I.  BASIS OF ACCOUNTING:
 
 The financial statements are prepared under the historical cost
 convention on the accrual basis of accounting in accordance with the
 generally accepted accounting principles, the applicable mandatory
 Accounting Standards and the relevant 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 on the
 date of the financial statements and the reported amounts of revenues
 and expenses during the reporting period. Differences between actual
 results and estimates are recognised in the period in which the results
 are known.
 
 III.  REVENUE RECOGNITION:
 
 a) Revenue/Income and Cost/Expenditure are generally accounted for on
 accrual as they are earned or incurred, except in case of significant
 uncertainties.
 
 b) Export Benefits are recognised in the year of export.
 
 c) Share Issue Expenses are charged, first against available balance in
 the Securities Premium Account.
 
 d) Sale of goods is recognized on transfer of significant risks and
 rewards of ownership which is generally on the despatch of goods.
 Export Sales are accounted for on the basis of the dates of On Board
 Bill of Lading.
 
 IV.  FIXED ASSETS AND DEPRECIATION / AMORTISATION:
 
 A) FIXED ASSETS:
 
 Fixed Assets are carried at cost of acquisition or construction or at
 revalued amounts, less accumulated depreciation and amortisation.
 
 B) DEPRECIATION / AMORTISATION:
 
 a) LEASEHOLD LAND:
 
 Cost of Leasehold land is amortised over the lease period.
 
 b) OTHER FIXED ASSETS:
 
 i) Depreciation on all assets is provided on the Straight Line Method
 in accordance with the provisions of Section 205 (2) (b) of the
 Companies Act, 1956.
 
 ii) Depreciation on Revalued Assets is calculated on their respective
 book values, at the rates considered applicable by the valuers. The
 additional charge of depreciation on account of revaluation is
 withdrawn from the Revaluation Reserve and credited to the Profit and
 Loss Account.
 
 iii) Improvements to leased premises are amortised over the period of
 the lease / charged off on premature termination of lease.
 
 iv) Depreciation on other assets, except to the extent stated in (a)
 and [(b) (ii) and (iii)] above, has been provided on the Straight Line
 Method at the rates and in the manner prescribed in Schedule XIV to the
 Companies Act, 1956.
 
 v) Depreciation on additions to assets or on sale/disposal of assets is
 calculated pro-rata from the month of such addition, or upto the month
 of such sale/disposal, as the case may be.
 
 V.  INVESTMENTS:
 
 Investments are classified into Current and Long-term Investments.
 Current Investments are stated at lower of cost and fair value.
 Long-term Investments are stated at cost. A provision for diminution is
 made to recognise a decline, other than temporary, in the value of
 Long-term Investments.
 
 VI.  FOREIGN CURRENCY TRANSLATIONS:
 
 All transactions in foreign currency, are recorded at the rates of
 exchange prevailing on the dates when the relevant transactions take
 place;
 
 Monetary assets and liabilities in foreign currency, outstanding at the
 close of the year, are converted in Indian Currency at the appropriate
 rates of exchange prevailing on the date of the Balance Sheet.
 Resultant gain or loss, except to the extent it relates to long term
 monetary items, is charged to the Profit and Loss Account for the year.
 Such gain or loss relating to long term monetary items for financing
 acquisition of depreciable capital assets, is adjusted to the
 acquisition cost of such asset and depreciated over its remaining
 useful life;
 
 In respect of forward exchange contracts entered into to hedge foreign
 currency risks, the difference between the forward rate and exchange
 rate at the inception of the contract is recognized as income or
 expense over the life of the contract. Further, the exchange
 differences arising on such contracts are recognised as income or
 expense along with the exchange differences on the underlying assets /
 liabilities. Profit or loss on cancellations / renewals of forward
 contracts is recognised during the year.
 
 VII.  INVENTORY VALUATION:
 
 a) Raw Materials, Materials in Process, Finished Goods, Goods for Trade
 and Stores, Spares, etc. are valued at Cost or Net Realisable value,
 whichever is lower.
 
 b) Goods in transit are valued at cost to date.
 
 c) Cost comprises all costs of purchase, costs of conversion and
 other costs incurred in bringing the inventory to their present
 location and condition. Cost formulae used is either First in First
 Out, or Specific Identification, or the Average Cost, as
 applicable.
 
 d) Due allowances are made for obsolete inventory based on technical
 estimates made by the Company.
 
 e) Interdivisional transfers are valued, either at Works/Factory Costs
 of the transferor unit/division, plus transport and other charges.
 
