a.  Basis of Preparation
 
 The financial statements have been prepared to comply in all material
 respects with the mandatory Accounting Standards issued by the
 Institute of Chartered Accountants of India and the relevant provisions
 of the Companies Act, 1956 (''the Act''). The financial statements have
 been prepared under the historical cost convention on an accrual basis.
 The Company follows the mercantile system of accounting and recognises
 income and expenditure on accrual basis.
 
 b.  Revenue Recognition
 
 i.  Revenue from domestic sales is recognized on accrual basis. Sales
 and Finished Goods are accounted inclusive of excise duty, cess but
 excluding sales tax and trade discounts. Revenue from export sales is
 recognized on the basis of the shipping bills for exports.
 
 ii.  Export incentives are accounted on accrual basis.
 
 iii. Interests on deposits are accounted on time proportion basis
 taking into account the amount outstanding and the rates applicable.
 
 iv.  Dividend income is recognized only when a right to receive payment
 is established.
 
 v.  Claims are accounted for when there is a reasonable certainty with
 regard to their ultimate collection.
 
 vi.  Other incomes are recognized on accrual basis.
 
 c.  Fixed Assets
 
 i.  Fixed Assets are stated at cost inclusive of duties (net of CENVAT
 credit to the extent applicable), taxes, incidental expenses,
 erection/commissioning expenses and interest and all other costs
 allocated up to the date of commencement of commercial production.
 
 ii.  Gains or losses arising from retirement or disposal of fixed
 assets are recognised in the Profit & Loss account.
 
 d.  Depreciation
 
 Depreciation is provided on Fixed Assets under the straight line method
 at the rates and in the manner prescribed in Schedule XIV of the
 Companies Act, 1956 and the notification issued there under, except
 that depreciation has been provided at 100 % on assets costing
 individually Rs. 5,000/- or less irrespective of whether or not the
 aggregate cost of such assets constitutes more than 10 % of the total
 cost of the assets under the particular grouping. Depreciation on
 addition to fixed assets during the year is charged on pro rata basis
 with reference to the month of addition.
 
 Furniture & fixtures includes the cost of Rs.38.05 lakhs towards
 interior decoration and civil work for leased premises and depreciation
 rate adopted in respect of these assets are at the rate of 10% under
 straight line method.
 
 e.  Impairment of Assets
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value. An impairment loss is charged to the
 Profit and Loss Account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting period is
 reversed, if there is a change in the estimate of recoverable amount.
 During the year the Company tested impairment of fixed assets as per
 the Accounting Standard 28 Impairment of Assets to identify
 impairment loss, if any. The realizable amount calculated as per net
 selling price for all the cash generating units was higher than the
 carrying values of such units. Accordingly, no impairment was required
 to be recognized during the year.
 
 f.  Investments
 
 Long Term Investments are stated at cost of acquisition and income from
 investments not carrying fixed return is accounted at the time of
 receipt. Gains or losses on disposal of investments are recognized in
 the Profit & Loss Account.  The decline in value of Long term
 investments other than temporary, wherever applicable, is given effect
 to as per Accounting Standard 13 (AS 13).
 
 g.  Inventories
 
 The inventory has been valued as under:
 
 i.  Raw materials, Stores and spares are valued at the lower of cost
 and net realisable value. Cost includes cost of raw materials,
 transportation charges, and Store/Warehouse charges. The cost is
 determined on weighted average basis and excludes claimable levies and
 taxes.
 
 ii.  Work in progress is valued at the lower of cost and net realisable
 value proportionate to the stage of progress. The cost includes direct
 material, labour and appropriate portion of overheads.
 
 iii. Finished goods are valued at lower of cost and net realisable
 value. The cost includes direct material; appropriate portion of
 overheads and includes excise duty and Cess.
 
 iv.  By-products are valued at net realizable value.
 
 h.  Retirement benefits to employees
 
 i Retirement benefit in the form of provident fund is charged to the
 Profit and Loss account on accrual basis.
 
 ii Provision for Gratuity and Leave encashment is made on the basis of
 actuarial valuation at the end of the year in line with AS-15
 (Revised). Gratuity is an unfunded liability.
 
