ACCOUNTING STANDARD (AS) 1

DISCLOSURE OF ACCOUNTING POLICIES

(This Accounting Standard includes paragraphs 24-27 set in bold italictype and paragraphs 1-23 set in plain
type, which have equal authority. Paragraphs in bold italic type indicate the main principles. This Accounting
Standard should be read in the context of the Preface to the Statements of Accounting Standards1.)
The following is the text of the Accounting Standard (AS) 1 issued by the Accounting Standards Board, the
Institute of Chartered Accountants of India on Disclosure of Accounting Policies. The Standard deals with the
disclosure of significant accounting policies followed in preparing and presenting financial statements.
In the initial years, this accounting standard will be recommendatory in character. During this period, this
standard is recommended for use by companies listed on a recognised stock exchange and other large
commercial, industrial and business enterprises in the public and private sectors.

INTRODUCTION
1. This statement deals with the disclosure of significant accounting policies followed in preparing and
presenting financial statements.
2. The view presented in the financial statements of an enterprise of its state of affairs and of the profit or loss
can be significantly affected by the accounting policies followed in the preparation and presentation of the
financial statements. The accounting policies followed vary from enterprise to enterprise. Disclosure of
significant accounting policies followed is necessary if the view presented is to be properly appreciated.
3. The disclosure of some of the accounting policies followed in the preparation and presentation of the
financial statements is required by law in some cases.
4. The Institute of Chartered Accountants of India has, in Statements issued by it, recommended the disclosure
of certain accounting policies, e.g., translation policies in respect of foreign currency items.
5. In recent years, a few enterprises in India have adopted the practice of including in their annual reports to
shareholders a separate statement of accounting policies followed in preparing and presenting the financial
statements.
6. In general, however, accounting policies are not at present regularly and fully disclosed in all financial
statements. Many enterprises include in the Notes on the Accounts, descriptions of some of the significant
accounting policies. But the nature and degree of disclosure vary considerably between the corporate and
the non-corporate sectors and between units in the same sector.
7. Even among the few enterprises that presently include in their annual reports a separate statement of
accounting policies, considerable variation exists. The statement of accounting policies forms part of accounts
in some cases while in others it is given as supplementary information.

8. The purpose of this Statement is to promote better understanding of financial statements by establishing
through an accounting standard the disclosure of significant accounting policies and the manner in which
accounting policies are disclosed in the financial statements. Such disclosure would also facilitate a more
meaningful comparison between financial statements of different enterprises.

EXPLANATION FUNDAMENTAL ACCOUNTING ASSUMPTIONS:

Certain fundamental accounting assumptions underlie the preparation and presentation of financial statements.
They are usually not specifically stated because their acceptance and use are assumed. Disclosure is necessary
if they are not followed.
The following have been generally accepted as fundamental accounting assumptions:
A. GOING CONCERN:
The enterprise is normally viewed as a going concern, that is, as continuing in operation for the foreseeable
future. It is assumed that the enterprise has neither the intention nor the necessity of liquidation or of curtailing
materially the scale of the operations.
When preparing financial statements, management shall make an assessment of an entitys ability to continue
as a going concern. An entity shall prepare financial statements on a going concern basis unless management
either intends to liquidate the entity or to cease trading, or has no realistic alternative but to do so. When
management is aware, in making its assessment, of material uncertainties related to events or conditions that
may cast significant doubt upon the entitys ability to continue as a going concern, the entity shall disclose
those uncertainties. When an entity does not prepare financial statements on a going concern basis, it shall
disclose that fact, together with the basis on which it prepared the financial statements and the reason why the
entity is not regarded as a going concern.

B. CONSISTENCY:
It is assumed that accounting policies are consistent from one period to another.

C. ACCRUAL:
An entity shall prepare its financial statements, except for cash flow information, using the accrual basis of
accounting.
When the accrual basis of accounting is used, an entity recognises items as assets, liabilities, equity, income
and expenses (the elements of financial statements) when they satisfy the definitions and recognition criteria
Revenues and costs are accrued, that is, recognised as they are earned or incurred (and not as money is received
or paid) and recorded in the financial statements of the periods to which they relate. (The considerations

affecting the process of matching costs with revenues under the accrual assumption are not dealt with in this
Statement.)

