Basis of Accounting
 
 The accounts have been prepared in accordance with historical cost
 convention and on accrual basis.
 
 Use of Estimates
 
 The presentation of financial statements in conformity with the
 generally accepted accounting principles requires estimates and
 assumptions to be made that affect the reported amounts of assets and
 liabilities on the date of the financial statements and the reported
 amounts of revenues and expenses during the reporting period.
 Difference between the actual and estimates are recognised in the
 period in which the results are known/materialised.
 
 Fixed Assets
 
 a) Fixed Assets are stated at cost less depreciation. Cost comprises of
 purchase price and attributable expenses (including financing charges)
 and is net of permissible credits/set offs.
 
 b) Expenditure (including financing charges) incurred for fixed assets,
 the construction / installation/acquisition of which is not completed,
 is included under the Capital Work- in-Progress and the same is
 related/classified to the respective fixed assets on the completion.
 
 Depreciation/Amortisation
 
 a) Depreciation on fixed assets (other than leasehold land) has been
 provided in accordance with Schedule XIV to the Companies Act, 1956, on
 Straight Line Method. In respect of fixed assets whose actual cost does
 not exceed Five thousand rupees, depreciation is provided at the rate
 of 100 percent, irrespective of the date of addition during the year.
 
 b) Premium on Leasehold Land is amortised over the duration of the
 Lease.
 
 Investments
 
 Investments are valued at cost plus attributable expenses of
 acquisition and are classified as Long Term Investments and Current
 Investments (investments intended to be held for not more than one
 year). Long Term Investments are stated at cost. However, where there
 is a diminution, other than temporary, in the value of a long-term
 investment, necessary^
 
 provision is made to recognise the decline. Current Investments are
 stated at lower of cost and fair value, computed on individual
 investment basis.
 
 Valuation of Inventories
 
 Inventories are valued at lower of the cost and net realisable value.
 Cost of inventories is computed on moving weighted average basis. Cost
 comprises of all costs of purchase, costs of conversion and other costs
 incurred in bringing the inventories to their present location and
 condition.
 
 Sales
 
 Sales are inclusive of Excise Duty but excluding Value Added
 Tax/Central Sales Tax and are net of Trade Discounts, Rebates and
 Incentives.
 
 Export Benefits
 
 Consumption of Raw Materials is arrived at after adjusting the
 difference between the cost of indigenous/duty paid imported raw
 materials and international cost of raw materials entitled to be
 imported/imported under Duty Exemption Scheme of the Government of
 India against direct/indirect exports made/to be made by the Company
 during the year. Export Incentives under Duty Entitlement Pass Book
 Scheme and Focus Market Scheme under EXIM policy/ Foreign Trade Policy
 are accounted for in the year of export. Profit/Loss on sale of
 DEPB/Import licenses is accounted in the year of such sale.
 
 Foreign Currency Transactions
 
 Transactions in foreign currencies are accounted at the exchange rates
 prevailing on the day of the transaction. Gains and losses arising out
 of subsequent fluctuations are accounted on actual payment/realisation.
 Monetary items related to foreign currency transactions, remaining
 unsettled at the end of the year are adjusted at the rates prevailing
 at the year end or are stated at the amounts likely to be realised or
 required to be disbursed, except for those considered doubtful of
 recovery. The exchange fluctuation arising on account of such
 adjustments are dealt in Profit and Loss Account. Non- monetary items
 are reported by using the exchange rate at the date of transaction.
 
 The Company enters into Forward Contracts to hedge its Foreign Currency
 Exposures. Premium/ Discount in respect of outstanding forward
 contracts at the year end are amortised as expense or income over the
 life of the contract.
 
 Employee Benefits:
 
 A) Short-term employee benefits:
 
 Short-term employee benefits consisting of wages, salaries, social
 security contributions, ex-gratia and accrued leave are recognised in
 the year to which it relates.
 
 B) Post employment benefits:
 
 i) Benefits in the nature of contribution to provident fund,
 superannuation scheme, employee state insurance scheme etc.  provided
 by the company to the employees have been identified as defined
 contribution plans in terms of provisions of AS-15 on “Employee
 Benefits” where the obligation of the company is limited to a
 pre-agreed amount as fixed by the administrator of those plans. Such
 contributions are recognised in the year to which they relate.
 
 ii) Benefit in the nature of gratuity paid by company to the employees
 has been identified as defined benefit plan in terms of provisions of
 AS-15 on “Employee Benefits”. The gratuity scheme in respect of the
 employees of the company is administered through Life Insurance
 Corporation of India (LIC). Annual contributions as determined by LIC
 are charged to profit and loss account. The liability of the company is
 also determined through actuarial valuation technique at balance sheet
 date and the additional liability, if any, arising out of the
 difference between the actuarial valuation and the plan assets as at
 the balance sheet date is provided for at the year end.
 
 Research and Development
 
 Revenue expenditure on Research and Development is charged to Profit
 and Loss Account as incurred. Capital expenditure on assets acquired
 for Research and Development is added to Fixed Assets.
 
 Government Grants
 
 Special Capital Incentive received from the Government for setting
 up/expansion of an industrial undertaking in underdeveloped area of the
 State, is credited to Capital Reserve (Capital Incentive Reserve).
 Government grants/subsidy related to specific fixed assets is reduced
 from the cost of the asset concerned.
 
 Borrowing Cost
 
 Borrowing costs directly attributable to the acquisition/
 construction/installation of fixed assets are capitalised as part of
 the cost of the assets up to the date the assets are put to use. Other
 borrowing costs are charged to Profit and Loss Account.
 
 Taxation
 
 a) Provision for current tax is made and retained in the accounts on
 the basis of estimated tax liability as per the applicable provisions
 of the Income Tax Act, 1961.
 
 b) Deferred tax assets and liabilities are recognised for timing
 differences between the accounting and taxable income, based on tax
 rates that have been enacted or substantively enacted by the Balance
 Sheet date.  Deferred tax assets, subject to the consideration of
 prudence, are recognised only if there is reasonable certainty that
 sufficient future taxable income will be available, against which they
 can be realised. At each Balance Sheet date, the carrying amount of
 deferred tax assets is reviewed to reassure its realisation.
 
 Leases
 
 Assets acquired on leases where a significant portion of the risks and
 rewards of ownership are retained by the lessor are classified as
 operating leases. Lease rentals are charged to the Profit and Loss
 Account on accrual basis. Assets leased out under operating lease are
 capitalised, depreciation thereon is provided in the books and rental
 income is recognised on accrual basis over the lease term. Assets
 leased out are stated at original cost and the depreciation thereon is
 provided in the books.
 
 Impairment
 
 The carrying amount of an asset is reviewed at each balance sheet date
 for any indication of impairment based on internal/ external factors.
 An impairment loss is recognised wherever the carrying amount of an
 asset exceeds its recoverable amount. The recoverable amount is the
 greater of the assets net selling price and value in use. In assessing
 value in use, the estimated future cash flows are discounted to their
 present value at the weighted average cost of capital.
 
 Provisions, Contingent Liabilities and Contingent Assets
 
 A provision is made based on a reliable estimate when it is probable
 that an outflow of resources embodying economic benefit will be
 required to settle an obligation. Contingent Liabilities, if material,
 are disclosed by way of notes to accounts. Contingent Assets are not
 recognised or disclosed in the financial statements.