Labour Welfare Fund which are defined contribution schemes are recognized as an expense in the Statement of Profit and Loss in the period in which the contribution is due.

(c) Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation using the projected unit credit method at the end of each financial year. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

(d) Long term compensated absences including leave encashment are provided for on the basis of actuarial valuation. Accumulated leave, which is expected to be utilized within next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

1.11 TAXES ON INCOME

Tax expenses comprise of current and deferred tax.

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted.

Deferred tax is recognized on timing differences between the accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods and is quantified using the tax rates and tax laws enacted or substantively enacted as on the Balance Sheet date. Where there is an unabsorbed depreciation or carried forward of losses under tax laws, deferred tax assets are recognized to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized. In other cases deferred tax assets are recognized and carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.12 BORROWING COSTS

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are capitalized as part of such asset till the time the asset is ready for its intended use or sale. All other borrowing costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.

1.13 INVENTORIES

Inventories are valued after providing for obsolescence, if any, as under:

a) Raw materials, Components, Stores and Spares are valued at lower of cost or net realizable value. The cost includes freight inward, direct expenses, duties and taxes, other than those subsequently recoverable. In case of Heavy Engineering Division, it is arrived at on "FIFO Method" and other divisions on "Weighted Average Method"

b) Costs of Dies, Jigs, Tools and Patterns purchased/ manufactured are charged off in relevant year, at lower of cost or net realizable value, arrived at after providing for suitable diminution/ amortization.

c) Goods-in-transit are valued at costs incurred till the Balance Sheet date.

d) Work-in-progress is valued at lower of cost or net realizable value. The cost includes direct material, direct labour, and appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortized over the period of the contract on the basis of sales booked.

e) Finished goods are valued at lower of cost or net realizable value. Cost includes related overheads and wherever applicable, excise duty.

1.14 LIQUIDATED DAMAGES

As per the accounting policy adopted by the company, liquidated damages imposed by the customers and are outstanding for more than two years as at the reporting date are fully provided for net of reversals on account of subsequent waivers/ recovery.

1.15 FOREIGN CURRENCY TRANSLATION

a) Initial recognition

Foreign currency transactions are reported in the reporting currency by applying to the foreign currency amount, the exchange rate between reporting currency and the foreign currency at the date of the transaction.

b) Conversion

Foreign currency monetary items are re-instated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction. Non-monetary items which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

The financial statements of overseas sites of the company which are integral foreign operations are translated as if the transactions of the foreign operations have been those of the company itself.

c) Exchange differences

Exchange differences are recognized as income or as expense in the period to which they relate. Premium or discount on forward exchange contracts for hedging an underlying asset/ liability, is recognized in the Statement of Profit and Loss over the period of the contract.

1.16 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognized for liabilities that can be measured by using a substantial degree of estimation, if:

(a) the Company has a present obligation as a result of past event;

(b) a probable outflow of resources is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated.

Contingent Assets are neither recognized nor disclosed. Contingent Liabilities are not recognized, but are disclosed in Notes to Accounts. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each balance sheet date.

1.17 LEASES

Assets acquired under leases where the significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals are charged to the Statement of Profit and Loss on accrual basis.

1.18 SEGMENT REPORTING

The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenues, expenses, assets and liabilities which relate to the company as a whole and are not allocable to segments on reasonable basis have been included under unallocated revenues/expenses/assets/liabilities.

Information given, is in accordance with the requirements of Accounting Standard 17 on Segment Reporting, notified under the Companies (Accounting Standards) Rules, read with rule 7 to the Companies (Accounts) Rules, 2014 in respect of Section 133 to the Companies Act, 2013. The Company has identified business segments as the primary segment and geographical segment as secondary segment. Segments have been identified after taking into account the nature of the products, differential risk and returns, organizational structure and internal reporting system.

The Company''s Primary business segments are organized on product lines as follows:

(i) Heavy Engineering (also known as Industrial Machinery Division) - engaged in engineering, fabrication and manufacturing of Machinery for Sugar Plants, Cement Plants, Boilers and Power Plants, Industrial and Marine Gears, Mineral Processing and EPC, Petro-chemicals and Space, Defense and Nuclear Power Business;

(ii) Foundry and Machine Shop-Manufacturing of Grey and Ductile Iron Castings required by various industries and machining of components; and

(iii) Others-Non Reportable Segment includes units manufacturing Precision Instruments such as pressure and temperature gauges.

1.19 EARNINGS PER SHARE

The company reports basic and diluted earnings per share in accordance with Accounting Standard 20 - Earnings Per Share notified under the Companies (Accounting Standards) Rules, read with rule 7 to the Companies (Accounts) Rules, 2014 in respect of Section 133 to the Companies Act, 2013. Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity share holders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

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Sep 30, 2014

1.1 METHOD OF ACCOUNTING

The Company maintains its accounts under the historical cost convention, except for certain fixed assets which are revalued, on an accrual basis and complies in all material respects with Generally Accepted Accounting Principles in India. The Company has prepared these financial statements to comply in all material respects with Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and relevant provisions of the Companies Act, 1956.

1.2 USE OF ESTIMATES

The presentation of the financial statements, in conformity with the Generally Accepted Accounting Principles, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management''s evaluation of relevant facts and circumstances as on the date of the financial statements. The actual outcome may diverge from these estimates.

