i.  Basis of preparation of Financial Statements:
 
 The accompanying financial statements have been prepared under the
 historical cost convention, in accordance with Generally Accepted
 Accounting Principles and the provisions of the Companies Act, 1956.
 
 ii.  Use of Estimates:
 
 The preparation of financial statements in conformity with Generally
 Accepted Accounting Principles requires estimates and assumptions to be
 made that affect the reported amounts of assets and liabilities and
 disclosure of contingent liabilities on the date of the financial
 statements and the reported amounts of revenues and expenses during the
 reporting period. Actual results could differ from these estimates and
 the differences between actual results and estimates are recognised in
 the periods in which the results are known / materialized.
 
 Hi. Revenue Recognition:
 
 Revenue is recognized when it is earned and no significant uncertainty
 exists as to its realization or collection.
 
 Gross sales are inclusive of excise duty and net of trade discounts and
 sales tax. Excise duty is presented as a reduction from gross sales in
 the Profit and Loss Account.
 
 iv.  Foreign Currency Transactions:
 
 Transactions in foreign currencies are accounted at the prevailing
 rates of exchange on the date of transaction.
 
 Monetary items denominated in foreign currencies, are restated at the
 prevailing rates of exchange at the Balance Sheet date. All gains and
 losses arising out of fluctuations in exchange rates are accounted for
 in the Profit and Loss Account.
 
 Non-monetary items such as investments are carried at historical cost
 using the exchange rates on the date of the transaction.
 
 Exchange differences on forward exchange contracts, entered into for
 hedging foreign exchange fluctuation risk in respect of an existing
 asset / liability, are recognised in the Profit and Loss Account in the
 reporting period in which the exchange rate changes. Premium / Discount
 on forward exchange contracts are treated as an expense / income over
 the life of the contract.
 
 v.  Employee Benefits:
 
 Compensation to employees for services rendered is measured and
 accounted for in accordance with the revised AS-15 on Employee
 Benefits.
 
 Employee Benefits such as salaries, allowances, non-monetary benefits
 and employee benefits under defined contribution plans such as
 provident and other funds, which fall due for payment within a period
 of twelve months after rendering service, are charged as expense to the
 Profit and Loss Account in the period in which the service is rendered.
 
 Employee Benefits under defined benefit plans including leave
 encashment (compensated absences) and gratuity which fall due for
 payment after a period of twelve months from rendering service or after
 completion of employment, are measured by the projected unit credit
 method, on the basis of actuarial valuations carried out by third party
 actuaries at each Balance Sheet date. The Companys obligations
 recognized in the Balance Sheet represent the present value of
 obligations as reduced by the fair value of plan assets, where
 applicable.
 
 Actuarial Gains and Losses are recognized immediately in the Profit and
 Loss Account.
 
 vi.  Fixed Assets and Depreciation:
 
 Fixed assets are stated at cost of acquisition or construction less
 accumulated depreciation. Subsequent expenditure, which substantially
 enhances the previously assessed standard of performance of the assets,
 is added to the carrying value of fixed assets.
 
 Leasehold Land is amortised over the period of lease. Depreciation is
 provided on Plant & Machinery and Buildings on the Straight Line Method
 and on other Assets on the Written Down Value Method at the rates
 specified in Schedule XIV of the Companies Act, 1956. Certain items of
 machinery are depreciated at the rates of 20%, 25% and 33.33% by the
 Straight Line Method, as the useful life estimated by the management is
 shorter than that prescribed by statute.
 
 Assets costing less than Rs. 5,000 are depreciated at 100%. Additions
 and deletions to fixed assets during the year are depreciated,
 pro-rata, over the period they have been put to use during the year.
 
 vii.  Investments:
 
 Investments are classified as long term or current in accordance with
 Accounting Standard 13 on Accounting for Investments. Long term
 investments are stated at cost and provision is made to recognize a
 decline, other than temporary, if any. Current investments are valued
 at lower of cost and net realizable value.
 
 viii. Inventories:
 
 Items of inventory are measured at the lower of cost and net realizable
 value.
 