NATURE OF ACCOUNTING POLICIES

1. The accounting policies refer to the specific accounting principles and the methods of applying those
principles adopted by the enterprise in the preparation and presentation of financial statements.
2. There is no single list of accounting policies which are applicable to all circumstances. The differing
circumstances in which enterprises operate in a situation of diverse and complex economic activity make
alternative accounting principles and methods of applying those principles acceptable. The choice of the
appropriate accounting principles and the methods of applying those principles in the specific circumstances of
each enterprise calls for considerable judgement by the management of the enterprise.
3. The various statements of the Institute of Chartered Accountants of India combined with the efforts of
government and other regulatory agencies and progressive managements have reduced in recent years the
number of acceptable alternatives particularly in the case of corporate enterprises. While continuing efforts in
this regard in future are likely to reduce the number still further, the availability of alternative accounting
principles and methods of applying those principles is not likely to be eliminated altogether in view of the
differing circumstances faced by the enterprises.

AREAS IN WHICH DIFFERING ACCOUNTING POLICIES ARE ENCOUNTERED

The following are examples of the areas in which different accounting policies may be adopted by different
enterprises.
Methods of depreciation, depletion and amortisation
Treatment of expenditure during construction
Conversion or translation of foreign currency items
Valuation of inventories
Treatment of goodwill
Valuation of investments
Treatment of retirement benefits
Recognition of profit on long-term contracts
Valuation of fixed assets
Treatment of contingent liabilities.

The above list of examples is not intended to be exhaustive.

CONSIDERATIONS IN THE SELECTION OF ACCOUNTING POLICIES

The primary consideration in the selection of accounting policies by an enterprise is that the financial
statements prepared and presented on the basis of such accounting policies should represent a true and fair
view of the state of affairs of the enterprise as at the balance sheet date and of the profit or loss for the period
ended on that date.
For this purpose, the major considerations governing the selection and application of accounting policies are:
a. PRUDENCE:
In view of the uncertainty attached to future events, profits are not anticipated but recognised only when
realised though not necessarily in cash. Provision is made for all known liabilities and losses even though the
amount cannot be determined with certainty and represents only a best estimate in the light of available
information.
b. SUBSTANCE OVER FORM:
The accounting treatment and presentation in financial statements of transactions and events should be
governed by their substance and not merely by the legal form.
c. MATERIALITY:
Financial statements should disclose all material items, i.e. items the knowledge of which might influence
the decisions of the user of the financial statements.

DISCLOSURE OF ACCOUNTING POLICIES

1. To ensure proper understanding of financial statements, it is necessary that all significant accounting policies
adopted in the preparation and presentation of financial statements should be disclosed.
2. Such disclosure should form part of the financial statements.
3. It would be helpful to the reader of financial statements if they are all disclosed as such in one place instead
of being scattered over several statements, schedules and notes.
4. Examples of matters in respect of which disclosure of accounting policies adopted will be required are
contained in paragraph 14. This list of examples is not, however, intended to be exhaustive.
5. Any change in an accounting policy which has a material effect should be disclosed. The amount by which
any item in the financial statements is affected by such change should also be disclosed to the extent
ascertainable. Where such amount is not ascertainable, wholly or in part, the fact should be indicated. If a
change is made in the accounting policies which has no material effect on the financial statements for the
current period but which is reasonably expected to have a material effect in later periods, the fact of such
change should be appropriately disclosed in the period in which the change is adopted.
6. Disclosure of accounting policies or of changes therein cannot remedy a wrong or inappropriate treatment of
the item in the accounts.
ACCOUNTING STANDARD
1 .All significant accounting policies adopted in the preparation and presentation of financial statements should
be disclosed.
2. The disclosure of the significant accounting policies as such should form part of the financial statements and
the significant accounting policies should normally be disclosed in one place.
3. Any change in the accounting policies which has a material effect in the current period or which is
reasonably expected to have a material effect in later periods should be disclosed. In the case of a change in
accounting policies which has a material effect in the current period, the amount by which any item in the
financial statements is affected by such change should also be disclosed to the extent ascertainable. Where such
amount is not ascertainable, wholly or in part, the fact should be indicated.
4. If the fundamental accounting assumptions, viz. Going Concern, Consistency and Accrual are followed in
financial statements, specific disclosure is not required. If a fundamental accounting assumption is not
followed, the fact should be disclosed.