1.3 REVENUE RECOGNITION A - Product Sales

(a) Domestic sales of manufactured items are recognized on dispatch and are stated net of returns, discounts and rebates. Sales are recorded exclusive of sales tax.

(b) Export sales are recognized on date of bill of lading/ airway bill and/ or passing of rights to the customer, whichever is earlier and initially recorded at the relevant exchange rates prevailing on the date of transaction;

(c) Income on items delivered directly by suppliers/sub-contractors to the client is recognized on dispatch and receipt of suppliers''/sub-contractors'' invoices;

(d) Income on account of price variation is recognized on the acceptance of the claim by the client and on certainty of its realization.

B - Contract Revenue

(a) In case of certain long term contracts, revenue is recognized on ''Percentage of Completion Method.'' Percentage of completion is determined as a proportion of costs incurred to date to the total estimated contract costs. Contract costs include costs that relate directly to the specific contract and costs that are attributable to contract activity and allocable to the contract. Costs that cannot be attributed or allocable to contract activity are expensed as and when incurred.

(b) When the final outcome of a contract cannot be reliably estimated, contract revenue is recognized only to the extent of costs incurred that are expected to be recoverable. Expected loss is recognized immediately when it is probable that the total estimated contract costs will exceed total contract revenue.

(c) Variations and claims for escalation are recognized as a part of contract revenue to the extent it is probable that they will result in revenue and are capable of being reliably measured.

(d) Difference between costs incurred plus recognized profit/less recognized losses and the amount of invoiced sales is disclosed as Contracts-in-progress.

C - Service Revenue

Revenue from services are recognized as and when the services are performed.

D - Interest and Dividend Income

(a) Interest Income on deployment of surplus funds is recognized using the time proportion method, based on the underlying interest rates.

(b) Dividend is accrued in the year in which it is declared whereby the right to receive is established.

E - Export Benefits

Export benefits in the form of Duty Drawback (All Industry Rate) and DEPB are recognized on accrual basis.

1.4 TANGIBLE FIXED ASSETS

Fixed Assets are stated at cost, net of tax/duty credits availed less depreciation/amortization to date and impairment, if any, except in the case of certain items of land, buildings, plant and machinery and roads, water works and drainage, which are stated on the basis of the revalued cost less depreciation/ amortization to date and impairment, if any.

1.5 INTANGIBLE ASSETS

Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

1.6 DEPRECIATION/AMORTIZATION

(a) Depreciation is computed on Straight Line Method on certain Buildings and Plant and Machinery, of Heavy Engineering Division and Foundry Division and all the fixed assets of Instrumentation Division, in the manner prescribed in Schedule xIV to the Companies Act, 1956.

Depreciation on the value written-up on revaluation, is calculated on straight line method over the residual technical life assessed by the valuer. Premium on leasehold land is amortized over the period of lease. Depreciation on all other fixed assets is computed on Written Down Value method in the manner prescribed in Schedule xIV to the Companies Act, 1956.

In respect of sites, which are integral foreign operations, depreciation is provided in the manner prescribed by local laws so as to write off the assets over their useful life.

(b) Intangible assets are amortized on a Straight Line Method over the estimated useful economic life and in particular:

i) Patents are amortized on the basis of life of Patents as specified in the Patent Documents;

ii) Technical Know-how is amortized in over a period of six years; and

iii) Computer Software, included in intangible assets, is amortized over a period of three years.

(c) Depreciation on additions to/ deletions from the fixed assets during the year is calculated on pro-rata basis from/ to the date of addition/ deletion.

1.7 CAPITAL WORK-IN-PROGRESS (INCLUDING INTANGIBLE ASSETS UNDER DEVELOPMENT)

Projects under commissioning and other Capital Work-in-Progress (Including Intangible Assets under Development) are carried at cost, comprising direct costs and related incidental expenses.

1.8 IMPAIRMENT OF ASSETS

Impairment is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discounting factor.

1.9 INVESTMENTS

Investments of long term nature are stated at cost less provision for diminution in value, if such decline is other than temporary. Current investments are stated at lower of cost or fair value.

1.10 EMPLOYEE BENEFITS

(a) Short term employee benefits are those which are payable within twelve months of rendering service and are recognized as expense in the period in which the employee renders the related service. (b) Contributions to Provident Fund and Superannuation Fund, ESIC and Labour Welfare Fund which are defined contribution schemes are recognized as an expense in the Statement of Profit and Loss in the period in which the contribution is due.

(c) Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation using the projected unit credit method at the end of each financial year. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

(d) Long term compensated absences including leave encashment are provided for on the basis of actuarial valuation. Accumulated leave, which is expected to be utilized within next twelve months, is treated as short term employee benefits. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

1.11 taxes ON INCOME

Tax expenses comprise of current and deferred tax.

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961. The tax rates and tax laws used to compute the amounts are those that are enacted or substantively enacted.

Deferred tax is recognized on timing differences between the accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods and is quantified using the tax rates and tax laws enacted or substantively enacted as on the Balance Sheet date. Deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognized to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.12 BORROWING COSTS

Borrowing costs attributable to the acquisition, construction or production of qualifying assets are capitalized as part of such asset till the time the asset is ready for its intended use or sale. All other borrowing costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.

