1.  System of Accounting:
 
 (i) The Company generally follows the mercantile system of accounting
 and recognizes significant items of income and expenditure on an
 accrual basis.
 
 (ii) The Financial Statements have been prepared under the historical
 cost convention, in accordance with the generally accepted accounting
 principles and provisions of the Companies Act, 1956 as adopted
 consistently by the Company.
 
 2.  Use of Estimates
 
 The preparation of Financial Statements require estimates and
 assumption to be made that affect the reported amount of assets and
 liabilities on the date of Financial Statements and the reported amount
 of revenues and expenses during the reported period. Difference between
 the actual results and estimates are recognized in the period which the
 results are known/materialized.
 
 3.  Fixed Assets and Depreciation:
 
 (i) The Gross Block of Fixed Assets is shown at the cost of
 acquisition, which includes Taxes, Duties and other identifiable direct
 expenses.
 
 (ii) The Company provides depreciation on all its fixed assets on
 Straight Line Method in accordance with the provisions of Sec. 205(2)
 (b) of the Companies Act, 1956 in the manner and at the rates specified
 in Schedule XIV of the Companies Act, 1956.
 
 (iii) Depreciation on additions to fixed assets is being provided on
 pro- rata basis from the next month of acquisition and on assets sold,
 discarded, demolished or scrapped, the same is being provided up to the
 month in which the said asset is sold, discarded, demolished or
 scrapped.
 
 4.  Investments:
 
 Unquoted Investments are valued at cost of acquisition. Provision for
 diminution in value of long term investment is made only if such a
 decline is other than temporary.
 
 5.  Inventories:
 
 (i) Finished Goods and Work-in-progress are valued on the principle of
 direct cost or market value whichever is lower.
 
 (ii) Raw and Packing Materials are valued at Landed Cost.
 
 (iii) Stores, spares and consumables are valued at landed cost.
 
 6.  Sales and Income Recognition:
 
 (i) Sales are recognized when goods are supplied and are recorded net
 of trade discounts and rebates.
 
 (ii) Insurance, dividend, refunds and other claims are accounted on
 cash basis in the year of receipt.
 
 (iii) Interest income on investments is booked on a timed proportionate
 basis taking into account the amounts invested and the rate of
 interest.
 
 7.  Employees Retirement Benefits:
 
 (i) Contributions to Provident Fund & Family Pension Scheme are
 accounted on accrual basis and charged to Profit and Loss Account for
 the year.
 
 (ii) The Company has adopted a policy of permitting its employees to
 avail their leave due in a year in a planned and phased manner so as to
 avoid accumulation of leave therefore, liability on account of leave
 encashment is not provided for the year as the employees are eligible
 for leave salary of the year in the year of termination or retirement.
 
 (iii) The Company has provided on an actuarial basis during the year
 liability in respect of Gratuity payable to employees and the same is
 charged to the Profit & Loss Account.
 
 8.  Research and Development:
 
 Revenue expenditure pertaining to Research and Development is charged
 to revenue under the respective heads of account in the year in which
 it is incurred. Capital expenditure, if any, on Research and
 Development is shown as an addition to fixed assets.
 
 9.  Provision for Taxation:
 
 (i) In view of the loss during the year as well as carried forward
 losses no provision for taxation is made.
 
 (ii) In absence of Deferred Tax Liability no provision for the same is
 required to be made. The Company has not also recognized the Deferred
 Tax Assets as carried forward losses are significant and shall
 recognize the Deferred Tax Assets in succeeding years when there is
 certainty to have sufficient taxable income.
 
 10.  Treatment of Contingent Liabilities:
 
 Contingent Liabilities are determined on the basis of available
 information and disclosed by way of to the Accounts.