Accounting Policies of Schneider Electric President Systems Ltd. Company

2. Material accounting policies

2.1 Basis of preparation

These financial statements have been prepared in
accordance with the Indian Accounting Standards (“Ind
AS”) as prescribed by Ministry of Corporate Affairs
pursuant to Section 133 of the Companies Act, 2013
(“the Act”), read with the Companies (Indian Accounting
Standards) Rules, 2015 as amended by the companies(
Indian Accounting Standards ) Amendment Rules, 2016,
other relevant provisions of the Act and other accounting
principles generally accepted in India.

The financial statements have been prepared on on
accrual and going concern basis following the historical
cost convention, except for certain financial assets and
liabilities measured at fair value. No climate-related
matters were identified that create material uncertainties
related to events or conditions that may cast significant
doubt on company’s ability to continue as a going concern.

The Ind AS financial statements are presented in Indian
Rupees (“f”) and all values are rounded to the nearest
million (f 000,000), except when otherwise indicated.

Accounting policies have been consistently applied
except where a newly issued standard is initially adopted
or revision to an existing accounting standard requires a
change in the accounting policy hitherto in use.

a. Current versus non-current classification

The w presents assets and liabilities in the balance sheet
based on current/non- current classification. An asset is
treated as current when it is:

- Expected to be realized or intended to be sold or
consumed in the normal operating cycle,

- Held primarily for purpose of trading,

- Expected to be realized within twelve months after
the reporting period, or

- 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.

Deferred tax assets and deferred tax liabilities are classified
as non- current assets and non-current liabilities.

A liability is current when:

- It is expected to be settled in the normal operating
cycle,

- It is held primarily for purpose of trading,

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

- 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.

If a liability meets the criteria for classification as non¬
current, it is classified as non-current even if :

- Management intends or expects to settle the liability
within twelve months after the reporting period, or

- Entity settles the liability between the end of
the reporting period and the date the financials
statements are approved for issue.

The operating cycle is the time between the acquisition
of assets for processing and their realization in cash and
cash equivalents. The Company has identified twelve
months as its operating cycle, except for project business.
The projects business comprises long-term contracts
which have an operating cycle exceeding one year. For
classification of current assets and liabilities related to
project business, the Company uses the duration of the
contract as its operating cycle.

b. Property, plant and equipment

Property, plant and equipment including capital work-in¬
progress are stated at cost, less accumulated depreciation
and accumulated impairment losses, if any. The cost
comprises of purchase price, taxes, duties, freight and
other incidental expenses directly attributable and related
to acquisition and installation of the concerned assets and
are further adjusted by the amount of CENVAT credit, VAT
credit availed, input tax credit under goods and service
tax, wherever applicable. The Company identifies and
determines cost of each component/ part of the asset
separately, if the component/ part have a cost which is
significant to the total cost of the asset and has useful life
that is materially different from that of the remaining asset.
Similarly, when significant parts of plant and equipment
are required to be replaced at intervals or when a major
inspection/overhauling is required to be performed, such
cost of replacement or inspection is capitalised (if the
recognition criteria is satisfied) in the carrying amount
of plant and equipment as a replacement cost or cost
of major inspection/overhauling, as the case may be and
depreciated separately based on their specific useful life.
Likewise, when a major inspection is performed, its cost
is recognised in the carrying amount of the plant and
equipment as a replacement if the recognition criteria
are satisfied. All other repair and maintenance costs are
recognised in profit or loss as incurred. The present value
of the expected cost for the decommissioning of an asset
after its use is included in the cost of the respective asset
if the recognition criteria for a provision are met.

Subsequent expenditure related to an item of property,
plant and equipment is added to its book value only if it
increases the future benefits from the existing asset
beyond its previously assessed standard of performance.
All other expenses on existing property, plant and
equipment, including day-to-day repair and maintenance
expenditure and cost of replacing parts are charged to the
statement of profit and loss for the period during which
such expenses are incurred.

An item of property, plant and equipment and any
significant part initially recognised is derecognised
upon disposal or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising
on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying
amount of the asset) is included in the income statement
when the asset is derecognised.

The residual values, useful lives and methods of
depreciation of property, plant and equipment are reviewed
at each financial year end and adjusted prospectively, if
appropriate.

Property, plant and equipment held for sale is valued at
lower of their carrying amount and net realizable value.
Any write-down is recognised in the statement of profit
and loss.

The Company has elected to carry previous GAAP carrying
values of property, plant and equipment as deemed cost at
the date of transition to Ind AS.

Depreciation on property, plant and equipment

Depreciation on property, plant and equipment is
calculated on a straight-line basis using the rates arrived
at based on the useful lives estimated by the management.
The estimated useful lives of assets are as follows:

Leasehold Land and Leasehold Improvements are
depreciated over the primary period of lease or over the
useful life whichever is shorter. An assets below 5,000 is
fully depreciated in the year of capitalization.

Advance paid towards the acquisition of property, plant
and equipment outstanding at each balance sheet date
is classified as capital advances under the non-current
assets and cost of assets not ready to use before such date
are disclosed as ‘Capital work-in-progress’.

d. Intangible assets

Intangible assets acquired separately are measured on
initial recognition at cost. Intangible assets acquired in
a business combination are recognised at fair value at
the acquisition date. Subsequently, intangible assets are
carried at cost less any accumulated amortisation and
accumulated impairment losses, if any. Internally generated
intangible assets, excluding capitalized development
costs, are not capitalized and expenditure is reflected in
the statement of profit and loss in the year in which the
expenditure is incurred.

Intangible assets are amortized on a straight-line basis
over the estimated useful economic life. Patents and
trademarks, computer software and designs and copyrights
are amortized over a period of nine years, six years and
five years respectively, from the date available for use.
All other intangible assets are assessed for impairment
whenever there is an indication that the intangible asset
may be impaired.

Gains or losses arising from de-recognition of an intangible
asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset
and are recognised in the statement of profit and loss
when the asset is derecognised. Depreciation amount of

intangible assets with a finite useful life is allocated on a
systematic basis over its useful life, which is considered to
be on straight line basis.

e. Leases

The Company assesses at contract inception whether a
contract is, or contains, a lease. That is, if the contract
conveys the right to control the use of an identified asset
for a period at time in exchange for a consideration. Lease
liability and right-of-use assets have been separately
presented in the balance sheet and lease payment have
classified as financing cash flow.

Where the Company is lessee

The Company applies a single recognition and
measurement approach for all leases, except for short¬
term leases and leases of low-value assets. The Company
recognises lease liabilities to make lease payments and
right-of-use assets representing the right to use the
underlying assets.

(i) Right-of-use assets

The Company recognises right-of-use assets at the
commencement date of the lease (i.e., the date the
underlying asset is available for use). Right-of-use
assets are measured at cost, less any accumulated
depreciation and impairment losses, and adjusted
for any remeasurement of lease liabilities. The cost
of right-of-use assets includes the amount of lease
liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement
date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over
the shorter of the lease term and the estimated useful
lives of the assets, as follows:

If ownership of the leased asset transfers to the
Company at the end of the lease term or the
cost reflects the exercise of a purchase option,
depreciation is calculated using the estimated useful
life of the asset.

The right-of-use assets are also subject to impairment
assessment. Refer to the accounting policies in
section 2.2 (f) Impairment of non-financial assets.

(ii) Lease liabilities

At the commencement date of the lease, the Company
recognises lease liabilities measured at the present
value of lease payments to be made over the lease
term. The lease payments include fixed payments

(including in substance fixed payments) less any lease
incentives receivable, variable lease payments that
depend on an index or a rate, and amounts expected
to be paid under residual value guarantees. The
lease payments also include the exercise price of a
purchase option reasonably certain to be exercised
by the Company and payments of penalties for
terminating the lease, if the lease term reflects the
Company exercising the option to terminate. Variable
lease payments that do not depend on an index or
a rate are recognised as expenses (unless they
are incurred to produce inventories) in the period
in which the event or condition that triggers the
payment occurs.

In calculating the present value of lease payments,
the Company uses its incremental borrowing rate at
the lease commencement date because the interest
rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made.
In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in
the lease term, a change in the lease payments (e.g.,
changes to future payments resulting from a change
in an index or rate used to determine such lease
payments) or a change in the assessment of an option
to purchase the underlying asset.

Short term lease and leases of low-value assets

The Company applies the short-term lease
recognition exemption of its short-term lease (i.e.,
those lease that have a lease term of 12 months
or less from the commencement date and do not
contain a purchase option). It also applies the lease
of low value assets recognition exemption to lease
that are of low value. Lease payment on short term
lease and lease of low value assets are recognized
as expenses on the straight-line basis over the lease
term.