1.13 INVENTORIES

Inventories are valued after providing for obsolescence, if any, as under:

(a) Raw materials, Components, Stores and Spares are valued at lower of cost or net realizable value. The cost includes freight inward, direct expenses, duties and taxes, other than those subsequently recoverable. In case of Heavy Engineering Division, it is arrived at on "FIFO Method" and other divisions on "Weighted Average Method".

(b) Costs of Dies, Jigs, Tools and Patterns purchased/ manufactured are charged off in relevant year, at lower of cost or net realizable value, arrived at after providing for suitable diminution/ amortization.

(c) Goods-in-transit are valued at costs incurred till the Balance Sheet date.

(d) Work-in-progress is valued at lower of cost or net realizable value. The cost includes direct material, direct labour, and appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortized over the period of the contract on the basis of sales booked.

(e) Finished goods are valued at lower of cost or net realizable value. Cost includes related overheads and wherever applicable, excise duty.

1.14 FOREIGN CURRENCY TRANSLATION

(a) Initial recognition

Foreign currency transactions are reported in the reporting currency by applying to the foreign currency amount, the exchange rate between reporting currency and the foreign currency at the date of the transaction.

(b) Conversion

Foreign currency monetary items are re-instated using the exchange rate prevailing at the reporting date. Non-monetary items which are measured in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction. Non-monetary items which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

The financial statements of overseas sites of the company which are integral foreign operations are translated as if the transactions of the foreign operations have been those of the company itself.

(c) Exchange differences

The Company has opted to avail the option provided under Paragraph 46A of Accounting Standard 11 - The Effects of Changes in Foreign Exchange Rates, inserted vide Notification dated December 29, 2011. Accordingly, exchange differences on long term foreign currency monetary items are being dealt with in the following manner:

Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset. In other cases, the foreign exchange difference is accumulated in Foreign Currency Monetary Item Translation Difference Account and amortized over the balance period of such long term asset/ liability.

All other exchange differences are recognized as income or as expense in the period to which they relate.

(d) Premium or discount on forward exchange contracts for hedging an underlying asset/ liability, is recognized in the Statement of Profit and Loss over the period of the contract.

1.15 PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provisions are recognized for liabilities that can be measured by using a substantial degree of estimation, if:

(a) the Company has a present obligation as a result of past event;

(b) a probable outflow of resources is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated

Contingent Assets are neither recognized nor disclosed. Contingent Liabilities are not recognized, but are disclosed in Notes to Accounts. Provisions, Contingent Liabilities and Contingent Assets are reviewed at each balance sheet date.

1.16 LEASES

Assets acquired under leases where the significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals are charged to the Statement of Profit and Loss on accrual basis.

1.17 SEGMENT REPORTING

The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue expenses, assets and liabilities which relate to the company as a whole and are not allocable to segments on reasonable basis have been included under unallocated revenue/expenses/assets/liabilities.

Information given, is in accordance with the requirements of Accounting Standard 17 on Segment Reporting, notified under the Companies (Accounting Standards) Rules, 2006 (as amended). The Company has identified business segments as the primary segment and geographical segment as secondary segment. Segments have been identified after taking into account the nature of the products, differential risk and returns, organizational structure and internal reporting system.

The Company''s Primary business segments are organized on product lines as follows:

(i) Heavy Engineering (also known as Industrial Machinery Division) - engaged in engineering, fabrication and manufacturing of Machinery for Sugar Plants, Cement Plants, Boilers and Power Plants, Industrial and Marine Gears, Mineral Processing and EPC, Petro-chemicals and Space, Defense and Nuclear Power Business;

(ii) Foundry and Machine Shop - Manufacturing of Grey and Ductile Iron Castings required by various industries and machining of components; and

(iii) Others - Non Reportable Segment includes units manufacturing Precision Instruments such as pressure and temperature gauges.

1.18 EARNINGS PER SHARE

The company reports basic and diluted earnings per share in accordance with Accounting Standard 20 - Earnings Per Share notified under the Companies (Accounting Standards) Rules, 2006 (as amended). Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity share holders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

(b) TERMS AND RIGHTS ATTACHED TO EQUITY SHARES:

The Company has only one class of equity shares having par value of Rs. 2 per share. Each shareholder of equity share is entitled to one vote per share. The company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

4 (ii) Corporate Loan of Rs. 7500 Lakhs (Rs. 4000 Lakhs from State Bank of India and Rs. 3500 Lakhs from Bank of India) at an interest rate of 12.50 % is secured by:

(a) First pari passu charge on specified demarcated fixed assets of the company''s Heavy Engineering Division.

(b) Mortgage of two specified immovable properties at Pune city.

(c) 2nd pari passu charge on current assets of the Company.

Foot Note- The non current trade receivables considered good of Rs. 1154.07 Lakhs includes Rs. 921.27 Lakhs ( Previous year Rs. 921.27 Lakhs) from parties against whom the company has initiated legal/ arbitration proceedings.

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Sep 30, 2013

1.1 METHOD OF ACCOUNTING

The Company maintains its accounts under the historical cost convention, except for certain fixed assets which are revalued, on an accrual basis and complies in all material respects with generally accepted accounting principles in India. the Company has prepared these financial statements to comply in all material respects with Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and relevant provisions of the Companies Act, 1956.