 VIII.  EMPLOYEE BENEFITS:
 
 a) Short term employee benefits are recognised as an expense at the
 undiscounted amount in the Profit and Loss Account of the year in which
 the related service is rendered.
 
 b) Post employment benefits
 
 i.  Defined contribution plans:
 
 Companys contribution to the superannuation scheme, state governed
 provident fund scheme, etc. are recognised during the year in which the
 related service is rendered
 
 ii.  Defined benefit plans:
 
 - Gratutiy
 
 The present value of the obligation is determined based on an actuarial
 valuation, using the Projected Unit Credit Method. Actuarial gains and
 losses arising on such valuation are recognised immediately in the
 Profit and Loss Account. The fair value of the plan assets of the Trust
 administered by the Company, is reduced from the gross obligation under
 the defined benefit plan, to recognise the obligation on a net basis;
 
 - Provident Fund
 
 For certain employees, monthly contributions are made to a Trust
 administered by the Company. The interest rate payable by the Trust to
 the beneficiaries is notified by the Government. The Company has an
 obligation to make good the shortfall, if any, between the return on
 investments of the Trust and the notified interest rate.
 
 c) Long term compensated absences are provided on the basis of an
 actuarial valuation
 
 d) Termination Benefits
 
 Termination benefits are recognised as and when incurred.
 
 IX.  GOVERNMENT GRANTS:
 
 Grants received against specific fixed assets are adjusted to the cost
 of the assets. Revenue grants are recognized in the Profit and Loss
 Account in accordance with the related scheme and in the period in
 which these are accrued.
 
 X.  RESEARCH AND DEVELOPMENT :
 
 Revenue expenditure, including overheads on Research and Development,
 is charged as an expense through the natural heads of account in the
 year in which incurred. Expenditure which results in the creation of
 capital assets is capitalised and depreciation is provided on such
 assets as applicable.
 
 XI.  EXPENDITURE DURING CONSTRUCTION AND EXPENDITURE ON NEW PROJECTS:
 
 In case of new projects and in case of substantial
 modernisation/expansion at existing units of the Company, expenditure
 incurred prior to commencement of commercial production is capitalised.
 
 XII.  BORROWING COSTS.
 
 Interest and other borrowing costs attributable to qualifying assets,
 are capitalised. Front End Fees are amortised over the period of the
 related borrowing but not exceeding the period of five years. Other
 interest and borrowing costs are charged to revenue.
 
 XIII.  PREMISES TAKEN ON LEASE:
 
 For premises taken on lease, lease rentals payable are charged to
 revenue.
 
 XIV.  TAXATION:
 
 Income-tax expense comprises Current tax and Deferred tax charge or
 credit. Provision for current tax is made on the assessable income at
 the tax rate applicable to the relevant assessment year. The Deferred
 tax Asset and Deferred tax Liability is calculated by applying tax rate
 and tax laws that have been enacted or substantively enacted by the
 Balance Sheet date. Deferred tax Assets arising mainly on account of
 brought forward losses and unabsorbed depreciation under tax laws, are
 recognised, only if there is a virtual certainty of its realisation,
 supported by convincing evidence.  Deferred tax Assets on account of
 other timing differences are recognised, only to the extent there is a
 reasonable certainty of its realisation. At each Balance Sheet date,
 the carrying amount of Deferred Tax Assets is reviewed to reassure
 realisation.
 
 XV.  IMPAIRMENT OF ASSETS :
 
 The carrying amounts of assets are reviewed at each Balance Sheet date.
 If there is any indication of impairment based on internal / external
 factors, i.e. when the carrying amount of the asset exceeds the
 recoverable amount, an impairment loss is charged to the Profit and
 Loss Account in the year in which an asset is identified as impaired.
 An impairment loss recognized in prior accounting periods is reversed
 or reduced if there has been a favourable change in the estimate of the
 recoverable amount.
 
 XVI.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS :
 
 Provisions involving a 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
 financial statements. Contingent Assets are neither recognised nor
 disclosed in the financial statements.