I.  Basis for preparation of financial statements.
 
 The financial statements are prepared under historical cost convention
 on accrual basis as a going concern in accordance with the generally
 accepted accounting principles in India and to comply with all material
 aspects with the mandatory accounting standards notified by the
 Companies (Accounting Standard) Rules 2006 and the provisions of the
 Companies Act, 1956.  The preparation of financial statements requires
 management to make certain estimates and assumptions that affect the
 amounts reported in the financial statements and notes thereto.
 Differences between estimates and actuals are recognized in the period
 in which they materialize.
 
 II.  1 ) Fixed Assets:
 
 (a) Fixed assets are stated at acquisition cost less accumulated
 depreciation / amortization and cumulative impairment.
 
 (b) Land purchased/acquired and under the possession of the company are
 treated as free hold land.
 
 (c) Technical know-how / license fee relating to plant / facilities are
 capitalized as part of cost of the underlying asset.
 
 (d) Income approach is adopted for accounting Government grants related
 to depreciable fixed assets. Grants utilized for acquisition of
 depreciable Fixed Assets are treated as Deferred Government Grants and
 the same is recognized in the Profit and Loss account on a systematic
 and rational basis over the useful life of the assets.
 
 (e) Depreciation is charged on Plant and Machinery on straight line
 method and on other tangible assets (excluding land) on written down
 value method at the rates specified in Schedule XIV of the Companies
 Act subject to adjustment for impairment, if any, except in the case of
 roads, culverts, bridges, dams and godowns (factory) for which
 depreciation has been charged at 10% as against 5% prescribed in the
 Companies Act, 1956. On additions to assets, depreciation is charged
 from the date of such addition and on sale or discarding of assets upto
 the date of such sale or discarding.
 
 (f) An asset is treated as impaired when the carrying amount of assets
 exceeds its recoverable value. Impairment loss is charged to the Profit
 and Loss account in the year in which an asset is identified as
 impaired. When the recoverable amount of previously impaired assets
 exceeds its carrying amount, the value of asset is reinstated by
 reversing the impairment loss considered in prior years limited to
 lower of its recoverable value or carrying amount at the depreciated
 historical cost.
 
 2) Construction period expenses on Project:
 
 (a) Revenue expenses exclusively attributable to projects incurred
 during construction period are capitalized. However, such expenses in
 respect of capital facilities being executed along with production /
 operation simultaneously are charged to revenue.
 
 (b) Financing cost incurred during construction period on loans
 specifically borrowed and utilized for projects is capitalized upto the
 date of capitalization.
 
 (c) Financing cost, if any, incurred on general borrowings used for
 projects is capitalized at the weighted average cost. The amount of
 such borrowings is determined after setting off the amount of internal
 accruals, if any.
 
 III.  Capital Stores:
 
 Capital stores are valued at cost. Specific provision is made for
 likely diminution in value, wherever required.
 
 IV.  Intangible Assets:
 
 a) Technical know-how / license fee relating to production process and
 process design are recognized as intangible assets and amortised on a
 straight line method over a period of 5 years or life of the underlying
 plant / facility whichever is earlier.
 
 b) Expenditure incurred on Research and Development, other than capital
 account is charged to revenue.
 
 c) Costs incurred on computer software purchased/developed resulting in
 future economic benefits, are capitalized as intangible assets and
 amortised over a period of 5 years.
 
 V Inventory Valuation:
 
 a) Raw materials and stores and spares are valued at or below cost.
 Cost being ascertained on moving weighted average method. In cases
 where there has been a decline in the price of imported and indigenous
 raw material and it is estimated the cost of finished product will
 exceed the net realizable value, the materials are written down to net
 realizable value.
 
 b) Materials in process are not valued consistently.
 
 c) Finished/Trading products are valued at lower of cost or net
 realizable value in the aggregate, productwise. Intermediate products
 are valued at lower of cost or net realizable value derived from
 finished products and saleable by-product at realizable value. Cost of
 Finished / semi-finished / intermediate products are determined based
 on annual average cost excluding interest and head office and
 administrative overheads. Cost of finished goods in warehouse includes
 freight and handling charges.
 
 d) Materials in transit / under inspection are valued at cost.
 
 VI.  Capital Commitments:
 
 Estimated amount of contracts remaining to be executed on capital
 accounts, above Rs. Five lakh in each case, are considered for
 disclosure.
 
 VII.  Borrowing Cost:
 
 Borrowing Costs that are specifically identified to the acquisition or
 construction of qualifying assets are capitalised as part of such
 asset.  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 Profit and Loss Account.
 
 VIII.  Investments:
 
 Long term investments are valued at cost, after providing for
 diminution in value if it is of a permanent nature. Current investments
 are valued (individually) at lower of cost and quoted/fair value.
 
