1 Basis of Preparation of Financial Statements
 
 The Company maintains its accounts on accrual basis following the
 historical cost convention, except for the revaluation of certain fixed
 assets, in accordance with the Generally Accepted Accounting Principles
 (GAAP) and in compliance with the Accounting Standards specified in the
 Companies (Accounting Standards) Rules, 2006 notified by the Central
 Government and other provisions of the Companies Act, 1956. However,
 certain escalation and other claims are accounted for in terms of
 contracts with the customers / admitted by the appropriate authorities.
 
 2 Use of Estimates
 
 The preparation of financial statements in conformity with GAAP
 requires that the management of the Company makes estimates and
 assumptions that affect the reported amounts of income and expenses of
 the period, the reported balances of assets and liabilities and the
 disclosures relating to contingent liabilities as of the date of the
 financial statements. These estimates assume the Company to be a going
 concern and are made on the basis of information available at the time.
 Estimates may be revised, if the circumstances, on which they were
 based alter or if new information becomes available. Actual results may
 be different from these estimates. Examples of such estimates include,
 the useful life of tangible and intangible fixed assets, provision for
 doubtful debts / advances, future obligations in respect of retirement
 benefit plans, etc. Difference, if any, between the actual results and
 estimates is recognised in the period in which the results are known.
 
 3 Fixed Assets
 
 (a) Fixed assets are stated at cost net of tax / duty credit availed,
 if any, except for land and buildings added prior to 30th June, 1985
 which are stated at revalued cost as at that date based on the report
 of technical expert.
 
 (b) Fixed assets are eliminated from financial statements, either on
 disposal or when retired from active use. The retired assets are
 disposed off immediately.
 
 (c) Pre-operative expenses, including interest on borrowings upto the
 date of commercial operations, are treated as part of the project cost
 and capitalised.
 
 (d) Internally manufactured / constructed fixed assets are capitalised
 at factory cost, including excise duty, where applicable.
 
 (e) Machinery spares which are specific to particular item of fixed
 assets and whose use is irregular are capitalised as part of the cost
 of machinery.
 
 (f) Capital work-in-progress includes cost of fixed assets under
 installation / erection as at the balance sheet date and capital
 advances.
 
 4 Impairment of Assets
 
 As at each balance sheet date, the carrying amount of assets is tested
 for impairment so as to determine:
 
 (a) the provision for impairment loss, if any; and
 
 (b) the reversal of impairment loss recognised in previous periods, if
 any.
 
 Impairment loss is recognised when the carrying amount of an asset
 exceeds its recoverable amount.  Recoverable amount is determined:
 
 (a) in the case of an individual asset, at the higher of the net
 selling price and the value in use; and
 
 (b) in the case of a cash generating unit (a group of assets that
 generates identified, independent cash flows), at the higher of the
 cash generating units net selling price and the value in use.
 
 (Value in use is determined as the present value of estimated future
 cash flows from the continuing use of an asset and from its disposal at
 the end of its useful life.)
 
 5 Intangible Assets and Amortisation
 
 Intangible assets are recognised when it is probable that the future
 economic benefits that are attributable to the assets will flow to the
 Company and the cost of the asset can be measured reliably. Intangible
 assets are amortised as follows:
 
 (a) Goodwill              : Over a period of ten years;
 
 (b) Leasehold land        : Over the period of lease;
 
 (c) Specialised software  : Over a period of five years;
 
 (d) Lump sum fees for 
 technical know-how        : Over a period of five years
                             from the date of commercial 
                             production; and
 
 (e) Commercial rights     : Over a period of ten years.
 
 6 Investments
 
 Each category / item of investment is valued as follows:
 
 (a) Long-term investments are carried at cost after providing for any
 diminution in value, if such diminution is of other than temporary, in
 nature.
 
 (b) Current investment are carried at the lower of cost and fair value.
 