CASE STUDY:

STATE BANK OF INDIA - Giving wings to an Aspirational India:

INTRODUCTION:
State Bank of India is an Indian multinational, Public Sector banking and financial services company. It is
a government-owned corporation with its headquarters in Mumbai, Maharashtra. As of December 2013, it had
assets of US$388 billion and 17,000 branches, including 190 foreign offices, making it the largest banking and
financial services company in India by assets.[4][5]
State Bank of India is one of the Big Four banks of India, along with Bank of Baroda, Punjab National
Bank and Bank of India.[6][7]
The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding, in 1806, of
the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of Madras merged into
the other two "presidency banks" in British India, Bank of Calcutta and Bank of Bombay, to form the Imperial Bank
of India, which in turn became the State Bank of India. [8] Government of India owned the Imperial Bank of India in
1955, with Reserve Bank of India (India's Central Bank) taking a 60% stake, and renamed it the State Bank of
India. In 2008, the government took over the stake held by the Reserve Bank of India.
State Bank of India is a regional banking behemoth and has 20% market share in deposits and loans among Indian
commercial banks.

History

Logo of State Bank of India

he roots of the State Bank of India lie in the first decade of the 19th century, when the Bank of Calcutta, later
renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency
banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and theBank of
Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and
were the result of royal charters. These three banks received the exclusive right to issue paper currency till 1861
when, with the Paper Currency Act, the right was taken over by the Government of India. The Presidency banks
amalgamated on 27 January 1921, and the re-organised banking entity took as its name Imperial Bank of India.
The Imperial Bank of India remained a joint stock company but without Government participation.
Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India, which is India's central
bank, acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the Imperial Bank of India
became the State Bank of India. In 2008, the government of India acquired the Reserve Bank of India's stake in
SBI so as to remove any conflict of interest because the RBI is the country's banking regulatory authority.

Operations
SBI provides a range of banking products through its network of branches in India and overseas, including products
aimed at non-resident Indians (NRIs). SBI has 14 regional hubs and 57 Zonal Offices that are located at important
cities throughout India.

Domestic presence
SBI has 14,816 branches in India, as on 31 March 2013, of which 9,851 (66%) were in Rural and Semi-urban
areas.[2] In the financial year 2012-13, its revenue was INR 200,560 Crores (US$36.9 billion), out of which domestic
operations contributed to 95.35% of revenue. Similarly, domestic operations contributed to 88.37% of total profits
for the same financial year.
Under the Pradhan Mantri Jan Dhan Yojana of financial inclusion launched by Government in August 2014, SBI
held 11,300 camps and opened over 30 lakhs accounts by September, which included 21.16 lakh accounts in rural
areas and 8.8 lakh accounts in urban areas.

International presence[edit]

The Israeli branch of the State Bank of India located in Ramat Gan.

As of 28 June 2013, the bank had 180 overseas offices spread over 34 countries. It has branches of the parent
in Moscow, Colombo, Dhaka, Frankfurt, Hong Kong, Tehran,Johannesburg, London, Los Angeles, Male in
the Maldives, Muscat, Dubai, New York, Osaka, Sydney, and Tokyo. It has offshore banking units in the Bahamas,
Bahrain, andSingapore, and representative offices in Bhutan and Cape Town.
The Canadian subsidiary, State Bank of India (Canada) also dates to 1982. It has seven branches, four in
the Toronto area and three in the Vancouver area.
SBI operates several foreign subsidiaries or affiliates. In 1990, it established an offshore bank: State Bank of India
(Mauritius). SBI (Mauritius) has 15 branches in major cities/towns of the country including Rodrigues.
SBI Sri Lanka now has three branches located in Colombo, Kandy and Jaffna. The Jaffna branch was opened on 9
September 2013. SBI Sri Lanka, the oldest bank in Sri Lanka, celebrated its 150th year in Sri Lanka on 1 July
2014.