 Cost of inventories comprises of all costs of purchase (other than
 refundable duties and taxes), costs of conversion and other costs
 incurred in bringing the inventories to their present condition and
 location.  Costs of raw materials, packing materials and stores and
 spares are determined by the average method.  Costs of work in process
 and finished goods inventories are determined by the absorption costing
 method.  Excise duty related to finished goods stock is included under
 Schedule Q Increase / Decrease in stocks.
 
 All import requirements of a principal raw material are managed by an
 overseas affiliate, which enters into futures contracts on the Groups
 behalf. A recharge is made by the affiliate for the Companys share of
 hedging costs or credits. Such recharges are absorbed into the cost of
 imported material on delivery. Since the Company does not itself carry
 out the futures contracts, the hedges are not recorded by it in its
 books.
 
 ix.  Taxation:
 
 Incomes Taxes are accounted for in accordance with Accounting Standard
 22 on Accounting for Taxes on Income. Income taxes comprise both
 current and deferred tax.
 
 Current tax is measured at the amount expected to be paid to/recovered
 from the revenue authorities, using applicable tax rates and laws.
 
 The tax effect of the timing differences that result between taxable
 income and accounting income and are capable of reversal in one or more
 subsequent periods are recorded as a deferred tax asset or a deferred
 tax liability. Deferred tax assets and liabilities are recognized for
 future tax consequences attributable to timing differences. They are
 measured using the substantively enacted tax rates and tax regulations.
 
 The carrying amount of deferred tax assets at each Balance Sheet date
 is reduced to the extent that it is no longer reasonably certain that
 sufficient future taxable income will be available against which the
 deferred tax asset can be realized.
 
 Fringe Benefit Tax (FBT) payable under the provisions of section 115WC
 of the Income Tax Act, 1961 is in accordance with the Guidance note on
 Accounting for Fringe Benefit Tax issued by the ICAI regarded as an
 additional income tax and considered in determination of the profits
 for the year. Tax on distributed profits payable in accordance with the
 provisions of section 115 O of the Income Tax Act, 1961 is in
 accordance with the Guidance Note on Accounting for Corporate Dividend
 Tax regarded as a tax on distribution of profits and is not considered
 in the determination of profits.
 
 x.  Earnings Per Share:
 
 The Company reports basic and diluted Earnings per Share in accordance
 with Accounting Standard 20 on Earnings per Share. Basic Earnings per
 Share is computed by dividing the net profit or loss for the year by
 the weighted average number of equity shares outstanding during the
 year. Diluted Earnings per Share is computed by dividing the net profit
 or loss for the year by the weighted average number of equity shares
 outstanding during the year as adjusted for the effects of all dilutive
 potential equity shares, except where the results are anti-dilutive.
 
 xi.  Cash Flow Statement:
 
 The Cash Flow Statement is prepared by the indirect method set out in
 Accounting Standard - 3 on Cash Flow Statement and presents cash flows
 by operating, investing and financing activities of the Company.  Cash
 and cash equivalents presented in the cash flow statement consists of
 cash on hand and demand deposits with banks as on the Balance Sheet
 date.
 
 xii.  Operating Lease
 
 Operating lease receipts or payments are recognized as income or
 expenditure in the Profit and Loss Account on a straight-line basis,
 which is representative of the time pattern of benefits received from
 the use of assets taken on lease.
 
 xiii. Contingent Liabilities:
 
 Contingent liabilities as defined in Accounting Standard 29 on
 Provisions, Contingent Liabilities and Contingent Assets are disclosed
 by way of notes to accounts. Disclosure is not made if the possibility
 of an outflow of future economic benefits is remote. Provision is made
 if it becomes probable that an outflow of future economic benefits will
 be required to settle the obligation.