A.  Basis of preparation of financial statements:
 
 The financial statements are prepared under the historical cost
 convention on the accrual basis of accounting in accordance with the
 generally accepted accounting principles, the applicable mandatory
 Accounting Standards and the relevant provisions of the Companies Act,
 1956.
 
 B.  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 amounts of assets and liabilities on the
 date of the financial statements and the reported amounts of revenues
 and expenses during the reporting period. Differences between actual
 results and estimates are recognised in the period in which the results
 are known.
 
 C.  Recognition of Revenue and Expenditure:
 
 a.  Revenue / Income and Cost / Expenditure are generally accounted for
 on accrual as they are earned or incurred except in case of significant
 uncertainties;
 
 b.  Sale of goods is recognized on transfer of significant risks and
 rewards of ownership. Recognition in the case of local sales is
 generally on the despatch of goods.  Export Sales are generally
 accounted for on the basis of the dates of On Board Bill of Lading;
 
 c.  Export Benefits are recognised in the year of export;
 
 d.  Share Issue Expenses are charged first against available balance in
 the Securities Premium Account;
 
 e.  Dividend income is recognised in the year in which the right to
 receive dividend is established.
 
 D.  Employee Benefits:
 
 a.  Short term employee benefits are recognised as an expense at the
 undiscounted amount in the Profit and Loss Account of the year in which
 the related service is rendered;
 
 b.  Post employment benefits
 
 i.  Defined contribution plans:
 
 Companys contribution to the superannuation scheme, state governed
 provident fund scheme, etc. are recognised during the year in which the
 related service is rendered;
 
 ii.  Defined benefit plans:
 
 The present value of the obligation under such plans is determined
 based on an actuarial valuation using the Projected Unit Credit Method.
 Actuarial gains and losses arising on such valuation are recognised
 immediately in the Profit
 
 and Loss Account. In the case of gratuity which is funded with the Life
 Insurance Corporation of India, the fair value of the plan assets is
 reduced from the gross obligation under the defined benefit plan to
 recognise the obligation on net basis;
 
 c.  Long term compensated absences are provided on the basis of an
 actuarial valuation;
 
 d.  Termination Benefits are recognised as an expense in the Profit and
 Loss Account of the year in which they are incurred.
 
 E.  Foreign Currency Translations:
 
 a.  All transactions in foreign currency are recorded at the rates of
 exchange prevailing on the dates when the relevant transactions take
 place;
 
 b.  Monetary assets and liabilities in foreign currency outstanding at
 the close of the year are converted in Indian Currency at the
 appropriate rates of exchange prevailing on the date of the Balance
 Sheet. Resultant gain or loss is accounted for during the year;
 
 c.  In respect of forward exchange contracts entered into to hedge
 foreign currency risks the difference between the forward rate and
 exchange rate at the inception of the contract is recognized as income
 or expense over the life of the contract. Further, the exchange
 differences arising on such contracts are recognised as income or
 expense along with the exchange differences on the underlying assets /
 liabilities. Profit or loss on cancellations / renewals of forward
 contracts is recognised during the year;
 
 d.  Exchange differences arising on other derivative contracts entered
 into to hedge foreign currency exposure on account of highly probable
 forecast transactions, were recognized and marked to market, in line
 with principles laid down in Accounting Standard 30 – Financial
 Instruments – Recognition and Measurement, issued by The Institute of
 Chartered Accountants of India, to the extent, no specific accounting
 treatment is prescribed under Company law or by any other regulatory
 authority. Accordingly, such gain or loss on effective hedges was
 carried forward under Hedging Reserve to be recognized in the Profit
 and Loss Account only in the year in which underlying transactions are
 complete. In the absence of a designation as effective hedge, the gain
 or loss would be immediately recognized in the Profit and Loss Account.
 With effect from 1st April, 2010, the Company has discontinued the
 aforesaid accounting treatment and is accordingly, recognizing mark to
 market losses in the Profit and Loss Account (Refer Note 21 in
 Schedule U)
 
 e. Accounting of foreign branch (integral foreign operation):
 
 i. Monetary assets and liabilities are converted at the appropriate
 rate of exchange prevailing on the Balance Sheet date;
 
 ii. Fixed assets and depreciation thereon are converted at the exchange
 rates prevailing on the date of the transaction.
 
 iii. Revenue items (excluding depreciation) are converted at the rate
 prevailing on date of the transaction.
 