Where the Company is the lessor

Leases in which the Company does not transfer
substantially all the risks and rewards of ownership
of an asset are classified as operating leases. Assets
subject to operating leases are included in Property,
Plant & Equipment. Lease income on an operating
lease is recognised in the Statement of Profit and
Loss on a straight-line basis over the lease term.
Costs, including depreciation, are recognised as an
expense in the Statement of Profit and Loss.

f. Impairment of non- financial assets

The Company assesses at each reporting date, whether

there is an indication that an asset may be impaired. If any

indication exists, or when annual impairment testing for
an asset is required, the Company estimates the asset’s
recoverable amount. An asset’s recoverable amount is
the higher of an asset’s or cash-generating unit’s (CGU)
fair value less costs of disposal and its value in use.
Recoverable amount is determined for an individual asset,
unless the asset does not generate cash inflows that are
largely independent of those from other assets or group
of assets. Where the carrying amount of an asset or CGU
exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount.
Further, the input and assumptions used in both value
in use or fair value less costs of disposal model are not
impacted by climate-related risks, If any.

In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset.
In determining fair value less costs of disposal, recent
market transactions are taken into account, if available.
If no such transactions can be identified, an appropriate
valuation model is used.

Impairment losses including impairment on inventories,
are recognised in the statement of profit and loss. After
impairment, depreciation is provided on the revised
carrying amount of the asset over its remaining useful life.
These calculations are corroborated by valuation multiples,
quoted share prices for publicly traded companies or other
available fair value indicators.

The Company bases its impairment calculation on detailed
budgets and forecast calculations, which are prepared
separately for each of the Company’s CGUs to which
the individual assets are allocated. These budgets and
forecast calculations generally cover a period of five yea rs.
For longer periods, a long-term growth rate is calculated
and applied to project future cash flows after the fifth year.
To estimate cash flow projections beyond periods covered
by the most recent budgets/forecasts, the Company
extrapolates cash flow projections in the budget using
a steady or declining growth rate for subsequent years,
unless an increasing rate can be justified. In any case, this
growth rate does not exceed the long-term average growth
rate for the products, industries, or country or countries in
which the entity operates, or for the market in which the
asset is used.

g. Financial instruments

A financial instrument is any contract that gives rise to
a financial asset of one entity and a financial liability or
equity instrument of another entity.

i. Financial Assets

The Company classifies its financial assets in the
following measurement categories:

- Those to be measured subsequently at fair value
(either through other comprehensive income, or
through profit or loss)

- Those measured at amortized cost

Initial recognition and measurement

All financial assets are recognised initially at fair value
plus, in the case of financial assets not recorded at fair
value through profit or loss, transaction costs that are
attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require
delivery of assets within a time frame established by
regulation or convention in the market place (regular
way trades) are recognised on the trade date, i.e.,
the date that the company commits to purchase or
sell the asset. However, trade receivables that do
not contain a significant financing component are
measured at transaction price.

Subsequent measurement

For purposes of subsequent measurement financial
assets are classified in following categories:

- Debt instruments at fair value through profit and
loss (FVTPL)

- Debt instruments at fair value through other
comprehensive income (FVTOCI)

- Debt instruments at amortized cost

- Equity instruments

Where assets are measured at fair value, gains and
losses are either recognised entirely in the statement
of profit and loss (i.e. fair value through profit or loss),
or recognised in other comprehensive income (i.e.
fair value through other comprehensive income). For
investment in debt instruments, this will depend on
the business model in which the investment is held.
For investment in equity instruments, this will depend
on whether the Company has made an irrevocable
election at the time of initial recognition to account
for equity instruments at FVTOCI.

Debt instruments at amortized cost

A Debt instrument is measured at amortized cost if
both the following conditions are met:

- The asset is held within a business model
whose objective is to hold assets for collecting
contractual cash flows, and

- Contractual terms of the asset give rise on
specified dates to cash flows that are solely
payments of principal and interest (SPPI) on the
principal amount outstanding.

This category is most relevant to the Company.
After initial measurement, such financial assets are
subsequently measured at amortized cost using the
effective interest rate (EIR) method. Amortised cost
is calculated by taking into account any discount or
premium on acquisition and fees or costs that are
an integral part of EIR. EIR is the rate that exactly
discounts the estimated future cash receipts over
the expected life of the financial instrument or a
shorter period, where appropriate, to the gross
carrying amount of the financial asset. When
calculating the effective interest rate, the Company
estimates the expected cash flows by considering
all the contractual terms of the financial instrument
but does not consider the expected credit losses.
The EIR amortization is included in finance income
in profit or loss. The losses arising from impairment
are recognised in the profit or loss. This category
generally applies to trade and other receivables.

Debt instruments at fair value through OCI

A Debt instrument is measured at fair value through
other comprehensive income if following criteria are
met:

- Business Model Test: The objective of financial
instrument is achieved by both collecting
contractual cash flows and for selling financial
assets.

- Cash flow characteristics test: The contractual
terms of the Debt instrument give rise on
specific dates to cash flows that are solely
payments of principal and interest on principal
amount outstanding.

Debt instrument included within the FVTOCI category
are measured initially as well as at each reporting date
at fair value. Fair value movements are recognised
in the other comprehensive income (OCI), except
for the recognition of interest income, impairment
gains or losses and foreign exchange gains or losses
which are recognised in statement of profit and loss.
On derecognition of asset, cumulative gain or loss
previously recognised in OCI is reclassified from the
equity to statement of profit & loss. Interest earned
whilst holding FVTOCI financial asset is reported as
interest income using the EIR method.

Debt instruments at FVTPL

FVTPL is a residual category for financial instruments.
Any financial instrument, which does not meet the

criteria for amortized cost or FVTOCI, is classified
as at FVTPL. In addition, the company may elect to
designate a debt instrument, which otherwise meets
amortized cost or FVTOCI criteria, as at FVTPL.
However, such election is allowed only if doing so
reduces or eliminates a measurement or recognition
inconsistency (referred to as ‘accounting mismatch’).
The company has not designated any debt instrument
as at FVTPL.

Debt instruments included within the FVTPL
category are measured at fair value with all changes
recognised in the statement of profit and loss.

Equity investments of other entities

All equity investments in scope of Ind AS 109 are
measured at fair value. Equity instruments which
are held for trading and contingent consideration
recognised by an acquirer in a business combination
to which Ind AS 103 applies are classified as at
FVTPL. For all other equity instruments, the Company
may make an irrevocable election to present in other
comprehensive income all subsequent changes in the
fair value. The Company makes such election on an
instrument-by-instrument basis. The classification is
made on initial recognition and is irrevocable.

If the Company decides to classify an equity
instrument as at FVTOCI, then all fair value changes on
the instrument, excluding dividends, are recognised
in the OCI. There is no recycling of the amounts from
OCI to profit and loss, even on sale of investment.
However, the Company may transfer the cumulative
gain or loss within equity. Equity instruments included
within the FVTPL category are measured at fair value
with all changes recognised in the Profit and loss.

Derecognition

A financial asset (or, where applicable, a part of a
financial asset or part of a Company of similar financial
assets) is primarily derecognised (i.e. removed from
the Company''s statement of financial position) when:

- The rights to receive cash flows from the asset
have expired, or

- the Company has transferred its rights to receive
cash flows from the asset or has assumed an
obligation to pay the received cash flows in full
without material delay to a third party under a
"pass through" arrangement and either;

- the Company has transferred the rights to
receive cash flows from the financial assets or

- the Company has retained the contractual right
to receive the cash flows of the financial asset,
but assumes a contractual obligation to pay the
cash flows to one or more recipients.

Where the Company has transferred an asset, the
Company evaluates whether it has transferred
substantially all the risks and rewards of the
ownership of the financial assets. In such cases, the
financial asset is derecognised. Where the entity has
not transferred substantially all the risks and rewards
of the ownership of the financial assets, the financial
asset is not derecognised

Where the Company has neither transferred a
financial asset nor retains substantially all risks
and rewards of ownership of the financial asset, the
financial asset is derecognised if the Company has
not retained control of the financial asset. Where the
Company retains control of the financial asset, the
asset is continued to be recognised to the extent of
continuing involvement in the financial asset.

