(I) ACCOUNTING POLICIES :
 
 A. BASIS OF ACCOUNTING :
 
 The financial statements are prepared under the historical cost
 convention on the basis of Accrual Concept.
 
 B. FIXED ASSETS AND DEPRECIATION :
 
 a) Fixed Assets are stated at cost/revalued figures (as applicable)
 less depreciation.
 
 b) Depreciation is provided on straight line method as per Section
 205(2)(b): of the Companies Act, 1956:
 
 (i) in respect of assets acquired up to December 16,1993,at the rates
 in force at the time of acquisition of assets in accordance with
 Circular No. 1/86 dated 21/5/86 issued by Dept.of Company Affairs.
 
 (ii) in respect of assets acquired after December 16, 1993, at the
 rates specified in Schedule XIV to the Companies Act, 1956.
 
 c) Depreciation on revalued assets has been calculated on the revalued
 figures and on the other assets, it is provided on cost.
 
 d) Depreciation on additions/deletions to the fixed assets during the
 year is provided on pro-rata basis according to the period during which
 such assets are put to use.
 
 C. REVENUE RECOGNITION :
 
 The Company recognizes sales of products as they are delivered at
 invoice value including excise duties but excluding sales tax and trade
 discounts.
 
 D. VALUATION OF INVENTORIES :
 
 a) Raw materials are valued at cost or Net Realisable Value whichever
 is lower, on FIFO basis.
 
 b) Stores, Spare parts and Packing Materials are valued at cost or Net
 Realisable Value, whichever is lower.
 
 c) Work in process is valued at cost (including appropriate portion of
 production overheads) or Net Realisable Value, whichever is lower.
 
 d) Finished goods are valued at lower of cost (including appropriate
 portion of production overheads) or Net Realisable Value.
 
 E. INVESTMENTS:
 
 Investments are stated at cost.
 
 F. RESEARCH AND DEVELOPMENT COST :
 
 a) Revenue expenditure on Research and Development is charged to Profit
 and Loss Account of the year in which it is incurred.
 
 b) The expenditure which results into creation of fixed assets is
 capitalised and is shown as an addition to the fixed assets.
 
 c) Depreciation on such additions is provided as per method stated in
 para B (b) above.
 
 G. FOREIGN CURRENCY TRANSACTIONS :
 
 a) The transactions in foreign currencies are converted into Indian
 Rupees at the rates of exchange prevailing on the date of transactions.
 
 b) The net gain/loss arising out of foreign exchange transactions
 pertaining to revenue nature is taken to Profit & Loss Account.
 
 c) The balances in Current Assets and Current Liabilities in foreign
 currencies at the date of Balance Sheet have been converted into Indian
 Rupees at the rates of exchange prevalent on that date.
 
 H. EXCISE DUTY :
 
 Excise Duty is accounted gross of CENVAT benefit availed on inputs and
 fixed assets.
 
 I. MISCELLANEOUS EXPENDITURE WRITTEN OFF :
 
 a) Deferred Revenue expenses, consisting of expenditure during
 construction period but not directly/indirectly related to project are
 written off equally over seven years.
 
 J. RETIREMENT BENEFITS :
 
 a) Gratuity is provided for on the basis of actuarial valuation made by
 independent actuaries.
 
 b) Contributions to defined contribution schemes such as Provident Fund
 and Family Pension Fund are charged to the Profit and Loss account
 during each year as they are incurred.
 
 c) Provision for encashment of leave entitlement is made on accrual
 basis
 
 K. BORROWING COST:
 
 Net Cost of borrowed fund,for Project are Capitalised and Included in
 the cost of fixed assets till its completion & other borrowing cost are
 recognised as an expense in the year in which they are incurred.