A) Accounting Concepts :
 
 The company follows the Mercantile system of Accounting and recognises
 Income and Expenditure on Accrual basis. The accounts are prepared on
 historical cost basis, as a going concern, and are consistent with
 generally accepted accounting principles subject to the comments made
 in our audit report of even date.
 
 B) Fixed Assets :
 
 Fixed Assets are recorded at cost of acquisition or construction,
 Expenses related to Load Management System Department are capitalised
 except Rs.24.98 Crores.
 
 C) Investments :
 
 Investments are stated at cost/acquisition.
 
 D) Foreign Currency Transactions :
 
 Income and Expenditure and Assets and Liabilities related to foreign
 currency transactions are related at exchange rates prevailing on the
 date of payment and receipt. Transaction of imported raw materials are
 translated at exchange rates prevailing on the dates on which the
 material was physically received by the company or on the dates on
 which payments were made.
 
 E) Inventories :
 
 FINISHED GOODS :
 
 Valued at Cost, Cost for own manufactured goods includes material,
 labour and related factory overheads excluding depreciation.
 
 WORK-IN-PROCESS :
 
 Considering raw material, labour and related overheads.
 
 RAW MATERIALS :
 
 At cost, FIFO method is used wherever applicable.                                   
 
 F) Research and Development :
 
 Research and Development Cost (other than cost of fixed assets
 acquired) are charged as an expense in the year in which they are
 incurred.
 
 G) Public Issue Expenses :
 
 Public Issue Expenses are amortised proportionately over a period of
 six years.
 
 H) Gratuity :
 
 Gratuity and other retirement benefits to employees are considered only
 on the basis of actual payment.
 
 I) Depreciation :
 
 Depreciation on fixed assets is provided on written down value at the
 rates prescribed under Schedule XIV of the companies Act, 1956. However
 no depreciation is charged by the Management on LTLMS system under
 implementation.
 
 J) Contingent Liabilities :
 
 Contingent Liabilities are not provided for, but are disclosed by way
 of Notes to Accounts.
 
 K) Revenue Recognition :
 
 Technical Knowhow Fees, Preliminary Expenses, Testing Equipment and
 Public Issues Expenses are amortised proportionately over a period of
 six years.
 
 L) The loans granted to the companies under the same management, as
 defined under Section 370 1(B) of the Companies Act, 1956, have been
 adjusted.
 
 M) Events occurring after the Balance Sheet Date :-
 
 There is a dispute between the Company & Maharashtra State Electricity
 Board regarding fulfilment of LTLMS installation order. Now the matter
 has been referred to Arbitrators and the same is pending with
 Arbitrators for final award.