i. Basis of Accounting
 
 The Accounts of the Company are prepared under the historical cost
 convention and in accordance with applicable accounting standards
 except where otherwise stated.
 
 In preparation of Financial Statements, fundamental accounting
 assumption of going concern has been followed except in case of
 Nanjangud, Thane and Rajpura Units.
 
 For recognition of income and expenses, Accrual basis of Accounting is
 followed except in following cases where accounting has been done on
 cash basis because of uncertainty involved :
 
 a) Insurance and other claims receivable.
 
 b) interest income on overdue debts (to the extent not certain of
 recovery).
 
 c) Fuel Escalation Charges payable to Electricity Board.
 
 ii. Revenue Recognition
 
 Revenue from the sale of goods including manufactured products is
 recognised upon passage of title to the customer, which generally
 coincides with delivery.
 
 iii. Fixed Assets
 
 Fixed Assets are stated at cost less accumulated depreciation. The cost
 of an asset comprises its purchase price and any directly attributable
 cost of bringing the asset to working condition for its intended use.
 Expenditure for additions, improvements and renewals are capitalised
 and expenditure for maintenance and repairs are charged to the Profit
 and Loss Account. When assets are sold or discarded, their cost and
 accumulated depreciation are removed from the accounts and any gain or
 loss resulting from their disposal is included in the Profit and Loss
 Account.
 
 iv. Depreciation
 
 Depreciation is provided on straight-line method in terms of Section
 205(2)(b) of the Companies Act, 1956. The rates of depreciation
 considered are on the following basis
 
 a) On Fixed Assets installed up to 31st December 1987, the rates
 corresponding to the rates applicable under the Income Tax Rules in
 force at the time of acquisition/purchase of respective assets.
 
 b) On Fixed Assets installed on and from 1st January 1988 onwards, at
 the rates and in the manner specified in Schedule XIV to the Companies
 Act, 1956.
 
 v. Investments
 
 Long Term Investments are stated at cost. Provision for loss on account
 of diminution in the value of investments is made, wherever required.
 
 vi. Inventories :
 
 a) Inventories are valued as follows :
 
 - Stores & Spare Parts and Raw Materials - At yearly weighted average
 cost or net realisable value, whichever is lower.
 
 - Goods under Process and Finished Goods - At cost or net realisable
 value, whichever is lower. Cost for this purpose includes material,
 labour and an appropriate portion of overheads.
 
 - Waste & Scrap - At estimated realisable value.
 
 vii. Retirement Benefits
 
 The Company has a policy of providing for gratuity liability on the
 basis of actuarial valuation and contributing the same to the Gratuity
 Fund which meets gratuity liability of employees of the Company as and
 when it arises. Leave encashment liability, has been provided on the
 basis of actuarial Valuation. (Refer Note No. 7 in Schedule 23)