Impairment of financial assets

In accordance with I nd AS 109, the Company applies
expected credit losses (ECL) model for measurement
and recognition of impairment loss on the following
financial asset and credit risk exposure

- Financial assets measured at amortized cost;

- Financial assets measured at fair value through
other comprehensive income (FVTOCI);

The Company follows "simplified approach" for
recognition of impairment loss allowance on:

- Trade receivables or contract revenue
receivables;

- All lease receivables resulting from the
transactions within the scope of Ind AS 17

Under the simplified approach, the Company does
not track changes in credit risk. Rather, it recognizes
impairment loss allowance based on lifetime ECLs at
each reporting date, right from its initial recognition.
The Company uses a provision matrix to determine
impairment loss allowance on the portfolio of
trade receivables. The provision matrix is based
on its historically observed default rates over the
expected life of trade receivable and is adjusted for
forward looking estimates. At every reporting date,
the historically observed default rates are updated
and changes in the forward looking estimates are
analysed.

For recognition of impairment loss on other financial
assets and risk exposure, the Company determines
whether there has been a significant increase in the
credit risk since initial recognition. If credit risk has
not increased significantly, 12-month ECL is used to
provide for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If, in the

subsequent period, credit quality of the instrument
improves such that there is no longer a significant
increase in credit risk since initial recognition, then
the Company reverts to recognizing impairment loss
allowance based on 12- months ECL.

i. Financial liabilities:

Initial recognition and measurement

Financial liabilities are classified at initial recognition as
financial liabilities at fair value through profit or loss, loans
and borrowings, and payables, net of directly attributable
transaction costs. The Company financial liabilities include
loans and borrowings including bank overdraft, trade
payables, trade deposits, retention money, and liabilities
towards services, sales incentive and other payables.

The measurement of financial liabilities depends on their
classification, as described below:

Trade payables

These amounts represent liabilities for goods and services
provided to the Company prior to the end of financial year
which are unpaid. Trade and other payables are presented
as current liabilities unless payment is not due within 12
months after the reporting period. They are recognised
initially at fair value and subsequently measured at
amortized cost using EIR method.

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss
include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at fair value
through profit or loss. Financial liabilities are classified as
held for trading if they are incurred for the purpose of
repurchasing in the near term. Gains or losses on liabilities
held for trading are recognised in the statement of profit
and loss.

Financial liabilities designated upon initial recognition at
fair value through profit or loss are designated as such at
the initial date of recognition, and only if the criteria in Ind
AS 109 are satisfied. For liabilities designated as FVTPL,
fair value gains/ losses attributable to changes in own
credit risk are recognised in OCI. These gains/ losses are
not subsequently transferred to profit and loss. However,
the Company may transfer the cumulative gain or loss
within equity. All other changes in fair value of such liability
are recognised in the statement of profit or loss.

Loans and borrowings

Borrowings are initially recognised at fair value, net of
transaction cost incurred. After initial recognition, interest¬
bearing loans and borrowings are subsequently measured
at amortized cost using the EIR method. Gains and losses
are recognised in profit or loss when the liabilities are
derecognised as well as through the EIR amortization

process. Amortized cost is calculated by taking into
account any discount or premium on acquisition and
fees or costs that are an integral part of the EIR. The EIR
amortization is included as finance costs in the statement
of profit and loss.

Derecognition

A financial liability is derecognised when the obligation
under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another
from the same lender on substantially different terms,
or the terms of an existing liability are substantially
modified, such an exchange or medication is treated as the
derecognition of the original liability and the recognition
of a new liability. The difference in the respective carrying
amounts is recognised in the statement of profit and loss.

Offsetting of financial instruments:

Financial assets and financial liabilities are offset and the
net amount is reported in the balance sheet if there is a
currently enforceable legal right to offset the recognised
amounts and there is an intention to settle on a net basis,
to realize the assets and settle the liabilities simultaneously

Reclassification of financial assets/ liabilities:

The Company determines the classification of financial
assets and liabilities on initial recognition. After initial
recognition, no reclassification is made for financial
assets which are equity instruments and financial
liabilities. For financial assets which are debt instruments,
a reclassification is made only if there is a change in the
business model for managing those assets. Changes to
the business model are expected to be infrequent. The
Company’s senior management determines change in the
business model as a result of external or internal changes
which are significant to the Company’s operations. Such
changes are evident to external parties. A change in
the business model occurs when the Company either
begins or ceases to perform an activity that is significant
to its operations. If the Company reclassifies financial
assets, it applies the reclassification prospectively from
the reclassification date which is the first day of the
immediately next reporting period following the change
in business model. The Company does not restate any
previously recognised gains, losses (including impairment
gains or losses) or interest.

h. Inventories

Raw materials, components, stores and spares are valued
at lower of cost and net realizable value. However, materials
and other items held for use in the production of inventories
are not written down below cost if the finished products
in which they will be incorporated are expected to be sold
at or above cost. Cost of raw materials, components and
stores and spares is determined on first-in-first-out basis
(FIFO).

Work-in-progress and finished goods are valued at lower
of cost and net realizable value. Cost includes direct
materials and labour and a proportion of manufacturing
overheads based on normal operating capacity. Cost of
work in progress and finished goods is determined on FIFO
basis.

Stock-in-trade are valued at lower of cost and net
realizable value. Cost includes cost of purchase and other
costs incurred in bringing the inventories to their present
location and condition. Cost is determined on first-in-first-
out basis.

Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of
completion and estimated costs necessary to make the
sale.

Provision for inventory obsolescence is assessed based
on expected use of inventory in future period and adjusted
from the gross value of the inventory.

i. Revenue recognition

Revenue towards satisfaction of a performance obligation
is measured at the amount if transaction price (net of
variable consideration) allocated to that performance
obligation. The transaction price of goods sold and
services rendered is net of variable consideration on
account of various discounts and schemes offered by the
Company as part of the contract. Revenue from contracts
with customers is recognised when control of the goods
are transferred to the customer at an amount that reflects
the consideration to which the Company expects to be
entitled in exchange for those goods. The Company has
generally concluded that it is the principal in its revenue
arrangements because it typically controls the goods
before transferring them to the customer.

Sale of goods

Revenue from sale of goods is recognised at the point
in time when control of the goods is transferred to the
customer, generally on delivery of the goods.

The Company considers whether there are other promises
in the contract that are separate performance obligations
to which a portion of the transaction price needs to be
allocated (e.g., warranties, sales points). In determining
the transaction price for the sale of goods, the Company
considers the effects of variable consideration, the
existence of significant financing components, non-cash
consideration, and consideration payable to the customer
(if any).

The Company recognises revenues from sale of goods
to group entities, on the basis of an agreed mark-up in
accordance with the terms of the agreement entered into
by the Company with its group Company.

Variable consideration

If the consideration in a contract includes a variable amount,
the Company estimates the amount of consideration to
which it will be entitled in exchange for transferring the
goods to the customer. The variable consideration is
estimated at contract inception and constrained until
it is highly probable that a significant revenue reversal
in the amount of cumulative revenue recognised will
not occur when the associated uncertainty with the
variable consideration is subsequently resolved. Some
contracts for the sale of goods provide customers with
volume rebates. The volume rebates give rise to variable
consideration.

- Volume rebates

The Company provides retrospective volume rebates
to certain customers once the quantity of products
purchased during the period exceeds a threshold specified
in the contract. Rebates are generally offseted against
amounts payable by the customer. To estimate the variable
consideration for the expected future rebates, the Company
applies the most likely amount method for contracts with a
single-volume threshold and the expected value method
for contracts with more than one volume threshold. The
selected method that best predicts the amount of variable
consideration is primarily driven by the number of volume
thresholds contained in the contract. The Company then
applies the requirements on constraining estimates of
variable consideration and recognises a refund liability
for the expected future rebates.

Revenue from sale of services

The Company provides installation and commissioning
services that are either sold separately or bundled
together with the sale of equipment to a customer which
generally constitutes a single performance obligation with
the supply under overall project.

The Company also provides maintenance and other
services. Revenues from maintenance are recognised on
time-proportion basis and revenues from other services
are recognised on completion at a point in time.

Other operating revenue

Other operational revenue represents income earned from
the activities incidental to the business and is recognised
when the right to receive the income is established as per
the terms of contract.

Export benefits arising from duty drawback scheme,
service/merchandise export incentive scheme and
Rodtep are accounted for to the extent there is reasonable
certainty of utilization / realisation of the same. Revenue
from exports benefits measured at the fair value of
consideration received or receivable.

Other income / other operating income

Interest income

Interest income is recognised using the time proportionate
method based on underlying interest rates. For all debt
instruments measured either at amortised cost or at fair
value through other comprehensive income, interest
income is recorded using the effective interest rate (EIR).

