1.  Accounting Convention
 
 The financial statements are prepared under the historical cost
 convention on the Accrual Concept of accountancy in accordance with
 the accounting principles generally accepted in India and comply with
 the accounting standards issued by the Institute of Chartered
 Accountants of India to the extent applicable and with the relevant
 provisions of the Companies Act, 1956.
 
 2.  Use of Estimates
 
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual result and estimates are recognized in the period in
 which the results are known / materialized.
 
 3.  Tangible Fixed Assets
 
 Fixed assets are stated at cost of acquisition / construction except
 for certain fixed assets which have been stated at revalued amounts,
 less accumulated depreciation, amortization and impairment loss (if
 any). Cost comprises of purchase price, import duties and other
 non-refundable taxes or levies and any directly attributable cost to
 bring the assets ready for its intended use. Exchange difference, if
 any, in respect of long term liabilities incurred to acquire fixed
 assets is adjusted to the carrying cost of fixed assets.
 
 Direct expenses, as well as pro rata identifiable indirect expenses on
 projects during the year of construction are capitalized.  Capital
 assets (including expenditure incurred during the construction period)
 under erection / installation are stated in the Balance Sheet as
 Capital Work in Progress.
 
 4.  Intangible Assets
 
 Intangible assets are stated at cost of acquisition / cost incurred
 less accumulated amortization.
 
 5.  Depreciation / Amortization
 
 All tangible fixed assets, except freehold land, leasehold land and
 capital work in progress, are depreciated on a straight line method at
 the rates and in the manner prescribed in Schedule XIV of the
 Companies Act, 1956.  Leasehold land shall be written off in the year
 in which the respective lease period expires.  Intangibles Assets
 including Intellectual Property Rights in the nature of production
 processes, software and patents are amortized over a period of 5 years
 starting from the year after the year of incurring expenditure /
 commercialization. The value of these intangible assets is reviewed at
 each balance sheet date to assess the probability of continuing future
 benefits. If there is any indication that the value of such assets is
 impaired, the resulting impairment loss is recognized in the financial
 statements.
 
 6.  Impairment of Assets
 
 Consideration is given at each balance sheet date to determine whether
 there is any indication of impairment of the carrying amount of the
 companys each class of the fixed assets. If any indication exists, an
 assets recoverable amount is estimated. An impairment loss is
 recognized whenever the carrying amount of an asset exceeds its
 recoverable amount. The recoverable amount is the greater of the net
 selling price and value in use. In assessing value in use, the
 estimated future cash flows are discounted to their present value based
 on an appropriate discount factor.
 
 7.  Investments
 
 Current investments are carried at the lower of cost and fair value
 computed category wise. Long term investments are stated at cost.
 Provision for diminution in the value of long term investments is made,
 only if, in the opinion of the management, such a decline is regarded
 as being other than temporary.
 
 8.  Inventories
 
 Raw materials, packing materials, stores, spares and consumables are
 valued at lower of cost (net of refundable taxes and duties) or net
 realizable value. The cost of these items of inventory comprises of
 cost of purchase and other incidental costs incurred to bring the
 inventories to their present location and condition.  Work in progress
 and finished goods are valued at lower of cost or net realizable value.
 The cost of work in process and finished goods includes cost of
 conversion and other costs incurred to bring the inventories to their
 present location and condition.
 
 Cost of inventories is determined on Weighted Average basis.  Excise
 Duty in respect of finished goods lying in factory premises are
 provided for and included in valuation of inventory in case of non EOU
 units.  Custom duty is accounted as and when goods are cleared from the
 bonded warehouse.
 
 9.  Revenue Recognition
 
 Revenue from domestic sales is accounted on dispatch of products to
 customers.
 
 Revenue from export sales is recognized on shipment/ air lift of
 products. Exports sales include exchange rate difference arising on
 realization of revenue.  Income from Contract Research is recognized
 under Percentage Completion Method basis as per contractual terms.
 Interest income is accrued on a time basis, by reference to the
 principal outstanding and at the effective interest rate applicable.
 
 Dividend income from investments is recognized when the shareholders
 rights to receive payment have been established.
 
 10.  Foreign Currency Transactions
 
 Transactions denominated in foreign currencies are recorded at the
 exchange rates prevailing on the date of the transaction.
 
 Monetary items denominated in foreign currencies at the year end are
 restated at the year end rates. Non monetary foreign currency items are
 carried at cost.
 