State Bank of India (S.B.I.) Branch at Tsim Sha Tsui, Hong Kong

In 1982, the bank established a subsidiary, State Bank of India (California), which now has ten branches nine
branches in the state of California and one in Washington, D.C. The 10th branch was opened in Fremont, California
on 28 March 2011. The other eight branches in California are located in Los Angeles, Artesia, San Jose, Canoga
Park, Fresno, San Diego, Tustin and Bakersfield.
In Nigeria, SBI operates as INMB Bank. This bank began in 1981 as the Indo-Nigerian Merchant Bank and received
permission in 2002 to commence retail banking. It now has five branches in Nigeria.
In Hindu States of Nepal (Hindu Rajya Nepal), SBI owns 49% of SBI Nepal (State Bank in Nepal) share with Nepal
Government owing the rest and SBI NEPAL has branches throughout the country in each and every city as banking
has become the major part of daily life for Nepalese people. In Moscow, SBI owns 60% of Commercial Bank of
India, with Canara Bank owning the rest. In Indonesia, it owns 76% of PT Bank Indo Monex.
The State Bank of India already has a branch in Shanghai and plans to open one in Tianjin.
In Kenya, State Bank of India owns 76% of Giro Commercial Bank, which it acquired for US$8 million in October
2005.

Employees
SBI is one of the largest employers in the country having 222,033 employees as on 31 March 2014, out of which
there were 45,132 female employees (20%) and 2,610 (1%) employees with disabilities. On the same date, SBI
had 42,744 Schedule Caste (19%) and 17,243 Schedule Tribe (8%) employees. The percentage of Officers,
Assistants and Sub-staff was 36%, 46% and 18% respectively on the same date Hiring drive: 1,776 Assistants and
1,394 Officers joined the Bank in FY 2013-14, for expansion of the branch network and to mitigate staff shortage,
particularly at rural and semi-urban branches. Staff productivity: As per its Annual Report for FY 2013-14, each
employee contributed net profit of INR 4.85 lakhs.

Recent awards and recognitions

SBI was ranked 73rd largest bank in the world, according to 2014 SNL financial data.

SBI won the Best Bank award in the 'ASiAMONEY FX POLL OF POLLS 2014 for best overall performance
as domestic provider of Forex services over the last 10 years.

SBI was ranked as the top bank in India based on tier 1 capital by The Banker magazine in a 2014 ranking.

SBI was ranked 298th in the Fortune Global 500 rankings of the world's biggest corporations for the year
2012.

SBI won "Best Public Sector Bank" award in the D&B India's study on 'India's Top Banks 2013'.

State Bank of India won three IDRBT Banking Technology Excellence Awards 2013 for Electronic Payment
Systems, Best use of technology for Financial Inclusion, and Customer Management & Business
Intelligence in the large bank category.

SBI won National Award for its performance in the implementation of Prime Ministers Employment
Generation Programme (PMEGP) scheme for the year 2012.

Best Online Banking Award, Best Customer Initiative Award & Best Risk Management Award (Runner Up)
by IBA Banking Technology Awards 2010

SKOCH Award 2010 for Virtual corporation Category for its e-payment solution

SBI was the only bank featured in the "top 10 brands of India" list in an annual survey conducted by Brand
Finance and The Economic Times in 2010.

The Bank of the year 2009, India (won the second year in a row) by The Banker Magazine

Best Bank Large and Most Socially Responsible Bank by the Business Bank Awards 2009

Best Bank 2009 by Business India

The Most Trusted Brand 2009 by The Economic Times.

SBI was named the 29th most reputed company in the world according to Forbes 2009 rankings

Most Preferred Bank & Most preferred Home loan provider by CNBC

Visionaries of Financial Inclusion By FINO

Technology Bank of the Year by IBA Banking Technology Awards

SBI was 50th Most Trusted brand in India as per the Brand Trust Report 2013

INTRODUCTION OF IAS:
DEFINITIONS
Indian Accounting Standards (Ind ASs) are Standards prescribed under Section 211(3C) of the
Companies Act, 1956.
Material Omissions or misstatements of items are material if they could, individually or collectively,
influence the economic decisions that users make on the basis of the financial statements. Materiality
depends on the size and nature of the omission or misstatement judged in the surrounding
circumstances. The size or nature of the item, or a combination of both, could be the determining factor.
The components of other comprehensive income include:

) changes in revaluation surplus (see Ind AS 16 Property, Plant and Equipmentand Ind AS 38) Intangible Assets);
b)actuarial gains and losses on defined benefit plans recognised in accordance with paragraph 92 and 129A of Ind
AS 19 Employee Benefits;
c)gains and losses arising from translating the financial statements of a foreign operation (see Ind AS 21 The Effects
of Changes in Foreign Exchange Rates);
d)gains and losses on remeasuring available-for-sale financial assets (see Ind AS 39 Financial Instruments:
Recognition and Measurement);

e)the effective portion of gains and losses on hedging instruments in a cash flow hedge (see Ind AS 39).