 F.  Fixed Assets and Depreciation:
 
 a.  Fixed Assets:
 
 Fixed Assets are carried at cost of acquisition / construction or at
 revalued amounts less accumulated depreciation and amortisation. Cost
 of acquisition includes taxes / duties (net of credits availed) and
 other attributable costs for bringing assets to the condition required
 for their intended use.
 
 b.  Depreciation / Amortisation:
 
 i. Cost of Leasehold Land is amortised over the period of the lease.
 
 ii. Depreciation is provided as per the rates and in the manner
 prescribed under Schedule XIV to the Companies Act, 1956, on the
 Straight Line Method.
 
 iii. Depreciation on additions to assets or on sale / disposal of
 assets is calculated pro-rata from the date of such addition or upto
 the date of such sale / disposal as the case may be.
 
 iv. Cost of Customised software capitalized is amortised over a period
 of five years.
 
 G.  Investments:
 
 Investments are classified into Current and Long term Investments.
 Current Investments are stated at lower of cost and fair value. Long
 term Investments are stated at cost.  A provision for diminution is
 made to recognise a decline other than temporary in the value of Long
 term Investments.
 
 H.  Inventory Valuation:
 
 a.  Raw Materials and Components, Work in Progress, Finished Goods,
 Goods for Trade and Stores, Spares, etc. are valued at Cost or Net
 Realisable value whichever is lower.
 
 b.  Goods in transit are valued at cost to date.
 
 c.  Cost comprises all costs of purchase, costs of conversion and
 other costs incurred in bringing the inventory to their present
 location and condition. Cost formulae used are either First In First
 Out or Average Cost as applicable.
 
 d. Inter-unit transfers are valued either at works / factory costs of
 the transferor unit.
 
 I.  Taxation:
 
 Income-tax expense comprises Current tax and Deferred tax charge or
 credit.
 
 a.  Provision for current tax is made on the assessable income at the
 tax rate applicable to the relevant assessment year.
 
 b.  Deferred Tax is recognized on timing difference between taxable
 income and accounting income that originated in one period and are
 capable of reversal in one or more subsequent period(s). The Deferred
 tax Asset and Deferred tax Liability is calculated by applying tax rate
 and tax laws that have been enacted or substantively enacted by the
 Balance Sheet date.  Deferred tax Assets arising on account of brought
 forward losses and unabsorbed depreciation under tax laws are
 recognised only if there is a virtual certainty of its realisation
 supported by convincing evidence.  Deferred tax assets on account of
 other timing differences are recognised only to the extent there is a
 reasonable certainty of its realisation. At each Balance Sheet date the
 carrying amount of deferred tax assets are reviewed to reassure
 realisation.
 
 J.  Borrowing Costs:
 
 Interest and other borrowing costs attributable to acquisition /
 construction of qualifying assets are capitalised as part of the cost
 of such assets upto the date the assets are ready for their intended
 use. Other borrowing costs are charged as expense in the year in which
 these are incurred.
 
 K.  Impairment of Assets:
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 to assess whether there is any indication that an individual asset /
 group of assets (constituting a Cash Generating Unit) may be impaired.
 If there is any indication of impairment based on internal / external
 factors i.e. when the carrying amount of the assets exceed the
 recoverable amount an impairment loss is charged to the Profit and Loss
 Account in the year in which an asset is identified as impaired.  An
 impairment loss recognized in prior accounting periods is reversed or
 reduced if there has been a favourable change in the estimate of the
 recoverable amount.
 
 L.  Provisions Contingent Liabilities and Contingent Assets:
 
 Provisions involving a 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
 financial statements. Contingent Assets are neither recognised nor
 disclosed in the financial statements.