1.1 Basis of preparation:
 
 These financial statements have been prepared in accordance with the
 generally accepted accounting principles in India under the historical
 cost convention on accrual basis and to comply in all material aspects
 with the accounting standards notified under Section 211(3C) [Companies
 (Accounting Standards) Rules, 2006, as amended] and the other relevant
 provisions of the Companies Act, 1956.
 
 1.2 The company has ascertained its operating cycle as 12 months for
 the purpose of current - non current classification of assets and
 liabilities.
 
 1.3 Revenue recognition:
 
 a) Sales:
 
 Sales are recognised on despatch of products to customers, which
 generally coincides with transfer of ownership. Sales are net of
 returns, trade discounts and allowances.
 
 b) Montreal Protocol compensation:
 
 The company is eligible to receive compensation from Multilateral Fund
 under the Montreal Protocol for phasing out the production of
 Chlorofluorocarbons and supply of Carbon Tetra Chloride to non feed
 stock sector. The aforesaid compensation is received in periodic
 instalments subject to meeting certain conditions stipulated in the
 Protocol and accordingly the compensation is accounted only after
 complying with such conditions and ensuring that there is no
 uncertainty in this regard. Following this practice compensation
 received during the year alone has been accounted and shown under Other
 Income.
 
 c) Income from Certified Emission Reduction (CER):
 
 The company is entitled to receive Carbon Credits towards CER from
 United Nations Framework Convention for Climate Change (UNFCCC).
 
 Income from CER is reckoned when the company is entitled to such
 credits, which occurs
 
 - on incineration of HFC 23 at Mettur
 
 - on production of steam from Waste Heat Recovery Boiler at Karaikal.
 
 1.4 Valuation of assets:
 
 a) Inventories are valued at lower of cost and net realisable value.
 Cost is determined on weighted average basis and comprises of all
 applicable costs incurred for bringing the inventories to their present
 location and condition and includes appropriate overheads wherever
 applicable.
 
 b) Fixed assets are valued at cost except certain land, buildings and
 plant and machinery in respect of PVC division which are stated at
 revalued amounts.  Intangible assets are valued at cost and amortised
 on a straight line basis over their estimated useful lives.
 
 c) An impairment loss is recognised whenever the carrying amount of an
 asset exceeds the recoverable amount.
 
 d) Investments
 
 Long term investment:
 
 At cost, or lower of cost where there has been any diminution in value,
 other than temporary.
 
 1.5 Depreciation/Amortisation:
 
 Depreciation on fixed assets is provided on a straight line basis at
 the rates (other than the Assets stated below) specified in Schedule
 XIV of the Companies Act, 1956:
 
 i) On all assets whose actual cost does not exceed Rs.5,000/- - 100%
 
 ii) On moulds, computers and peripherals and motor cars - 33.33%
 
 iii) On furniture and office equipment - 20%
 
 iv) On helicopter - 10%
 
 v) Leasehold land is amortised over the period of lease
 
 vi) In the event the useful life of any fixed asset being assessed to
 be lower than the life derived from Schedule XIV rates or above
 mentioned rates, the book value of such assets is charged off as
 depreciation, during the balance useful life of such assets.
 
 1.6 New project expenses/ Borrowing costs:
 
 Salaries and related costs, travel and other direct costs including
 exchange difference arising from settlement/ restatement of foreign
 currency liability contracted for import of fixed assets relating to
 new projects incurred prior to their commencement of operation are
 capitalised.
 
 Borrowing costs that are directly attributable to the acquisition,
 construction or production of a qualifying asset are capitalized as
 part of the cost of the asset. These borrowing costs include exchange
 differences arising from foreign currency borrowings to the extent that
 they are regarded as adjustment to interest.
 
 1.7 Employee benefits:
 
 Short term employee benefits including accumulated compensated absence
 are recognised as an expense as per the company''s scheme based on
 expected obligations on undiscounted basis.
 
 Post retirement benefits comprise of employees'' provident fund and
 gratuity which are accounted for as follows.
 
 (a) Provident Fund
 
 This is a defined contribution plan and contributions made to the fund
 are charged to revenue. The company has no further obligations for
 future provident fund benefits other than annual contributions
 
 (b) Gratuity
 
 This is a defined benefit plan and the company''s scheme is administered
 by Life Insurance Corporation of India. The liability is determined
 based on the actuarial valuation using projected unit credit method as
 at Balance Sheet date.
 
 Actuarial gains and losses, comprising of experience adjustments and
 the effects of changes in actuarial assumptions, are recognised
 immediately in the Statement of Profit and Loss as income or expense.
 
 1.8 Foreign currency transactions:
 
 Foreign currency transactions are recorded at the rate of exchange
 prevailing on the date of the respective transactions.
 
 Monetary assets and liabilities denominated in foreign currency are
 converted at year end rates.
 
 Exchange differences arising on settlement/ conversion are adjusted to
 Statement of Profit and Loss except to the extent indicated in note
 1.6.
 
 Wherever forward contracts are entered into, the exchange difference is
 dealt with in the Statement of Profit and Loss. Realised gains or
 losses on cancellation of forward contracts are recognised in the
 Statement of Profit and Loss of the year in which they are cancelled.
 
 1.9 Income tax:
 
 Provision for current tax is made based on the liability computed in
 accordance with the relevant tax rates and tax laws. Deferred tax is
 accounted for by computing the tax effect of the timing differences
 which arise during the year and reverse out in the subsequent periods.
 Deferred tax is calculated at the tax rates enacted or substantively
 enacted by the Balance Sheet date. Deferred tax assets are recognised
 only if there is a reasonable certainty and virtual certainty with
 respect to unabsorbed depreciation and business loss, that they will be
 realised.
 
 1.10 Research and Development:
 
 Revenue expenditure on research and development is charged as an
 expense in the period in which it is incurred.
 
 1.11 Hire purchase/ Leased assets:
 
 Operating lease charges are charged to Statement of Profit and Loss on
 straight line basis.
 
 In the case of Hire Purchase, present value of the minimum lease
 rentals is capitalised as fixed assets with corresponding amount shown
 as hire purchase liability. The principal component of the hire
 purchase is adjusted against the hire purchase liability and the
 interest component is charged to Statement of Profit and Loss.
 
 1.12 Provisions and contingent liabilities:
 
 Provisions are recognised when the company has a present obligation as
 a result of past events, and it is probable that an outflow of
 resources will be required to settle the obligation and a reliable
 estimate of the amount of the obligation can be made.
 Contingent liabilities are disclosed when there is a possible
 obligation arising from past events, the existence of which will be
 confirmed only by the occurrence or non occurrence of one or more
 uncertain future events not wholly within the control of the company or
 a present obligation that arises from past events where it is either
 not probable that an outflow of resources will be required to settle or
 a reliable estimate of the amount cannot be made.
 
 1.13 Use of estimates:
 
 The preparation of financial statements in conformity with accounting
 principles generally accepted in India requires the management to make
 estimates and assumptions that affect the reported amount of assets and
 liabilities as of the Balance Sheet date, reported amount of revenues
 and expenses for the year and disclosure of contingent liabilities as
 of the Balance Sheet date. The estimates and assumptions used in these
 financial statements are based upon management''s evaluation of relevant
 facts and circumstances as of the date of the financial statements.
 Actual results could differ from these estimates.