ACCOUNTINGPOLICIES

A. Debrciation :

(a) Tangible Assets :

TheDebrciationonFixedassetsisprovidedaspertheSchedule-IItotheCompaniesAct, 2013.

(b) Intangible Assets:

(i) Softwareandtheirimplementationcostsarewrittenoffovertheperiodof5years.

(ii) Technical Know-how acquired and internally generated are amortized over the useful life of the assets, not exceeding 10 years.

(c) Leasehold and is amortized over the period of lease.

B. Investments(LongTerm):

Investments (Long Term) are valued at cost. A provision for diminution is made to recognise a decline, other than temporary, in the value of investments.

C. Valuation of Inventory:

Inventories are valued at lower of their cost or net realisable value. The cost of raw materials, stores and consumables is measured on moving weighted average basis.

D. Employees Retirement Benefit:

The accruing liability of Gratuity is covered by Employees Group Gratuity Scheme of Life Insurance Corporation of India (LIC) and the brmium is accounted for in the year of accrual. The additional liability, if any, due to deficit in the Plan assets managed by LIC as compared to the brsent value of accrued liability on the basis of actuarial valuation, is recognised and provided for.

Benefits in respect of leave encashable at retirement / cessation are provided for, based on valuation, as at the Balance Sheet date, made by independent actuaries.

E. Research and Development Expenses:

Revenue expenditure on Research and Development is charged off as an expense in the year in which incurred and capital expenditure is grouped with Fixed Assets under appropriate heads and debrciation is provided as per rates applicable.

F. Foreign Currency Transactions:

(a) Foreign Currency transactions are recorded at the rate of exchange on the date ofthe transaction.

(b) Monetary items of Assets and Liabilities booked in foreign currency are translated into rupee at the exchange rate brvailing at the Balance Sheet date.

(c) Exchange difference resulting from settlement of such transaction and from translation of monetary items of Assets and Liabilities are recognised in the Statement of Profit and Loss.

(d) The brmium or discounts arising on Forward Contracts is amortized over the life of the Contract.

(e) Exchange difference arising on translation of foreign currency liabilities for acquisition of fixed assets are adjusted to the Statement of Profit and Loss.

G. Cost of borrowings incurred for acquisition, construction or production of qualifying asset is capitalised as per Accounting Standard (AS 16) the Companies (Accounting Standard) Rules, 2006.

H. Leases:

(a) Where the Company is the Lessee:

Leases where the Lessor effectively retains substantially all the risks and benefits of ownership ofthe leased item, are classified as operating leases. Operating lease payments are recognised as an expense in the Statement of Profit and Loss.

(b) Where the Company is the Lessor:

Assets subject to operating leases are included in fixed assets, lease income is recognised in the Statement of Profit and Loss. Costs, including debrciation, are recognised as an expense in the Statement of Profit and Loss.

I. Incentives:

Incentives receivable / received are disclosed as "Other Income", in the Financial Statements.

1. The Consortium of Banks has sanctioned working capital limits - both fund based and non-fund based - to the Company. These limits are secured by hypothecation of Company's stock of raw materials, work-in-progress, finished goods, consumable stores, spares, bills receivable and book debts, both brsent and future, situated at Company's factories or at any other place.

The fund based limits, if utilised, are payable on demand to the Banks. During the year 2014-15, the Company has not utilised any fund based limits.

2. All amounts which became due, for transfer to the Credit of Investor Education and Protection Fund, as of 31st March, 2015, have been transferred to that fund, except a sum of Rs. 60,000 being amount of 5 (five) fixed deposits and interest thereon amounting to Rs. 25,051. In view of the directives received from the Government Authorities, these amounts are not transferred to the Fund, being involved in an investigation.

3. As per the Accounting Standard AS 26 - Intangible Assets, the Company has recognised Intangible Assets arising out of in-house Research and Development activities of the Company amounting to Rs. 6,07,27,190 11,73,96,866), in the development phase of a new model Multipurpose Vehicles, Monocoque Bus (Project T2) and TD 2650 CRDI BS IV version of the SUV. As the development activity is continued, the said asset is considered as Capital Work-in-progress, and will be amortized over the period of its life, after completion ofthe development phase.

4. During the year under report the eligibility and method of availing, various incentives, granted by the Government of Madhya Pradesh, as per the Industrial Promotion Policy, being clarified, the Company recognised a sum of Rs. 20,73,01,099

29,15,86,018) in the Statement of Profit & Loss as "Industrial Investment Promotion Assistance". These incentives are now accounted on accrual basis. These incentives are available as per the Industrial Promotion Policy of the Government of Madhya Pradesh, based on the investment made by the Company, in eligible assets, for eligible products, in the State of Madhya Pradesh. These incentives are monetary incentives.

5. The Company has spent Rs. 88,00,000 towards Corporate Social Responsibility (CSR) activities, which is included in "Miscellaneous Expenses" [ Note No. 26 (n)] to the Notes to Account.

6. The Company is operating in a Single Segment.

7. Previous year/period's figures are re-arranged wherever necessary and shown in brackets.

As per our separate report of even date.

For M/s. P. G. Bhagwat

[FRN : 101118W]

Chartered Accountants

S. S. Athavale

Partner

Membership No. 83374

Aparna G. Lambore

Company Secretary

Prasan Firodia Sudhir Mehta Sanjay Bohra

Managing Director Director

Chief Financial Officer

Place : Pune

Date : 6th May, 2015