1.0 BASIS OF PREPARATION
 
 1.1 The financial statements are prepared under historical cost
 convention in accordance with the mandatory accounting standards issued
 by the Institute of Chartered Accountants of India and the provisions
 of the Companies Act, 1956.
 
 1.2 The preparation of financial statements requires the Management to
 make estimates and assumptions that affect the reported amount of
 assets and liabilities, and disclosure of contingent liabilities as at
 the date of the financial statements.  The Management believes that
 these estimates and assumptions are reasonable and prudent. However,
 actual results may differ from estimates on a case to case basis.
 
 2.0 FIXED ASSETS
 
 2.1.1 Land in possession of the Company for which requisite payment has
 been made to the Government of Assam and for which mutation is pending,
 is classified as Freehold.
 
 2.1.2 Fixed assets are verified once in three years. Discrepancies, if
 any, on verification are adjusted in the books of accounts.
 
 2.2 Construction Period Expenses on Projects
 
 2.2.1 Revenue expenses exclusively attributable to projects incurred
 during construction period are capitalized. However, such expenses in
 respect of capital facilities as are executed simultaneously with the
 production / operations are charged to revenue.
 
 2.2.2 Financing cost incurred during the construction period on loans
 specifically borrowed and utilized for projects is capitalized on
 quarterly basis up to the date of capitalization.
 
 2.2.3 Financing cost incurred on General Borrowings used for projects
 is capitalized. The amount of such borrowings is determined after
 setting off the amount of internal accruals.
 
 2.3 Capital Stores
 
 2.3.1 Capital stores are valued at cost. Specific provision is made for
 likely diminution in value, wherever required.
 
 2.4 Depreciation / Amortisation
 
 2.4.1 Depreciation on fixed assets is provided in accordance with the
 rates as specified in Schedule XIV to the Companies Act, 1956, on
 straight-line method, up to 95% of the cost of the assets. Depreciation
 is charged pro-rata on quarterly basis on assets from / up to the
 quarter of capitalization / sale / disposal / dismantling during the
 year.
 
 2.4.2 Assets costing up to Rs.5000/- each are depreciated fully in the
 year of capitalization.
 
 2.4.3 Insurance Spares depreciated to the extent of 100% over the
 balance useful life of the concerned item of fixed asset.
 
 2.4.4 Expenditure on Enabling Assets like railway siding, roads,
 culverts etc. the ownership of which are not retained by the Company,
 are charged to revenue in full.
 
 2.5 Impairment of Assets
 
 2.5.1 Carrying amount of cash generating units / assets is reviewed for
 impairment at the end of the year. Impairment, if any, is recognized
 where the carrying amount exceeds the recoverable amount, the latter
 being the higher of net realizable price and value in use.
 
 3.0 INTANGIBLE ASSETS
 
 3.1 Costs incurred on technical know-how/license fee relating to
 production facilities and processes are charged to revenue.
 
 3.2 Costs incurred on technical know-how/license fee relating to
 process design/plants/facilities are accounted for as Work-in- Progress
 - Intangible Assets during the construction period of the said
 plant/facility. At the time of capitalization of the said
 plant/facility, such costs are also capitalized as intangible asset and
 amortised on a straight line basis over a period of ten years or life
 of the said plant/facility, whichever is earlier, beginning from the
 quarter in which the said plant/facility is capitalized.
 
 3.3 Expenditure on Research and Development other than on capital
 account is charged to revenue.
 
 3.4 Costs incurred on computer software purchased/developed, resulting
 in future economic benefits are capitalized as Intangible Assets and
 are amortised over a period of three years beginning from the quarter
 in which such software is capitalized.
 
 4.0 FOREIGN CURRENCY TRANSLATION
 
 4.1 Transactions in foreign currency are recorded at exchange rates
 prevailing on the date of transactions.
 
 4.2 Monetary items denominated in foreign currencies (such as cash,
 receivables, payables etc.) outstanding at the year end, are translated
 at exchange rates applicable as at the year end.
 
 4.3 Non monetary items denominated in foreign currency, (such as
 investment, fixed asset etc) are valued at the exchange rate prevailing
 on the date of transaction.
 
 4.4 Any gains and losses arising due to exchange differences at the
 time of translation at the year end or settlement before that date, are
 charged to the Profit & Loss Account.
 
 4.5 Premium/discount arising at the inception of the forward exchange
 contracts entered into to hedge foreign currency risks are amortised as
 expense/income over the life of the contract. Outstanding forward
 contracts as at the reporting date are restated at the exchange rate
 prevailing on that date.
 
 5.0 INVESTMENT
 
 5.1 All long term Investments are valued at cost and provision for
 diminution in value is made, wherever such diminution is not temporary.
 
