1.1 System of Accounting:
 
 (i) The Company follows the mercantile system of accounting and
 recognises income and expenditure on an accrual basis except in case of
 significant uncertainties and interest on delayed payment by parties.
 
 (ii) Financial statements are based on historical cost except certain
 fixed assets which are stated at fair value.
 
 1.2 Revenue recognition:
 
 (i) Revenue is recognised when the significant risk and rewards of
 ownership of the goods have been passed to the buyers. Sale of goods is
 exclusive of Sales tax/VAT. Sales excludes captive consumption.
 
 (ii) Sales made on high seas basis delivered to the customers directly
 and not held in stocks are not included in the Sales / Turnover and are
 included on net basis in other income or as the case may be other
 expenses.
 
 (iii) Sugar sold under levy quota for each season, is accounted at the
 price as notified by the Govt. as available till such time, pending
 final notification for each season. The difference in price pending
 final notification is accounted on an estimation by the management
 taking into account factors affecting the calculation of levy sugar
 price.
 
 (iv) Export incentive in the nature of duty draw back or Duty
 Entitlement Pass Book under Duty Exemption Scheme is accounted for
 in the year of Export.
 
 1.3 Fixed Assets and Depreciation:
 
 (a) Fixed Assets:
 
 (i) Fixed assets are carried at cost of acquisition or construction
 cost and includes amount added on fair valuation, less accumulated
 depreciation (except free hold land), amortisation and impairment loss,
 if any.
 
 (ii) Expenditure during construction period incurred on the projects
 under implementation are
 
 treated as Pre-operative Expenses pending allocation to the assets, and
 are included under Capital Work in Progress. These expenses are
 apportioned to fixed assets on commencement of commercial production.
 Capital Work in Progress is stated at the amount expended up to the date
 of Balance Sheet.
 
 (b) Depreciation:
 
 (i) Depreciation on fixed assets (including on revalued portion on fair
 value) has been provided as under: -
 
 (a) Plant & Machinery & Aircraft:
 
 On straight-line method basis at the rates and in the manner specified
 in Schedule XIV to the Companies Act, 1956.
 
 (b) Other Assets (except clause ''c'' below):
 
 On written down value basis at the rates and in the manner specified in
 Schedule XIV to the Companies Act, 1956.
 
 (c) Intangible assets represented by computer software is being
 amortised over a period of five years Leasehold land is amortised over
 the lease period.
 
 (ii) Depreciation on assets added, sold or discarded during the year
 has been provided on pro-rata basis.
 
 1.4 Investments:
 
 Long term investments are stated at cost of acquisition. Diminution in
 value of such long term investments is not provided for except where
 determined to be of permanent nature.  Current investments are stated
 at lower of cost or fair market value.
 
 1.5 Inventories:
 
 (i) Stock of Raw Materials is valued at cost or net realisable value
 whichever is lower. Cost is arrived at on FIFO basis.
 
 (ii) Stock of Materials-in-Process and Finished goods is valued at cost
 or net realisable value whichever is lower*.
 
 (iii) Stores, Spares and Packing material are valued at cost. Cost is
 arrived at on Weighted Average basis.
 
 (iv) Obsolete Stores and Spares when identified and technically
 determined, are valued at estimated realisable value.
 
 (v) By-products - Molasses and Bagasse has been valued at estimated
 realisable value.
 
 (vi) Trial run inventories are valued at cost or estimated realisable
 value whichever is lower*.
 
 *Cost is arrived at on full absorption basis as per Accounting Standard
 AS-2 Valuation of Inventories.
 
 1.6 Research and Development:
 
 Revenue expenditure on Research and Development is charged against the
 profit for the year.
 
 Capital expenditure on Research and Development is shown as an addition
 to Fixed Assets.
 
 1.7 Government Grants:
 
 Government grants / subsidies received towards specific Fixed assets
 have been deducted from the Gross value of the concerned Fixed assets
 and grant / subsidies received during the year towards revenue expenses
 have been reduced from respective expenses. Capital Subsidies under
 Sugar Promotion Policy, 2004 is recognised to the extent the claims are
 accepted and settled.
 
 1.8 Foreign Currency Transactions:
 
 Foreign Currency transactions are recorded at the rates of exchange
 prevailing on the date of transaction. Monetary foreign currency assets
 and liabilities outstanding at the close of the financial year are
 revalorised at the exchange rates prevailing on the balance sheet date.
 Exchange differences arising on account of fluctuation in the rate of
 exchange is recognised in the Profit & Loss Account. However, in
 respect of long term foreign currency monetary items, the exchange
 difference relating to acquisition of capital assets, has been adjusted
 to the capital assets.
 
