1. Basis of preparation of Financial Statements
 
 i. As reported in Para 3.a of the Auditors Report, the Financial
 Statement have been prepared under the historical cost convention, and
 as going concern in accordance with the generally accepted accounting
 principles and the provisions of the Companies Act, 1956.
 
 ii. The Company follows the mercantile system of accounting and
 recognises Income and Expenditure on accrual basis, except where
 otherwise stated. Refer para-I 6. and 1.10 of this Schedule.
 
 2. Fixed Assets
 
 Fixed Assets are carried at cost of acquisition/construction.
 
 3. Depreciation
 
 Depreciation is provided for on Fixed Assets, except on land on
 straight line method at the rates prescribed by Schedule XIV of the
 Companies Act, 1956 on pro-rata basis from the month of
 addition/installation. (Refer para 11.5 of this schedule)
 
 4. Investments
 
 Investments are carried at cost
 
 5. Inventories
 
 i. Raw materials (Waste Paper and Chemicals), Coal, Stores, consumables
 and packing materials are valued at cost.
 
 ii. Raw materials in transit are carried at cost.
 
 iii. Work in Process is valued at Estimated net realisable value.
 
 iv. Finished goods are valued at the lower of cost or net realizable
 value.
 
 6. Sales
 
 i. Sales includes Excise levies but excludes Sales tax.
 
 ii. Discounts, rebates and incentives are accounted for as per the
 terms fixed or as per, the prevailing practice and the claims for price
 and quantity variations and the charges receivable/payable on delayed
 payment are accounted for in the year when the same are established.
 
 7. Foreign Currency Translations
 
 i. The Foreign Currency translations are made at the rate of conversion
 prevailing on the date on which the transaction is recognised.
 
 ii. Closing Balances of current assets and current liabilities are
 converted at the rates prevailing at the year end. The gains/losses on
 account of difference in Foreign Exchange, have been recognised in the
 financial statements by way of adjustments in the respective needs of
 accounts.
 
 iii. Cash balance in foreign currency carried as per the rate
 prevailing on the year end.
 
 8. Cenvat
 
 i. Cenvat benefit on Raw materials, Chemicals and Packing Materials is
 accounted for at the time of consumption by reducing the same from the
 respective costs.
 
 ii. Cenvat benefit on Capital goods is recognised upon commissioning
 of such capital goods by reducing the same form the cost of the
 respective asset.
 
 9. Financial Expenses
 
 Billing discounting charges are accounted for on time accrual basis.
 
 10. Special Capital Incentive
 
 Special Capital incentive receivable from the Government of Maharashtra
 is accounted for on receipt basis.
 
 11. Retirement benefits
 
 Retirement benefits are provided on accrual basis, based on fair
 estimation. (Refer Para II. 4 of this Schedule).