A.  Basis of Preparation of Financial Statement:
 
 a) The financial statements have been prepared in compliance with all
 material aspects of the mandatory Accounting Standards issued by the
 Institute of Chartered Accountants of India (ICAI) and relevant
 provision of the Companies Act, 1956 and in accordance with the
 generally accepted accounting principles in India.
 
 b) The financial statements are based on historical cost and are
 prepared on accrual basis.
 
 B.  Revenue Recognition:
 
 a) Sale of goods is recognized when they are invoiced to customers and
 are net of excise duty, Commercial Tax (UP VAT).
 
 b) Insurance, duty drawback and other claims are accounted for on
 receipt basis or as acknowledged by the appropriate authorities.
 
 C.  Fixed Assets:
 
 a) Fixed Assets are stated at their original cost of
 acquisition/installation less accumulated depreciation and net off
 subsidies duties and taxes. The cost of assets comprises of purchase
 price and directly attributable cost of bringing the assets to working
 condition for its intended use.
 
 b) Capital work in progress:
 
 All expenses incurred for acquiring, erecting and commissioning of the
 fixed assets including interest on loan utilized for meeting capital
 expenditure are shown under capital work in progress. The advance given
 for acquiring fixed assets is also shown along with capital work in
 progress.
 
 D.  Depreciation:
 
 Depreciation on fixed assets has been provided on straight line method
 (SLM) at the rates and manner prescribed under Schedule XIV to the
 Companies Act, 1956 of India.
 
 E.  Preliminary Expenses:
 
 Preliminary expenses are amortized over a period of 5 years.
 
 F.  Investments:
 
 a) Long Term Investments are carried at cost after deducting provision,
 if any, for diminution in value considered to be other than temporary
 in nature.
 
 b) Current Investments are stated at lower of cost and fair value.
 
 G.  Impairment:
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value being higher of value in use and net
 selling price. An impairment loss is recognized as an expense in the
 Profit and Loss Account in the year in which an asset is impaired. The
 impairment loss recognized in prior accounting period is reversed if
 there has been an improvement in recoverable amount.
 
 H. Earning per share:
 
 Basic and Diluted Earnings per shares are calculated by dividing the
 net profit attributable to the ordinary shareholders by the weighted
 average number of ordinary shares outstanding during the year.
 
 I.  Borrowing Cost:
 
 Borrowing Costs that are directly attributable to the acquisition or
 construction of Qualifying Assets are capitalized as part of cost of
 such assets. Other Borrowing Costs are charged as expense in the year
 in which these are incurred.
 
 J.  Valuation of Inventories:
 
 a) Raw materials, Stores & Spares and packing material are valued at
 cost. Costs of Inventories are ascertained on FIFO basis.
 
 b) Work-in-progress is valued at cost which includes cost of inputs and
 other overheads upto the stage of completion.
 
 c) Finished Goods are valued at lower of cost and net realizable value.
 K.  Excise Duty, Commercial Tax (UP VAT) & Custom Duty :
 
 i) The CENVAT credit available on purchase of raw materials and other
 eligible inputs is adjusted against excise duty payable on clearance of
 goods produced. The unadjusted CENVAT credit is shown under the head
 Loans and Advances.
 
 ii) The company is eligible for interest free loan from State
 Government of Uttar Pradesh of the equivalent amount of the VAT
 liability paid for 15 years which shall be repayable after 15 years.
 L.  Taxation:
 
 (a) Provision for current income tax is determined on the basis of the
 amount of tax payable on taxable Income for the year.
 
 (b) In accordance with Accounting Standard 22 on Accounting for Taxes
 on Income issued by the Institute of Chartered Accountants of India,
 deferred tax liabilities and assets are recognized at substantively
 enacted tax rate, subject to the consideration of prudence, on timing
 difference, being the difference between the taxable income and
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods. At each balance sheet date
 the Company re-assesses unrecognized deferred tax assets.
 
 M. Foreign Currency Transaction:
 
 Transactions in foreign currency are recorded at the rate of exchange
 prevailing on the date of transaction. Year end balance of foreign
 currency transaction is translated at the year end rates. Exchange
 differences arising on settlement / conversion of monetary items are
 recognized as income or expense in the year in which they arise except
 in cases where they relate to acquisition of fixed assets in which case
 they are adjusted to the carrying cost of such assets.
 
 N. Employee Benefits:
 
 The company contributes to the employee''s provident fund maintained
 under the Employees Provident Fund Scheme of the Central Government and
 the same is charged to the Profit & Loss Account. Provision for
 gratuity is made on the basis of actuarial valuation at the year end in
 conformity with the Accounting Standard -15.
 
 0.  Prior Period Items:
 
 Prior period itemsjf any, are included in respective heads of accounts
 and material items are disclosed by way of notes on accounts.  
 
 P.  Contingent Liabilities:
 
 Contingent Liabilities are determined on the basis of available
 information and which are not provided for is disclosed by way of notes
 to the Accounts.