1.2 use of estimates

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on management''s evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

1.3 revenue recognition

income is recognized on accrual basis, except where mentioned otherwise, in particular:

(a) Domestic sales of manufactured items are recognized on dispatch and are stated net of returns;

(b) Export sales are recognized on date of bill of lading/airway bill and/or passing of rights to the customer whichever is earlier and initially recorded at the relevant exchange rates prevailing on the date of transaction;

(c) income on items delivered directly by suppliers/sub-contractors to the client is recognized on dispatch and receipt of suppliers''/ sub-contractors'' invoices;

(d) income from project site activities is recognized on acceptance by the client on the basis of the work performed;

(e) income on account of price variation is recognized on acceptance of the claim by the client and on certainty of its realization;

(f) Revenue from long term projects of Special Products division involving dispatch, commissioning and erection is recognized on the basis of milestone specified in the contracts after matching costs and revenue at each stage; and

(g) dividend is accrued in the year in which it is declared whereby the right to receive is established.

1.4 tangible fixed ASSETS

Fixed Assets are stated at cost, net of tax/duty credits availed less depreciation/amortization to date and impairment, if any, except in the case of certain items of land, buildings, plant and machinery and roads, water works, drainage, which are stated on the basis of the revalued cost less depreciation/amortization to date and impairment, if any.

1.5 intangible ASSETS

intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

1.6 depreciation/amortization

(a) The depreciation is computed on the Straight-Line Method on certain Buildings and Plant & Machinery, of heavy Engineering Division and Foundry Division and all the fixed assets of Tiwac Division in the manner prescribed in Schedule XIV to the Companies Act, 1956.

The Depreciation on the value written up on revaluation is calculated on straight line method over the residual technical life assessed by the value.

Premium on leasehold land is amortized over the period of lease.

The depreciation on all other fixed assets is computed on the Written Down Value method in the manner prescribed in Schedule xiV to the Companies Act, 1956.

in respect of branches, which are an integral part of foreign operations, depreciation is provided in the manner prescribed by local laws so as to write off the assets over their useful life.

(b) intangible assets are amortized on a Straight Line basis over the estimated useful economic life and in case of:

(i) Patents are amortized on the basis of life of Patents as specified in the Patent Documents;

(ii) Technical Know-how is amortized on Straight Line Basis in six equal installments; and

(iii) Computer Software, included in intangible assets, is amortized over a period of three years.

(c) Depreciation on additions to/deletions from the fixed assets during the year is calculated on pro-rata basis from the date of addition/deletion.

1.7 Capital Work-in Progress (including intangible Assets under Development)

Projects under commissioning and other Capital Work-in-Progress (including intangible Assets under Development) are carried at cost, comprising direct cost and related incidental expenses.

1.8 impairment of ASSETS

impairment is ascertained at each balance sheet date in respect of Cash Generating units. An impairment loss is recognized whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. in assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

1.9 investments

investments of long term nature are stated at cost less provision for diminution in value, if such decline is other than temporary. Current investments are stated at lower of cost or net realizable value.

1.10 employee benefits

(a) Short term employee benefits are those which are payable within twelve months of rendering service and are recognized as expense in the period in which the employee renders the related service.

(b) Contributions to the Provident Fund and Superannuation Fund, ESiC and Labour Welfare Fund which are defined contribution schemes are recognized as an expense in the Statement of Profit and Loss in the period in which the contribution is due.

(c) Gratuity liability is a defined benefit obligation and is provided for on the basis of actuarial valuation using the projected unit credit method at the end of each financial year. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss.

(d) Long term compensated absences including leave encashment are provided for on the basis of actuarial valuation. Accumulated leave, which is expected to be utilized within next twelve months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

1.11 taxes on income

Tax expenses comprise current and deferred tax.

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the income Tax Act, 1961. The tax rates and tax laws used to compute amount are those that are enacted or substantively enacted.

Deferred tax is recognized on timing differences between the accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods and is quantified using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date.

Deferred tax assets (representing unabsorbed depreciation or carried forward losses) are recognized to the extent that there is a virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized.

1.12 borrowing costs

Borrowing costs attributable to acquisition, construction or production of qualifying assets are capitalized as part of such asset till the time the asset is ready for its intended use or sale. All other borrowing costs are recognized as an expense in the Statement of Profit and Loss in the period in which they are incurred.

1.13 inventories

inventories are valued after providing for obsolescence, if any, as under: -

(a) Raw materials, Components, Stores and Spares at lower of cost or net realizable value. The cost includes freight inward, direct expenses, duties and taxes other than those subsequently recoverable. in case of heavy Engineering Division, it is arrived at on "FiFo Method" and other divisions on "Weighted Average Method".

(b) Costs of Dies, Jigs, Tools, Mould Boxes and Patterns purchased/manufactured are charged off in relevant year at lower of cost or net realizable value, arrived at after providing for suitable diminution/amortization.

(c) Goods in transit at cost incurred till balance sheet date.

(d) Work in Progress at lower of cost or net realizable value. The cost includes direct material, direct labour, and appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortized over the period of contract on the basis of sales booked.

(e) Finished Goods at lower of cost or net realizable value. Cost includes related overheads and wherever applicable excise duty.

1.14 Foreign CURRENCY Translation

(a) initial recognition

Foreign currency transactions are reported in the reporting currency by applying to the foreign currency amount the exchange rate between reporting currency and the foreign currency at the date of transaction.