BASIC DISCLOSURE:

An entity shall clearly identify each financial statement and the notes. In addition, an entity shall display the
following information prominently, and repeat it when necessary for the information presented to be
understandable:

a)the name of the reporting entity or other means of identification, and any change in that information from
the end of the preceding reporting period;

b)whether the financial statements are of an individual entity or a group of entities;

c)the date of the end of the reporting period or the period covered by the set of financial statements or notes;

(d)the presentation currency, as defined in Ind AS 21; and

)the level of rounding used in presenting amounts in the financial statements.

BALANCE SHEET
Information to be presented in the balance sheet

s a minimum, the balance sheet shall include line items that present the following amounts:
(a)property, plant and equipment;
(b)investment property;
(c)intangible assets;
(d)financial assets (excluding amounts shown under (e), (h) and (i));
(e)investments accounted for using the equity method;
(f)biological assets;
(g)inventories;
(h)trade and other receivables;
(i)cash and cash equivalents;
(j)the total of assets classified as held for sale and assets included in disposal groups classified as held for
sale in accordance with Ind AS 105 Non-current Assets Held for Sale and Discontinued Operations;
(k)trade and other payables;
(l)provisions;
(m)financial liabilities (excluding amounts shown under (k) and (l));
(n)liabilities and assets for current tax, as defined in Ind AS 12 Income Taxes;
(o)deferred tax liabilities and deferred tax assets, as defined in Ind AS 12;
(p)liabilities included in disposal groups classified as held for sale in accordance with Ind AS 105;
(q)non-controlling interests, presented within equity; and
(r)issued capital and reserves attributable to owners of the parent.

. An entity shall present additional line items, headings and subtotals in the balance sheet when such
presentation is relevant to an understanding of the entitys financial position.

. When an entity presents current and non-current assets, and current andnon-current liabilities, as separate
classifications in its balance sheet, it shall not classify deferred tax assets (liabilities) as current assets
(liabilities).
Current/non-current distinction

. An entity shall present current and non-current assets, and current andnon-current liabilities, as separate
classifications in its balance sheet in accordance with paragraphs 6676 except when a presentation
based on liquidity provides information that is reliable and more relevant. When that exception applies,
an entity shall present all assets and liabilities in order of liquidity.

. Whichever method of presentation is adopted, an entity shall disclose the amount expected to be recovered
or settled after more than twelve months for each asset and liability line item that combines amounts
expected to be recovered or settled:
(a)no more than twelve months after the reporting period, and
(b)more than twelve months after the reporting period.
Current assets
6. An entity shall classify an asset as current when:

a)it expects to realise the asset, or intends to sell or consume it, in its normal operating cycle;
(b)it holds the asset primarily for the purpose of trading;

c)it expects to realise the asset within twelve months after the reporting period; or

d)the asset is cash or a cash equivalent (as defined in Ind AS 7) unless the asset is restricted from being
exchanged or used to settle a liability for at least twelve months after the reporting period.
An entity shall classify all other assets as non-current.
Current liabilities
69An entity shall classify a liability as current when:
(a)it expects to settle the liability in its normal operating cycle;
(b)it holds the liability primarily for the purpose of trading;

c)the liability is due to be settled within twelve months after the reporting period; or

d)it does not have an unconditional right to defer settlement of the liability for at least twelve months after
the reporting period (see paragraph 73). Terms of a liability that could, at the option of the counterparty,
result in its settlement by the issue of equity instruments do not affect its classification.
An entity shall classify all other liabilities as non-current.

A)items of property, plant and equipment are disaggregated into classes in accordance with Ind AS 16;
b)receivables are disaggregated into amounts receivable from trade customers, receivables from related parties,
prepayments and other amounts;
c)inventories are disaggregated, in accordance with Ind AS 2 Inventories, into classifications such as merchandise,
production supplies, materials, work in progress and finished goods;
d)provisions are disaggregated into provisions for employee benefits and other items; and
e)equity capital and reserves are disaggregated into various classes, such aspaid-in capital, share premium and
reserves.