 5.2 All current investments are valued at lower of cost or fair market
 value.
 
 6.0 INVENTORIES
 
 6.1 Raw Materials
 
 6.1.1 Crude Oil is valued at cost determined on weighted average basis
 or net realizable value, whichever is lower.
 
 6.1.2 Para-Xyelene, Mono-Ethyl Glycol and Methanol (purchased) are
 valued at cost on weighted average basis or net realizable value,
 whichever is lower.
 
 6.1.3 Stock in Process is valued at raw material cost plus 50% of the
 estimated conversion costs as applicable or net realizable value
 whichever is lower.
 
 6.2 Stock-in-Trade
 
 6.2.1 Finished Products are valued at cost based on First in First out
 (FIFO) or net realizable value, whichever is lower.
 
 6.2.2 By-products are valued at net realizable value.
 
 6.2.3 Cost of Finished Products internally consumed is based on :
 
 - Para Xyelene - at net variable cost (net of sale value of
 bye-products)
 
 - Molten DMT - at cost or net realizable value, whichever is lower,
 reduced by cost of flaking and packing.
 
 - Methanol (recovered) - at net realizable value (basic price).
 
 6.3 Stores and Spares
 
 6.3.1 Stores and Spares are valued at weighted average cost. In case of
 declared obsolete stores and spares, provision is made for likely loss
 on sale/disposal and charged to revenue. Further, a general provision @
 5% is also made on the balance stores and spares (excluding capital
 stores) towards likely diminution in the value.
 
 6.3.2 Stores & Spares in transit are valued at cost.
 
 7.0 DEBTORS
 
 7.1 Specific provision is made on,sundry debtors wherever uncertainty
 of recovery is envisaged.
 
 8.0 PROVISIONS AND CONTINGENT LIABILITIES
 
 8.1 Provisions are recognized when there is a present obligation as a
 result of past event.
 
 8.2 Contingent Liabilities.
 
 8.2.1 Show cause notices issued by various Government Authorities are
 not considered as obligation.
 
 8.2.2 When the demand notices are raised against such show cause
 notices and are disputed by the Company, then these demands are
 classified as obligations.
 
 8.2.3 The treatment in respect of disputed obligations are as under:
 
 (a) A provision is recognized in respect of present obligations where
 the outflow of resources is probable;
 
 (b) All other cases above Rs.5 lakh are disclosed as contingent
 liabilities unless the possibility of outflow of resources is remote.
 
 9.0 CAPITAL COMMITMENTS
 
 9.1 Estimated amount of contracts remaining to be executed on capital
 accounts are disclosed in each case above Rs.5 lakh.
 
 10.0 REVENUE RECOGNITION
 
 10.1 Gross sales are net of trade discounts and include, inter-alia,
 Excise Duties and Education Cess.
 
 10.2 Other claims (including interest on outstanding) are accounted for
 generally at cost when there is certainty that the claims are
 realizable.
 
 10.3 Income and expenditure up to Rs.5 lakh in each case of
 error/omission pertaining to previous years are accounted for in the
 current year.
 
 10.4 Pre-paid expenses up to Rs.5 lakh in each case are charged to
 revenue.
 
 11.0 TAXES ON INCOME
 
 11.1 Provision for current tax is made as per the provisions of the
 Income Tax Act, 1961. Deferred tax liability /Assets resulting from
 timing difference between book and taxable profit is accounted for
 considering the tax rate and laws that have been enacted or
 substantively enacted as on the Balance Sheet date. Deferred tax asset
 is recognized and carried forward only to the extent that there is
 virtual certainty that the asset will be realized in future.
 
 12.0 EMPLOYEES BENEFITS
 
 12.1 Short term benefits
 
 Short term employee benefits are accounted in the period during which
 the services have been rendered.
 
 12.2 Post employment benefits and other long term employee benefits
 
 12.2.1 The Companys contribution to the provident fund is remitted to
 separate trust established for this purpose based on a fixed percentage
 of the eligible employees salary and charged to the profit & loss
 account. Short fall, if any, in the fund assets, based on Government
 specified minimum rate of return will be made good by the company and
 charged to the profit & loss account.
 
 12.2.2 The Company operates defined benefit plans for gratuity. The
 cost of providing such defined benefits is determined using the
 projected unit credit method of actuarial valuation made at the end of
 the year and is administered through a separate trust set up by the
 Company. Difference between the fund balance and the accrued liability,
 on the basis of actuarial valuation, is recognised in Profit & Loss
 Account.
 
 12.2.3 Obligations on the post retirement medical benefits,
 resettlement and long service awards are provided using the projected
 unit credit method of actuarial valuation made at the end of the year.
 
 12.3 Termination benefits
 
 Payments made under Voluntary retirement scheme are charged to the
 Profit & Loss Account.