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120Schedule forming part of the Accounts for the year ended 31st March, 2011SCHEDULE ‘N’Notes1. The Financial Statements are prepared to comply in all material aspects with all the applicable accounting principles in India, the applicable AccountingStandards notified under section 211(3C) of the Companies Act, 1956 and the relevant provisions of the Companies Act, 1956.2. Significant Accounting Policies2.1 SalesRevenue from sales/services (exclusive of Sales Tax/ Value Added Tax) is being recognised on accrual basis in keeping with related arrangementswith customers and is net of credit notes on account of returns and allowances.2.2 Fixed AssetsFixed Assets are stated at their original cost/cost of acquisition ( Note 3 below ) less depreciation. Impairment loss, if any, is recognised wherever thecarrying amount of fixed assets of a cash generating unit exceeds its recoverable amount i.e. net selling price or value in use, whichever is higher.2.3 DepreciationDepreciation (including amortisation) is calculated in the following manner :(a)(b)Leasehold land is amortised over the period of lease.In respect of other assets, at rates prescribed in Schedule XIV to the Companies Act, 1956 on ‘Straight Line Method’ except Plant andMachinery given under operating leases which are depreciated over a period of 3 to 6 years, being the useful life as estimated by themanagement.2.4 InventoriesInventories, other than Loose Tools are valued at lower of weighted average cost/actual cost( inclusive of conversion expenses and applicableoverheads for manufacturing activities) and net realizable value. Loose tools are charged off on purchase except for certain Loose Tools (originallyacquired prior to 1st September 2008 and subsequently transferred to the Company pursuant to the Scheme of Arrangement effective 1st April,2010), which are written off over a period up to 5 years from the date of purchase, after retaining 10% of the residual value.2.5 TaxationCurrent Tax in respect of taxable income is provided for the year based on applicable tax rates and laws. Deferred Tax is recognised subject to theconsideration of prudence in respect of deferred tax assets, on timing differences, being the difference between taxable income and accounting incomethat originate in one period and are capable of reversal in one or more subsequent periods and is measured using tax rates and laws that have beenenacted or substantively enacted by the Balance Sheet date. Deferred tax assets are reviewed at each Balance Sheet date to re-assess realisation.2.6 Employee Benefits2.6.1 Short-term Employee benefits (i.e. benefits payable within one year) are recognised in the period in which the employee services are rendered.2.6.2 Contributions towards provident funds are recognised as expense. Provident fund contributions in respect of employees are made to common trust- ‘Tractors India Employees Provident Fund’ (being administered by the trustees of the said fund for the benefit of employees of the Company andits Holding Company i.e. TIL Limited) and such Trust invest funds following a pattern of investments prescribed by the Government. The interest ratepayable to the members of the Trust is not lower than the rate of interest declared annually by the Central Government under the Employees’Provident Funds and Miscellaneous Provisions Act,1952 and shortfall, if any, on account of interest is made good by the Company. ( Also refer note15.2 below ) Contributions under Employees’ Pension Scheme is made as per statutory requirements and charged as expenses for the year.2.6.3 The Company also contributes to the Central Government administered Employees’ State Insurance Scheme for its eligible employees, which is adefined contribution plan.2.6.4 Provisions for Gratuity for eligible employees is (being a defined benefit plan) made on the basis of year-end actuarial valuation using projected unitcredit method.2.6.5 In respect of certain eligible employees transferred from Parent Company (TIL Ltd) who have attained 45 years of age as on 1st April 2009, provision forSuperannuation under defined benefit plan is made on the basis of year end actuarial valuation ( Note 15.3 below) using projected unit credit method.