Ind AS 8 requires retrospective adjustments to effect changes in accounting policies, to the extent practicable,
except when the transition provisions in another Ind AS require otherwise. Ind AS 8 also requires restatements
to correct errors to be made retrospectively, to the extent practicable.
Disclosure of accounting policies

7An entity shall disclose in the summary of significant accounting policies:

he measurement basis (or bases) used in preparing the financial statements, and
(b)the other accounting policies used that are relevant to an understanding of the financial statements.

d AS 40 Investment Property requires disclosure of the criteria developed by the entity to distinguish investment
property from owner- occupied property and from property held for sale in the ordinary course of business,
when classification of the property is difficult.

Disclosure of acconting policy of maruti Suzuki:

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1.1 General Information
The Company is primarily in the business of manufacturing, purchase and sale of motor vehicles,
components and spare parts (automobiles). The other activities of the Company comprise facilitation of
Pre-Owned Car sales, Fleet Management and Car Financing. The Company is a public company listed on the
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
1.2 Basis for Preparation of Financial Statements
These financial statements have been prepared in accordance with the generally accepted accounting
principles in India under the historical cost convention on an accrual basis. These financial statements have
been prepared to comply in all material respects with the applicable accounting principles in India, the
applicable accounting standards notified under Section 211(3C) [Companies (Accounting Standards) Rules, 2006
as amended] of the Companies Act, 1956, issued pursuant to the Companies (Accounting Standards) Rules,
2006 as per Section 211(3C) of the Companies Act, 1956 read with the General Circular 15/2013 dated
13th September 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act,
2013, Accounting Standard 30, Financial Instruments: Recognition and Measurement issued by the Institute of
Chartered Accountants of India to the extent it does not contradict with any other accounting standard referred to in
Section 211 (3C) [Companies (Accounting Standards) Rules, 2006 as amended] of the Act, other recognised
accounting practices and policies and the relevant provisions of the Companies Act, 1956.
All assets and liabilities have been classified as current or non- current as per the Companys operating cycle
and other criteria set out in the Revised Schedule VI to the Companies Act, 1956. Based on the nature of
products and the time between the acquisition of assets for processing and their realisation in cash and

cash equivalents, the Company has ascertained its operating cycle as 12 months for the purpose of current
non current classification of assets and liabilities.
1.3 Revenue Recognition
Domestic and export sales are recognised on transfer of significant risks and rewards to the customer
which takes place on dispatch of goods from the factory and port respectively.
The Company recognises income from services on rendering of services.
1.4 Fixed Assets
Tangible Assets
a) Fixed assets (except freehold land which is carried at cost) are carried at cost of acquisition or
construction or at manufacturing cost (in case of own manufactured assets) in the year of capitalisation less
accumulated depreciation.
b) Assets acquired under finance leases are capitalised at the lower of their fair value and the present value of
minimum lease payments.
Intangible Assets
Lumpsum royalty is stated at cost incurred as per the relevant licence agreements with the technical know-how
provider less accumulated amortisation.
1.5 Borrowing Costs
Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are
capitalised till the month in which each asset is put to use as part of the cost of that asset.
1.6 Depreciation / Amortisation
a) Tangible fixed assets except leasehold land are depreciated on the straight line method on a pro-rata basis
from the month in which each asset is put to use.
Depreciation has been provided at the rates prescribed in Schedule XIV to the Companies Act, 1956 except
for certain fixed assets where, based on the managements estimate of the useful lives of the assets, higher
depreciation has been provided on the straight line method over the following useful lives:
Plant and Machinery
Dies and Jigs
Electronic Data Processing

8 11
4
3

In respect of assets whose useful life has been revised, the unamortised depreciable amount is charged
over the revised remaining useful lives of the assets.
b) Leasehold land is amortised over the period of lease.
c) All assets, the individual written down value of which at the beginning of the year is ` 5,000 or less, are
depreciated at the rate of 100%. Assets purchased during the year costing
` 5,000 or less are depreciated at the rate of 100%.

d) Lump sum royalty is amortised on a straight line basis over 4 years from the start of production of the
related model.

