1. Financial statements are prepared under accrual method as per
 historical cost convention in accordance with applicable accounting
 standards except as otherwise stated. However, the accounts have been
 prepared on going concern basis, despite the company being a sick
 industrial company and incurring operational losses continuously.
 
 2. Fixed assets and depreciation:
 
 2.1 Fixed assets are stated at historical cost less accumulated
 depreciation, if any.
 
 2.2 The original cost of fixed assets acquired through foreign currency
 loan is adjusted at the end of each financial year by any change in
 liability arising out of expressing the outstanding foreign loan at the
 rate of exchange prevailing at the date of Balance Sheet.
 
 2.3 Depreciation is provided on Straight Line method at the rates
 specified in Schedule XIV of the Companies Act, 1956 on pro-rata basis
 from the date of acquisition/commissioning.
 
 2.4 Assets costing up to value of Rs. 5000/- are written off in the
 first year of purchase.
 
 2.5 Consideration is given at each balance sheet date to determine
 whether there is any indication of impairment of the carrying amount of
 the companys 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 greater of the net selling price arid
 value in use. In assessing the value in use, the estimated future cash
 flows are discounted to their present value based on an appropriate
 discount factor.
 
 3 Inventories:
 
 Inventories are stated at lower of cost and net realizable value. The
 Cost for Raw Materials and work in progress is the purchase cost of raw
 material arrived at on first in first out basis.The cost of finished
 goods is arrived on weighted average basis of the material consumed,
 direct production expenses and depreciation.
 
 4 Preliminary expenses and Public issue expenses are amortized over 10
 years and 60 Months respectively.
 
 5 Retirement Benefits:
 
 The provision for gratuity payable under the Payment of Gratuity Act
 1972, and the liability for amount payable to the employees in respect
 of accumulated earned leave, are being provided in the accounts on the
 assumption that such benefits are payable to all employees at the end
 of the accounting year.
 
 6 Accounting For Taxation
 
 Provision for current tax is made on the basis of taxable income for
 the current accounting year in accordance with the Income Tax Act, 1961
 The deferred tax on account of timing differences between the book and
 the tax profits/loss for the year is accounted for using the tax
 rates and laws that have been substantially enacted as on the balance
 sheet date. Deferred tax assets arising from the timing differences are
 recognized to the extent there is virtual certainty that these would be
 realized in future.
 
 7 Foreign Currency Transactions:
 
 7.1 Foreign currency transactions are recorded at the exchange rates
 prevailing at the date of the transaction.
 
 7.2 Gains/losses arising out of fluctuation in the exchange rates are
 recognized in the period in which they arise except in respect of Fixed
 Assets where exchange variance is adjusted in the carrying amount of
 the respective Fixed Assets.
 
 7.3 Foreign Currency receivables/payables are translated at the
 relevant rates of exchange prevailing at the year end.
 
 8 The Company has made the provision, for its liability towards the
 diamond accumulation plan matured during the year but against which
 the members have not bought the Jewellery by year end. This provision
 has been made equivalent to the difference of maturity value and the
 amount paid by the members.