A.  Basis of Preparation of Financial Statements
 
 The financial statements nave been prepared under the historical cost
 convention on mercantile system of accounting unless otherwise
 specifically stated.
 
 B.  Fixed Assets
 
 (a) Fixed assets are stated at cost, net of CENVAT and/or at revalued
 price, less accumulated depreciation, all costs, including financing
 costs relating to borrowed funds attributable to construction or
 acquisition of fixed assets till commencement of commercial production
 and/or put to use.
 
 (b) Assets identified and evaluated technically as obsolete and held
 for disposal are stated at their estimated net realisable value.
 
 C.  Depreciation
 
 a) Depreciation on plants and buildings acquired after 31st March,1989
 is provided on straight line method at the rates and in the manner
 prescribed in Schedule XIV to the Companies Act, 1956.
 
 b) Depreciation on other fixed assets is provided on written down value
 method at the rates and in the manner prescribed in Schedule XIV to the
 Companies Act, 1956.
 
 D.  Foreign Exchange Transactions
 
 Monetary assets and liabilities related to foreign currency
 transactions remaining unsettled at the end of the year are translated
 at the dosing rate.
 
 The difference in translation of long term monetary assets and
 liabilities and realised gains and losses on such foreign exchange
 transactions are recognised in the respective capital asset in respect
 of transactions covered by forward exchange contracts, the difference
 between contract rate and the rate on the date of transaction is
 charged to the Profit and Loss Account over the period of the contract
 
 E.  Inventories
 
 a) flaw material at cost and finished goods including in transit
 (except molasses) are carried at lower of cost and net realisable
 value.
 
 b) Stock of finished farm products, molasses and bagasse are carried at
 estimated selling price.  
 
 c) Packing materials, stores, spares, standing cane and other crops are
 carried at cost
 
 d) Goodsin process/work in progress is carried at estimated cost.
 
 e) Loose tools and instruments are carried at depreciated value.
 
 F.  Excise Duty
 
 Excise duty in respect of finished goods held in stock except in
 respect of those products which are being used for captive consumption,
 has been accounted for at the end of the period and is Included in the
 value of closing stock.
 
 G.  Employees Benefits
 
 a) Defined Contribution Plan
 
 Companys contributions paid/payable during the year to provident fund
 and pension fund are recognised in the Profit and Loss Account
 
 b) Defined Benefit Plan
 
 Comparys liabilities towards gratuity are determined using the
 projected unit credit method which considers each period of service as
 giving rise to additional unit of benefit entitlement and measures each
 unit separately to build up the final obligation. Actuarial gain and
 losses are recognised immediately in the profit and loss account as
 income or
 
 expenses. Obligation measured at the present value of estimated future
 cash flows using a discounted rate that is determined by reference to
 market yields at the Balance Sheet date or government bonds where the
 currency and terms of the government are consistent with the currency
 and estimated terms of the defined benefit obligation.
 
 c) Short term benefits (namely leave encashment) are provided for on
 accrual basis.
 
 H.  Leases
 
 a) In respect of assets taken on lease upto 31.03.2001 and in respect
 of operating lease taken there after, if any, lease rentals are
 expensed with reference to lease term, except for rentals pertaining to
 the period upto the date of commissioning of the assets which are
 capitalised.
 
 b) Income in respect of assets given on lease if any, is recognised on
 accrual basis with reference to lease terms.
 
 I.  Investments:
 
 a) Current investments are stated at lower of cost or fair market
 value.
 
 b) Long term investments are stated at cost less provision for
 diminution and written-off.
 
 J.  Interest Revenue:
 
 Revenue arising from the use by others of enterprise resources yielding
 interest and dividends etc. are recognised when no significant
 uncertainty as to measurability or collectability exists.
 
 K.  Provision for Current and Deferred Tax:
 
 Provision for current tax is made after taking into consideration
 benefits admissible under the provisions of Income Tax Act, 1961.
 Deferred tax resulting from timing differences between taxable income
 and accounting income is accounted for using the tax rates and laws
 that are enacted or substantively enacted as on the Balance Sheet Date.
 The deferred tax assets is recognised and carried forward only to the
 extent that there is virtual certainty that the assets will be realised
 in future.
 
 L.  Impairment of Assets:
 
 The carrying amount of assets are reviewed at each Balance Sheet date,
 if there is any indication of impairment based on internal/external
 factors. An asset is impaired when the carrying amount of the asset
 exceeds the recoverable amount. An impairment is charged to the Profit
 and Loss Account in the year in which an asset is identified as
 impaired. Impairment losses recognised in prior accounting periods are
 reversed if there is any change in the estimate of the recoverable
 amount.
 
 M.  Provisions, Contingent Liabilities and Assets:
 
 Provisions are recognised in respect of obligations where, based on the
 evidence available, their existence at the Balance Sheet date is
 considered probable.
 
 Contingent liabilities are shown by way of notes to the accounts in
 respect of obligations where, based on the evidence available their
 existence at the Balance Sheet date is considered not probable.