1.1 Basis of Preparation of Financial Statements
 
 The Financial Statements have been prepared under the historical cost
 convention and in accordance with the provisions of the Companies Act,
 1956. Accounting policies not referred to otherwise are consistent and
 are in consonance with the generally accepted accounting principles in
 India.
 
 1.2 Use of Estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles 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 results and estimates are recognised in the period in which the
 results are known / materialized.
 
 1.3 Tangible and Intangible Fixed Assets
 
 (i) Tangible fixed assets are stated at cost of acquisition and
 subsequent improvements thereto; net of CENVAT / Value Added Tax,
 rebates, less accumulated depreciation, and impairment loss, if any.
 
 (ii) All costs, including financing costs and net charge on foreign
 exchange contracts till commencement of commercial production, are
 capitalised. Cost includes freight, duties, taxes and incidental
 expenses related to the acquisition and installation of fixed asset.
 
 (iii) Intangible assets acquired separately are measured on initial
 recognition at cost. Following initial recognition, intangible assets
 are carried at cost less accumulated ammortisation and impairment loss,
 if any.
 
 (iv) Expenses incurred relating to the Project prior to commencement of
 commercial production are classified as Project Development Expenditure
 and disclosed under Capital Work-in-Progress (net of income earned
 during the project development stage).
 
 1.4 Depreciation/ Amortisation
 
 (i) Depreciation on tangible assets is provided on straight line method
 at the rates and in the manner prescribed in Schedule XIV to the
 Companies Act, 1956.
 
 (ii) Assets costing Rs. 5,000 or less are being fully depreciated in
 the year of acquisition.
 
 (iii) Cost of leasehold land is amortized over the period of lease.
 
 (iv) The intangible assets are amortized on straight line method at the
 rate and in the manner prescribed in Schedule XIV to the Companies Act
 1956, and where such rate is not prescribed over the useful economic l
 ife of the respective assets.
 
 1.5 Impairment of Assets
 
 The carrying amounts of the assets are reviewed at each balance sheet
 date. An asset is treated as impaired when the carrying cost of the
 asset exceeds its recoverable value. An impairment loss is charged when
 the asset is identified as impaired.
 
 1.6 Government Grants
 
 Grants received/to be received, if any, against specified fixed asset
 is/will be adjusted to the cost of the asset and in case where it is
 not against any specific fixed asset, the same is/will be taken as
 Capital Reserve. Further, the revenue grants are/will be recognised in
 the Profit and Loss Account in accordance with the related scheme and
 in the period in which it is/will be admitted.
 
 1.7 Foreign Currency Transactions
 
 (i) Transactions denominated in foreign currencies are normally
 recorded at the exchange rates prevailing on the date of the
 transaction. All transactions of integral foreign operations are
 recorded by applying to the foreign currency amounts on an average
 exchange rate between the reporting currency and the foreign currency.
 
 (ii) Monetary items denominated in foreign currencies at the year end
 are restated at the year end rates. In case of monetary items which are
 covered by forward exchange contracts, the difference between the year
 end rate and rate on the date of the contract is recognised as exchange
 difference and the premium paid/received on forward contracts is
 recognised over the life of the contract.
 
 (iii) Non-monetary foreign currency items are carried at cost.
 
 (iv) Any income or expense on account of exchange difference either on
 settlement or on translation is recognised as revenue except in respect
 of the project cost, same are recognized as Capital Work in Progress.
 
 1.8 Investments
 
 Investments that are readily realisable and intended to be held for not
 more than a year are classified as current investments. All other
 investments are classified as long-term investments. Current
 investments are carried at lower of cost and fair value determined on
 an individual investment basis. Long-term investments are carried at
 cost. Provision for diminution in the value of long term investments is
 made only if such a decline is other than temporary in nature in the
 opinion of the management.
 
 1.9 Inventories
 
 Inventories are valued at weighted average cost or net realizable value
 whichever is lower.
 
 1.10 Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets. A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 1.11 Employee Retirement Benefits
 
 (i) Short term employee benefits are charged off at the undiscounted
 amount in the period in which the related service is rendered.
 
 (ii) Post employment and other long term employee benefits are charged
 off in the period in which the employee has rendered services. The
 amount charged off is recognized at the present value of the amounts
 payable determined using actuarial valuation techniques. Actuarial
 gains and losses in respect of post employment and other long term
 benefits are charged to Profit and Loss Account/Project Development
 Expend iture Account.
 
 1.12 Taxes on I ncome
 
 Provision for Income Tax is made on the basis of estimated taxable
 income for the period at current rates. Tax expense comprises both
 Current Tax and Deferred Tax at the applicable enacted or substantively
 enacted rates. Current Tax represents the amount of Income Tax payable/
 recoverable in respect of taxable income/ loss for the reporting
 period. Deferred Tax represents the effect of timing difference between
 taxable income and accounting income for the reporting period that
 originates in one year and are capable of reversal in one or more
 subsequent years.
 
 1.13 Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions involving substantial degree of estimation in measurement
 are recognised when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognised but are disclosed in the
 Notes. Contingent Assets are neither recognised nor disclosed in the
 financial statements.
 
 1.14 Revenue Recognition
 
 All expenses and income to the extent considered payable and receivable
 respectively, unless otherwise stated, are accounted for on an accrual
 basis. Revenue is recognized to the extent that it is probable that the
 economic benefits will flow to the Company and the revenue can be rel
 iably measured.
 
 Revenue from sale of goods is recognized when the significant risks and
 rewards of ownership of the goods have passed to the buyer. Sales are
 disclosed net of quality claims and rebates.
 
 1.15 Insurance Claims
 
 Insurance claims are accounted as and when admitted / settled.