Long term Contracts

The Company recognise revenue when control of the
goods or services are transferred to the customer, at an
amount that reflects the consideration (i.e., the transaction
price) to which the Company is expected to be entitled
in exchange for those goods or services excluding any
amount received on behalf of third party (such as indirect
taxes). An asset created by the Company’s performance
does not have an alternate use and as per the terms of
the contract, the Company has an enforceable right to
payment for performance completed till date. Hence, the
Company transfers control of a good or service over time
and, therefore, satisfies a performance obligation and
recognises revenue over time. The Company recognise
revenue at the transaction price which is determined on
the basis of purchase order entered into with the customer.
The Company recognise revenue for performance
obligation satisfied over time only if it can reasonably
measure its progress towards complete satisfaction of
the performance obligation. The Company would not be
able to reasonably measure its progress towards complete
satisfaction of a performance obligation if it lacks reliable
information that would be required to apply an appropriate
method of measuring progress. In those circumstances,
the Company recognise revenue only to the extent of cost
incurred until it can reasonably measure outcome of the
performance obligation.

The Company uses cost-based input method for
measuring progress for performance obligation satisfied
over time. Under this method, the Company recognises
revenue in proportion to the actual project cost incurred as
against the total estimated project cost. While using cost-
based input method, the Company excludes costs that
does not contribute to an entity’s progress in satisfying
performance obligation, such as borrowing costs.

The management reviews and revises its measure of
progress periodically and are considered as change in
estimates and accordingly, the effect of such changes
in estimates is recognised prospectively in the period in
which such changes are determined.

Contract balances

Trade receivables

A receivable represents the Company’s right to an amount
of consideration that is unconditional (i.e., only the passage

of time is required before payment of the consideration
is due). Trade receivables are recognized initially at the
transaction price as they do not contain significant
financing component. The company hold the trade
receivables with the objective of collecting the contractual
cash flows and therefore measures them subsequently at
amortised cost using the effective interest method, less
loss allowances.

Contract liabilities

A contract liability is the obligation to transfer goods
to a customer for which the Company has received
consideration (or an amount of consideration is due) from
the customer. If a customer pays consideration before
the Company transfers goods to the customer, a contract
liability is recognised when the payment is made or the
payment is due (whichever is earlier). Contract liabilities
are recognised as revenue when the Company performs
under the contract.

j. Foreign currencies

Items included in the financial statements are measured
using the currency of the primary economic environment
in which the entity operates (‘the functional currency'').
The Company’s financial statements are presented in
Indian rupee (f) which is also the Company’s functional
and presentation currency.

Foreign currency transactions are recorded on initial
recognition in the functional currency, using the exchange
rate prevailing at the date of transaction.

Transactions and balances

Transactions in foreign currencies are initially recorded
by the Company at its functional currency spot rates at
the date the transaction first qualifies for recognition.
However, for practical reasons, the Company uses an
average rate if the average approximates the actual rate
at the date of the transaction.

Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency
spot rates of exchange at the reporting date. Exchange
differences arising on settlement or translation of monetary
items are recognised in profit or loss. Non-monetary items
that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates at the
dates of the initial transactions. Non-monetary items
measured at fair value in a foreign currency are translated
using the exchange rates at the date when the fair value
is determined. The gain or loss arising on translation of
non-monetary items measured at fair value is treated in
line with the recognition of the gain or loss on the change
in fair value of the item (i.e., translation differences on
items whose fair value gain or loss is recognised in OCI or

profit or loss are also recognised in OCI or profit or loss,
respectively).

k. Employee benefits

i. Short-term obligations

Liabilities for wages and salaries, including non¬
monetary benefits that are expected to be settled
wholly within twelve months after the end of the
period in which the employees render the related
services are recognised in respect of employee
service upto the end of the reporting period and are
measured at the amount expected to be paid when
the liabilities are settled. The liabilities are presented
as current employee benefit obligations in the
balance sheet.

ii. Other long-term employee benefit obligations

Gratuity

Gratuity liability is defined benefit obligation and is
provided for on the basis of an actuarial valuation
on projected unit credit (PUC) method made at the
end of each financial year. The Company''s gratuity
fund scheme is managed by trust maintained with
Insurance companies to cover the gratuity liability of
the employees and premium paid to such insurance
companies is charged to the statement of profit and
loss.

Remeasurements, comprising of actuarial gains
and losses, the effect of the asset ceiling, excluding
amounts included in net interest on the net defined
benefit liability and the return on plan assets
(excluding amounts included in net interest on the net
defined benefit liability), are recognised immediately
in the balance sheet with a corresponding debit
or credit to retained earnings through OCI in the
period in which they occur. Remeasurements are not
reclassified to profit or loss in subsequent periods.

Net interest is calculated by applying the discount
rate to the net defined benefit liability or asset. The
Company recognises the following changes in the
net defined benefit obligation as an expense in the
statement of profit and loss:

- Service costs comprising current service
costs, past-service costs, gains and losses on
curtailments and non-routine settlements

- Net interest expense or income
Provident fund

Retirement benefit in the form of provident fund is a
defined contribution scheme. The Company has no
obligation, other than the contribution payable to the
fund. The Company recognizes contribution payable

through provident fund scheme as an expense,
when an employee renders the related services.
If the contribution payable to scheme for service
received before the balance sheet date exceeds the
contribution already paid, the deficit payable to the
scheme is recognised as liability after deducting
the contribution already paid. If the contribution
already paid exceeds the contribution due for
services received before the balance sheet date, then
excesses recognised as an asset to the extent that
the prepayment will lead to, for example, a reduction
in future payment or a cash refund.

Compensated absences

Compensated absences which are expected to occur
within twelve months after the end of the period in
which the employee renders the related services are
recognised as undiscounted liability at the balance
sheet date. Compensated absences which are not
expected to occur within twelve months after the
end of the reporting period in which the employee
renders the related services are recognised as an
actuarially determined liability at the present value
of the defined benefit obligation at the balance
sheet date. The Company recognised compensated
absence liability as current liability.

iii. Share based payments

Employees (including senior executives) of the
Company receive remuneration from the ultimate
holding Company in the form of share-based
payments, whereby employees render services as
consideration for equity instruments (equity-settled
transactions).

Equity-settled transactions

The cost of equity-settled transactions is determined
by the fair value at the date when the grant is made
using an appropriate valuation model. That cost
is recognised as employee benefits expense in
the statement of profit and loss together with a
corresponding increase in other equity as ‘Share
based payments reserve’ in lines with requirement
as per Ind AS 102 (Share based payments), over
the period in which the performance and/or service
conditions are fulfilled. The cumulative expense
recognised for equity settled transactions at each
reporting date until the vesting date reflects the
extent to which the vesting period has expired and
the Company’s best estimate of the number of equity
instruments that will ultimately vest. The statement
of profit and loss expense or credit for a period
represents the movement in cumulative expense
recognised as at the beginning and end of that period
and is recognised in employee benefits expense.

Service and non-market performance conditions
are not taken into account when determining the
grant date fair value of awards, but the likelihood
of the conditions being met is assessed as part of
the Company’s best estimate of the number of
equity instruments that will ultimately vest. Market
performance conditions are reflected within the
grant date fair value. Any other conditions attached
to an award, but without an associated service
requirement, are considered to be non-vesting
conditions. Non-vesting conditions are reflected in
the fair value of an award and lead to an immediate
expensing of an award unless there are also service
and/or performance conditions.

No expense is recognised for awards that do not
ultimately vest because non-market performance
and/or service conditions have not been met. Where
awards include a market or non-vesting condition,
the transactions are treated as vested irrespective
of whether the market or non-vesting condition is
satisfied, provided that all other performance and/or
service conditions are satisfied.

When the terms of an equity-settled award are
modified, the minimum expense recognised is the
expense had the terms had not been modified, if the
original terms of the award are met. An additional
expense is recognised for any modification that
increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification.
Where an award is cancelled by the entity or by the
counterparty, any remaining element of the fair value
of the award is expensed immediately through profit
or loss.

l. Taxes

Tax expense for the year comprises of current income tax

and deferred tax.

i. Current tax

Current tax is determined as the tax payable in respect
of taxable income for the year and is computed in
accordance with relevant tax regulations. Current
income tax relating to items recognised outside profit
or loss is recognised outside profit or loss (either in
other comprehensive income or in equity).

ii. Deferred tax

Deferred tax is provided on temporary differences
between the tax bases of assets and liabilities and
their carrying amounts for financial reporting
purposes at the reporting date.

Deferred tax assets and liabilities are recognised
for all deductible temporary differences, the carry

forward of unused tax credits and any unused tax
losses. Deferred tax assets are recognised to the
extent that 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 utilized.

The carrying amount of deferred 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 tax asset to be utilized. Unrecognised
deferred tax assets are re-assessed at each reporting
date and are recognised to the extent that it has
become probable that future taxable profits will allow
the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the
tax rates that are expected to apply in the year when
the asset is realized or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the reporting date.