 7 Inventories
 
 Inventories are valued at the lower of cost and net realisable value,
 after providing for obsolescence. The cost is determined as follows:
 
 (a) Raw materials, packing 
     materials stores and spares      : At cost, on weighted average 
                                        basis;
 
 (b) Work-in-progress - Manufacturing : At cost, plus appropriate
                                        production overheads;
 
 (c) Finished goods - Manufacturing   : At cost plus appropriate
                                        production overheads, 
                                        including excise duty paid /
                                        payable on such goods; and
 
 (d) Finished goods - Trading         : At cost, on weighted average 
                                        basis.
 
 8 Foreign currency transactions
 
 (a) The reporting currency of the Company is Indian Rupee.
 
 (b) Foreign currency transactions are recorded on initial recognition
 in the reporting currency, using the exchange rate at the date of the
 transaction. At each balance sheet date, foreign currency monetary
 items are reported using the closing rate. Non-monetary items which are
 carried at historical cost denominated in a foreign currency are
 reported using the exchange rate at the date of the transaction.
 
 (c) Exchange differences that arise on settlement of monetary items or
 on reporting at each balance sheet date of the Companys monetary items
 at the closing rate, are recognised as income or expense in the period
 in which they arise.
 
 9 Derivative Contracts
 
 Derivative contracts entered into, to hedge foreign currency / price
 risks on unexecuted firm commitments and highly probable forecast
 transactions, are recognised in the financial statements at fair value
 as on the balance sheet date. The gain or loss arising out of fair
 valuation of derivative contracts are recognised in the profit and loss
 account or balance sheet, as the case may be, after applying the test
 of hedge effectiveness. The gains or losses are recognised as hedge
 reserve in the balance sheet when the hedge is effective and where the
 hedge is ineffective the same is recognised in the profit and loss
 account. The premium or discount on forward contracts is amortised as
 expense or income over the period of the contract. Gains and losses on
 roll over or cancellation of derivative contracts which qualify as
 effective hedge are recognised in the profit and loss account in the
 same period in which the hedged item is accounted.
 
 10 Revenue Recognition
 
 (a) Revenue from sale of goods is recognised, when all significant
 risks and rewards of ownership are transferred to the buyer, under the
 terms of the contract and no significant uncertainty exists regarding
 the amount of the consideration that will be derived from the sale of
 the goods. Sales include excise duty and price variation and exclude
 value added tax / sales tax, brokerage and commission.
 
 (b) Service income is recognised as per the terms of the contracts with
 the customers.
 
 (c) Revenue from contracts is recognised based on percentage of
 completion method after providing for foreseeable losses, if any.
 Percentage of completion is determined as a proportion of the costs
 incurred upto the reporting date to the total estimated cost to
 complete.
 
 (d) Interest income on deposits, securities and loan is recognised at
 the agreed rate on time proportion basis.
 
 (e) Dividend income is accounted for when the right to receive the
 dividend is established.
 
 11 Employee Benefits
 
 (a) Short term employee benefits
 
 All employee benefits payable wholly within twelve months of rendering
 service are classified as short term employee benefits. Benefits such
 as salaries, wages, short term compensated absences, etc. and the
 expected cost of bonus, ex-gratia are recognised during the period in
 which the employee renders the related service.
 
 (b) Defined contribution plans
 
 Companys contributions paid / payable during the year to provident
 fund, officers superannuation fund, employee state insurance scheme
 and labour welfare fund are recognised in the profit and loss account
 during the period in which the employee renders the related services.
 
 (c) Defined benefit plans
 
 For defined benefit schemes in the form of gratuity fund and post
 retirement medical benefits, the cost of providing benefits is
 determined using the Projected Unit Credit Method, with actuarial
 valuations being carried out at each balance sheet date.
 
 Actuarial gains and losses are recognised in full in the profit and
 loss account for the period in which they occur.
 
 Past service cost is recognised immediately to the extent that the
 benefits are already vested, and otherwise is amortised on a straight-
 line basis over the average period until the benefits become vested.
 
 The retirement benefit obligation recognised in the balance sheet
 represents the present value of the defined benefit obligation as
 adjusted for unrecognised past service cost, and as reduced by the fair
 value of scheme assets.
 
 The obligation is measured at the present value of the estimated future
 cash flows. The discount rates used for determining the present value
 of the obligation under defined benefit plans, is based on the market
 yields on Government securities as at the balance sheet date, having
 maturity periods approximating to the terms of related obligations.
 
