(I) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
 
 The Company follows the mercantile system of accounting and recognises
 income and expenditure on accrual basis. The accounts are prepared on
 historical cost basis as a going concern and are consistent with
 generally accepted accounting principles.
 
 (II) SIGNIFICANT ACCOUNTING POLICIES
 
 a) Revenue Recognition
 
 (i) Domestic sales are accounted for on dispatch of goods to customers.
 Gross Sales are net of sales returns
 
 (ii) Export sales are accounted for on the basis of dates of Bill of
 Lading.  Gross Sales are inclusive of incentives/ benefits and net of
 sales returns
 
 b) Fixed Assets
 
 Fixed assets are stated at cost of acquisition less depreciation. Cost
 includes taxes, duties, freight, installation and other direct or
 allocated expenses up to the date of commercial production and net of
 CENVAT credit and Subsidy received, if any.
 
 c) Depreciation
 
 (i) Depreciation on Fixed Assets is provided on ''Straight Line Method''
 at rates prescribed in Schedule - XIV to the Companies Act, 1956.
 
 (ii) Depreciation on fixed assets added /disposed off during the year
 is provided on prorata basis.
 
 d) Impairment of Assets
 
 An asset is treated as impaired when the carrying cost of assets exceed
 its recoverable value. An impairment loss is charged to the Profit and
 Loss Account as and when an asset is identified as impaired. The
 impairment loss recognized in prior accounting period is reversed if
 there has been a change in the estimate of recoverable amount.
 
 e) Expenditure during construction period
 
 The expenditure incurred and attributable interest & financing costs
 incurred prior to commencement of commercial production including Trial
 Run Expenses in respect of new project & substantial expansion of
 existing facilities are capitalised.
 
 f) Investments
 
 Current investments are carried at the lower of cost and quoted / fair
 value, computed category wise. Long Term Investments are stated at
 cost. Provision for diminution in the value of long-term investments is
 made only if such a decline is other than temporary in the opinion of
 the management.
 
 g) Inventories
 
 Inventories are valued as under :-
 
 Raw Materials At Cost
 
 Work-in-Process At Cost
 
 Finished Goods At lower of cost or net realisable value
 
 Stores and Spare Parts At Cost
 
 Cost of Work in Process and Manufactured Goods includes material,
 labour & other appropriate overheads wherever applicable.
 
 h) Foreign Currency Transactions
 
 (i) Transaction in foreign currencies are recorded at the exchange
 rates prevailing on the date of the transaction or at the exchange rate
 under related forward exchange contracts. The realized exchange gains/
 losses are recognized in the Profits Loss account. All foreign currency
 current assets/liabilities are translated in rupees at the rates
 prevailing on the date of balance sheet.
 
 (ii) In respect of branches, which are integral foreign operations, all
 transactions are translated at monthly average rates. Branch monetary
 assets and liabilities are restated at the rates prevailing on the date
 of balance sheet.
 
 i) Employee benefits
 
 (i) Short Term Employee Benefit are recoginsed as an expense at the
 undiscounted amount in the profit and loss account of the year in which
 the related service is rendered.
 
 (ii) Post employment 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 based upon the premium amount
 determined by Life Insurance Corporation (LIC) and State Bank of India
 Group Gratuity Scheme in case of covered employees. The employees which
 are not yet covered in the above Group Gratuity Scheme, provision for
 the same has been made on estimated basis by the management.
 
 (iii) 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 liabilities on account of leave encashment have been
 provided on the basis of actuarial valuation, using projected unit
 credit method, as at the balance sheet date.
 
 j) Taxation
 
 (i) Provision for current tax is made with reference to taxable income
 computed for the accounting period, for which the financial statements
 are prepared by applying the tax rates as applicable.
 
 (ii) Deferred tax is recognised subject to the consideration of
 prudence, on timing differences being the difference between taxable
 income and accounting income that originate in one period and are
 capable of reversal in one or more subsequent periods. Such deferred
 tax is quantified using the tax rates and laws enacted or substantively
 enacted as on the Balance Sheet date. Deferred tax assets are
 recognised and carried forward to extent that there is a reasonable
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realised.
 
 k) Borrowing Cost
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 I) Government Grants
 
 Grants and subsidies from the government are recognized when there is
 reasonable assurance that the grant/subsidy will be received and all
 attaching conditions will be complied with.When the grant or subsidy
 relates to an expense item, it is netted off with the relevant expense.
 Where the grant or subsidy relates to an asset, its value is deducted
 in arriving at the carrying amount of the related asset.
 
 m) Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions involving substantial degree of estimation in measurement
 are recognised when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognised but are disclosed in the
 notes. Contingent Assets are neither recognised nor disclosed in the
 financial statements.
 
 (2) (a) Term Loans from Banks are secured by first charge on all Fixed
 Assets except specific assets and second charge on curret assets, of
 the Company.
 
 (b) Working capital loans from Banks are secured by Hypothecation of
 all current assets and second charge on Fixed Asset:.  except specific
 assets, of the Company.
 
 (c) The Vehicle Loans from the Banks & Others are secured by
 Hypothecation of specified Vehicles against which the finance is
 obtained.