FIXED ASSETS
 
 - Fixed assets are stated at their original cost (including cost
 incidental to acquisition) less depreciation.
 
 - Loss on scrapping of Fixed Assets and profit or loss on sale of Fixed
 Assets are included in the Profit & Loss Account and calculated as the
 difference between the value realized and the book value.
 
 Depreciation is provided in accordance with Section 205 read with
 Schedule XIV to the Companies Act, 1956 (Act), in the following manner:
 
 (i) On Plant and Machinery and Computers added during the period 1st
 November 1977 to 31st October 1987 on Straight Line Method, on the
 basis of specified period (within the meaning of Section 205(2)(b) of
 the Act) determined in the year of acquisition, at rates prescribed
 under the Income Tax Act, 1961 and Rules framed thereunder, as was in
 force during the relevant financial year.
 
 (ii) On Plant and Machinery added from 1st November 1987, on Straight
 Line Method at rates specified in Schedule XIV to the Act as existing
 at the time of capitalisation.
 
 (iii) On Silos and Rollers included in Plant and Machinery added from
 1st January 2006, on Straight Line Method @20%.
 
 (iv) On Research Equipment added from 1st January 2003, on Straight
 Line Method @25%.
 
 (v) On Air conditioners, on Written Down Value Method @ 13.91%.
 
 (vi) On computers added from 1st November 1987, on Straight Line
 Method @25%.
 
 (vii) On all other assets, on Written Down Value Method, at rates
 specified in Schedule XIV to the Act.
 
 (viii) All assets costing Rs 5,000 or less are fully depreciated in the
 year of additions.
 
 (ix) In respect of assets acquired, sold or discarded during the
 period, prorated depreciation, for the period during which each such
 asset was in use, after rounding off part of the month to the whole
 month.
 
 (x) Leasehold land is amortized over the period of the lease and
 freehold land is not depreciated.
 
 Cash generating units/assets are assessed for possible impairment at
 balance sheet dates based on external and internal sources of
 information. Impairment loses, if any, recognised as an expense in the
 Profit & Loss Account.
 
 INTANGIBLE ASSETS
 
 Intangible Assets (not internally generated) are recognised only when
 future economic benefits attributable to the assets will flow to the
 enterprises and cost can be measured reliably and are being amortized
 in equal installments over its useful life of four years.
 
 ASSETS ACQUIRED UNDER LEASE
 
 For assets acquired under operating lease, rentals payable are charged
 to Profit & Loss Account.
 
 INVENTORIES
 
 Inventories are valued using weighted average cost formula and are
 valued at the lower of cost and net realizable value.
 
 In respect of finished goods, cost, which comprises of expenditure
 incurred in the normal course of business in bringing inventories to
 their location and condition including relevant overheads, is
 calculated on basis appropriate to the business carried on by the
 Company. Excise duty payable on finished goods lying in the factory of
 manufacture are included in the value of closing stock after creating
 suitable provision for the liability. In respect of Intermediates, cost
 includes attributable production overheads.
 
 Cost for raw material includes expenditure incurred in the normal
 course of business in bringing inventories to their present location.
 Customs Duty payable for materials cleared from port but kept in bonded
 warehouse are included in the value of closing stock after creating
 suitable provision for liability.
 
 INVESTMENT
 
 Long term investments are stated at cost, and where applicable,
 provision is made against diminution in value. Profit or loss on sale
 of investment are included in the Profit & Loss Account and calculated
 as the difference between the net proceeds realised and the book value.
 Dividends are accounted for in the year in which they are received.
 
 RETIREMENT/TERMINAL BENEFITS
 
 a) Contribution to Superannuation and Provident Fund Schemes are
 recognized in the Profit & Loss Account on accrual basis. Provident
 Fund contributions are made to a Trust administered by the Company. The
 interest rate payable to the members of the Trust is not lower than the
 statutory rate of interest declared by the Central Government.
 Contribution for the shortfall is made good by the Company on a year to
 year basis. Contribution to Superannuation Scheme is made to a separate
 fund administered by Insurance Company.
 
 b) The following Defined Benefit Plans are provided for based on
 valuations as at the Balance Sheet date, made by independent actuaries:
 
 i.  Liability for Gratuity.
 
 ii.  Expected annual cost of providing pension to management staff as
 per respective conditions of their employment.
 
 iii. Liability accrued during the year in respect of
 retirement/terminal benefit payable to certain employees governed by
 agreement with the Union representing them.
 
 iv.  Liability accrued up to the close of the year for encashment of
 leave not availed by the management staff as stipulated in their
 respective terms of employment.
 
 c) Actuarial gains or losses are charged to Profit & Loss Account.
 
 d) As per service rules, part of the leave accrued during the year,
 which cannot be accumulated are accounted for on accrual basis and
 charged to Profit & Loss Account as short term benefit.
 
 e) Terminal benefits are recognized as expense as and when incurred.
 
 SALES
 
 Sales are recognized when goods are supplied in accordance with the
 terms of the sale and are inclusive of excise duty and net of turnover
 discount. *
 
 TRANSACTIONS IN FOREIGN CURRENCIES
 
 Transactions in foreign currencies are accounted for in the following
 manner:
 
 (a) In case of forward exchange contract, the premium or discount
 arising at the inception of a such contract is amortized as expense or
 income over the life of the contract. Exchange differences on such a
 contract are recognised in the statement of Profit & Loss in reporting
 period in which the exchange rates changed. Profit or loss arising on
 cancellation or renewal of forward contract is recognised as income or
 expense of the period.
 
 (b) Foreign currency transactions not covered by forward exchange
 contracts are accounted for at exchange rates prevailing at the date of
 the transaction. Gains/losses arising from the settlement of such
 transactions and from the translation of monetary assets and
 liabilities denominated in foreign currencies are recognised in the
 Profit & Loss Account
 
 BORROWING COST
 
 Borrowing costs that are directly attributable to the acquisition or
 construction of a qualifying asset that necessarily takes a substantial
 period of time to get ready for its intended use are capitalised till
 substantial completion of all the activities that are necessary for
 this purpose. Other borrowing costs are charged to revenue.
 
 ACCOUNTING FOR INCOME TAX
 
 Current Tax represents the amount that otherwise would have been
 payable under the Income Tax Act, 1961 had this financial year been
 reckoned as the basis for computation of tax payable under the
 prevailing taxation laws.
 
 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. Deferred Tax assets are not
 recognised unless there is reasonable certainty that sufficient future
 taxable income will be available against which such deferred tax assets
 can be realised.
 
 RESEARCH AND DEVELOPMENT
 
 Revenue expenditure incurred on Research and Development is charged to
 revenue. Capital expenditure incurred for Research and Development is
 included under Fixed Assets.