A.  BASIS OF ACCOUNTING
 
 These accounts are prepared on the historical cost basis and on the
 accounting principles of a going concern.  Accounting policies, not
 specifically referred to otherwise, are consistent and in accordance
 with generally accepted accounting principles in India (Indian GAAP)
 and in compliance with the Accounting Standards issued by the Institute
 of Chartered Accountants of India (ICAI) as referred to in sec. 211
 (2c) of the Companies Act, 1956.
 
 B.  REVENUE RECOGNITION
 
 Sales are recognized at the time of dispatch of goods and are exclusive
 of excise duty and sales Tax/VAT. All expenses and income are accounted
 for on accrual basis.
 
 C.  FIXED ASSETS
 
 Fixed assets are stated at cost less accumulated depreciation. The cost
 of fixed assets includes their original cost of acquisition net of
 cenvat including taxes, freight and other incidental expenses related
 to acquisition and installation of the concerned assets.
 
 D DEPRECIATION
 
 Depreciation on fixed assets is provided on Straight Line Method(SLM)
 in the manner and at the. rates as specified in Schedule XIV of the
 Companies Act, 1956. Depreciation on additions / deductions to Fixed
 Assets is provided on pro-rata basis from the date of actual
 installation or up to the date of such sale / disposal, as the case may
 be.
 
 E.  INVENTORIES
 
 Raw Materials, Stores & Spares, Goods under process and Finished Goods
 are valued at cost or Net Realizable Value, whichever is lower. Waste
 and Scrap is valued at Net Realizable Value.
 
 Cost of inventories of Raw Materials and Stores and Spares is
 ascertained on FIFO Basis.
 
 Cost of goods under process and finished goods comprise of cost of
 materials, production overhead and depreciation on Plant and Machinery.
 Cost of material for this purpose is ascertained on FIFO.
 
 Provision for obsolescence in inventories is made, whenever required.
 
 F.  INVESTMENTS
 
 Current investments are valued at lower of cost or fair market value.
 
 H.  EXASE DUTY
 
 Excise duty is paid on clearance of goods, but is accounted for in the
 books on accrual basis. Accordingly, provision for excise duty is made
 for goods lying in the Bonded Warehouse.
 
 I.  EMPLOYEES'' RETIREMENT BENEFITS
 
 a) The liability for Gratuity & Leave Encashment is accounted for on
 the basis of actuarial valuation in accordance with Accounting
 Standard-15 (Revised) issued by the Institute of Chartered Accountants
 of India.
 
 b) Retirement benefits in the form of Provident Fund are charged to the
 Profit and Loss Account for the year when the contributions to the
 respective funds are due.
 
 J.  RESEARCH AND DEVELOPMENT
 
 Capital Expenditure is shown separately under respective heads of fixed
 assets. Revenue expenses including depreciation are included under the
 respective heads of expenses.
 
 K.  BORROWING COST
 
 Interest on borrowings are recognized in the Profit and Loss account
 except interest incurred on borrowings, specifically raised for
 Projects which is capitalized with the cost of the asset until such
 time the asset is ready to be put to use for intended purpose.
 
 L TAXATION
 
 A) Provision for Taxation is made on the basis of the taxable profits
 computed for the current accounting period (reporting period) in
 accordance with Income Tax Act, 1961.
 
 B) Deferred Tax is recognized, subject to consideration of prudence, on
 timing difference, being difference between taxable income and
 accounting income / expenditure that originate in one period and are
 capable of reversal in one or subsequent year(s). Deferred taxes are
 reviewed for their carrying value at each balance sheet date.
 
 M.  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, the carrying amount is reduced to its recoverable
 amount and the reduction is treated as an impairment loss and is
 recognized in the profit and loss account. If at any subsequent balance
 sheet date there is an indication that a previously assessed impairment
 loss no longer exists, the recoverable amount is reassessed and the
 asset is reflected at recoverable amount subject to a maximum of
 depreciated historical cost and is accordingly reversed in the profit
 and loss account.