 iii Superannuation for the Executives is contributed by way of
 subscription to the fund with the LIC of India and the same is charged
 to profit and loss account on accrual basis.
 
 i.  Accounting for Grants
 
 The Company has fulfilled the obligations under the terms of the USAID
 Grant.  In line with the generally accepted accounting principles, a
 sum of Rs.11.25 Lakhs is being apportioned out of the grant to the
 Profit and Loss Account.
 
 j. Foreign Currency Transactions
 
 Exchange differences arising on reporting of foreign currency monetary
 items at rates different from those at which they are initially
 recorded during the period, or reported in previous financial
 statements, in so far as they relate to the acquisition of a
 depreciable capital asset, are added to or deducted from the cost of
 the asset and are depreciated over the balance life of the asset.
 
 Exchange differences arising on the settlement of the monetary items
 not covered above, or on reporting such monetary items of Company at
 rates different from those at which they are initially recorded during
 the year or reported in previous financial statements, are recognized
 as income or as expenses in the year in which they arise.
 
 In relation to the forward contracts entered into to hedge the foreign
 currency risk of the underlying monetary assets / liabilities, the
 exchange difference is calculated as the difference between the foreign
 currency amount of the contract translated at the exchange rate at the
 reporting date, or the settlement date where the transaction is settled
 during the reporting period, and the corresponding foreign currency
 amount translated at the later of the date of inception of the forward
 exchange contract and the last reporting date. Such exchange
 differences are recognised in the profit and loss account in the
 reporting period in which the exchange rates change.
 
 The premium or discount on all such contracts arising at the inception
 of each contract is amortised as income or expense over the life of the
 contract. Any profit or loss arising on the cancellation or renewal of
 forward contracts is recognized as income or as expense for the period.
 
 k. Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition of or
 construction of qualifying assets are capitalized as part of the cost
 of such assets. A qualifying asset is one that necessarily takes
 substantial time to get ready for its intended use. All other borrowing
 costs are charged to revenue.
 
 l.  Provisions, Contingent Liabilities and Contingent Assets
 
 A provision is recognized when there is a present obligation as a
 result of 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 not discounted to its present value and are determined
 based on Management estimate of amounts required to settle the
 obligation at the balance sheet date. These are reviewed at each
 balance sheet date and adjusted to reflect the current Management
 estimates.
 
 Contingent liabilities are not recognized in the financial statements.
 Contingent asset is neither recognized nor disclosed in the financial
 statements
 
 m. Taxation
 
 Tax expense comprises current and deferred tax. Provision for current
 income tax is made on the assessable income at the tax rate applicable
 to the relevant assessment year. Deferred income taxes are recognized
 for the future tax consequences attributable to timing differences
 between the financial statement determination of income and their
 recognition for tax purposes.
 
 The effect of a change in tax rates on deferred tax assets and
 liabilities is recognised in the income statement using the tax rates
 and tax laws that have been enacted or substantively enacted at the
 balance sheet date. Deferred tax assets are recognised only to the
 extent that there is reasonable certainty that sufficient future
 taxable income will be available against which such deferred tax assets
 can be realised. If the company has unabsorbed depreciation or carry
 forward tax losses, deferred tax assets are recognised only if there is
 virtual certainty supported by convincing evidence that such deferred
 tax assets can be realised against future taxable profits.
 
 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 normal income tax during the specified period. In the year in
 which the Minimum Alternative Tax (MAT) credit becomes eligible to be
 recognized as an asset in accordance with the recommendations contained
 in guidance Note issued by the Institute of Chartered Accountants of
 India, the said asset is created by way of a credit to the profit and
 loss account and shown as MAT Credit Entitlement.
 
 n. Earnings per Share (EPS)
 
 The earnings considered in ascertaining the company''s earnings per
 share comprise the net profit after tax. The number of shares used in
 computing basic earnings per share is the weighted average number of
 shares outstanding during the year. The number of shares used in
 computing diluted earnings per share comprises the weighted average
 number of shares considered for deriving basic earnings per share and
 also the weighted average number of shares, if any, which would have
 been issued on the conversion of all dilutive potential equity shares.