1.  System of Accounting and Use of Estimates
 
 The Company follows the mercantile system of accounting by following
 accrual concept in the preparation of accounts.  The preparation of
 financial statements requires estimates and assumptions to be made that
 affect the reported amount of assets and liabilities on the date of the
 financial statements and the reported amount of revenues and expenses
 during the reporting period. Difference between the actual results and
 estimates are recognized in the period in which the results are known/
 materialized.
 
 2.  Fixed Assets
 
 Value of gross block of fixed assets represent cost of acquisition,
 including non-refundable taxes & duties, expenditure on installations, 
 attributable pre-operative expenses including borrowing cost and other 
 identifiable direct expenses incurred upto the date of commencement of 
 commercial use of the assets.
 
 However value of gross block of fixed assets acquired upto 31.03.1985
 has been stated at revalued amount as on 31.03.1986.
 
 3.  Depreciation
 
 Depreciation on fixed assets is provided for on straight line method in
 accordance with the provisions of section 205(2)(b) of the Companies
 Act, 1956. Depreciation on additions/disposals during the year is
 provided on pro-rata basis.  Consequent to changes made in schedule
 XIV, vide Notification No.GSR 756E dated 16.12.93, the company had
 revised the rate of depreciation. The specified period had been
 recomputed as suggested by the Circular dated 20.12.93 except in case
 of petty assets like furniture, fixture and office equipment where it
 is difficult to effect the changes. While adopting the revised rates,
 the Spinning Plant has been categorized as Continuous Process Planf on
 the basis of technical opinion obtained by the company.
 
 Value of leasehold land is amortized over the period of its lease.
 
 4.  Valuation of Inventories
 
 Inventories are valued at lower of cost and net realisable value. Cost
 is measured on First In First Out basis.
 
 5.  Turnover
 
 i) Turnover are inclusive of excise duty, refund and other related
 realization but exclusive of value added tax charged.  
 
 ii) Job income included in turnover is accounted for on delivery of 
 finished goods inclusive of excise duty.
 
 6.  Investments
 
 Long term Investments are carried at cost. Whereas, current investments
 are carried at lower of cost and net realisable value. In case of long
 term investment!, otherthan temporary diminution in the value of
 investment is provided for.
 
 7.  Benefits Receivable Against Export and Its Obligation
 
 Unutilized credits, entitlements under Duty Entitlements Pass Book
 (DEPB) schemes are accounted for in the year of export at market value.
 
 8.  Foreign Currency Transactions
 
 i) Transactions denominated in foreign currencies are normally recorded
 at the exchange rate prevailing on the day of the transactions.
 
 ii) Monitory items denominated in foreign currency at the year end and
 not covered by forward exchange contracts are translated at year end
 rates and those covered by forward contracts are translated at the rate
 ruling at the date of transactions as increased or decreased by the
 proportionate difference between the forward rate and exchange rate on
 the date of transactions such difference having been recognized over
 the life of the contract. Foreign exchange financial instruments in
 hand at the year end are valued at mark to market.
 
 Any income or expenses on account of exchange difference either on
 settlement or on translation is recognized in the profit and loss
 account.
 
 9.  Employees'' Benefits
 
 i) Short-term employee benefits are recognized as an expense at the
 undiscounted amount in the profit and loss account for the year in
 which the related service is rendered.
 
 ii) Retirement and other long term employee benefits are recognized as
 an expense in the profit and loss account for the year in which the
 employee has rendered services. The expense is recognized at the
 present value of the amount payable determined using actuarial
 valuation techniques. Actuarial gains and losses in respect of
 retirement and other long term benefits are charged to the profit and
 loss account.
 
 10.  Provision For Doubtful Debts
 
 15% is being provided each year on amount outstanding over a period of
 6 months.
 
 11.  Taxes On Income
 
 Current tax is determined as the amount of tax payable to the Taxation
 Authorities in respect of taxable income for the year.
 
 Deferred tax is recognized, subject to consideration of prudence, in
 respect of deferred tax assets, on timing differences being difference
 between taxable income and accounting income that originate in one year
 and are capable of reversal in one or more subsequent years.
 
 In respect of unabsorbed depreciation / carry forward of losses under
 the tax laws, deferred tax assets are recognized only to the extent
 that there is virtual certainty that future taxable income will be
 available against which such deferred tax assets can be realized.
 
 12.  Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets. A qualifying asset is one that takes necessarily
 substantial period of time to get ready for its intended use. All other
 borrowing costs are charged to revenue.
 
 13.  Except where stated, accounting policies are consistent with the
 generally accepted accounting principles and have been consistently
 applied.