a) Accounting convention
 
 The financial statements are prepared under the historical cost
 convention, as modified to include the revaluation of certain fixed
 assets, and have been prepared in accordance with applicable Accounting
 Standards and relevant presentational requirements of the Companies
 Act, 1956.
 
 b) Use of estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires management to make estimates
 and assumptions that affect the reported amounts of assets and
 liabilities and disclosure of contingent liabilities on the date of
 financial statements and the results of operations during the year.
 Differences between the actual results and estimates are recognised in
 the year in which the results are known or materialised.
 
 c) Fixed assets
 
 i) Owned assets
 
 All fixed assets are stated at cost of acquisition or construction,
 except for certain assets which are revalued and are, therefore, stated
 at their revalued book values. Financing costs (up to the date the
 assets are ready to be put to use for commercial production) relating
 to borrowed funds or deferred credits attributable to acquisition or
 construction of fixed assets are included in the gross book value of
 fixed assets to which they relate.
 
 ii) Assets taken on fnance lease
 
 Fixed assets taken on fnance lease are stated at the lower of cost of
 fnance lease assets or present value of the minimum fnance lease
 payments at the inception of fnance lease.
 
 iii) Impairment of fixed assets
 
 Consideration is given at each balance sheet date to determine whether
 there is any indication of impairment of the carrying amount of the
 fixed assets. If any indication exists, an assets recoverable amount is
 estimated. An impairment loss is recognised whenever the carrying
 amount of an asset exceeds its recoverable amount. The recoverable
 amount is the greater of net selling price and value in use. In
 assessing value in use, the estimated future cash flows are discounted
 to their present value based on an appropriate discount factor.
 
 d) Depreciation
 
 i) Depreciation on all fixed assets is provided on the straight line
 method at the rates specifed in schedule XIV to the Companies Act, 1956
 or at rates arrived at on the basis of the balance useful lives of the
 assets based on technical evaluation/ revaluation of the related
 assets, whichever is higher.
 
 ii) Depreciation is calculated on a pro-rata basis only in respect of
 additions to plant and machinery having a cost in excess of Rs. 5000.
 Assets costing upto Rs. 5000 are fully depreciated in the year of
 purchase.  No depreciation is provided on assets sold, discarded, etc.
 during the year.
 
 iii) In respect of revalued assets, an amount equivalent to the
 additional charge arising due to revaluation is transferred from the
 revaluation reserve to the Profit and loss account.
 
 iv) In respect of assets taken on fnance lease, depreciation is
 provided in accordance with the policy followed for owned assets.
 
 v) No write-off is made in respect of leasehold land as the lease is a
 long lease.
 
 e) Investments
 
 Long term investments are stated at cost as reduced by amounts written
 off/ provision made for diminution in value. Current investments are
 stated at cost or fair value, whichever is lower.
 
 f) Inventories
 
 Stores and spares are valued at cost or under. Stock-in-trade is valued
 at the lower of cost and net realisable value. Cost of inventories is
 ascertained on a ‘weighted average basis. In the case of fnished goods
 and process stocks, appropriate share of labour, overheads and excise
 duty is included.
 
 g) Research and development
 
 Revenue expenditure on research and development is charged as an
 expense in the year in which it is incurred.  
 
 h) Export benefts
 
 Export benefts are accounted for on accrual basis.
 
 i) Employees benefts
 
 Provision for employee benefts charged on accrual basis is determined
 based on Accounting Standard (AS) 15 (Revised) Employee Benefts as
 notifed under the Companies (Accounting Standards) Rules, 2006 as
 under:
 
 i) Contributions to the provident fund, gratuity fund and
 superannuation fund are charged to revenue.
 
 ii) Gratuity liability determined on an actuarial basis is provided to
 the extent not covered by the funds available in the gratuity fund.
 
 iii) Provision for privilege and medical leave salary is determined on
 actuarial basis.
 
 iv) Provision for casual leave is determined on arithmetical basis.
 
 j) Foreign currency transactions
 
 Transactions in foreign currency are recorded at the exchange rates
 prevailing on the date of the transaction.
 
 Monetary items denominated in foreign currency are reported using the
 closing exchange rates on the date of the balance sheet.
 
 The exchange differences arising on settlement of monetary items or on
 reporting these items at the rates different from the rates at which
 these were initially recorded / reported in previous financial
 statements, are recognised as income / expense in the year in which
 they arise.
 
 In case of forward exchange contracts, the premium or discount, arising
 at the inception of such contracts is amortised as income or expense
 over the life of the contract and the exchange differences on such
 contracts, i.e., differences between the exchange rates at the
 reporting/ settlement date and the exchange rates on the date of
 inception of contract/ the last reporting date, is recognised as income
 / expense for the year.
 
 k) Revenue recognition
 
 Sales are recognised at the point of despatch to customers and include
 excise duty.  
 
 l) Income-tax
 
 Current income-tax liability is provided for in accordance with the
 provisions of the Income-tax Act, 1961.
 
 Deferred tax is recognised, subject to the consideration of prudence,
 on timing differences, being the difference between taxable income and
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods. In respect of unabsorbed
 depreciation and carry forward of losses, deferred tax assets are
 recognised based on virtual certainty that suffcient future taxable
 income will be available against which such deferred tax assets can be
 realised.