1.7 Inventories
a) Inventories are valued at the lower of cost, determined on the weighted average basis and net realisable
value.
a) The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs
and related production overheads. Net realisable value is the selling price in the ordinary course of
business, less the estimated costs of completion and the estimated costs necessary to make the sale.
1.2

a) Tools are written off over a period of three years except for tools valued at ` 5,000 or less individually
which are charged to revenue in the year of purchase.
b) Machinery spares (other than those supplied along with main plant and machinery, which are
capitalised and depreciated accordingly) are charged to revenue on consumption except those
valued at ` 5,000 or less individually, which are charged to revenue in the year of purchase.
1.8. Investments
Current investments are valued at the lower of cost and fair value. Long-term investments are valued at
cost except in the case of other than temporary decline in value, in which case the necessary provision is
made.
1.9 Research And Development
Revenue expenditure on research and development is charged against the profit for the year in which it is
incurred. Capital expenditure on research and development is shown as an addition to fixed assets and
depreciated accordingly.

1.3 Foreign Currency Translations And Derivative Instruments

a) Foreign currency transactions are recorded at the exchange rates prevailing at the date of the
transactions. Exchange differences arising on settlement of transactions are recognised as income or
expense in the year in which they arise.
b) At the balance sheet date, all monetary assets and liabilities denominated in foreign currency are
reported at the exchange rates prevailing at the balance sheet date by recognising the exchange difference
in the statement of profit and loss. However, the exchange difference arising on foreign currency
monetary items that qualify and are designated as hedge instruments in a cash flow hedge is initially
recognised in hedge reserve and subsequently transferred to the statement of profit and loss on
occurrence of the underlying hedged transaction.
Effective 1st April 2008, the Company adopted Accounting Standard - 30, Financial Instruments: Recognition
and Measurement issued by The Institute of Chartered Accountants of India to the extent the adoption
does not contradict with the accounting standards notified under Section 211(3C) of the Companies Act,
1956 and other regulatory requirements. All derivative contracts (except for forward foreign exchange
contracts where underlying assets or liabilities exist) are fair valued at each reporting date. For derivative
contracts designated in a hedging relationship, the Company records the gain or loss on effective
hedges, if any, in a hedge reserve, until the transaction is complete. On completion, the gain or loss is
transferred to the statement of profit and loss of that period. Changes in fair value relating to the
ineffective portion of the hedges and derivatives not qualifying or not designated as hedges are recognised
in the statement of profit and loss in the accounting period in which they arise.

b) In the case of forward foreign exchange contracts where an underlying asset or liability exists, the difference
between the forward rate and the exchange rate at the inception of the contract is recognised as income or
expense over the life of the contract. Profi or loss arising on cancellation or renewal of a forward contract is
recognised as income or expense in the year in which such cancellation or renewal is made.
1.8 Employee Benefit Costs
Short - Term Employee Benefits:
Recognised as an expense at the undiscounted amount in the statement of profit and loss for the year in
which the related service is rendered.
Post Employment and Other Long Term Employee Benefits:
(i) The Company has Defined Contribution Plans for post employment benefit namely the Superannuation
Fund which is recognised by the income tax authorities. This Fund is administered through a Trust set
up by the Company and the Companys contribution thereto is charged to the statement of profit and
loss every year. The Company also maintains an insurance policy to fund a post-employment medical
assistance scheme, which is a Defined Contribution Plan administered by The New India Insurance Company
Limited. The Companys contribution to State Plans namely Employees State Insurance Fund and
Employees Pension Scheme are charged to the statement of profit and loss every year.
(ii) The Company has Defined Benefit Plans namely Gratuity, Provident Fund & Retirement Allowance for employees
and Other Long Term Employee Benefits i.e. Leave Encashment
/ Compensated Absences, the liability for which is determined on the basis of an actuarial valuation at the
end of the year based on the Projected Unit Credit Method and any shortfall in the size of the fund
maintained by the Trust is additionally provided for in the statement of profit and loss. The Gratuity Fund and
Provident Fund are recognised by the income tax authorities and are administered through Trusts set up by the
Company.
Termination benefits are immediately recognised as an expense.
Gains and losses arising out of actuarial valuations are recognised immediately in the statement of profit and
loss as income or expense.
1.9 Customs Duty
Custom duty available as drawback is initially recognised as purchase cost and is credited to consumption of
materials on exported vehicles.
1.1 Government Grants
Government grants are recognised in the statement of profit and loss in accordance with the related schemes
and in the period in which these accrue.
1.2 Taxes
Tax expense for the year, comprising current tax and deferred tax, is included in determining the net profit/ (loss)

for the year.