Deferred tax relating to items recognised outside the
statement of profit and loss is recognised outside
the statement of profit and loss (either in other
comprehensive income or in equity). Deferred tax
items are recognised in correlation to the underlying
transaction either in OCI or direct in equity.

Deferred tax assets and deferred tax liabilities are
offset, if a legally enforceable right exist to set off
current tax assets against current tax liabilities and
deferred tax relates to the same taxable entity and
the same taxation authority.

Taxes paid on acquisition of assets or on incurring
expenses

Assets are recognised net of the amount of goods &
services tax (GST) paid, except when the tax incurred
on a purchase of assets is not recoverable from the
taxation authority, in which case, the tax paid is
recognised as part of the cost of acquisition of the
asset.

Expenses are recognised net of the amount of GST
paid, except when the tax incurred on a purchase
of services is not recoverable from the taxation
authority, in which case, the tax paid is expensed off
in statement of profit and loss.

The net amount of tax recoverable from, or payable
to, the taxation authority is included as part of
other current/ non- current assets or other current
liabilities in the balance sheet.

m. Segment reporting

The Company is engaged mainly in the business of
“Designing, manufacturing and supplying of standard and
customized enclosure systems”. The Board of Directors of
the Company, which has been identified as being the chief
operating decision maker (CODM), evaluates the Company’s
performance, allocates resources based on the analysis of
the various performance indicators of the Company as a
single unit. Therefore there is no reportable segment for
the Company, in accordance with the requirements of Ind
AS 108- ‘Operating Segment Reporting’, notified under
the Companies (Indian Accounting Standard) Rules, 2015.

n. Earnings Per Share

Basic earnings per share are calculated by dividing the
net profit or 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 is adjusted for events such as bonus issue, bonus
element in a rights issue, share split, and reverse share split
(consolidation of shares) that have changed the number
of equity shares outstanding, without a corresponding
change in resources.

For the purpose of calculating diluted earnings per share,
the net profit or loss for the period attributable to equity
shareholders and the weighted average number of shares
outstanding during the period are adjusted for the effect
of all potentially dilutive equity shares.

As at the balance sheet date, the Company does not have
any dilutive potential equity shares.

o. Borrowing Cost

Borrowing cost includes interest and other costs incurred
in connection with the borrowing of funds and charged
to Statement of Profit and Loss on the basis of effective
interest rate (EIR) method. Borrowing cost also includes
exchange differences to the extent regarded as an
adjustment to the borrowing cost.

Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily
takes a substantial period of time to get ready for its

intended use or sale are capitalized as part of the cost
of the respective asset. All other borrowing costs are
recognised as expense in the period in which they occur.

1. Corporate Information

Schneider Electric President Systems Limited ('SEPSL' or 'the Company') is a designer, manufacturer and supplier of standard and customized enclosure systems for over 30 years in 19-inch enclosures for IT and Telecom infrastructure, systems management and operations.

The Company's operations predominantly relate to manufacture of enclosures, card frames, components and accessories and trading of electrical equipments. SEPSL is a manufacturer in India offering standard and customized enclosure solutions, including card frames and components, with a focus on the IT/Networking and ITES, Telecom, General and Industrial Electronics sectors.

SEPSL also has a nationwide network of sales offices, representatives and distributors to support customer wherever they may need assistance for installation, commissioning and on-going services.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention unless stated otherwise. The accounting policies adopted in the preparation of financial statements are consistent with those of the previous year.

Going concern uncertainty

The Company incurred a net loss of Rs.37,182,769 for the financial year ended 31st March, 2015. Further, the Company incurred a net loss of Rs.48,192,526 and Rs.33,295,488 for the year ended 31st March, 2014 and 2013, respectively. While these factors would normally indicate the existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern, the receipt of financial and operating support from the parent company, including increased borrowing limits and extension to repay the borrowing on 31st October, 2018 from a group company in India, mitigates this uncertainty. Consequently, no adjustments have been made to the carrying value, or classification of the balance sheet amounts.

2.1. Summary of significant accounting policies

a. Change in accounting estimate

Depreciation / amortization on tangible and intangible assets

Due to application of Schedule II to the Act with effect from April 01, 2014, the management has re-established useful lives and residual values of all its fixed assets and determined separate useful life for each major component of the fixed assets, if they have useful life that is materially different from that of the remaining asset. The management believes that depreciation rates currently used fairly refect its estimate of the useful lives and residual values of fixed assets, though these rates in certain cases are different from lives prescribed under schedule II.

The carrying amount of other components, i.e. components whose remaining useful life is not nil on April 01, 2014, is depreciated over their remaining useful life. Accordingly, depreciation of Rs.11,131,797 (net of tax impact) has been adjusted to the opening balance of surplus in the Statement of profit and loss, with corresponding adjustment to net book value of fixed assets, in accordance with the transitional provision of Schedule II of the Act.

Further, basis such change the depreciation / amortization expenses for the year ended 31st March, 2015 are higher by Rs.4,947,555 (net of tax).

b. Use of estimates

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

c. Tangible fixed assets

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day- to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

Advances paid towards the acquisition of fixed assets are disclosed as "Capital advances" under Loans and Advances and the cost of assets not ready to be put to use as at the balance sheet date are disclosed as 'Capital work-in-progress'.

d. Depreciation on tangible fixed assets

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management. The Company has used the following rates to provide depreciation on its fixed assets.

*For these classes of assets, where the estimated useful lives are different from lives prescribed under Schedule II, management has estimated these useful lives after taking into consideration technical assessment, prior asset usage experience and the risk of technological obsolescence.

Leasehold land is amortised on a straight line basis over the period of lease.

Depreciation is provided on pro-rata basis from/up to the date of purchase or disposal, for asset purchased or sold during the year.

e. 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.

Intangible assets are amortized on a straight line basis over the estimated useful economic life. Patents and trademarks, computer software and designs and copyrights are amortised over a period of nine years, six years and five years respectively, from the date available for use.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

f. Leases

Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and present value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized.

A leased asset is depreciated on a straight-line basis over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalized asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term.

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

g. Borrowing costs

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

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

h. Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company's cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the ffth year.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the statement of profit and loss.

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

i. Inventories

Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on first-in-first-out basis.

Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of work in progress and finished goods (including excise duty) is determined on first-in-first-out basis.

Traded goods are valued at lower of cost and net realizable value. Cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition. Cost is determined on first-in-first-out basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

Provision for inventory obsolescence is assessed and adjusted from the gross value of the inventory.

j. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits following to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

The amount recognised as sale is exclusive of trade discounts.

Income from services

Service income primarily comprises income from commissioning and installation, service charges, processing charges and commission income and is recognized on accrual basis as per the terms and over the period of the contract with the customers, as and when the services are rendered. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit following to the Company. Hence it is excluded from revenue.

Interest Income

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate.

Other Income

Export incentives are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

k. Foreign currency translation

Foreign currency transactions and balances

Initial recognition

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

Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange differences

The Company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as income or as expenses in the period in which they arise.

l. Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year as an expenditure, when an employee renders the related service. The Company has no obligation, other than the contribution payable to the provident fund.

The Company operates defined benefit plan for its employees, viz. gratuity. The costs of providing benefits under the plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for the plan using the projected unit credit method. Actuarial gains and losses for defined benefit plan are recognized in full in the period in which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 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.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

The Company recognizes termination benefit as a liability and an expense when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the termination benefits fall due more than 12 months after the balance sheet date, they are measured at present value of future cash flows using the discount rate determined by reference to market yields at the balance sheet date on government bonds.

m. Income taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes refect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that suffcient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profts.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that suffcient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that suffcient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that suffcient future taxable income will be available.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to be carried forward. In the year in which the company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as "MAT Credit Entitlement." The Company reviews the "MAT credit entitlement" asset at each reporting date and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period.

n. Segment reporting

Identification of segments

The Company's operating businesses are organized and managed separately according to the nature of products and services provided; with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter-segment transfers

The Company generally accounts for intersegment sales and transfers at cost plus appropriate margins.

Allocation of common costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

Segment accounting policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

o. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or 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 effects of anti-dilutive potential equity shares are not considered in calculating dilutive earnings per share.

As at the balance sheet date, the Company does not have any dilutive potential equity shares.

p. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to refect the current best estimates.

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

q. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non- occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

r. Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and on hand, demand deposits and short- term investments with an original maturity of three months or less.

s. Measurement of EBITDA

The Company has elected to present earnings/ (losses) before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. In its measurement, the Company does not include depreciation and amortization expense, fnance costs, interest income and tax expense..

