A.  Basis of accounting:
 
 The financial statements are prepared under the historical cost
 convention and comply with the applicable accounting standards issued
 by the Institute of Chartered Accountants of India and the relevant
 provisions of the Companies Act, 1956.
 
 B.  Fixed Assets:
 
 Fixed Assets are stated at cost of acquisition less depreciation. All
 costs relating to the acquisition and installation of fixed assets are
 capitalised.
 
 C.  Depreciation:
 
 i) Depreciation is provided as per Written Down Value prescribed under
 Schedule XIV of the Companies Act, 1956.  
 
 ii) Depreciation on Leased Premises is provided over a period of five
 years i.e the tenure of the lease
 
 D.  Foreign Currency transactions:
 
 Transactions of foreign currencies are recorded at the exchange rates
 prevailing on the date of the transaction or at the exchange rate under
 related forward exchange contracts. The realized exchange gains/losses
 are recognized in the Profit & Loss Account. All foreign currency,
 assets / liabilities are translated in rupees at the rates prevailing
 on the date of Balance Sheet.
 
 E.  Investments:
 
 a.  Long term investments are carried at cost after providing for any
 diminution in value, if such diminution is of other than temporary
 nature.
 
 b.  Current investments are carried at the lower of cost and market
 value. The determination of carrying cost of such investments is done
 on the basis of specific identification.
 
 F.  Taxes on income:
 
 i.  Current year tax is determined in accordance with Income Tax Act,
 1961 at the Current Tax rates based on assessable income.
 
 ii.  The Company has carried forward losses under Tax Laws. In absence
 of virtual certainty of sufficient future taxable income, deferred tax
 asset has not been recognized by way of prudence in accordance with
 Accounting Standard 22 Accounting for taxes on income issued by The
 Institute of Chartered Accountants of India.
 
 G.  Impairment of Assets:
 
 At each balance sheet date, the carrying amounts of fixed assets are
 reviewed by the management to determine whether there is any indication
 that those assets suffered an impairment loss. If any such indication
 exists, the recoverable amount of the assets, is estimated in order to
 determine the extent of impairment loss. Recoverable amount is the
 higher of an assets net selling price and value in use.
 
 H.  Revenue Recognition:
 
 Revenue is recognised to the extent it is probable that the economic
 benefit will flow to the Company and the revenue can be reliably
 measured.
 
 i.  Exploration Income is recognised when services are provided
 
 ii.  Interest Income is recognised on accrual basis
 
 iii.  Dividend Income is accounted on accrual basis when the right to
 receive the dividend is established.
 
 I.  Employee Benefits
 
 Leave encashment : - The company does not have a policy of carry
 forward of pending leaves and hence no provision for the same is made
 as mentioned under AS - 15 issued by ICAI.
 
 Gratuity : - Gratuity provision is made for qualifying employees.
 Gratuity liability is defined benefit obligation and is provided for on
 the basis of an actuarial valuation on projected unit cost method.
 
 J Provisions, contingent liabilities and contingent assets
 
 Estimation of the probability of any loss that might be incurred on
 outcome of contingencies on basis of information available upto the
 date on which the financial statements are prepared. A provision is
 recognised when an enterprise has a present obligation as a result of a
 past event and it is probable that an outflow of resources will be
 required to settle the obligation, in respect of which a reliable
 estimate can be made. Provisions are determined based on management
 estimates required to settle the obligation at the balance sheet date,
 supplemented by experience of similar transactions. These are reviewed
 at each balance sheet date and adjusted to reflect the current
 management estimates. In cases where the available information
 indicates that the loss on the contingency is reasonably possible but
 the amount of loss cannot be reasonably estimated, a disclosure to this
 effect is made in the financial statements. In case of remote
 possibility neither provision nor disclosure is made in the financial
 statement. The company does not account for or disclose contingent
 asset, if any.
 
 K The stock options granted are accounted for as per the accounting
 treatment prescribed by Employee Stock Option Scheme and Employee Stock
 Purchase Guidelines, 1999, issued by Securities and Exchange Board of
 India, whereby the intrinsic value of the option is recognised as
 deferred employee compensation.
 
 The deferred employee compensation is charged to Profit & Loss Account
 on straight-line basis over the vesting period of the option. The
 employee stock option outstanding account is shown net of any
 unamortised deferred employee compensation.