1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
 
 The financial statements are prepared to comply in all material aspects
 with all the applicable accounting principles in India, the applicable
 accounting standards notified under section 211(3C) of the Companies
 Act, 1956 and the relevant provisions of the Companies Act, 1956.
 
 2) FIXED ASSETS:
 
 Fixed assets are stated at cost of acquisition less accumulated
 depreciation. Acquisition cost includes taxes, duties, freight,
 insurance and other incidental expenses related to acquisition and
 installation and are net of CENVAT credits, where applicable. Revenue
 expenses incidental and related to projects are capitalised along with
 the related fixed assets, where appropriate.
 
 3) DEPRECIATION:
 
 Depreciation on fixed assets is provided using the straight-line method
 based on useful lives of assets as estimated by the management.
 Depreciation is charged on a pro-rata basis for assets purchased / sold
 during the year. The management''s estimate of useful lives for the
 various fixed assets is given below, which is higher than the rates
 prescribed under Schedule XIV of Companies Act, 1956 : Building 20
 years
 
 Plant and Machinery
 
 - Jigs and Tools                          5 years
 
 -  Others                                 7 years
 Computers                                 3 years
 Furniture and Fixtures                    5 years
 Vehicles                                  5 years
 
 Leasehold land is amortised over the period of lease.
 
 Individual assets costing less than Rs.5,000 are depreciated in full in
 the year of purchase.
 
 4) REVENUE RECOGNITION:
 
 Revenue from the sale of products is recognised upon transfer of
 ownership to the customers, and is net of sales tax, where applicable,
 but inclusive of excise duty.
 
 Interest income on fixed deposits is recognised on time proportion
 basis.
 
 5) FOREIGN CURRENCY TRANSACTIONS: Transactions in foreign currency are
 accounted for at the exchange rates prevailing on the date of
 transactions.
 
 Exchange differences arising on foreign currency transactions settled
 during the year are recognised in the Profit and Loss Account for the
 year. All monetary items denominated in foreign currency are translated
 at exchange rates prevailing on the Balance Sheet date. The resultant
 exchange differences are recognised in the Profit and Loss Account for
 the year.
 
 The premium or discount arising at the inception of forward exchange
 contracts, entered into to hedge the foreign currency risk of existing
 assets and liabilities, is amortized as expense or income over the life
 of the contract. Exchange differences on such contracts are recognized
 in the statement of profit and loss in the year in which the exchange
 rates change. Any profit or loss arising on cancellation or renewal of
 forward exchange contract is recognized as income or as expected for
 the year.
 
 6) WARRANTY:
 
 Product warranty costs are determined and provided for in the year, in
 which the revenues are recognised, based on past experience.
 
 7) INVENTORIES:
 
 Inventories are stated at the lower of cost and net realisable value.
 ''Cost'' is arrived at using First-In- First-Out (FIFO) / Weighted
 Average method and includes appropriate overheads in case of work-
 in-progress and finished goods. Finished goods are stated inclusive of
 excise duty.
 
 Provision for obsolescence is made, wherever necessary.
 
 8) EMPLOYEES'' BENEFITS:
 
 Benefits to employees comprise provident fund, gratuity, leave
 encashment/compensated absences, superannuation and long service award.
 
 Defined Contribution Plan:
 
 - The Company has a separate Superannuation Scheme for its officers
 under the aegis of the Life Insurance Corporation of India.
 Contributions made in accordance with the scheme of the Life Insurance
 Corporation of India are charged to the Profit and Loss Account.
 
 - Contributions to the employees'' state insurance fund, administered by
 the prescribed government authorities, are made in accordance with the
 Employees'' State Insurance Act, 1948 and are recognized as an expense
 on an accrual basis.
 
 Defined Benefit Plans:
 
 - Contributions towards Company''s gratuity liability made to Life
 Insurance Corporation of India are adjusted against the gratuity
 liability determined by an independent actuary as at year end on the
 basis of Projected Unit Credit Method and the short fall, if any, is
 charged to the Profit and Loss Account. In case fair value of plan
 assets is in excess of the present value of the defined benefit
 obligations, the resultant asset is recognized as at balance sheet
 date.
 
 - Actuarial gains and losses comprise experience adjustments and the
 effects of change in actuarial assumptions and are recognised
 immediately in the profit and loss account as income and expense.
 
 Other Long Term Employee Benefit:
 
 - Contribution to the provident fund and family pension fund,
 administered through a private trust, is made in accordance with the
 provisions of the Employees Provident Fund and Miscellaneous Provisions
 Act, 1952 and is recognised as an expense on an accrual basis. Further^
 the Company gets an actuarial valuation carried out as at year end to
 determine liability towards guaranteed interest rates, if any, and the
 same is also recognised as an expense on an accrual basis.
 
 Other Employee Benefits:
 
 - The liability for long term compensated absence and long-term service
 award is recognised in accordance with rules of the Company, based on
 actuarial valuation by an independent actuary carried out at the
 balance sheet date on the basis of Projected Unit Credit Method.
 
