Year Ended March 31, 2008 - Lumax Auto Technologies Ltd.

Schedule “W”:Notes To Consolidated Accounts1. Significant Accounting Policies:A) Basis of Preparation of Financial Statements:The financial statements have been prepared under the historical cost convention in accordance with the generally accepted accountingprinciples and the provisions of the Companies Act, 1956 as adopted consistently by the Company.The Company generally follows mercantile system of accounting and recognizes significant items of income and expenditure on accrualbasis.B) Fixed Assets :Fixed Assets are stated at cost net of CENVAT, Cess, Deferred Excise duty and VAT set-off less accumulated depreciation. Cost includespurchase cost together with inward freight, duties, taxes and incidental cost of acquisition and installation and eligible borrowing costs andalso includes pre-operative expenses incurred during the construction, trial and stabilization period, up to the period such assets are put tocommercial use.C) Depreciation:Depreciation on Fixed Assets is provided on Straight Line Method at the rates as provided under schedule XIV to the Companies Act, 1956.D) Intangible Assets and Amortisation:Intangible assets are recognised as per the criteria specified in Accounting Standard (AS) 26 “Intangible Assets” issued by the Institute ofChartered Accountants of India and are amortised as follows:(a) Leasehold land: over the period of lease(b) Specialised software: Over a period of three yearsE) Investments:a) Current Investments are valued at cost or market price whichever is lower.b) Long Term Investments are valued at cost less permanent diminution if any.F) Inventories:a) Raw Materials including components, consumables & packing material are valued at cost after making provision forobsolescence wherever necessary. Cost is determined on First-in-First-Out (FIFO) basis.b) Work in Progress is valued at estimated Cost.c) Goods purchased for resale & other finished goods are valued at lower of the cost or net realizable value.d) Scrap is valued at estimated realizable value.G) Deferred Revenue ExpenditureFor Subsidiary Company :Expenditure incurred on know how for modification of existing products along with any future expenditure is appropriately amortized on thecommencement of commercial production of the modified products as the benefit of expenditure is expected in future years.H) Revenue Recognition:a) Sale of goods is recorded when supply of goods takes place in accordance with the terms of Sale. It includes Excise duty butexcludes trade discount and Sales Tax.b) Interest income is recognized on accrual basis.I) Employees' Retirement Benefits:For holding company:a) The company's contribution to provident fund is charged to profit & loss account.b) The Company's contribution to Gratuity Fund of Life Insurance Corporation of India is charged to Profit & Loss Account on the basis ofscheme subscribed by the Company. The contribution is provided on the basis of actuarial valuation.c) Voluntary Retirement Compensation:- 20% of the amount paid to the employees towards Voluntary Retirement is chargedto Profit & Loss Account.d) Provision for accrued liability for leave encashment due to employees is not made in the accounts. The liability being of afluctuating nature from year to year, is accounted for only at the time of retirement / payment.78