H. Provisions, contingent liabilities and contingent assets

Provisions are recognised only when:

a] the company has a present obligation (legal or constructive) as a result of a past event;

b] it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation; and

c] a reliable estimate can be mad e of the amount of the obligation.

Provision is measured using the cash flows estimated to settle the present obligation and when the effect
of time value of money is material, the carrying amount of the provision is the present value of those cash
flows. Reimbursement expected in respect of expenditure required to settle a provision is recognised only
when it is virtually certain that the reimbursement will be received.

Contingent liability is disclosed in case of:

d] a present obligation arising from past events, when it is not probable that an outflow of resources
will be required to settle the obligation; and

e] a present obligation arising from past events, when no reliable estimate is possible. Contingent
assets are disclosed where an inflow of economic benefits is probable.

Provisions, contingent liabilities and contingent assets are reviewed at each Balance Sheet date.
Department appeals, in respect of cases won by the Company, are also considered as Contingent
Liabilities.

I. Cash and Cash Equivalents

Cash and cash equivalents include cash and cheques in hand, bank balances, demand deposits with banks
and other short term highly liquid investments that are readily convertible to know amounts of cash and
which are subject to an insignificant risk of changes in value where original maturity is three months or
less.

J. Employee benefits

Short-term employee benefits are measured on an undiscounted basis and expensed as the related
service is provided. A liability is recognised for the amount expected to be paid under short-term cash
bonus, if the Group has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.

K. Statement of Cash Flows

Statement of Cash Flows is prepared segregating the cash flows into operating, investing and financing
activities. Cash flow from operating activities is reported using indirect method, adjusting the net profit
for the effects of:

Ý changes during the period in inventories and operating receivables and payables transactions of a
non-cash nature;

Ý non-cash items such as depreciation, provisions, deferred taxes, unrealised foreign currency gains and
losses, and undistributed profits of associates; and

Ý all other items for which the cash effects are investing or financing cash flows.

Cash and cash equivalents (including bank balances) shown in the Statement of Cash Flows exclude items
which are not available for general use as on the date of Balance Sheet.