 In case of items which are covered by forward exchange contracts, the
 difference between the year end rate and rate on the date of the
 contract is recognised as exchange difference and the premium paid on
 forward contract is recognised over the life of the contract. In case
 of financial derivative contracts, premiums paid, gains/losses on
 settlement and provision for losses, are recognised in the Profit and
 Loss Account.
 
 1.9 Employee Benefits :
 
 (a) Short Term Employee Benefits:
 
 Short term employee benefits are recognised as expenditure at the
 undiscounted value in the Profit and Loss Account of the year in which
 the related service is rendered.
 
 (b) Post Employment Benefits:
 
 (i) Defined Contribution Plans:
 
 Company''s contribution to the superannuation scheme, pension under
 Employees'' Pension Scheme, 1995 etc. are recognised during the year in
 which the related service is rendered.
 
 (ii) Defined Benefit Plans:
 
 - Gratuity:
 
 Gratuity liability is covered under the Gratuity- cum-Insurance Policy
 of Life Insurance Corporation of India (LIC). The present value of the
 obligation is determined based on an actuarial valuation, using the
 Projected Unit Credit Method. Actuarial gains and losses arising on such
 valuation are recognised immediately in the Profit and Loss Account.
 The amount funded by the Trust administered by the Company under the
 aforesaid Policy, is reduced from the gross obligation under the
 defined benefit plan, to recognise the obligation on a net basis.
 
 - Provident Fund:
 
 Monthly contributions are made to a Trust administered by the Company.
 The interest rate payable by the Trust to the beneficiaries is notified
 by the Government. The Company has an obligation to make good the
 shortfall, if any, between the return on the investments of the Trust
 and the notified interest rate.
 
 (c) Long term compensated absences are provided on the basis of
 actuarial valuation.
 
 (d) Compensation to employees under Voluntary Retirement Scheme is
 charged to Profit and Loss Account in the year of accrual.
 
 1.10 Borrowing Cost:
 
 (i) Borrowing cost attributable to acquisition and construction of
 assets are capitalised as part of the cost of such assets up to the date
 when such assets are ready for intended use and other borrowing costs
 are charged to Profit & Loss Account.
 
 (ii) Expenses on issue of shares, debentures and foreign currency
 convertible bonds (FCCBs), premium on redemption of FCCBs, which is
 being provided entirely on issuance as well as exchange rate difference
 arising on revalorisation of such premium are charged to Securities
 Premium Accounts in accordance with Section 78 of the Companies Act,
 1956.
 
 1.11 Provision for Current and Deferred Tax:
 
 (i) Provision for Current tax is made with reference to taxable income
 computed for the accounting period for which the financial statements
 are prepared by applying the tax rates relevant to the respective
 ''Previous Year''.  Minimum Alternate Tax (MAT) eligible for set-off in
 subsequent years (as per tax laws), is recognised as an asset by way of
 credit to the Profit and Loss Account only if there is convincing
 evidence of its realisation. At each Balance Sheet date, the carrying
 amount of MAT Credit Entitlement receivable is reviewed to reassure
 realisation.
 
 (ii) Deferred Ta x resulting from ''timing difference'' between book and
 taxable profit for the year is accounted for using the current tax
 rates.  The deferred tax asset is recognised and carried forward only
 to the extent that there is a reasonable certainty that the assets will
 be adjusted in future. However, in case of deferred tax assets
 (representing unabsorbed depreciation or carry forward losses) are
 recognised, if and only if there is a virtual certainty that there
 would be adequate future taxable income against which such deferred tax
 assets can be realised.
 
 1.12 Impairment of Assets:
 
 The Carrying amount of assets are reviewed at each Balance Sheet date
 if there is any indication of impairment based on internal/ external
 factors An asset is impaired when the carrying amount of the asset
 exceeds the recoverable amount. An impairment loss is charged to the
 Profit and Loss Account in the year in which an asset is identified as
 impaired. An impairment loss recognised in prior accounting periods is
 reversed if there has been change in the estimate of the recoverable
 amount.
 
 1.13 Provisions, Contingent Liabilities and Contingent Assets:
 
 Provisions involving a 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 the
 Financial Statements. Contingent Assets are neither recognised nor
 disclosed in the Financial Statements.
 
 1.14 Employee Stock Options and Shares Plan (ESOP):
 
 In accordance with SEBI guidelines, the excess of the market price of
 the shares, at the date of grant of options under the ESOP, over the
 exercise price, is treated as Employee Compensation Expense.