A. Use of estimates

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

b. Tangible fixed assets

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day-to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

Advances paid towards the acquisition of fixed assets are disclosed as "Capital advances" under Loans and Advances and the cost of assets not ready to be put to use as at the balance sheet date are disclosed as ''Capital work-in-progress''.

c. Depreciation on tangible fixed assets

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management, or those prescribed under the Schedule XIV to the Companies Act, 1956, whichever is higher. The Company has used the following rates to provide depreciation on its fixed assets.

Leasehold land is amortised on a straight line basis over the period of lease.

Depreciation is provided on pro-rata basis from/up to the date of purchase or disposal, for asset purchased or sold during the year. Assets costing less than Rs. 5,000 individually are fully depreciated in the year of purchase.

d. Intangible assets

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

Intangible assets are amortized on a straight line basis over the estimated useful economic life. Patents and trademarks, computer soft- ware and designs and copyrights are amortised over a period of nine years, six years and five years respectively, from the date available for use.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

e. Leases

Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and present value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss. Lease Management fees, legal charges and other initial direct costs of lease are capitalized.

A leased asset is depreciated on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule XIV to the Companies Act, 1956, whichever is lower. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalized asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life envisaged in Schedule XIV to the Companies Act, 1956.

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as op- erating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

f. Borrowing costs

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

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is deter- mined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year.

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

h. Inventories

Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on first-in-first-out basis.

Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of work in progress and finished goods (including excise duty) is determined on first-in-first-out basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

Provision for inventory obsolescence is assessed and adjusted from the gross value of the inventory.

i. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year.

The amount recognised as sale is exclusive of trade discounts.

Income from services

Service income primarily comprises income from commissioning and installation, service charges, processing charges and commission income and is recognized on accrual basis as per the terms and over the period of the contract with the customers, as and when the services are rendered. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit flowing to the Company. Hence it is excluded from revenue.

Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

Other Income

Export incentives are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate Collection of the relevant export proceeds.

j. Foreign currency translation

Foreign currency transactions and balances Initial recognition

Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate be- tween the reporting currency and the foreign currency at the date of the transaction.

Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, meas- ured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange differences

The Company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as income or as expenses in the period in which they arise.

k. Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year as an expenditure, when an employee renders the related service. The Company has no obligation, other than the contribution payable to the provident fund.

The Company operates defined benefit plan for its employees, viz. gratuity. The costs of providing benefits under the plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for the plan using the projected unit credit method. Actuarial gains and losses for defined benefit plan are recognized in full in the period in which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 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.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for meas- urement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

l. Income taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income Tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Compa- ny operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the cur- rent year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differenc- es only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable Notes to financial statements for the year ended 31 March 2014 income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

m. Segment reporting

Identification of segments

The Company''s operating businesses are organized and managed separately according to the nature of products and services provided; with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter-segment transfers

The Company generally accounts for intersegment sales and transfers at cost plus appropriate margins.

Allocation of common costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs. Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

Segment accounting policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

n. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or 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 effects of anti-dilutive potential equity shares are not considered in calculating dilutive earnings per share.

As at the balance sheet date, the Company does not have any dilutive potential equity shares.

o. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

p. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non- occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

q. Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and on hand, demand deposits and short-term investments with an original maturity of three months or less.

r. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present earn- ings/ (losses) before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. In its measurement, the Company does not include depreciation and amortization expense, finance costs, interest income and tax expense.

(b) Terms/ rights attached to equity shares

The Company has only one class of equity shares having a par value of ?10 per share. Each holder of equity is entitled to one vote per share. The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of directors is subject to the approval of the shareholders in ensuing Annual General meeting.

In event of liquidation of the Company, the holders of equity shares would 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.

On 3 January 2013, the promoters of the Company had come out with delisting offer to acquire up to 1,512,006 equity shares representing 25 per cent of the equity capital of the Company from the public shareholders to comply with SEBI guidelines on minimum shareholding pattern, however the Company could not get prescribed numbers of shares required to successfully de-list the stock.

As per records of the Company, including its register of shareholders/ members and other declaration received from shareholders regarding beneficial interest, the above shareholding represent both legal and beneficial ownership of shares.

A. Use of estimates

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

b. Tangible fixed assets

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price.

Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day- to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. Advances paid towards the acquisition of fixed assets are disclosed as "Capital advances" under Loans and Advances and the cost of assets not ready to be put to use as at the balance sheet date are disclosed as ''Capital work-in-progress''.

c. Depreciation on tangible fixed assets

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management, or those prescribed under the Schedule XIV to the Companies Act, 1956, whichever is higher. The Company has used the following rates to provide depreciation on its fixed assets.

Leasehold land is amortised on a straight line basis over the period of lease.

Depreciation is provided on pro-rata basis from/up to the date of purchase or disposal, for asset purchased or sold during the year. Assets costing less than Rs 5,000 individually are fully depreciated in the year of purchase.

d. 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.

Intangible assets are amortized on a straight line basis over the estimated useful economic life. Patents, computer software and copyrights are amortised over a period of nine years, six years and give years respectively, from the date available for use. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

e. Leases

Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and present value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized. A leased asset is depreciated on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule XIV to the Companies Act, 1956, whichever is lower. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalized asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life envisaged in Schedule XIV to the Companies Act, 1956.

Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

f. Borrowing costs

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

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

g. Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset''s recoverable amount. An asset''s recoverable amount is the higher of an asset''s or cash-generating unit''s (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company''s cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

h. Inventories

Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on first-in-first-out basis.

Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of work in progress and finished goods (including excise duty) and is determined on first-in-first-out basis. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

Provision for inventory obsolescence is assessed and adjusted from the gross value of the inventory.

i. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded from revenue. Excise duty deducted from revenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year. The amount recognised as sale is exclusive of trade discounts.

Income from services

Service income primarily comprises income from commissioning and installation, service charges, processing charges and commission income and is recognized on accrual basis as per the terms and over the period of the contract with the customers, as and when the services are rendered. The Company collects service tax on behalf of the government and therefore, it is not an economic benefit flowing to the Company. Hence it is excluded from revenue.

Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

Other Income

Export incentives are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

j. Foreign currency translation

Foreign currency transactions and balances

Initial recognition

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

Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange differences

The Company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as income or as expenses in the period in which they arise.

k. Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year as an expenditure, when an employee renders the related service. The Company has no obligation, other than the contribution payable to the provident fund.

The Company operates defined benefit plan for its employees, viz. gratuity. The costs of providing benefits under the plan are determined on the basis of actuarial valuation at each year-end. Actuarial valuation is carried out for the plan using the projected unit credit method. Actuarial gains and losses for defined benefit plan are recognized in full in the period in which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 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. The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

l. Income taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss. Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

m. Segment reporting

Identification of segments

The Company''s operating businesses are organized and managed separately according to the nature of products and services provided; with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter-segment transfers

The Company generally accounts for intersegment sales and transfers at cost plus appropriate margins.

Allocation of common costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

Segment accounting policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

n. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or 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 effects of anti-dilutive potential equity shares are not considered in calculating dilutive earnings per share. As at the balance sheet date, the Company does not have any dilutive potential equity shares.

o. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

p. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

q. Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and on hand, demand deposits and short- term investments with an original maturity of three months or less.

r. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present earnings/ (losses) before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. In its measurement, the Company does not include depreciation and amortization expense, finance costs, interest income and tax expense

A. Change in accounting policy

Presentation and disclosure of financial statements

During the year ended 31 March 2012, the revised Schedule VI notified under the Companies Act 1956, has become applicable to the company, for preparation and presentation of its financial statements. The adoption of revised Schedule VI does not impact recognition and measurement principles followed for preparation of financial statements. However, it has significant impact on presentation and disclosures made in the financial statements. The Company has also reclassified the previous year figures in accordance with the requirements applicable in the current year. For further details, refer note 41.

b. Use of estimates

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

c. Tangible fixed assets

Fixed assets are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. The cost comprises purchase price, borrowing costs if capitalization criteria are met and directly attributable cost of bringing the asset to its working condition for the intended use. Any trade discounts and rebates are deducted in arriving at the purchase price. Subsequent expenditure related to an item of fixed asset is added to its book value only if it increases the future benefits from the existing asset beyond its previously assessed standard of performance. All other expenses on existing fixed assets, including day- to-day repair and maintenance expenditure and cost of replacing parts, are charged to the statement of profit and loss for the period during which such expenses are incurred.

Gains or losses arising from derecognition of fixed assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. Advances paid towards the acquisition of fixed assets are disclosed as "Capital advances" under Loans and Advances and the cost of assets not ready to be put to use as at the balance sheet date are disclosed as 'Capital work-in-progress'.

d. Depreciation on tangible fixed assets

Depreciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the management, or those prescribed under the Schedule XIV to the Companies Act, 1956, whichever is higher. The Company has used the following rates to provide depreciation on its fixed assets.