(b) Conversion

Foreign currency monetary items are re-instated using the exchange rate prevailing at the reporting date. Non monetary items which are measured in terms of historical costs denominated in a foreign currency are reported using the exchange rate at the date of transaction. Non monetary items which are measured at fair value or other similar valuation denominated in a foreign currency, are translated using the exchange rate at the date when such value was determined.

The financial statements of foreign branches of the company which are integral to the operations are translated as if the transactions of the foreign operations have been those of the company itself.

(c) Exchange differences

The Company has opted to avail the choice provided under Paragraph 46A of AS-11; The Effects of Changes in Foreign Exchange Rates, inserted vide Notification dated December 29, 2011. Accordingly, exchange differences on long term foreign currency monetary items are being dealt with in the following manner:

Foreign exchange difference on account of a depreciable asset is adjusted in the cost of the depreciable asset, which would be depreciated over the balance life of the asset;

I n other cases, the foreign exchange difference is accumulated in a Foreign Currency Monetary item Translation Difference Account and amortized over the balance period of such long term asset/liability.

All other exchange differences are recognized as income or as expense in the period to which they relate.

(d) Premium or discount on forward exchange contracts is recognized in the Statement of Profit and Loss over the period of contract.

1.15 provisions, contingent liabilities and contingent ASSETS

Provisions are recognized for liabilities that can be measured only by using a substantial degree of estimation, if:

(a) the Company has a present obligation as a result of past event;

(b) a probable outflow of resources is expected to settle the obligation; and

(c) the amount of the obligation can be reliably estimated Contingent Assets are neither recognized nor disclosed.

Contingent Liabilities are not recognized, but are disclosed in Notes to Accounts.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each balance sheet date.

1.16 LEASES

Assets acquired under leases where the significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals are charged to the Statement of Profit and Loss on accrual basis.

1.17 SEGMENT Reporting (Refer Note 34)

The accounting policies adopted for segment reporting are in line with the accounting policies of the company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue expenses, assets and liabilities which relate to the company as a whole and are not allocable to segments on reasonable basis have been included under unallocated revenue/expenses/assets/liabilities. information given is in accordance with the requirements of Accounting Standard 17 on Segment Reporting issued by the institute of Chartered Accountants of India.

The Company has identified business segments as the primary and geographic segment as secondary segment. Segment have been identified after taking into account the nature of the products, differential risk and returns, the organizational structure and internal reporting system.

The Company''s Primary business segments are organized on product lines as follows:

(i) Heavy Engineering (also known as industrial Machinery Division) - engaged in engineering, fabrication and manufacturing of Machinery for Sugar Plants, Cement Plants, Boilers & Power Plants, industrial & Marine Gears, Mineral Processing & EPC, Petro Chemicals and Space, Defense and Nuclear Power Business;

(ii) Foundry & Machine Shop - Manufacturing of Grey & Ductile iron Castings required by various industries and machining of components; and

(iii) others - Non Reportable Segment, includes units manufacturing Precision instruments such as pressure and temperature gauges.

1.18 earnings PER SHARE

The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20, "Earning Per Share" notified under the Companies (Accounting Standards) Rules, 2006. Basic earnings per share are computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year.

For the purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to equity share holders and weighted average number of equity shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.

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Sep 30, 2010

1. Method of Accounting:

The Company maintains its accounts under the historical cost convention on an accrual basis and complies in all material respects with generally accepted accounting principles in India and relevant provisions of Companies Act, 1956.

2. Use of Estimates:

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on managements evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

3. Revenue Recognition:

Income is recognised on accrual basis, except where mentioned otherwise, in particular:

(i) Domestic sales of manufactured items are recognised on despatch and are stated net of returns.

(ii) Export sales are recognised on date of bill of lading/airway bill.

(iii) Income on items delivered directly by suppliers/sub-contractors to the client is recognised on despatch and receipt of suppliers/sub-contractors invoices.

(iv) Income from project site activities is recognised on acceptances by the client on the basis of the work performed.

(v) Income on account of price variation is recognised on acceptance of the claim by the client and on certainty of its realization.

(vi) Revenue from long term projects of Special Products Division involving despatch, commissioning and erection is recognized on the basis of milestone specified in the contracts.

4. Fixed Assets:

Fixed Assets are stated at cost, net of tax/duty credits availed less depreciation to date and impairment, if any, except in the case of certain items of land, buildings, plant and machinery and roads, water works, drainage, which are stated on the basis of the revalued cost.

5. Depreciation/Amortisation:

(i) The depreciation is computed on the Straight-Line Method on certain Buildings, Plant & Machinery and Furniture and Fixtures of Heavy Engineering Division and of Foundry Division and all the fixed assets of Tiwac Division in the manner prescribed in Schedule XIV to the Companies Act,1956.

The depreciation on all other fixed assets is computed on the Written Down Value method in the manner prescribed in Schedule XIV to the Companies Act, 1956.

In respect of Branch, which is an integral part of foreign operations, depreciation is provided in the manner prescribed in Schedule XIV of Companies Act, 1956.

(ii) Depreciation on Patents is provided on the basis of life of Patents as specified in the Patent Documents.

(iii) Technical know-how is depreciated on Straight Line Basis in six equal installments.

