1) ACCOUNTING CONVENTION:
 
 The financial statements have been prepared on the historical cost
 convention in accordance with the normally accepted accounting
 principles and comply in all material aspects with the notified
 accounting standards by Companies Accounting Standards Rules, 2006 and
 the relevant provisions of the Companies Act , 1956.
 
 2) FIXED ASSETS:
 
 a) Fixed Assets are stated at historical cost less depreciation. Cost
 includes, taxes and duties (but does not include taxes and duties for
 which CENVAT / VAT credit is available), freight and other direct or
 allocated expenses during construction period, net of any income
 earned. Assets acquired on hire purchase are capitalised at principal
 value.
 
 b) Amount of provisional consideration paid on land acquired under
 registered lease-cum-sale agreement for twenty one years; with option
 to the Company to convert the lease into absolute sale at the expiry of
 the lease; subject to fulfilment of the terms and conditions specified
 and payment of additional consideration, if any, to be fixed at that
 time, is capitalised and included, without being amortised over the
 period of lease.
 
 c) (i) Buildings and structures constructed on land acquired under
 lease-cum- sale agreement with option to convert the lease into
 absolute sale at the expiry of the lease are depreciated in the normal
 way and such assets on other lease-hold land are amortised over the
 period of lease.
 
 (ii) Assets at Tiptur, Pandhurna, and Decaffeination Plant at
 Vazhakulam are depreciated on written-down-value method and assets at
 other locations are depreciated on Straight-line method, at the rates
 specified in Schedule XIV to the Companies Act, 1956.
 
 (iii) Depreciation is provided at the rates specified in Schedule XIV
 to the Companies Act,1956 on written down value method.  Assets costing
 individually less than Rs.5,000/- are depreciated at 100%. On additions
 to and deductions from Fixed Assets, depreciation is provided on
 pro-rata basis.
 
 Amortisation on intangible assets is charged equally over the estimated
 useful life of the asset, not exceeding five years, commencing from the
 year of commercialisation. The useful life is estimated based on the
 evaluation of future economic benefits expected to flow from such
 assets.
 
 3) IMPAIRMENT OF ASSETS :
 
 The Company reviews the carrying amounts of its assets for any possible
 impairment at each balance sheet date. An impairment loss is recognized
 when the carrying amount of an asset exceeds its recoverable amount and
 the impairment loss, if any, is recognized in the Statement of Profit &
 Loss.
 
 4) INVESTMENTS:
 
 Long term Investments are stated at cost. Decline in value of long term
 investments, other than temporary, is provided for. Current Investments
 are stated at lower of cost and fair value.
 
 5) INVENTORIES :
 
 Inventories are valued at lower of cost on weighted average basis and
 net realisable value, after providing for obsolescence wherever
 considered necessary. Cost includes taxes and duties (other than duties
 and taxes for which CENVAT / VAT credit is available), freight and
 other direct expenses.
 
 6) EMPLOYEE BENEFITS :
 
 Gratuity liability, which is a defined benefit scheme and provision for
 leave encashment is accrued and provided for on the basis of
 independent actuarial valuation based on projected unit credit method
 made at the end of each financial year. Actuarial gains and losses are
 recognised in the Statement of profit and loss and are not deferred.
 Retirement benefits in the form of Provident Fund, Family Pension Fund
 and Superannuation Schemes, which are defined contribution schemes, are
 charged to the Statement of profit and loss of the year when the
 contribution to the respective funds accrue.
 
 7) REVENUE RECOGNITION :
 
 Revenue is recognised on their accrual and when no significant
 uncertainty on measurability or collectability exists. Expenditure is
 accounted for on their accrual.
 
 Sale of Goods:
 
 Revenue is recognised when all the significant risks and rewards of
 ownership of the goods have been passed on to the buyer, usually on
 delivery of goods. The Company collects sales taxes and value added
 taxes (VAT) on behalf of the government and, therefore, these are not
 economic benefits flowing to the Company. Hence, they are excluded from
 revenue.
 
 Interest:
 
 Interest income is recognised on a time proportion basis taking into
 account the amount outstanding and the applicable interest rate.
 Interest income is included under the head other income in the
 statement of profit and loss.
 