 - The liabilities for employee benefit in form of short-term
 compensated absence (vesting as well as non-vesting) have been
 recognised at undiscounted amount, in accordance with the rules of the
 Company.
 
 - Actuarial gains and losses comprise experience adjustments and the
 effects of change in actuarial assumptions and are recognised
 immediately in the profit and loss account as income and expense.
 
 9) RESEARCH AND DEVELOPMENT EXPENDITURE:
 
 All revenue expenses pertaining to research and development are charged
 to the Profit and Loss Account in the year in which these are incurred
 and expenditure of capital nature is capitalised as fixed assets.
 
 10) TAX EXPENSE:
 
 Tax expense comprises current and deferred tax.  The provision for
 income tax is determined in accordance with the provisions of the
 Income-tax Act, 1961.
 
 The Company provides for deferred tax based on the tax effect of timing
 differences resulting from the recognition of items in the financial
 statements and in estimating its current income tax provision.  The
 effect on deferred tax assets and liabilities of a change in tax rates
 is recognised in the statement of profit and loss using the tax rates
 and tax laws that have been enacted or substantively enacted by the
 balance sheet date. Deferred tax assets on unabsorbed depreciation or
 carry forward losses, if any, are recognised only if there is virtual
 certainty that such deferred tax assets can be realized against future
 taxable profits. In all other cases, deferred tax assets are recognised
 only to the extent there is a reasonable certainty that sufficient
 future taxable income will be available against which such deferred tax
 asset can be realised.
 
 Minimum alternative tax (MAT) credit is recognised as an asset only
 when and to the extent there is convincing evidence that the Company
 will pay income tax higher than that computed under MAT, during the
 period that MAT is permitted to be set off under the Income Tax Act,
 1961 (specified period). In the year, in which the MAT credit becomes
 eligible to be recognised as an asset in accordance with the
 recommendations contained in the Guidance Note issued by the Institute
 of Chartered Accountants of India (ICAI), the said asset is created by
 way of a credit to the profit and loss account and shown as MAT credit
 entitlement.  The Company reviews the same at each balance sheet date
 and writes down the carrying amount of MAT credit entitlement to the
 extent there is no longer convincing evidence to the effect that the
 Company will pay income tax higher than MAT during the specified
 period.
 
 11) BORROWING COSTS:
 
 Borrowing costs that are directly attributable to the acquisition,
 construction or production of qualifying asset are capitalised as part
 of the cost of that asset. Other borrowing costs are recognised as an
 expense in the period in which they are incurred.
 
 12) EARNINGS PER SHARE(EPS):
 
 In determining earnings per share, the Company considers the net profit
 after tax and includes the post tax effect of extra
 ordinary/exceptional item, if any. Basic earning per share is computed
 by dividing the net profit for the year attributable to the equity
 shareholders by the weighted average number of equity shares
 outstanding during the year and dilutive equity equivalent shares
 outstanding at the year end, except where the results would be anti
 dilutive.
 
 13) INTANGIBLE ASSETS:
 
 Intangible assets are recognised if it is probable that the future
 economic benefits attributable to the asset will flow to the enterprise
 and cost of the asset can be measured reliably in accordance with
 Accounting Standard - 26, on ''Intangibles Assets''.
 
 Intangible assets, if any, are amortised on straight-line basis over
 their useful lives determined on the basis of expected future economic
 benefits. The amortization period and method is reviewed at the end of
 each financial year.
 
 14) IMPAIRMENT OF ASSETS:
 
 At each Balance Sheet date, the Company assesses whether there is any
 indication that an asset may be impaired. If any such indication
 exists, the Company estimates the recoverable amount. If the carrying
 amount of the asset exceeds the recoverable amount, an impairment loss
 is recognised in the Profit and Loss account to the extent the carrying
 amount exceeds the recoverable amount.
 
 15) LEASES:
 
 For operating leases, rental income and expense is recognised on a
 straight-line basis over the lease term unless another systematic basis
 is more representative of the time pattern of the Company''s benefit.
 
 16) PROVISIONS AND CONTINGENCIES:
 
 Provisions are recognised when the Company has a present obligation as
 a result of past events, for which it is probable that an outflow of
 resources will be required to settle the obligation, and a reliable
 estimate of the amount can be made.  Provisions required to settle are
 reviewed regularly and are adjusted where necessary to reflect the
 current best estimates of the obligation.
 
 A disclosure for a contingent liability is made when there is a
 possible obligation or a present obligation that probably will not
 require an outflow of resources or where a reliable estimate of
 obligation cannot be made.
 
 17) DERIVATIVE INSTRUMENTS:
 
 The Company use derivative financial instruments such as forward
 exchange contracts to hedge its risks associated with foreign currency
 fluctuations. The foreign exchange contracts, if any, other than those
 covered under AS 11, entered for non speculative purposes, including
 the underlying hedged items, are valued on the basis of a fair value on
 marked to market basis and any loss on valuation is recognized in the
 profit and loss account, on a portfolio basis. Any gain arising on this
 valuation is not recognized by the Company in line with the principle
 of prudence.