1.  System of Accounting:
 
 - The Company follows the mercantile system of accounting and
 recognises income and expenditure on an accrual basis except those with
 significant uncertainties.
 
 - Financial Statements are based on historical cost. These costs are
 not adjusted to reflect the impact of the changing value in the
 purchasing power of money.
 
 - The preparation of Financial Statements in conformity with generally
 accepted accounting principles requires management to make estimates
 and assumptions that affect the reported amounts of assets,
 liabilities, revenue and expenses and disclosure of contingent assets
 and liabilities. The estimates and Assumptions used in accompanying
 financial statements are based upon Management''s evaluations of the
 relevant facts and circumstances as of the date of the financial
 statements. Actual results may differ from estimates and assumptions
 used in preparing the accompanying financial statements. Any revisions
 to accounting estimates are recognized prospectively in current and
 future periods.
 
 2.  Fixed Assets and depreciation:
 
 A.  Fixed Assets are stated at their original cost of acquisition
 including incidental expenses related to acquisition and installation
 of the concerned assets. Fixed Assets are shown net of accumulated
 depreciation (except free hold land).
 
 A.  Expenditure on New Projects and Expenditure during Construction
 etc. :
 
 In case of new projects or expansion at the existing units of the
 Company, expenditure incurred including interest and financing costs of
 specific borrowings, prior to commencement of commercial production is
 being capitalised to the cost of assets.
 
 B.  Depreciation:
 
 Fixed Assets:
 
 i. Depreciation on Buildings, Plant & Machinery, Electrical
 Installations, and Office Equipments is being provided on ''Straight
 Line Method'' basis in accordance with the provisions of Section
 205(2)(b) of the Companies Act, 1956, in the manner and at the rates
 specified in Schedule XIV to the said Act.
 
 ii. Depreciation in respect of Furniture & Fittings, Vehicles is being
 provided on ''Written down value'' basis in accordance with the
 provisions of Section 205(2)(a) of the Companies Act, 1956 in the
 manner and at the rates specified in Schedule XIV to the said Act.
 
 iii. Depreciation on additions to assets during the year is being
 provided at their respective rates on pro-rata basis from the date of
 acquisition/installation.
 
 iv. Depreciation on assets sold, discarded or demolished during the
 year, is being provided at their respective rates on pro-rata basis up
 to the date on which such assets are sold, discarded or demolished.
 
 3 .  Impairment of Assets :
 
 The Company tests for impairments at the close of the accounting
 period, if and only if, there are indications that suggest a possible
 reduction in the recoverable value of an asset. If the recoverable
 value amount of an Asset, i.e.  the net realisable value or the
 economic value in use of a cash generating unit, is lower than the
 carrying amount of the Asset, the difference is provided for as
 impairment. However, if subsequently, the position reverses and the
 recoverable amount become higher than the then carrying value, the
 provision to the extent of the then difference is reversed, but not
 higher than the amount provided for.
 
 4.  Investments:
 
 Investments are valued at cost of acquisition.
 
 i) Long Term: Long Term Investments are stated at cost. Diminution in
 the value of long term investments are generally not considered to be
 of a permanent nature. However where, in the opinion of the management,
 considering the facts and circumstances prevailing at the balance sheet
 date, diminution, if any, is determined to be of a permanent nature,
 provision for the same is made and investments are stated net of such
 provisions.
 
 ii) Current Investment : Current Investments are stated at cost less
 provision for diminution if any.
 
 5 Revenue Recognition : -
 
 Revenue recognition is generally postponed if the receipt can not be
 estimated with reasonable certainty.
 
 a) Income from Electricity generated is accounted on the basis of
 electricity wheeled into MSEB grid and jointly certified.
 
 b) Interest is accrued over the period and the amount of
 loan/investment.
 
 c) Dividend is accrued in the year in which it is declared, whereby
 right to receive is established.
 
 d) Profit/Loss on sale of investment is recognised on contract date.
 
 e) Income from Certified Emission Reduction units in accrued in the
 year of generation of wind power if the receipt of and value of units
 is reasonably certain.
 
 6 .  Borrowing Cost :-
 
 Interest on borrowings is recognised in the profit & Loss account
 except interest incurred on borrowings specifically received for
 projects are capitalized to the cost of asset until such time the asset
 is ready to be put to use for intended purpose.
 
 7.  Share issue & Deferred Revenue expenses are written off in five
 years.
 
 8.  Preliminary Expenses are written off in five years.
 
 9.  Employee Benefits :
 
 - Employee Benefit in the form of Provident Fund and Pension Scheme
 whether in pursuance of law or otherwise which are defined
 contributions are accounted on accrual basis and charged to Profit &
 Loss account.
 
 - Gratuity:
 
 Payment for present liability of future payment of gratuity is being
 made to approved gratuity fund, which fully cover the same under cash
 accumulation policy of the Life Insurance Corporation of India. The
 employee''s gratuity is a defined benefit funded plan. The present value
 of the obligation under such defined benefit plan is determined based
 on the actuarial valuation using the Projected Unit Credit Method as at
 the date of the Balance Sheet and the shortfall in the fair value of
 the Plan Assets is recognized as an obligation.
 
 - Superannuation:
 
 Defined contribution to Life Insurance Corporation of India for
 employees covered under Superannuation scheme are accounted at the rate
 of 15% of such employee''s annual salary.
 
 - Privilege Leave Benefits:
 
 Privilege Leave benefits or compensated absences is considered as long
 term unfunded benefits and is recognized on the basis of an actuarial
 valuation using the Projected Unit Credit Method determined by an
 appointed Actuary.
 
 10. Taxation :
 
 Provision for taxation is made on the basis of taxable profits computed
 in accordance with the Previous Year as per Income Tax Act. Deferred
 Tax resulting from timing difference between Book Profits & Tax Profits
 is accounted for at the applicable rate of tax to the extent the timing
 differences are expected to crystallize, after ignoring deferred tax
 adjustments originating and reversing during tax holiday period, in
 case of Deferred Tax Liabilities with reasonable certainty and in case
 of Deferred tax Assets with virtual certainty that there would be
 adequate future taxable income against which Deferred Tax Asset can be
 realized.
 
 11 . Provisions:
 
 Necessary Provisions are made for present obligations that arise out of
 past events prior to the Balance Sheet date entailing future outflow of
 economic resources. Such provisions reflect best estimates based on
 available information.
 
 Note : There are no loans and advances in the nature of loans to firms
 / companies in which Directors are interested.