 IX.  Revenue Recognition:
 
 a) Sales are recognized on an accrual basis when all significant risks
 and rewards of ownership are transferred to the buyer and the company
 retains no effective control of the goods transferred.
 
 b) Gross sales (net of returns) include excise duty, wherever
 applicable.
 
 c) Recognition of subsidy is generally made on the basis of in
 principle recognition / approval/ settlement of claims by the
 Government of India as per the policy in force.
 
 d) Other income is recognized on an accrual basis.
 
 e) Dividend income is recognized when right to receive dividend is
 established.
 
 f) Interest income is recognized when no significant uncertainty as to
 its realization exists.
 
 g) Scrap, salvaged / waste materials and sweepings are accounted for on
 realization.
 
 h) Claims on underwriters, carriers and on Customs and Central Excise
 Departments are taken into account on acceptance. Insurance and other
 miscellaneous claims are recognized on receipt/ acceptance of claim.
 Contractual pass through incentives, benefits etc.  are recognized on
 receipt basis.
 
 X.  Excise Duty:
 
 Excise duty is accounted on the basis of both payments made in respect
 of goods cleared as also provision made for goods lying in stock.
 Closing stock value of finished goods includes excise duty payable /
 paid on such goods.
 
 XI.  Foreign Currency Transactions:
 
 a) Receivables and payables in foreign currency as on the reporting
 date including forward exchange contracts are restated at the rate
 prevailing at that date.
 
 b) The premium in respect of forward exchange contracts is recognized
 over the life of the contracts.
 
 c) Variations arising on account of fluctuations in foreign exchange
 rates are treated as revenue (gain/loss (-)).
 
 XII.  Employee Benefits:
 
 a) The company''s contribution to the Provident Fund is remitted to
 separate trust established for this purposes based on a fixed
 percentage of the eligible employees salary and charged to Profit and
 Loss account. Shortfall, if any, in the fund assets based on the
 Government specified minimum rate of return will be made good by the
 company and charged to Profit and Loss account.
 
 b) The company operates defined benefit plan for gratuity and leave
 encashment. The cost of providing such defined benefits is determined
 using the projected unit credit method of actuarial valuation made at
 the end of the year and the gratuity fund is administered through a
 fund maintained by insurance company. Actuarial gain/loss is charged to
 Profit and Loss account.
 
 XIII.  Grants:
 
 a) Government grants in the nature of promoters'' contribution are
 credited to Capital reserve and treated as part of Shareholders funds.
 
 b) In case of depreciable assets, the cost of the asset is shown at
 gross value and grant thereon is treated as Capital Grants which are
 recognized as income in the Profit and Loss account over the period and
 in the proportion in which depreciation is charged.
 
 c) Revenue grants relating to revenue expenses are deducted from the
 respective expenses.
 
 d) In respect of revenue grants released by Government, the treatments
 in the accounts are considered as per the respective schemes notified
 by the Government. Other revenue grants relating to revenue expenses
 are considered as income and credited to Profit and Loss account.
 
 XIV.  Taxes:
 
 a) Provision for current tax is made in accordance with the provisions
 of the Income Tax Act, 1961.
 
 b) Deferred tax on account of timing difference between taxable income
 and accounting income is provided considering the tax rates and tax
 laws enacted or substantively enacted by the Balance Sheet date.
 
 c) Deferred tax assets are not recognized unless, in the management
 judgment there is a virtual certainty supported by convincing evidence
 that sufficient future taxable income will be available against which
 such deferred tax assets can be realized.
 
 XV.  Cenvat:
 
 Cenvat credit and VAT credit on eligible materials is recognised on
 receipt of such materials and Cenvat credit of eligible service tax is
 recognized on payment of service tax to the service provider.
 
 XVI.  Segment Reporting:
 
 The accounting policies adopted for segment reporting are in line with
 the accounting policies of the company.
 
 a) Revenue and expenses have been identified to segments on the basis
 of their relationship to the operating activities of the segment.
 Revenue and expenses which relate to the enterprise as a whole and are
 not allocable to segments on a reasonable basis have been included
 under unallocable corporate expenses.
 
 b) Investments, advance towards investments and other advances, which
 are not allocable to segments, are excluded from segment capital
 employed.
 
 XVII.  Contract Operation:
 
 a) In contract operations revenue is recognized on percentage of
 completion method. The stage of completion is ascertained on the basis
 of physical evaluation of respective contract activity on the reporting
 date.
 
 b) Foreseeable losses on contract activities are recognized fully
 irrespective of the progress of work.
 
 XVIII. Prior Period Adjustments:
 
 Individual items of Income and Expenditure relating to a prior period
 and exceeding Rs. One Lakh is accounted as a prior period item and
 disclosed accordingly.
 
 XIX.  Contingent Liabilities:
 
 a) Show Cause notices issued by various Government Authorities are not
 considered as Obligation.
 
 b) When the demand notices are raised against such show cause notices
 and are disputed by the company, these are classified as disputed
 obligations.
 
 c) The treatment in respect of disputed obligations, in each case, is
 as under:
 
 i) a provision is recognized in respect of present obligations where
 the outflow of resources is probable.  
 
 ii) all other cases are disclosed as contingent liabilities unless the
 Possibility of outflow of resources is remote.