(iv) Computer software included in intangible assets is amortized over a period of three years.

(v) Depreciation on additions to/deletions from the fixed assets during the year is calculated on pro-rata basis from the date of addition/deletion.

6. Capital Work-in-Progress:

Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost and related incidental expenses.

7. Impairment of Assets:

Impairment is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

8. Investments:

Investments of long term nature are stated at cost less permanent diminution in value, if any. Current Investments are stated at lower of cost or fair value.

9. Employee Benefits:

(i) Short term employee benefits are those which are payable within twelve months of rendering service and are recognized as expense at the period in which the employee renders the related service.

(ii) Contributions to the Provident Fund and Superannuation Fund which are defined contribution schemes are recognized as an expense in the Profit and Loss Account in the period in which the contribution is due.

(iii) Gratuity liability is a defined benefit obligation and is provided for on the basis of its actuarial valuation using the projected unit credit method at the end of each financial year. Actuarial gains and losses are recognized immediately in the Profit and Loss Account.

(iv) Long term compensated absences including leave encashment are provided for on the basis of actuarial valuation.

10. Taxes on Income:

Tax expenses comprise current and deferred tax.

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognized on timing differences between the accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods and is quantified using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

11. Borrowing Costs:

Borrowing costs attributable to acquisition, construction or production of qualifying assets are capitalized as part of such asset till the time the asset is ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.

12. Inventories:

Inventories are valued after providing for obsolescence, if any, as under: -

(a) Raw materials, Components, Stores and Spares at lower of cost or net realizable value. The cost includes freight inward, direct expenses, duties and taxes other than those subsequently recoverable. In case of Heavy Engineering Division, it is arrived at on "FIFO Method" and for others on "Weighted Average Method".

(b) Dies, Jigs, Tools, Mould Boxes and patterns at lower of cost or net realizable value arrived at after providing for suitable diminution.

(c) Goods in transit at cost incurred till date.

(d) Work in Progress at lower of cost or net realizable value. The cost includes direct material, direct labour, and appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortised over the period of contract on the basis of sales booked.

(e) Finished Goods at lower of cost or net realisable value. Cost includes related overheads and wherever applicable excise duty.

13. Foreign Currency Transactions:

Foreign Currency Transactions are accounted at the rates prevailing on the date of transaction. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account.

All foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing at the date of balance sheet and resultant exchange differences are recognized in the profit and loss account for the year.

In respect of branches, which are integral foreign operations, all transactions are translated at the rates prevailing on the date of transaction. Branch monetary Assets and Liabilities are restated at the year end rates, except for fixed assets and depreciation thereon which are restated at historical cost.

Premium or discount on forward exchange contracts is recognized in the profit and loss account over the period of contract.

14. Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if:

(a) the Company has a present obligation as a result of past event;

(b) a probable outflow of resources is expected to settle the obligation, and

(c) the amount of the obligation can be reliably estimated. Contingent Assets are neither recognised, nor disclosed.

Contingent Liabilities are not recognised, but are disclosed in Notes to Accounts.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

15. Research & Development Expenditure:

Expenditure on research phase is recognized as expense when it is incurred Expenditure on development phase which results in creation of assets is included in fixed assets.

16. Leases:

Assets acquired under leases where the significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals are charged to the profit & loss account on accrual basis.

Assets leased out under operating lease are capitalized. Rental Income is recognised on accrual basis over the lease term.

17. Segment accounting policy: (Refer C).

B. RELATED PARTY DISCLOSURES:

Related party disclosures as required under Accounting Standard 18 issued by the ICAI are given below:

(a) Relationship:

(i) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual.

Mr. Chakor L. Doshi : Chairman

: Wife : Mrs. Champa C. Doshi

: Son : Mr. Chirag C. Doshi

: Daughter : Mrs. Kanika G. Sanger

: Daughter-in-Law : Mrs. Tanaz Chirag Doshi (ii) Key Management personnel and relatives:

Mr. J. L. Deshmukh : Managing Director & CEO

: Brother : Mr. Pratap L. Deshmukh

Mr. Chirag C. Doshi : Managing Director

(iii) Enterprises over which any person described in (i) or (ii) above are able to exercise significant influence: Bombay Cycle & Motor Agency Ltd. Walchand Great Achievers Pvt. Ltd. Walchand Kamdhenu Commercials Pvt. Ltd. Walchand Chiranika Trading Pvt. Ltd. Chiranika Enterprises Chiranika Corporation Chiranika Properties Walchand Botanicals Pvt. Ltd. Rodin Holdings Inc. Olsson Holdings Inc. Vinod Shashank Chakor Pvt. Ltd. Chirag Enterprises

Bharat Capital Services Pvt. Ltd. Indpro Electronic System (India) Pvt. Ltd. Walchand Engineers Pvt. Ltd. Walchand Projects Pvt. Ltd. Walchand Power Systems Pvt. Ltd. Walchand Oil & Gas Pvt. Ltd. Walchand Leisure Realty Pvt. Ltd. Walchand BMH Pvt. Ltd.

C. SEGMENT REPORTING:

Information given in accordance with the requirements of Accounting Standard 17, on Segment Reporting issued by The Institute of Chartered Accountants of India.

