A.  FIXED ASSETS:
 
 (a) FIXED ASSETS (comprising both tangible and intangible items) are
 stated at cost of acquisition and subsequent improvements thereto
 including taxes, duties, freight and other incidental expenses related
 to acquisition and installation. Pre-operative expenses for major
 projects are also capitalised, where appropriate.
 
 (b) DEPRECIATION includes amortisation. Depreciation on tangible fixed
 assets including those utilised in RESEARCH AND DEVELOPMENT activities,
 is provided on straight line basis in accordance with Schedule XIV to
 the Companies Act, 1956.  Leasehold land is amortised on straight-line
 basis over the primary lease period. Intangible assets (Computer
 Softwares) are amortised over a period of five years.
 
 (c) MACHINERY SPARES, which are irregular in use and associated with
 particular asset, are treated as fixed asset and the cost is amortised
 over its utility period.
 
 (d) Impairment loss, if any, is recognised wherever the carrying amount
 of the fixed assets exceeds the recoverable amount i.e. the higher of
 the assets net selling price and value in use.
 
 B.  INVESTMENTS:
 
 (a) LONG TERM INVESTMENTS are stated at cost less write down for any
 permanent diminution in carrying value. CURRENT INVESTMENTS are stated
 at lower of cost and fair value. Fair value is determined on the basis
 of realisable or market value.
 
 (b) EARNINGS FROM INVESTMENTS, where appropriate, are accrued or taken
 into revenue in full on declaration or receipts.
 
 C.  INVENTORIES:
 
 Inventories are valued at lower of cost and estimated net realisable
 value. The costs are in general ascertained under weighted average
 formula.
 
 D.  FOREIGN CURRENCY TRANSACTIONS:
 
 Transactions in Foreign currencies are recorded at exchange rates
 prevailing on the date of the transaction. Monetary items denominated
 in foreign currency are restated at the exchange rate prevailing on the
 Balance Sheet date. Foreign currency non-monetary items carried in
 terms of historical cost are reported using the exchange rate at the
 date of transactions. Exchange differences arising on settlement of
 transactions and/or restatements are dealt with in the Profit and Loss
 Account.
 
 E.  DERIVATIVE INSTRUMENTS:
 
 The Company uses derivative financial instruments such as forward
 exchange contracts, currency swaps etc. to hedge its risks associated
 with foreign currency fluctuations relating to the underlying
 transactions, highly probable forecast transactions and firm
 commitments.  In respect of transaction covered by Forward Exchange
 Contracts, the premium or discount arising at the inception of such
 contract are amortised as expense or income over the life of contract.
 
 Other Derivative contracts outstanding at the Balance Sheet date are
 marked to market and resulting loss, if any, is provided for in the
 financial statements.
 
 Any profit or losses arising on cancellation of instruments are
 recognised as income or expenses for the period.
 
 F.  REVENUE:
 
 Revenue is recognised on completion of sale of goods and rendering of
 services. Sales are inclusive of excise duty less discounts as
 applicable. Export entitlements are recognised after completion of
 related exports on prudent basis.
 
 G.  CONSTRUCTION CONTRACTS:
 
 Revenue in respect of construction contracts is recognised on the basis
 of percentage of completion method. Stages of completion are determined
 based on completion of a physical proportion of the contract work.
 Anticipated loss on such contracts is provided for in the period of
 incurrence.
 
 H.  BORROWING COSTS:
 
 Borrowing costs, if any, attributable to the acquisition and
 construction of qualifying assets are added to the cost up to the date
 when such assets are ready for their intended use. Other borrowing
 costs are recognised as expense in the period in which these are
 incurred.
 
 I.  RESEARCH AND DEVELOPMENT EXPENDITURE (R&D):
 
 Revenue expenditure on R&D is expensed in the period in which it is
 incurred. Capital expenditure on R&D is capitalised.
 
 J.  EMPLOYEE BENEFITS:
 
 (a) Short-term Employee Benefits:
 
 The undiscounted amount of Short-term Employee Benefits expected to be
 paid in exchange for the services rendered by employees is recognised
 during the period when the employee renders the service.
 
 (b) Post Employment Benefit Plans:
 
 Contributions under Defined Contribution Plans payable in keeping with
 the related schemes are recognised as expense for the year.
 
 For Defined Benefit Plans, the cost of providing benefits is determined
 using the Projected Unit Credit Method, with actuarial valuations being
 carried out at each Balance Sheet date. Actuarial gains and losses are
 recognised in full in the Profit and Loss Account for the period in
 which they occur. Past service cost is recognised immediately to the
 extent that the benefits are already vested, and otherwise is amortised
 on a straight-line basis over the average period until the benefits
 become vested. The retirement benefit obligation recognised in the
 Balance Sheet represents the present value of the defined benefit
 obligation as adjusted for unrecognised past service cost, and as
 reduced by the fair value of scheme assets. Any asset resulting from
 this calculation is limited to past service cost, plus the present
 value of available refunds and reductions in future contributions to
 the scheme.
 
 (c) Other Long-term Employee Benefits (unfunded):
 
 The cost of providing long-term employee benefits is determined using
 Projected Unit Credit Method with actuarial valuation being carried out
 at each Balance Sheet date. Actuarial gains and losses and past service
 cost are recognised immediately in the Profit and Loss Account for the
 period in which they occur. Other long term employee benefit obligation
 recognised in the Balance Sheet represents the present value of related
 obligation.
 
 K.  PROVISIONS AND CONTINGENT LIABILITIES:
 
 The Company recognises a provision when there is a 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 the
 obligation. A disclosure for a contingent liability is made when there
 is a possible obligation or a present obligation that may, but probably
 will not, require an outflow of resources. Where there is a possible
 obligation or a present obligation and the likelihood of outflow of
 resources is remote, no provision or disclosure for contingent
 liability is made.
 
 L.  TAXATION:
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the period based on applicable tax rate and laws.
 Deferred tax is recognised subject to consideration of prudence in
 respect of deferred tax asset, on timing difference, being the
 difference between taxable income and accounting income that originates
 in one period and are capable of reversal in one or more subsequent
 periods and is measured using tax rate and laws that have been enacted
 or substantively enacted by the Balance Sheet date.  Deferred tax
 assets are reviewed at each Balance Sheet date to re-assess
 realisation.