a) Basis of Preparation of Financial Statements :
 
 i) The financial statements are prepared under the historical cost
 convention in accordance with the generally accepted accounting
 principles in India, the applicable Accounting Standards issued by the
 Institute of Chartered Accountants of India and relevant presentational
 requirements of the Companies Act, 1956.
 
 ii) Accounting policies not specificallv referred to otherwise are in
 consonance with prudent accounting principles.
 
 iii) All income and expenditure items having material bearing on the
 financial statements are recognised on accrual basis.
 
 b) Fixed Assets :
 
 Fixed Assets are stated at acquisition cost (net of modvat / cenvat, if
 any) including directly attributable cost of bringing them to their
 respective working conditions for the intended use less accumulated
 depreciation. All costs, including financing/ borrowing cost till
 commencement of commercial production attributable to the fixed assets
 have been capitalized.
 
 c) Revenue Recognition of Income & Expenditure :
 
 All income and expenditure are accounted on accrual basis.
 
 Sale of telecom equipments
 
 Revenue is recognized when significant risks and rewards of ownership
 of goods have passed to the buyer and is disclosed including Sales tax
 and Carriage outwards and excluding returns, as applicable.
 
 Interest
 
 Interest income is recognized on a time proportion basis taking into
 account the amount outstanding and the rate applicable.
 
 d) Depreciation:
 
 Depreciation on fixed assets is provided on Written down method at the
 rates specified in Schedule XIV of the Companies Act, 1956.
 
 e) Inventories:
 
 Raw materials are valued at cost on FIFO basis. Finished Goods are
 valued at cost or net realizable value whichever is lower.
 
 f) Investments:
 
 Investments made by the company are primarily of long term nature and
 are valued at cost. Provision will be made for decline, other than
 temporary, in the value of investments.
 
 g) Foreign Currency Transactions :
 
 Transactions denominated in foreign currencies are normally recorded at
 the exchange rates prevailing on the date of the transaction. Monetary
 items denominated in foreign currencies at the year end are restated at
 year end rates. In case of monetary items which are covered by forward
 exchange contracts, the difference between the year end rate and rate
 on the date of the contract is recognized as exchange difference and
 the premium paid on forward contracts is recognised over the life of
 the contract. Non- monetary foreign currency items are carried at cost.
 Any income or expense on account of exchange difference either on
 settlement or on translation is recognised as revenue except incases
 where they relate to acquisition of fixed asset in which case they are
 adjusted to the carrying cost of such asset.
 
 h) Retirement Benefits:
 
 Gratuity: Liability towards gratuity is provided on the basis of
 actuarial valuation made by an independent actuary.
 
 Provident Fund: The periodic contributions to Statutory Provident Fund
 are charged to revenue.
 
 i) Earning per Share :
 
 The Company reports its Earnings per Share (EPS) in accordance with
 Accounting Standard 20 issued by the Institute of Chartered Accountants
 of India.
 
 j) Taxes on Income :
 
 The current charge for income tax is calculated in accordance with the
 relevant tax regulations applicable to the company. Deferred tax asset
 / liability is recognized for future tax consequences attributable to
 the timing differences that result between the profit offered for
 income tax and the profit as per the financial statements. Deferred tax
 asset / liability are measured as per the tax rates / laws that have
 been enacted or substantively enacted by the Balance Sheet date.
 
 k) Provision, Contingent Liabilities and Contingent Assets :
 
 Provisions involving substantial degree of estimation in measurement
 are recognised when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognised but are disclosed in notes.
 Contingent Assets are neither recognised nor disclosed in the financial
 statements.