 Dividends:
 
 Dividend income is recognized when the Company''s right to receive
 dividend is established by the reporting date.
 
 8) FOREIGN CURRENCY TRANSACTION:
 
 Transactions in foreign currency are recorded at the rates of exchange
 in force at the time the transactions are effected. Monetary items
 denominated in foreign currency and outstanding at the Balance Sheet
 date are converted at the year end exchange rates and the resultant
 loss or gain other than for acquisition of fixed assets, is dealt with
 in the Profit and Loss Account. The Company uses foreign exchange
 forward contracts to hedge its exposure to movements in foreign
 exchange rates and the resultant gain or loss is dealt with in the
 Profit and Loss Account . Premium or discount on forward contracts is
 amortised over the life of such contract and is recognized as income or
 expense in the Profit and Loss account. Exchange differences arising on
 settlement / translation of long term monetary items utilized for
 acquisition of Fixed Assets are adjusted to carrying cost of Fixed
 Assets.
 
 9) BORROWING COSTS:
 
 Borrowing costs attributable to the acquisition or construction of
 qualifying asset is capitalized as part of such assets. All other
 borrowing costs are charged to revenue. A qualifying asset is an asset
 that necessarily requires a substantial period of time to get ready for
 its intended use or sale.
 
 10) TAXES ON INCOME:
 
 Provision for Income-tax is made for both current and deferred tax.
 Provision for current income tax is made on the assessable income at
 the tax rate applicable to the relevant assessment year. Deferred tax
 is accounted for by computing the tax effect of the timing difference
 which arise during the year and reverse out in the subsequent periods.
 Deferred tax is calculated at the tax rates substantively enacted by
 the Balance Sheet date. Deferred tax assets are recognized only if
 there is a virtual certainty that they will be realized.
 
 11) GOVERNMENT GRANTS:
 
 Subsidies from government in respect of fixed assets are deducted from
 the cost of respective assets as and when they accrue.  Subsidies
 related to revenue are recognised in the profit and loss statement to
 match them with the related costs which they are intended to
 compensate.
 
 12) RESEARCH & DEVELOPMENT:
 
 Expenditure on research phase is recognised as an expense as and when
 it is incurred.
 
 Expenditure on development phase is recognized as intangible assets if
 it is identifiable, capable of being controlled and from which future
 economic benefits are expected to flow to the enterprise. Intangible
 assets are stated at cost net of tax/duty credits availed, if any, less
 accumulated amortisation and cumulative impairment.
 
 13) EARNINGS PER SHARE:
 
 Basic earnings per share are calculated by dividing the net profit or
 loss for the period attributable to equity shareholders (after
 deducting the preference dividends and attributable taxes) by the
 weighted average number of equity share holders outstanding during the
 period.  The weighted average number of equity shares outstanding
 during the period is adjusted for events such as bonus issue, bonus
 element in a right issue, share split, and reverse share split
 (consolidation of shares) that have changed the number of equity shares
 outstanding, without a corresponding change in resources.
 
 For the purpose of calculating diluted earnings per share, the net
 profit or loss for the period attributable to equity shareholders and
 the weighted average number of shares outstanding during the period are
 adjusted for the effects of all dilutive potential equity shares.
 
 14) PROVISIONS & CONTINGENT LIABILITY:
 
 Provision is recognised when the company has a present obligation as a
 result of past event, it is probable that an outflow of resources
 embodying economic benefits will be required to settle the obligation
 and a reliable estimate can be made of the amount of the obligation.
 Provisions are not discounted to their present value and are determined
 based on the best estimate required to settle the obligation at the
 reporting date. These estimates are reviewed at each reporting date and
 adjusted to reflect the current best estimates.
 
 Contingent liability is a possible obligation that arises from past
 events whose existence will be confirmed by the occurrence or non
 occurrence of one or more uncertain future events beyond the control of
 the Company or a present obligation that is not recognized because it
 is not probable that an outflow of resources will be required to settle
 the obligation. Contingent liability also arises in extremely rare
 cases where there is a liability that cannot be recognized because it
 cannot be measured reliably. The Company does not recognise contingent
 liability but discloses its existence in financial statements.