1.  SYSTEM OF ACCOUNTING
 
 The financial statements are prepared under the historical cost
 convention in accordance with Indian Generally Accepted Accounting
 Principles (GAAP), and all income and expenditure having a material
 bearing on the financial statements are recognized on accrual basis.The
 financial statements comply with the applicable mandatory Accounting
 Standards.
 
 2.  REVENUE RECOGNITION
 
 Revenues, in respect of revenue from network products and projects are
 recognized on completion of respective works contracts. In respect of
 fixed price service activities, revenue is recognized on time and
 materials basis. In respect of other contracts, revenue is recognized
 on the achievement of the milestones set out in the contracts.
 
 The revenues from Services and Installation Charges are recognized on
 completion of respective works contract/s.
 
 Income from Investments is recognized on receipt basis.
 
 Interest is recognized using the Time-Proportion method, based on the
 rates implicit in the transaction.
 
 3.  USE OF ESTIMATES
 
 In preparation of financial statements conforming to GAAP requirements
 certain estimates and assumptions are essentially required to be made
 with respect to items such as provision for doubtful debts, future
 obligations under employee retirement benefit plans, income taxes and
 the useful life period of Fixed Assets.  Due care and diligence have
 been exercised by the Management in arriving at such estimates and
 assumptions since they may directly affect the reported amounts of
 income and expenses during the year as well as the balances of Assets
 and Liabilities including those which are contingent in nature as at
 the date of reporting of the financial statements.
 
 To comply with GAAP requirements relating to impairment of assets, if
 any, the Management periodically determines such impairment using
 external and internal resources for such assessment. Loss, if any,
 arising out of such impairment is expensed as stipulated under the GAAP
 requirements. Contingencies are recorded when a liability is likely to
 be incurred and the amount can be reasonably estimated. To this extent
 the results may differ from such estimates.
 
 4.  FIXED ASSETS
 
 Fixed Assets are stated at cost of acquisition less accumulated
 depreciation. All costs relating to the acquisition and installation of
 fixed assets are capitalized and include financing costs relating to
 borrowed funds attributable to acquisition up to the date the assets
 are ready for use.
 
 5.  DEPRECIATION
 
 Depreciation is provided on straight-line method at the rates specified
 in SCHEDULE XIV to the Companies Act, 1956.
 
 Depreciation is provided on pro-rata basis from the day on which the
 assets have been put to use and up to the day on which assets have been
 disposed off.
 
 The software asset is depreciated at the rates higher than that
 specified in schedule XIV based on useful life of assets, which is
 estimated by the management as three years.
 
 The project assets are depreciated at rates higher than that specified
 in schedule XIV based on useful life of assets, which is estimated by
 the management as five years.
 
 The management estimate useful life for fixed assets as under;
 
 Asset                         Estimated useful life of asset
 
 Computer Equipment                   5 to 6 years
 
 Plant and Machinery                  6 to 21 years
 
 Software Assets                      3 years
 
 Furniture and Office equipments      3 to 9 years
  
 IPR / Know-how                       3 years
 
 Vehicles and Other assets            9 to 11 years
 
 Project Assets                       5 years
 
 6.  INVESTMENTS
 
 Investments are classified into current and long-term investments.
 Current investments are stated at the lower of cost and fair value.
 Long-term investments are carried at cost less provision made, if any,
 for the decline in the value of such investments.
 
 7.  INVENTORIES
 
 Stock-in-trade is valued at lower of cost and net realizable value.
 Cost is determined on Weighted Average Method basis.
 
 8.  FOREIGN CURRENCY TRANSACTIONS
 
 Foreign currency transactions during the year are translated at the
 exchange rates prevailing on the respective date of transactions.
 
 Assets and Liabilities outstanding in foreign currency as on the date
 of the Balance Sheet are translated at exchange rates prevailing as on
 the last day of the relevant financial year. Differences rising out of
 such translations are charged to the respective revenue accounts.
 
 The operations of the company''s overseas branches are considered
 integral in nature and the balances/and transactions of the branches
 are translated using the aforesaid principle.
 
 9.  PROVISION FOR TAXATION
 
 Provision for Current Income Tax is made in accordance with the
 provisions of Income Tax Act, 1961.
 
 Deferred tax assets and liabilities are measured using substantially
 enacted tax rates as on the Balance Sheet date. Provision for Deferred
 Tax Liability is provided on timing differences. The effect of deferred
 tax assets and liabilities of a change in tax rates is recognized in
 the income statement.
 
 10.  LEASES
 
 The assets purchased under hire purchase agreements are included in the
 Fixed Assets block. The value of the asset purchased is capitalized in
 the books.  A liability for the same amount is created at the time of
 entering into
 
 agreement. The payments are made to the HP vendors as per the EMI''s
 given in the hire purchase agreements.  The finance charges are debited
 to the profit & loss statement and the principal amount is adjusted
 against the liability created for the vendor.
 
 Lease rental in respect of operating lease arrangements are charged to
 expense on a straight line basis over the term of the related lease
 agreement.
 
 11.  RETIREMENT BENEFITS
 
 Provident Fund:
 
 Employees receive benefits from a provident fund, which is a defined
 contribution plan. Both the employee and the Company makes monthly
 contributions to the Regional Provident Fund equal to a specified
 percentage of the covered employee''s salary. The Company has no further
 obligations under the plan beyond its monthly contributions. The
 contributions are charged to the Profit and Loss Account of the year
 when the contributions to the respective funds are due and there are no
 other obligations other than the contribution payable.
 
 Gratuity:
 
 The Company provides for gratuity in accordance with the Payment of
 Gratuity Act, 1972, a defined benefit retirement plan (the Plan)
 covering all employees. The plan, subject to the provisions of the
 above Act, provides a lump sum payment to eligible employees at
 retirement, death, incapacitation or termination of employment, of an
 amount based on the respective employee''s salary and the tenure of
 employment. Gratuity liability is accrued and provided for on the basis
 of an actuarial valuation on projected unit credit method made at the
 end of each financial year.  Actuarial gains/losses are immediately
 taken to profit and loss account and are not deferred.
 
 12.  BORROWING COSTS
 
 Borrowing costs attributable to the acquisition, construction or
 production of qualifying assets are capitalized as part of the cost of
 such assets up-to the date when such assets are ready for intended use.
 Other borrowing costs are charged as an expense in the year in which
 they are incurred.
 
 13.  CASH FLOW STATEMENT
 
 The Cash flow statement is prepared under the indirect method as per
 Accounting Standard 3 Cash Flow Statements.
 
 14.  EARNINGS PER SHARE
 
 The company reports basic and diluted earnings per share in accordance
 with the Accounting Standards – 20- ‘Earnings per Share''.
 
 15.  SEGMENT REPORTING
 
 The entire operations of the company related to one segment, i.e.,
 network product and related services and hence segment reporting is not
 applicable for this year.
 
 16.  IMPAIRMENT OF ASSETS
 
 All assets other than inventories and deferred tax asset, are reviewed
 for impairment, wherever events or changes in circumstances indicate
 that the carrying amount may not be recoverable. Assets whose carrying
 value exceeds their recoverable amount are written down to the
 recoverable amount.
 
 17.  PROVISION AND CONTINGENCIES
 
 The company creates a provision when there is present obligation as a
 result of a past event that probably requires an outflow of resources
 and a reliable estimate can be made of the amount of obligation. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that probably will not require an
 outflow of resources or where a reliable estimate of the obligation
 cannot be made.