Current tax is recognised based on assessable profit computed in accordance with the Income Tax Act and at the
prevailing tax rate.
Deferred tax is recognised for all timing differences. Deferred tax assets are carried forward to the extent it is
reasonably / virtually certain (as the case may be) that future taxable profit will be available against which
such deferred tax assets can be realised. Such assets are reviewed at each balance sheet date and written down
to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.
Minimum Alternative Tax credit is recognised as an asset only to the extent and when there is convincing
evidence that the Company will pay normal income tax during the specified period. Such asset is reviewed at
each balance sheet date and the carrying amount is written down to the extent there is no longer
convincing evidence to the effect that the Company will pay normal tax during the specified period.
Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively
enacted at the balance sheet date.
1.3 Dividend Income
Dividend from investments is recognised when the right to receive the payment is established and when no
significant uncertainty as to measurability or collectability exits.
1.4 Interest Income
Interest income is recognised on the time basis determined by the amount outstanding and the rate
applicable and where no significant uncertainty as to measurability or collectability exists.
1.5 Impairment of Assets
At each balance sheet date, the Company assesses whether there is any indication that an asset may be
impaired. If any such indication exists, the Company estimates the recoverable amount. If the carrying amount
of the asset exceeds its recoverable amount, an impairment loss is recognised in the statement of profit
and loss to the extent the carrying amount exceeds the recoverable amount.
1.6 Royalty
a) The Company pays / accrues for royalty in accordance with the relevant licence agreements with the
technical know- how provider.
b) The lump sum royalty incurred towards obtaining technical assistance / technical know-how to
manufacture a new model/ car, ownership of which rests with the technical know how provider, is
recognised as an intangible asset in accordance with the requirements of Accounting Standard-26
Intangible Assets. Royalty payable on sale of products i.e. running royalty is charged to the statement
of profit and loss as and when incurred.
1.7 Provisions and Contingencies

Provisions: Provisions are recognised when there is a present obligation as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate
of the expenditure required to settle the present obligation at the balance sheet date and are not discounted to
their present value.
Contingent Liabilities: Contingent liabilities are disclosed when there is a possible obligation arising from
past events, the existence of which will be confirmed only by the occurrence or non occurrence of one
or more uncertain future events not wholly within the control of the Company or a present obligation that
arises from past events where it is either not probable that an outflow of resources will be required to
settle or a reliable estimate of the amount cannot be made.
1.8 Leases
As a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are
classified as operating leases. Payments made under operating leases are charged to the statement of
profit and loss on a straight-line basis over the period of the lease or the terms of underlying agreement/s, as
the case may be.
As a lessor The Company has leased certain tangible assets and such leases where the Company has
substantially retained all the risks and rewards of ownership are classified as operating leases. Lease income
on such operating leases are recognised in the statement of profit and loss on a straight line basis over the
lease term which is representative of the time pattern in which benefit derived from the use of the leased
asset is diminished.
1.9 Cash And Cash Equivalents
In the cash flow statement, cash and cash equivalents include cash in hand, demand deposits with banks,
other short-term highly liquid investments with original maturities of three months or less.

Blanace sheet:
As at 31st March 2014

Schedule
No.
CAPITAL AND LIABILITIES
Capital
Reserves & Surplus
Deposits
Borrowings
Other Liabilities and Provisions

As on 31.03.2014 As on 31.03.2013
(Current Year)
(Previous Year)
`
`
1
2
3
4
5

TOTAL

1792234,59,89
As on 31.03.2014
(Current Year)
`

Schedule
No.
ASSETS
Cash and Balances with Reserve Bank
of India
Balances with Banks and money at call
and short notice
Investments
Advances
Fixed Assets
Other Assets
TOTAL

746,57,31
117535,67,65
1394408,50,48
183130,88,26
96412,96,19

684,03,40
98199,65,14
1202739,57,43
169182,71,36
95405,30,05
1566211,27,38
As on 31.03.2013
(Previous Year)
`

84955,66,05

65830,41,04

47593,97,22

48989,75,41

8
9
10

398308,18,98
1209828,71,92
8002,15,51

350877,50,51
1045616,55,3
7005,02,22

11

43545,90,21
1792234,59,89

47892,02,89
1566211,27,38