a.     A FIXED ASSETS -TANGIBLE
 
 1.  Fixed Assets are stated at cost net of CENVAt/Value Added tax,
 rebates, less accumulated depreciation and impairment loss, if any.
 
 2.  All costs, including financing costs till commencement of
 commercial production, net charges on foreign exchange contract and
 adjustments arising from exchange rate variations attributable to fixed
 assets are capitalized.
 
 3.  preoperative expenditure: Indirect expenditure incurred during
 construction period is capitalized under the respective asset head as a
 part of the indirect construction cost, to the extent to which the
 expenditure is indirectly related to the assets head. other Indirect
 expenditure incurred during the construction period, which is not
 related to the construction activities or which is not incidental
 thereto is written off in the profit and loss account.
 
 b.  DEPRECIATION
 
 Depreciation on Fixed Assets is provided on Straight Line Method on
 certain Assets and on written down Value Method on other Assets in
 accordance with Schedule XIV of the Companies Act, 1956, except in case
 of improvements to leased premises which are amortised over the period
 of lease. Land is not depreciated. Depreciation on revalued portion of
 fixed Assets, as applicable, is appropriated and adjusted out of
 Revaluation Reserve if available with the Company, on a global pooling
 basis and the balance is charged off in Accounts.
 
 c.  FIXED ASSETS -INTANGIBLE
 
 Assets identified as intangible assets are stated at cost including
 incidental expenses thereto, and are amortised over a predetermined
 period.
 
 D.  INVENTORY VALUATION
 
 Raw Materials, Stores, Spare parts, Chemicals etc., are valued at cost,
 computed on weighted average basis. Finished goods and work in process
 are valued at cost or net realisable value, whichever is lower. In the
 case of finished goods and work in process cost comprises of material,
 direct labour and applicable overhead expenses. the cost of finished
 goods also includes applicable excise duty.
 
 e.    INVESTMENTS
 
 (a) Investments made by the Company in various securities are primarily
 meant to be held over a long-term period.
 
 (b) (i) Holding of certain Investments is of strategic importance to
 the Company and therefore, the Company does not consider it necessary
 to provide for decrease in the Book Value of such Investments, till
 continuation of the relationship of strategic importance with the
 Investee Company, namely that of a Subsidiary, Associate, Company under
 the same management, Foreign Joint Ventures and/or Company associated
 with Avantha Group.
 
 (ii) However, appropriate provisions are made to recognise decrease in
 the Book Value of Investments in companies of Strategic importance
 also, as and when the Investee Company is either wound up or goes into
 liquidation or where the operations cease or are taken over by Receiver
 by operation of Law.
 
 (c) Investments in Government Securities are shown at cost and
 Investments, other than that of Strategic Importance to the Company are
 shown in the books at lower of cost or fair market value.
 
 (d) As a conservative and prudent policy, the Company does not provide
 for increase in the Book Value of individual investments held by it on
 the date of Balance Sheet.
 
 F.  DIVIDEND
 
 provision for Dividend, as proposed by the Directors, is made in the
 books of account, pending approval of the Shareholders at the Annual
 General Meeting.
 
 G.  FOREIGN CURRENCY TRANSACTIONS
 
 (i) Initial Recognition
 
 Foreign currency transaction are recorded in Indian rupees being the
 reporting currency, by applying to the foreign currency amount, the
 exchange rate between the reporting currency and the foreign currency
 at the respective dates of the transaction.
 
 (ii) Conversion
 
 Foreign currency monetary items are reported using the closing rate as
 at the year end. Non-monetary items which are carried in terms of
 historical cost denominated in a foreign currency are reported using
 the exchange rate at the date of the transaction.
 
 (iii) Exchange Differences
 
 Exchange differences arising on the settlement of monetary items or on
 reporting the company’s monetary items at rates different from those at
 which they were initially recorded during the financial year are
 recognized as income or as expenses in the financial year in which they
 arise except for adjustment of exchange difference arising on reporting
 of long term foreign currency monetary items in so far they related to
 the acquisition of a depreciable capital assets which are adjusted to
 the cost of the assets.
 
 h.  REVENUE RECOGNITION
 
 As per the requirement of the Companies (Amendment) Act, 1988, all
 Incomes and Expenses are accounted for on accrual basis.
 
 I.  RESEARCH & DEVELOPMENT
 
 Revenue expenditure on Research and Development is charged to the
 profit & Loss Account in the year in which it is incurred. Capital
 Expenditure on Research and Development is shown as an addition to
 Fixed Assets or work in progress, as the case may be.
 
 J.  RETIREMENT BENEFITS
 
 Short term employee benefits are charged off in the year in which the
 related services are rendered.  post employment and other long term
 employee benefits are charged off in the year in which the employee has
 rendered services. the amount charged off is recognized at the present
 value of the amount payable determined using actuarial valuation
 techniques. Actuarial gain and losses in respect of post employment and
 other long term benefits are charged to profit & Loss Accounts.
 
 K.  INCOME FROM INVESTMENTS
 
 Income from Investments, where appropriate, is taken to revenue in full
 on declaration or receipt and tax deducted at source thereon is treated
 as advance tax.
 
 l.  ADVANCES LICENSE, IMPORT ENTITLEMENTS
 
 Advance license, Import Entitlements are recognized at the time of
 export and the benefit in respect of advance License received by the
 company against export made by it are recognized as and when goods are
 imported against them.
 
 M.  TAXATION provision for Current tax is made on the basis of
 estimated taxable income for the relevant accounting year in accordance
 with the Income tax Act, 1961.
 
 The deferred tax liability on account of timing differences between the
 book profits and the taxable profits for the year is accounted by
 applying the tax rates as applicable as on the balance sheet date.
 
 Deferred tax assets arising from timing differences are recognised on
 the principles of virtual certainty that these would be realised in
 future.
 
 N.  IMPAIRMENT OF ASSETS
 
 The company applies the test of Impairment of certain assets as
 provided in Accounting Standard (AS) – 28 “Impairment of Assets”.
 
 O.  PROVISION AND CONTINGENCIES
 
 the Company shall create a provision when there is a present obligation
 as a result of past events that probably require an outflow of
 resources and a reliable estimate can be made of the amount of
 obligation. A disclosure for a contingent liability is made, when there
 is a possible obligation or a present obligation that probably will not
 require an outflow of resources or where a reliable estimate of the
 obligation cannot be made.
 
 P.  SHARE PREMIUM ACCOUNT: UTILISATION
 
 Debenture / Share / Zero Coupon Convertible Bonds issue expenses
 incurred and premium payable on Zero Coupon Convertible Bonds are
 adjusted in the same year against the Securities premium Account as
 permitted by section 78(2) of the Companies Act, 1956.