i) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
 The Financial Statements are prepared under the historical cost
 convention, on accrual basis of accounting, in accordance with the
 generally accepted accounting principles, as applicable, accounting
 standards issued by The Institute of Chartered Accountants of India and
 the relevant provisions of the Companies Act, 1956.
 
 ii) USE OF ESTIMATES
 
 The preparation of financial statements requires use of estimates and
 assumptions to be made that affect the reported amounts of assets,
 liabilities and disclosure of contingent liabilities on the date of
 financial statements and the reported amounts of revenues and expenses
 during the reporting period. Difference between the actual results and
 estimates are recognized in the period in which the results are known /
 materialized.
 
 iii) FIXED ASSETS
 
 The fixed assets viz. Land, Building and Plant & Machinery of
 Sikandrabad unit were revalued at fair market value as at 31st.  March,
 1994 as assessed by valuers appointed for the purpose. As a result,
 book value of such assets was increased by Rs.  2,42,29,586/- which was
 credited to Capital Reserve. The remaining fixed Assets are stated at
 cost, net of modvat/cenvat/vat, less accumulated depreciation inclusive
 of freight, duties, taxes and incidental expenses.
 
 iv) DEPRECIATION
 
 Depreciation on fixed assets has been charged on straight line method
 at the rates prescribed in schedule XIV of the Companies Act, 1956. In
 case of addition/deletion to Fixed Assets during the year, depreciation
 has been charged pro- rata with respect to date of addition/deletion.
 No depreciation is charged on leasehold land. In respect of revalued
 assets, an amount of Rs. 827,178/- being equivalent to the additional
 charge of depreciation arising due to revaluation is deducted from
 Capital Reserve and not charged to the Profit & Loss Account.
 
 v) INVENTORY VALUATION
 
 Inventories are valued at lower of cost or net realizable value except
 scrap which is valued at net realizable value. The cost is determined
 by using first-in-first-out (FIFO) method. Finished goods include costs
 of conversion and other costs incurred in bringing the inventories to
 their present location and condition.
 
 vi) BALANCE IN BANK IN TERM OF FIXED DEPOSITS
 
 Deposit in Banks in terms of Fixed Deposits includes interest accrued
 Rs. 66.65 Lacs (Previous Year Rs. 36.08 Lacs) up to the date of Balance
 Sheet, net of TDS on interest.
 
 vii) EMPLOYEES'' BENEFITS
 
 Retirement benefits, such as gratuity and earned leaves are accounted
 for on the basis of provisions as laid down under accounting standard
 (AS-15) “Provision for Retirement Benefits” for employees are as per
 the certificate provided by the management.
 
 Contributions to Provident Fund, a defined contribution plan are made
 in accordance with the statute, and are recognized as an expense when
 employees have rendered service entitling them to the contribution.
 
 Company''s contribution to state defined contribution plan namely,
 Employee State Insurance are made in accordance with the statute, and
 are recognized as an expenses when employees have rendered services
 entitling them to the contribution.
 
 viii) FOREIGN CURRENCY TRANSACTIONS
 
 Transactions denominated in foreign currencies are normally recorded at
 the exchange rate prevailing at the time of the transaction. Monetary
 items denominated in foreign currencies outstanding at the year end are
 translated at exchange rate applicable on the date of Balance Sheet. In
 respect of monetary items which are covered by forward exchange
 contracts, the difference between the realizable rates at the year-end
 and the rate on the date of contract is recognized as exchange
 difference. Any income or expenses on account of exchange difference
 either on settlement or on translation is recognized in the Profit and
 Loss Account except in cases where these relate to the acquisition of
 fixed assets, in those cases they are adjusted to the carrying cost of
 such assets.
 
 ix) MODVAT/CENVAT/VAT
 
 Modvat/Cenvat/Vat claimed on capital goods is credited to
 Assets/capital work in progress account.  Modvat/Cenvat/Vat on purchase
 of raw materials and other materials are deducted from the cost of such
 materials.
 
 x) PROPOSED DIVIDEND
 
 Dividends proposed by the Directors have been provided for in the books
 of account which is pending for approval at the
 
 Annual General Meeting.
 
 xi) TAXATION
 
 Provision is made for income tax liability in accordance with the
 provision of Income Tax Act, 1961.
 
 In accordance with the Accounting Standard (AS) - 22 “Accounting for
 taxes on income”, issued by The Institute of Chartered Accountants of
 India, the Deferred Tax Liability for timing differences between the
 book and tax profits is accounted for using the tax rates and tax laws
 that have been enacted or substantially enacted as of the Balance Sheet
 date.
 
 xii) PROVISIONS, CONTINGENT LIABILITIES AND ASSETS
 
 Provisions are recognized only when there is a present obligation as a
 result of past events and when a reliable estimate of the amount of the
 obligation can be made. Contingent liability is disclosed for (i)
 Possible obligation which will be confirmed only by future events not
 wholly within the control of the Company or (ii) Present obligation
 arising from past events where it is not probable that an outflow of
 resources will be required to settle the obligation or a reliable
 estimate of the amount of the obligation cannot be made. Contingent
 Assets are not recognized in the financial statements since this may
 result in the recognition of income that may never be realized.