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

Lumax Auto Technologies Ltd.For subsidiary company:a) Short Term Employee Benefits:Short Term employee benefits are recognized in the period during which the services have been rendered.b) Long Term Employee Benefits:i) Defined Contribution PlanProvident Fund and employees' state insurance schemes. All employees of the Company are entitled to receive benefits under theProvident Fund, which is defined contribution plan. Both the employees and the employer make monthly contributions to the plan at apredetermined rate (presently 12 %) of the employees' basic salary and dearness allowance . These contributions are made to the fundadministered and managed by the Government of India. In addition, some employees of the company are covered under the EmployeesState Insurance scheme which are also defined contribution scheme recognized and administered by the Government of India. TheCompany's contributions to both these schemes are expressed in the Profit and Loss Account. The Company has no further obligationsunder plans beyond its monthly contributions.ii)iii)Defined Benefit PlanLeave Encashment- Liability on account of unavailed Earned Leave at the year end is provided as per the actuarial valuationaccording to Projected Unit Credit Method.Gratuity- Liability on account of Gratuity at the year end is provided as per the actuarial valuation according to the Projected Unit CreditMethod.Actuarial gains and losses are recognized as and when incurred.J) Borrowing Costs:Borrowing Costs that are attributable to the acquisition or construction of qualifying fixed assets are capitalized as part of the cost of assets.All other borrowing costs are recognized as expense in the year in which they are incurred.K) Cash Flow Statement :Cash flow statement has been prepared following the indirect method set out in the Accounting Standard - 3 on “Cash Flow Statement”issued by the Institute of Chartered Accountants of India.L) Taxes On Income:a) Income Tax expenses for the period comprise of Current Tax, Deferred Tax & Fringe Benefit Tax.b) Current Tax & Fringe Benefit Tax are the amounts of tax payable on the taxable income/expenses for the year determined inaccordance with the provisions of the Income Tax Act, 1961.c) Deferred Tax is recognized, on the timing differences, being the difference between accounting income and taxable income, whichoriginates in one period and are capable of reversal in one or more subsequent accounting periods in accordance with provisions ofAccounting Standard 22 on “Accounting for Taxes on Income”, issued by the Institute of Chartered Accountants of India. Deferred TaxAsset in respect of brought forward losses is recognized as if there is virtual certainty that there will be sufficient future taxable incomeagainst which such asset can be realized.M) Translation of Foreign Currency itemsa) Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of the transaction. Exchange differencearising on settlement of transactions and translation of monetary items are recognised as income or expense in the year in which theyarise.b) Monetary items denominated in foreign currency are reported using the closing exchange rate on each Balance Sheet date.N) Segment ReportingThe Company has considered 'Business Segment' as the primary segment for disclosure. Further, since the company is engaged inthe manufacturing of “Automotive Parts”, in the opinion of the Management, the Company operates in one primary segment only.O) Accounting for Interests in Joint Ventures:Interests in Joint Ventures are accounted as follows:Type of Joint VentureJointly Controlled EntitiesAccounting treatmenta) Income on investments in incorporated Jointly Controlled Entities isrecognised when the right to receive the same is established.b) Investment in such Joint Ventures is carried at cost after providing for anypermanent diminution in value.P) Pre-Operative Expenditure:The expenditure incurred by the Company from the date of setting up of a new unit, up to the date of commencement of commercialproduction of the unit is treated as Pre-operative expenditure to be capitalized as a part of the indirect cost of construction. The amount ofsuch expenditure is to be apportioned over the individual assets in an equitable manner. The amount not directly attributable to fixed assetsare charged to the Profit and Loss account in the year in which such expenditure is incurred.79