The Financial Statements have been prepared on the historical cost
 convention and in accordance with normally accepted accounting
 principles.
 
 (i) Fixed Assets and Depreciation
 
 Fixed Assets are capitalised at acquisition cost, including directly
 attributable cost of bringing the assets to its working condition for
 the intended use.
 
 Depreciation on Fixed Assets has been charged under straight line
 method at the rates prescribed under Schedule XIV to the Companies Act,
 1956 and in respect of additions/ deductions made during the year/
 period, depreciation is charged on pro-rata basis from the month of
 addition / upto the date of sale.
 
 (ii) Inventories:
 
 Stock-in-trade is valued at lower of cost or net realisable value and
 other items of inventories are valued at cost. Cost includes all direct
 costs and other applicable manufacturing overheads and in ascertaining
 the cost, FIFO method is adopted.
 
 (iii) Revenue Recognition:
 
 (a) Revenue in respect of sale of products is recognised at the point
 of despatch to customers. Sales which represent invoiced value of goods
 include excise duty and are net of sales tax, returns and inter-branch
 transfers. Export sales are accounted at the prevailing rate of
 exchange as on the date of invoicing. The difference in the rate of
 exchange, if any, is accounted at the time of realisation.
 
 (b) Revenue in respect of Export incentives I benefits is recognized as
 and when these incomes are ascertained and quantified.
 
 (iv) Retirement Benefits:
 
 (a) Provision for gratuity to staff has been made on actuarial basis.
 
 (b) Contribution to Provident Fund and ESI Fund are accounted at the
 applicable rates on accrual basis.
 
 (c) Accrued liability for encashment of leave to employees is accounted
 on calendar year basis, in accordance with the Company Rules.
 
 (v) Excise Duty:
 
 CENVAT credit for Excise Duty on inputs and other capital goods is
 accounted fully and to the extent the sum availed off is adjusted
 towards payment of excise duty on dispatches leaving the unutilised
 balance being carried forward to subsequent year and kept in Advances
 recoverable in cash or in kind orvalueto be received.
 
 (vi) Tax on Income
 
 Not to recognize deferred tax assets on unabsorbed depreciation and
 carry forward of losses unless there is virtual certainty that there
 will be sufficient future taxable income available to realize such
 assets,