BASIS OF PREPARATION OF ACCOUNTS
 
 The fnancial statements of Agro Tech Foods Limited have been prepared
 and presented in accordance with Indian Generally Accepted Accounting
 Principles (GAAP) under the historical cost convention on the accrual
 basis. GAAP comprises accounting standards notifed by the Central
 Government of India under Section 211 (3C) of the Companies Act, 1956,
 other pronouncements of Institute of Chartered Accountants of India,
 the provisions of Companies Act, 1956 and guidelines issued by
 Securities and Exchange Board of India.
 
 REVENUE RECOGNITION
 
 Revenue from sale of goods is recognized when signifcant risks and
 rewards in respect of ownership of products are transferred to
 customers. Sales are recognized when goods are dispatched or as per the
 terms of contract.
 
 Income from interest on deposits, loans and interest bearing securities
 is recognized on the time proportionate method.
 
 FIXED ASSETS AND DEPRECIATION
 
 Fixed assets are accounted for at cost of acquisition or construction
 inclusive of inward freight, duties, taxes and directly attributable
 costs of bringing the asset to its working condition for its intended
 use.
 
 Advances paid towards the acquisition of fxed assets outstanding at
 each Balance Sheet date and assets under installation or under
 construction as at the Balance Sheet date are shown as Capital Work-
 in-Progress.
 
 Depreciation is provided on straight line method at rates based on the
 useful life of the fxed assets as estimated by the management as
 specifed below, or the rates specifed in accordance with the provisions
 of Schedule XIV of the Companies Act, 1956, whichever are higher.
 
 - Offce equipment, Computer and related 
   hardware and Software (Included
   in Plant and Machinery)                19% to 20%
 
 - Plant and Machinery                  6.33% to 9.5%
 
 - Furniture and Fixtures                 10%
 
 - Buildings
 
 - Factory Premises                     3.34%
 
 - Non Factory Premises                 1.63% to 16.67%
 
 - Vehicles                               19%
 
 In respect of assets given to the employees under a scheme,
 depreciation is provided at rates determined on the basis of the
 economic useful life of these assets (5 years), and these rates are
 higher than those specifed in Schedule XIV of the Companies Act, 1956.
 
 INTANGIBLE ASSETS AND AMORTIZATION
 
 Brands acquired by the Company, the value of which is not expected to
 diminish in the foreseeable future, are capitalized and recorded in the
 Balance Sheet as Trade Marks at cost of acquisition less accumulated
 amortisation. These are being amortized on straight- line method over
 the estimated useful life of forty years determined by persuasive
 evidences of expected usage contributing towards the performance and
 signifcant expenditure incurred to sustain the useful life of brands.
 Recoverable value of such brands is assessed in each fnancial year.
 
 IMPAIRMENT OF ASSETS
 
 The Company assesses at each Balance Sheet date whether there is any
 indication that an asset may be impaired. If any such indication
 exists, the Company estimates the recoverable amount of the asset. If
 such recoverable amount of the asset or the recoverable amount of the
 cash generating unit to which the asset belongs is less than its
 carrying amount, impairment provision is created to bring down the
 carrying value to its recoverable amount.  The reduction is treated as
 an impairment loss and is recognized in the profit and Loss Account. If
 at the Balance Sheet date there is an indication that if a previously
 assessed impairment loss no longer exists, the recoverable amount is
 reassessed and the impairment provision created earlier is reversed to
 bring it at the recoverable amount subject to a maximum of depreciated
 historical cost.
 
 INVESTMENTS
 
 Investments are classifed into current and long-term investments.
 Current investments are stated at the
 
 lower of cost and fair value. Long-term investments are stated at cost.
 A provision for diminution is made to recognise a decline, other than
 temporary, in the value of long-term investments.
 
 INVENTORIES
 
 Inventories are valued at lower of weighted average cost and estimated
 net realizable value after providing for cost of obsolescence, where
 necessary.  In the case of fnished goods, cost comprises material,
 labour and applicable overhead expenses and duties including excise
 duty paid/payable thereon.
 