 Exchange differences arising on settlement or restatement of long term
 foreign currency monetary items, in so far as they relate to
 acquisition of depreciable capital assets are adjusted to the carrying
 cost of such assets and depreciated over the balance life of the assets
 and in other cases, are accumulated in Foreign Currency Monetary Item
 Translation Difference Account and amortized over the balance period
 of such long term asset / liability but not beyond March 31, 2011 by
 recognition as income or expense in each of such periods. An asset or
 liability is designated as a long term foreign currency monetary item,
 if the asset or liability is expressed in a foreign currency and has a
 term of 12 months or more at the date of origination of the asset or
 liability.
 
 Exchange differences on other monetary items denominated in foreign
 currencies are recognized in the profit and loss account.
 
 11.  Redemption Premium on Foreign Currency Convertible Bonds
 
 Premium payable on redemption of Foreign Currency Convertible Bonds
 outstanding as at the balance sheet date is provided on time basis by
 adjusting against the Securities Premium Account. Any changes to the
 premium payable on account of conversion of bonds into equity shares
 are adjusted in the Share Premium Account.
 
 12.  Employee Benefits
 
 Short-term employee benefits are recognized as an expense at the
 undiscounted amount in the profit and loss account of the year in which
 the related service is rendered.
 
 Post employment benefits are recognized as an expense in the profit and
 loss account for the year in which the employee has rendered services.
 The expense is recognized at the present value of the amount payable
 towards contributions. The present value is determined using the market
 yields of government bonds, at the balance sheet date, at the
 discounting rate.
 
 Other long-term employee benefits are recognized as an expense in the
 profit and loss account for the period in which the employee has
 rendered services. Estimated liability on account of long-term benefits
 is discounted to the current value, using the yield on government
 bonds, as on the date of balance sheet, at the discounting rate.
 
 Actuarial gains and losses in respect of post employment and other
 long-term benefits are charged to the profit and loss account.
 
 13.  Research and Development Costs
 
 Research and development costs incurred for development of products are
 charged to revenue as incurred, except for development costs relating
 to the design and testing of new or improved materials, products or
 processes which are recognized as intangible assets to the extent that
 it is expected that such assets will generate future economic benefits.
 Research and development expenditure of capital nature is added to
 fixed assets.
 
 The carrying value of development costs is reviewed for impairment
 annually when the asset is not yet in use, and otherwise when events
 and change in circumstances indicate that the carrying value may not be
 recoverable.
 
 Expenditure on development of the production process of molecules is
 treated as capital work in progress and amortized over the period of
 life of each product once the commercial exploitation of the respective
 product starts / put to use
 
 14.  Borrowing Costs
 
 Borrowing costs that are directly attributable to the acquisition,
 construction or production of qualifying fixed assets are capitalized
 as part of the cost of such assets. All other borrowing costs are
 recognized as expense in the period in which they are incurred.
 
 15.  Financial Derivates and Hedging Transactions
 
 In respect of derivate contracts, premium paid, gains or losses on
 settlement and provision for losses for cash flow hedges are recognized
 in the profit and loss account.
 
 16.  Provision for Tax
 
 Tax expenses for a year comprise of current tax and deferred tax.
 Provision for current tax is determined based on assessable profits of
 the Company as determined under the Income Tax Act, 1961.
 
 Provision for deferred tax is determined based on the effect of timing
 difference between the assessable profits under the Income Tax Act and
 the profits as per the Profit and Loss Account. Deferred tax assets,
 other than those from carry forward losses and unabsorbed depreciation,
 are recognized 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 realized. Deferred tax assets arising
 from carry forward losses and unabsorbed depreciation, are recognized
 and carried forward only to the extent that there is a virtual
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realized.
 
 17.  Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions are recognized for when the Company has at present, legal or
 contractual obligation as a result of past events, only if it is
 probable that an outflow of resources embodying economic benefits will
 be required and if the amount involved can be measured reliably.
 
 Contingent liabilities being a possible obligation as a result of past
 events, the existence of which will be confirmed only by the occurrence
 or non occurrence of one or more future events not wholly in the
 control of the Company, are not recognized in the accounts. The nature
 of such liabilities and an estimate of its financial effect are
 disclosed in the Notes to Financial Statements.
 
 Contingent assets are neither recognized nor disclosed in the financial
 statements.