Depreciation is provided on pro-rata basis from/up to the date of purchase or disposal, for asset purchased or sold during the year. Assets costing less than Rs 5,000 individually are fully depreciated in the year of purchase.

e. 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.

Intangible assets are amortized on a straight line basis over the estimated useful economic life. Patents, computer software and copyright are amortised over a period of nine years, six years and five years respectively, from the date put to use. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized.

f. Leases

Finance leases, which effectively transfer to the company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the inception of the lease term at the lower of the fair value of the leased property and present value of minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognized as finance costs in the statement of profit and loss. Lease management fees, legal charges and other initial direct costs of lease are capitalized. A leased asset is depreciated on a straight-line basis over the useful life of the asset or the useful life envisaged in Schedule XIV to the Companies Act, 1956, whichever is lower. However, if there is no reasonable certainty that the Company will obtain the ownership by the end of the lease term, the capitalized asset is depreciated on a straight-line basis over the shorter of the estimated useful life of the asset, the lease term or the useful life envisaged in Schedule XIV to the Companies Act, 1956. Leases, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as operating leases. Operating lease payments are recognized as an expense in the statement of profit and loss on a straight-line basis over the lease term.

g. Borrowing costs

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

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur.

h. Impairment of tangible and intangible assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's (CGU) net selling price and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining net selling price, recent market transactions are taken into account, if available. If no such transactions can be identified, an appropriate valuation model is used.

The Company bases its impairment calculation on detailed budgets and forecast calculations which are prepared separately for each of the Company's cash-generating units to which the individual assets are allocated. These budgets and forecast calculations are generally covering a period of five years. For longer periods, a long term growth rate is calculated and applied to project future cash flows after the fifth year. After impairment, depreciation is provided on the revised carrying amount of the asset over its remaining useful life.

i. Investments

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

On initial recognition, all investments are measured at cost. The cost comprises purchase price and directly attributable acquisition charges such as brokerage, fees and duties.

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

On disposal of an investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the statement of profit and loss.

j. Inventories

Raw materials, components, stores and spares are valued at lower of cost and net realizable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. Cost of raw materials, components and stores and spares is determined on first-in-first-out basis.

Work-in-progress and finished goods are valued at lower of cost and net realizable value. Cost includes direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity. Cost of finished goods includes excise duty and is determined on first-in-first-out basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.

Provision for inventory obsolescence is assessed and adjusted from the gross value of the inventory.

k. Revenue recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognized:

Sale of goods

Revenue from sale of goods is recognized when all the significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of the goods. The Company collects sales taxes and value added taxes (VAT) on behalf of the government and, therefore, these are not economic benefits flowing to the Company. Hence, they are excluded froMrevenue. Excise duty deducted froMrevenue (gross) is the amount that is included in the revenue (gross) and not the entire amount of liability arising during the year. The amount recognised as sale is exclusive of trade discounts.

Income from services

Service income primarily comprises income from commissioning and installation, service charges, processing charges and commission income and is recognized on accrual basis as per the terms and the period of the contract with the customers, over which the service is rendered.

Interest

Interest income is recognized on a time proportion basis taking into account the amount outstanding and the applicable interest rate. Interest income is included under the head "other income" in the statement of profit and loss.

Dividends

Dividend income is recognized when the Company's right to receive dividend is established by the reporting date.

Other Income

Export incentives are recognised as income when the right to receive credit as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate collection of the relevant export proceeds.

l. Foreign currency translation

Foreign currency transactions and balances

Initial recognition

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

Conversion

Foreign currency monetary items are retranslated using the exchange rate prevailing at the reporting date. Non-monetary items, measured in terms of historical cost denominated in a foreign currency, are reported using the exchange rate at the date of the transaction.

Exchange differences

The Company accounts for exchange differences arising on translation/settlement of foreign currency monetary items as income or as expenses in the period in which they arise.

m. Retirement and other employee benefits

Retirement benefit in the form of provident fund is a defined contribution scheme. The contributions to the provident fund are charged to the statement of profit and loss for the year when the contributions are due. The Company has no obligation, other than the contribution payable to the provident fund.

The Company operates defined benefit plans for its employees, viz. gratuity. The costs of providing benefits under the plan are determined on the basis of actuarial valuation at each year-end. Separate actuarial valuation is carried out for each plan using the projected unit credit method. Actuarial gains and losses for both defined benefit plans are recognized in full in the period in which they occur in the statement of profit and loss.

Accumulated leave, which is expected to be utilized within the next 12 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.

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long-term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the year-end. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The Company presents the entire leave as a current liability in the balance sheet, since it does not have an unconditional right to defer its settlement for 12 months after the reporting date.

n. Income taxes

Tax expense comprises current and deferred tax. Current income-tax is measured at the amount expected to be paid to the tax authorities in accordance with the Income-tax Act, 1961 enacted in India and tax laws prevailing in the respective tax jurisdictions where the Company operates. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred income taxes reflect the impact of timing differences between taxable income and accounting income originating during the current year and reversal of timing differences for the earlier years. Deferred tax is measured using the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred income tax relating to items recognized directly in equity is recognized in equity and not in the statement of profit and loss.

Deferred tax liabilities are recognized for all taxable timing differences. Deferred tax assets are recognized for deductible timing differences only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. In situations where the Company has unabsorbed depreciation or carry forward tax losses, all deferred tax assets are recognized only if there is virtual certainty supported by convincing evidence that they can be realized against future taxable profits.

At each reporting date, the Company re-assesses unrecognized deferred tax assets. It recognizes unrecognized deferred tax asset to the extent that it has become reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which such deferred tax assets can be realized.

The carrying amount of deferred tax assets are reviewed at each reporting date. The Company writes-down the carrying amount of deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority.

o. Segment reporting

Identification of segments

The Company's operating businesses are organized and managed separately according to the nature of products and services provided; with each segment representing a strategic business unit that offers different products and serves different markets. The analysis of geographical segments is based on the areas in which major operating divisions of the Company operate.

Inter-segment transfers

The Company generally accounts for intersegment sales and transfers at cost plus appropriate margins.

Allocation of common costs

Common allocable costs are allocated to each segment according to the relative contribution of each segment to the total common costs.

Unallocated items

Unallocated items include general corporate income and expense items which are not allocated to any business segment.

Segment accounting policies

The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the financial statements of the Company as a whole.

p. Earnings Per Share

Basic earnings per share are calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share, the net profit or 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 effects of anti-dilutive potential equity shares are not considered in calculating dilutive earnings per share.

As at the balance sheet date, the Company does not have any dilutive potential equity shares.

q. Provisions

A provision is recognized when the Company has a present obligation as a result of past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the reporting date. These estimates are reviewed at each reporting date and adjusted to reflect the current best estimates.

Where the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit and loss net of any reimbursement.

r. Contingent liabilities

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Company or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

s. Cash and cash equivalents

Cash and cash equivalents for the purposes of cash flow statement comprise cash at bank and on hand, demand deposits and short- term investments with an original maturity of three months or less.

t. Measurement of EBITDA

As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to present earnings before interest, tax, depreciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. In its measurement, the Company does not include depreciation and amortization expense, finance costs and tax expense.

A. Basis of Accounting

The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act, 1956, and the relevant provisions of the Companies Act, 1956. (the Act)

B. Fixed Assets

Fixed Assets are stated at cost of acquisition (including incidental expenses relating to acquisition and installation of the asset and borrowing costs specifically relatable to the acquisition of the asset) less accumulated depreciation/amortisation.

C. Depreciation/Amortisation

Depreciation has been provided on straight line method at the rates prescribed under Schedule XIV to the Act except for demo stock capitalised which is depreciated @ 50% p.a. Assets individually costing Rs. 5,000 or less are depreciated fully in the year of acquisition.

Patents and Trademarks are amortised over a period of nine years from the year of put to use.

Design and Copyrights are amortised over a period of five years from the year of put to use.

Computer Software are amortised over a period of six years from the year of put to use.

D. Investments

Long term investments are stated at cost less provision, if any, for permanent diminution in value. Current investments are carried at the lower of cost and fair value.

E. Inventories

(a) Inventories are valued at lower of cost and net realisable value.

(b) Cost of raw materials and cost of traded goods is determined on first-in-first-out basis.

(c) Cost of Work-in-process and finished goods comprises all cost of purchase, cost of conversion and other related overheads.

F. Foreign Currency Transactions

(a) Foreign currency transactions are translated at the exchange rates prevailing on the date of the transactions.