 Goods in transit/with third parties and at godowns are valued at cost,
 which represents the costs incurred upto the stage at which the goods
 are in transit/with third parties and at godowns.
 
 FOREIGN EXCHANGE CONVERSION The transactions in foreign currency are
 accounted for at the exchange rate prevailing at the date of the
 transactions. Exchange differences arising on foreign currency
 transactions settled during the year are recognized in the profit and
 Loss Account.
 
 Monetary assets and liabilities denominated in foreign currencies as at
 the Balance Sheet date, not covered by forward exchange contracts, are
 translated at year end rates. The resultant exchange differences are
 recognized in the profit and Loss Account. Non-monetary assets are
 recorded at the rates prevailing on the date of the transaction.
 
 In respect of forward contracts, the differences between forward
 exchange rates and the exchange rates at the date of transaction are
 recognised as income or expense over the life of the contracts.
 
 EMPLOYEE BENEFITS
 
 Gratuity and long term compensated absences, which are defned beneft
 plans, are accrued based on an actuarial valuation at the Balance Sheet
 date.
 
 Provident Fund, wherein Company provides the guarantee of a specifed
 return on contribution are considered as defned beneft plans and are
 accrued based on an actuarial valuation at the Balance Sheet date.
 
 All actuarial gains and losses arising during the year are recognized
 in the profit and Loss Account of the year.
 
 EMPLOYEE STOCK OPTION SCHEME
 
 Stock options granted to the employees under the stock option scheme
 are evaluated as per the accounting treatment prescribed by Employee
 Stock Option Scheme (ESOP) and Employee Stock Purchase Scheme
 Guidelines, 1999 issued by the Securities and Exchange Board of India.
 Accordingly, the excess of market price of the shares as on the date of
 grant over the exercise price of the options and the excess of purchase
 price of the shares purchased by the ESOP Trust of the Company over the
 exercise price of the options is recognized as employee compensation in
 the profit and Loss Account and in case where exercise price is higher
 than the purchase price, the gain is accounted in the period, when the
 options are allotted to the employees.
 
 LEASES
 
 Leases that do not transfer substantially all the risks and rewards of
 ownership are classifed as operating leases and recorded as expense in
 profit and Loss Account.
 
 EARNINGS PER SHARE
 
 The basic earnings per share (EPS) is computed by dividing the net
 profit after tax for the year by the weighted average number of equity
 shares outstanding during the year.
 
 INCOME-TAX EXPENSE
 
 Income tax expense comprises current tax and deferred tax charge or
 credit.
 
 Current tax
 
 The current charge for income taxes is calculated in accordance with
 the relevant tax regulations applicable to the Company.
 
 Deferred tax
 
 Deferred tax charge or credit refects the tax effects of timing
 differences between accounting income and taxable income for the
 period. The deferred tax charge or credit and the corresponding
 deferred tax liabilities or assets are recognized using the tax rates
 that have been enacted or substantially enacted by the Balance Sheet
 date. Deferred tax assets are recognized only to the extent there is
 reasonable certainity that the assets can be realized in future.
 
 Deferred tax assets are reviewed at each Balance Sheet date and is
 written-down or written-up to refect the amount that is reasonably
 certain to be realized.  The break-up of the major components of the
 deferred tax assets and liabilities as at Balance Sheet date has been
 arrived at after setting off deferred tax assets and liabilities where
 the Company has a legally enforceable right to set-off assets against
 liabilities and where such assets and liabilities relate to taxes on
 income levied by the same governing taxation laws.
 
 PROVISIONS AND CONTINGENT LIABILITIES
 
 The Company creates a provision when there is a present obligation as a
 result of a past event that probably requires an outfow of resources
 and a reliable estimate can be made of the amount of the obligation. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that may, but probably will not,
 require an outfow of resources. Where there is possible obligation or a
 present obligation in respect of which the likelihood of outfow of
 resources is remote, no provision or disclosure is made.