The Company has identified business segments as the primary and Geographic segment as secondary segment. Segments have been identified after taking into account the nature of the products, differential risks and returns, the organizational structure and internal reporting system.

The Companys Primary business segments are organised on product lines as follows:

Heavy Engineering (also known as Industrial Machinery Division) – engaged in engineering, fabrication and manufacturing of Machinery for Sugar Plants, Cement Plants, Boilers & Power Plants, Industrial & Marine Gears, Mineral Processing & EPC, Petro Chemicals and Space, Defence and Nuclear Power Business.

Foundry & Machine Shop – Manufacturing of Grey & Ductile Iron Castings required by various Industries and machining of components.

Others – Non reportable segment, includes units manufacturing Precision Instruments such as pressure and temperature gauges and Infotech Services.

Segment Accounting Policies:

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under unallocated revenue/expenses/assets/liabilities.

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Sep 30, 2009

1. Method of Accounting:

The Company maintains its accounts under the historical cost convention on an accrual basis and complies in all material respects with generally accepted accounting principles in India and relevant provisions of Companies Act, 1956.

2. Use of Estimates:

The presentation of the financial statements in conformity with the generally accepted accounting principles requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Such estimates and assumptions are based on managements evaluation of relevant facts and circumstances as on the date of financial statements. The actual outcome may diverge from these estimates.

3. Revenue Recognition:

Income is recognised on accrual basis, except where mentioned otherwise, in particular:

(i) Domestic sales of manufactured items are recognised on dispatch and are stated net of returns.

(ii) Export sales are recognised on date of bill of lading/airway bill.

(iii) Income on items delivered directly by suppliers/sub-contractors to the client is recognised on despatch and receipt of suppliers/sub-contractorsinvoices.

(iv) Income from project site activities is recognised on acceptances by the client on the basis of the work performed.

(v) Income on account of price variation is recognised on acceptance of the claim by the client and on certainty of its realization.

(vi) Revenue from long term projects of Special Products Division involving despatch, commissioning and erection is recognized on the basis of milestone specified in the contracts.

4. Fixed Assets:

Fixed Assets are stated at cost, net of tax/duty credits availed, except in the case of certain items of land, buildings, plant and machinery and roads, water works, drainage, which are stated on the basis of the revalued cost.

5. Depreciation/Amortisation:

(i) The depreciation is computed on the Straight-Line Method on certain Buildings, Plant & Machinery and Furniture and Fixtures of Heavy Engineering Division and of Foundry Division and all the fixed assets of Tiwac Division in the manner prescribed in Schedule XIV to the Companies Act,1956.

The depreciation on all other fixed assets is computed on the Written Down Value method in the manner prescribed in Schedule XIV to the Companies Act, 1956.

In respect of Branches, which are integral foreign operations, depreciation is provided to write off the cost of assets in equal annual installments over their estimated useful lives over the contract period.

(ii) Depreciation on Patents is provided on the basis of life of Patents as specified in the Patent Documents.

(iii) Technical know-how is depreciated on Straight Line Basis in six equal installments.

(iv) Computer software included in intangible assets is amortized over a period of three years.

(v) Depreciation on additions to/deletions from the fixed assets during the year is calculated on pro-rata basis from the date of addition/deletion.

6. Capital Work-in-Progress:

Projects under commissioning and other Capital Work-in-Progress are carried at cost, comprising direct cost and related incidental expenses.

7. Impairment of Assets:

Impairment is ascertained at each balance sheet date in respect of Cash Generating Units. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.

8. Investments:

Investments of long term nature are stated at cost less permanent diminution in value, if any. Current Investments are stated at lower of cost or net realizable value.

9. Employee Benefits:

(i) Short term employee benefits are those which are payable within twelve months of rendering service and are recognized as expense in the period in which the employee renders the related service.

(ii) Contributions to the Provident Fund and Superannuation Fund which are defined contribution schemes are recognized as an expense in the Profit and Loss Account in the period in which the contribution is due.

(iii) Gratuity liability is a defined benefit obligation and is provided for on the basis of its actuarial valuation using the projected unit credit method at the end of each financial year. Actuarial gains and losses are recognized immediately in the Profit and Loss Account.

(iv) Long term compensated absences including leave encashment are provided for on the basis of actuarial valuation.

10. Taxes on Income:

Tax expenses comprise current and deferred tax.

Tax on income for the current period is determined on the basis of taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax is recognized on timing differences between the accounting income and taxable income that originate in one period and are capable of reversal in one or more subsequent periods and is quantified using the tax rates and tax laws enacted or substantively enacted as on the balance sheet date.

Deferred tax assets are recognized and carried forward to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized.

11. Borrowing Costs:

Borrowing costs attributable to acquisition, construction or production of qualifying assets are capitalized as part of such asset till the time the asset is ready for its intended use or sale. All other borrowing costs are recognised as an expense in the period in which they are incurred.

12. Inventories:

Inventories are valued after providing for obsolescence, if any, as under: -

(a) Raw materials, Components, Stores and Spares at lower of cost or net realizable value. The cost includes freight inward, direct expenses, duties and taxes other than those subsequently recoverable. In case of Heavy Engineering Division, it is arrived at on "FIFO Method" and for others on "Weighted Average Method".

(b) Dies, Jigs, Tools, Mould Boxes and patterns at lower of cost or net realizable value arrived at after providing for suitable diminution.