(b) Realised gains and losses on settled foreign exchange transactions are recognised in the Profit and Loss Account.

(c) Monetary assets and liabilities denominated in foreign currency as at the Balance Sheet date are translated at the exchange rates prevailing at the date of the Balance Sheet and the resultant exchange difference is recognised in the Profit and Loss Account.

(d) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

(e) The Company marks-to-market all outstanding derivative contracts at the year-end and the resultant mark-to-market losses, if any, are recognised in the Profit and Loss Account.

G. Revenue Recognition

(a) Sales are recognised based on the terms and conditions (mainly ex-works) agreed with the customer and upon transfer of ownership, risk and rewards. Sales include insurance, freight, packing and octroi and are exclusive of excise duty and sales tax.

(b) In respect of commission and other heads of income, the Company follows the practice of recognising income on an accrual and prudent basis.

H. Employee Benefits

(a) Defined Contribution Plans

The Company contributes on a defined contribution basis to Employees Provident Fund, Employees State Insurance Fund and Employees Pension Scheme towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.

(b) Defined Benefit Plans

The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit plan of Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using projected unit credit method.

Gratuity Fund is recognised by the income tax authorities and is administered through trustees. The Company has taken a group gratuity policy with Life Insurance Corporation of India.

Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

(c) Employee Leave Entitlement

The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the Profit and Loss Account. Leave balances to be utilised in short term is provided for on the basis of cost to Company and charged to the Profit and Loss Account.

I. Deferred Taxation

(a) Deferred tax resulting from timing differences between book and tax profits is accounted for under the Liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal.

(b) In case there are carried forward losses and unabsorbed depreciation as per the Income Tax Act, 1961, of India, deferred tax assets are recognised only when there is a virtual certainty supported by convincing evidence that such assets will be realised.

J. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

K. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 – " Provisions, Contingent Liabilities and Contingent Assets", issued by the Institute of Chartered Accountants of India is made.

L. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/materialised.

A. Basis of Accounting

The financial statements are prepared to comply in all material aspects with the applicable accounting principles in India, the applicable Accounting Standards notified under Section 211(3C) of the Companies Act, 1956, and the relevant provisions of the Companies Act, 1956. (the Act)

B. Fixed Assets

Fixed Assets are stated at cost of acquisition (including incidental expenses relating to acquisition and installation of the asset and borrowing costs specifically relatable to the acquisition of the asset) less accumulated depreciation.

C. Depreciation

Depreciation has been provided on straight line method at the rates prescribed under Schedule XIV to the Act except for demo stock capitalised which is depreciated @ 50% p.a. Assets individually costing Rs. 5,000 or less are depreciated fully in the year of acquisition.

D. Investments

Long term investments are stated at cost less provision, if any, for permanent diminution in value. Current investments are carried at the lower of cost and fair value (Refer Note No.5).

E. Inventories

(a) Inventories are valued at lower of cost and net realisable value.

(b) Cost of raw materials and cost of traded goods is determined on first-in-first-out basis.

(c) Cost of Work-in-process and finished goods comprises all cost of purchase, cost of conversion and other related overheads.

F. Foreign Currency Transactions

(a) Foreign currency transactions are translated at the exchange rates prevailing on the date of the transactions.

(b) Realised gains and losses on settled foreign exchange transactions are recognised in the Profit and Loss Account.

(c) Monetary assets and liabilities denominated in foreign currency as at the Balance Sheet date are translated at the exchange rates prevailing at the date of the Balance Sheet and the resultant exchange difference is recognised in the Profit and Loss Account.

(d) In respect of forward contracts, other than forward contracts in respect of firm commitments and highly probable forecast transactions, the premium or discount arising at the inception of forward exchange contract is amortised as expense or income over the life of the contract. Exchange differences on such contracts are recognised in the Profit and Loss Account in the reporting period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such a forward exchange contract is recognised as income or as expense for the year.

G. Revenue Recognition

(a) Sales are recognised based on the terms and conditions (mainly ex-works) agreed with the customer and upon transfer of ownership, risk and rewards. Sales include insurance, freight, packing and octroi and are exclusive of excise duty and sales tax.

(b) In respect of commission and other heads of income, the Company follows the practice of recognising income on an accrual and prudent basis.

H. Employee Benefits

(a) Defined Contribution Plans The Company contributes on a defined contribution basis to Employee’s Provident Fund, Employee’s State Insurance Fund and Employee’s Pension Scheme towards post employment benefits, all of which are administered by the respective Government authorities, and has no further obligation beyond making its contribution, which is expensed in the year to which it pertains.

(b) Defined Benefit Plan

The Company has a Defined Benefit Plan namely Gratuity for all its employees. The liability for the defined benefit plan of

Gratuity is determined on the basis of an actuarial valuation by an independent actuary at the year end, which is calculated using project -ed unit credit method.

Gratuity Fund is recognised by the income tax authorities and is administered through trustees. The Company has taken a group gratuity policy with Life Insurance Corporation of India.

Actuarial gains and losses which comprise experience adjustment and the effect of changes in actuarial assumptions are recognised in the Profit and Loss Account.

(c) Employee Leave Entitlement The employees of the Company are entitled to leave as per the leave policy of the Company. The liability in respect of unutilised leave balances is provided based on an actuarial valuation carried out by an independent actuary as at the year end and charged to the Profit and Loss Account. Leave balances to be utilised in short term is provided for on the basis of cost to Company and charged to the Profit and Loss Account.

I. Deferred Taxation

(a) Deferred tax resulting from timing differences between book and tax profits is accounted for under the Liability method at the current rate of tax to the extent that the timing differences are expected to crystallise/capable of reversal.

(b) In case there are carried forward losses and unabsorbed depreciation as per the Income Tax Act, 1961, of India, deferred tax assets are recognised only when there is a virtual certainty supported by convincing evidence that such assets will be realised.

J. Impairment of Assets

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognised in the Profit and Loss Account. If at the Balance Sheet date there is an indication that if a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount.

K. Provisions and Contingent Liabilities

The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation but the likelihood of outflow of resources is remote, no provision or disclosure as specified in Accounting Standard 29 – “ Provisions, Contingent Liabilities and Contingent Assets”, issued by the Institute of Chartered Accountants of India is made.

L. Use of Estimates

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Difference between the actual results and the estimates are recognized in the period in which the results are known/ materialised.

M. Miscellaneous Expenditure

Rights issue expenses will be written off upon issue of shares.

I SYSTEM OF ACCOUNTING

a) The accounts for the year have been prepared on the historical cost basis.

b) The Company follows the mercantile system of accounting and recognises income and expenditure on an accrual basis.

ii FIXED ASSETS

a) Fixed Assets have been accounted for at their original cost and include expenses related to acquisition and installation and interest on specific loans to the date of commissioning of the assets.

b) Depreciation in respect of the assets held as on 1.4.1994 have been provided on Written Down Value basis at the Rates prescribed in Schedule XIV of the Companies Act, 1956. However, depreciation in respect of the additions made after 1st April, 1994 have been provided on pro-rata basis with reference to the date of addition/disposal on a Straight Line basis at the rates prescribed in Schedule XIV of the Companies Act, 1956.

iii INVESTMENTS

Investments are stated at cost.

iv INVENTORIES

a) Raw materials and components are valued at Cost including Freight and Octroi and net of Excise Modvat Credit.

b) Finished Goods are valued at the lower of Cost or Market Value. Cost is arrived at on FIFO basis.

v ACCOUNTING FOR MODVAT CREDIT

Modvat Credit availed for Excise Duty paid on material received is credited to the material purchased, thereby reducing the cost of material consumed.

vi FOREIGN EXCHANGE FLUCTUATIONS

Foreign currency receivables and payables are revalued at year end exchange rates and exchange differences are recognised in the revenue account.

vii SALES

Sales are recorded at Ex-factory values net of Excise and Sales Tax, but inclusive of insurance, freight, packing and octroi duty.

viii GRATUITY

The Company has covered its employees under a Group Gratuity Cum Life Insurance Scheme and contributions to the scheme are debited to the revenue account.

ix DEFERRED REVENUE EXPENDITURE

a) Preliminary and pre-operative expenditure is amortised over 10 years in accordance with Section 35 D of the Income Tax Act, 1961.

b) Public Issue Expenditure is amortised over 10 years.

c) Technical Know-how fee paid to collaborator is amortised over 6 years.

d) Website development cost is amortised over 4years.

x LEAVE SALARY

Provision for unutilised encashable leave is made on the basis of an actuarial valuation.

xi EXPORT INCENTIVE

Export incentives under the Duty Entitlement Pass Book scheme are accounted on accrual basis on sale of the entitlement upto the date of finalisation of the accounts.