 (d) Long term employee benefits
 
 Compensated absences which are not expected to occur within twelve
 months after the end of the period in which the employee renders the
 related services are recognised as a liability at the present value of
 the defined benefit obligation at the balance sheet date
 
 (e) Termination benefits
 
 Termination benefits are recognised as an expense in the period in
 which they are incurred.
 
 12 Depreciation
 
 (a) Depreciation on the fixed assets is provided at the rates and in
 the manner specified in Schedule XIV to the Companies Act, 1956, on
 written down value method other than on buildings and plant and
 equipments, which are depreciated on a straight line method.  If the
 managements estimate of the useful life of a fixed asset at the time
 of acquisition of the asset or of the remaining useful life on
 subsequent review is shorter than that envisaged in the aforesaid
 Schedule, depreciation is provided at a higher rate based on the
 managements estimate of useful life / remaining life.
 
 (b) Buildings constructed on leasehold land are depreciated at normal
 rate as prescribed in Schedule XIV to the Companies Act, 1956, where
 the lease period of land is beyond the life of the building. In other
 cases, amortised over the lease period.
 
 (c) In the case of revalued assets, the difference between the
 depreciation based on revaluation and the depreciation charged on
 historical cost is recouped out of revaluation reserve.
 
 (d) In case of impaired assets, the depreciation is charged on the
 adjusted cost computed after impairment.
 
 (e) Leasehold land are amortised over the period of lease.
 
 13 Research and Development
 
 (a) Revenue expenditure on research and development is charged under
 respective heads of account.
 
 (b) Capital expenditure on research and development is included as part
 of fixed assets and depreciated on the same basis as other fixed
 assets.
 
 14 Borrowing Costs
 
 (a) Borrowing costs that are attributable to the acquisition,
 construction or production of a qualifying asset are capitalised as
 part of the cost of such asset till such time as the asset is ready for
 its intended use or sale. A qualifying asset is an asset that
 necessarily requires a substantial period of time (generally over 12
 months) to get ready for its intended use or sale.
 
 (b) All other borrowing costs are recognised as expense in the period
 in which they are incurred.
 
 15 Taxes on Income
 
 (a) Tax on income for the current period is determined on the basis of
 estimated taxable income and tax credits computed in accordance with
 the provisions of the Income Tax Act, 1961 and based on the expected
 outcome of assessments / appeals.
 
 (b) Deferred tax is recognised on timing differences between the
 accounted income and the taxable income for the year, and quantified
 using the tax rates and laws enacted or substantively enacted as on the
 balance sheet date.
 
 (c) Deferred tax assets relating to unabsorbed depreciation / business
 losses are recongnised and carried forward to the extent there is
 virtual certainty that sufficient future taxable income will be
 available against which such deferred tax assets can be realised.
 
 (d) Other deferred tax assets are recognised and carried forward to the
 extent that there is a reasonable certainty that sufficient future
 taxable income will be available against which such deferred tax assets
 can be realised.
 
 16 Provisions, Contingent liabilities and Contingent assets
 
 (a) Provisions are recognised for liabilities that can be measured only
 by using a substantial degree of estimation, if i) the Company has a
 present obligation as a result of a past event;
 
 ii) a probable outflow of resources is expected to settle the
 obligation; and iii) the amount of the obligation can be reliably
 estimated.
 
 (b) Reimbursements by another party, expected in respect of expenditure
 required to settle a provision, is recognised when it is virtually
 certain that reimbursement will be received if, obligation is settled.
 
 (c) Contingent liability is disclosed in the case of:
 
 i) a present obligation arising from past events, when it is not
 probable that an outflow of resources will be required to settle the
 obligation;
 
 ii) a present obligation when no reliable estimate is possible;
 
 iii) a possible obligation arising from past events, unless the
 probability of outflow of resources is remote.
 
 (d) Contingent assets are neither recognised nor disclosed.
 
 (e) Provisions, contingent liabilities and contingent assets are
 reviewed at each balance sheet date.