(c) Goods in transit at cost incurred till date.

(d) Work in Progress at lower of estimated cost or net realizable value. The cost includes direct material, direct labour, and appropriate overheads booked on normal level of activity. The expenditure on uncompleted contracts is amortised over the period of contract on the basis of sales booked.

(e) Finished Goods at lower of cost or net realisable value. Cost includes related overheads and excise duty.

13. Foreign Currency Transactions:

Foreign Currency Transactions are accounted at the rates prevailing on the date of transaction. Exchange differences arising on foreign currency transactions settled during the year are recognized in the profit and loss account.

All foreign currency denominated monetary assets and liabilities are translated at the exchange rate prevailing at the date of balance sheet and resultant exchange differences are recognized in the profit and loss account for the year.

In respect of branches, which are integral foreign operations, all transactions are translated at the rates prevailing on the date of transaction. Branch monetary Assets and Liabilities are restated at the year end rates, except for fixed assets and depreciation thereon which are restated at historical cost.

Premium or discount on forward exchange contracts is recognized in the profit and loss account over the period of contract.

14. Provisions, Contingent Liabilities and Contingent Assets:

Provisions are recognised for liabilities that can be measured only by using a substantial degree of estimation, if:

(a) the Company has a present obligation as a result of past event;

(b) a probable outflow of resources is expected to settle the obligation, and

(c) the amount of the obligation can be reliably estimated. Contingent Assets are neither recognised, nor disclosed.

Contingent Liabilities are not recognised, but are disclosed in Notes to Accounts.

Provisions, Contingent Liabilities and Contingent Assets are reviewed at each Balance Sheet date.

15. Research & Development Expenditure:

Revenue Expenditure is charged to Profit & Loss Account and Capital Expenditure is added to the cost of fixed assets in the year in which it is incurred.

16. Leases:

pAssets acquired under leases where the significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases and lease rentals are charged to the profit & loss account on accrual basis.

Assets leased out under operating lease are capitalized. Rental Income is recognised on accrual basis over the lease term.

17. Earnings per share:

The Company reports basic and diluted earnings per share in accordance with Accounting Standard 20, "Earnings Per Share" issued by the Institute of Chartered Accountants of India (ICAI). Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the year.

Diluted earnings per share reflect the potential dilution that could occur if securities or other contracts to issue equity shares were exercised or converted during the year. Diluted earning per share is computed using the weighted average number of equity shares and potential dilutive equity shares outstanding at the year end.

18. Segment accounting policy: (Refer C).

B. RELATED PARTY DISCLOSURES:

Related party disclosures as required under Accounting Standard 18 issued by the ICAI are given below:

(a) Relationship:

(i) Individuals owning, directly or indirectly, an interest in the voting power of the reporting enterprise that gives them control or significant influence over the enterprise, and relatives of any such individual.

Mr. Chakor L. Doshi : Chairman

: Wife : Mrs. Champa C. Doshi

Son : Mr. Chirag C. Doshi : Daughter: Mrs. Kanika G. Sanger : Daughter-in-Law: Mrs.Tanaz Chirag Doshi (ii) Key Management personnel and relatives:

Mr. J. L. Deshmukh : Managing Director & CEO

Brother: Mr. Pratap L. Deshmukh Mr. Chirag C. Doshi : Managing Director

(iii) Enterprises over which any person described in (i) or (ii) above are able to exercise significant influence: Bombay Cycle & Motor Agency Ltd. Walchand Great Achievers Pvt. Ltd. Walchand Kamdhenu Commercials Pvt. Ltd. Chiranika Trading Pvt. Ltd. Chiranika Enterprises Chiranika Corporation

The Companys Primary business segments are organised on product lines as follows:

Heavy Engineering (also known as Industrial Machinery Division) - engaged in engineering, fabrication and manufacturing of Machinery for Sugar Plants, Cement Plants and Boilers, Heavy Duty Gears, Mineral Processing, EPC Petro Chemicals and Space, Defence and Nuclear Power Business.

Foundry & Machine Shop-Manufacturing of CI & SGI Castings required by various Industries and machining of components.

Others-Non-reportable segment, includes units manufacturing pressure and temperature gauges and Infotech Services.

Segment Accounting Policies:

Segment accounting policies are in line with the accounting policies of the Company. In addition the following specific accounting policies have been followed for segment reporting:

(i) Segment Revenue includes Sales and other income directly identifiable with/allocable to the segment including inter segment revenue.

(ii) Expenses that are directly identifiable with/allocable to segments are considered for determining the Segment Result. Expenses, which relate to the Company as a whole and not allocable to segments, are included under "Unallocated Expenditure".

(iii) Income which relates to the Company as a whole and not allocable to segments is included in "Unallocated Income".

(iv) Segment assets and liabilities include those directly identifiable with the respective segments.

Unallocated assets and liabilities represent the assets and liabilities that relate to the Company as a whole and not allocable to any segment.

(v) Inter-Segment Transfer Pricing

Segment Revenue resulting from transactions with other business segments is accounted on the basis of transfer price agreed between the segments. Such transfer prices are agreed on a negotiated basis.

(vi) The Company has identified geographical distribution between domestic sale and exports as the Secondary Segment.

The Revenue, Assets & Liabilities, to the extent possible to be identified separately have been reported.