1.  Accounting Concepts:
 
 The financial statements are prepared and presented in accordance with
 the Generally Accepted Accounting Principles (GAAP) in India and comply
 in all material aspects with the Accounting Standards (AS) notified
 under the Companies (Accounting Standard) Rules, 2006 (as amended),
 other pronouncements of the Institute of Chartered Accountants of
 India, the relevant provisions of the Companies Act, 1956, and
 guidelines issued by Securities and Exchange Board of India.
 
 2.  Use of Estimates:
 
 The preparation of financial statements requires estimates and
 assumptions to be made that effects the reported amount of assets and
 liabilities on the date of financial statements and reported amount of
 revenues and expenses during the reporting period. Difference between
 the actual results and estimates are recognised in the period in which
 the results are known/materialise.
 
 3.  Fixed Assets:
 
 Fixed assets are stated at cost, less accumulated
 depreciation/amortisation. Cost comprises the purchase price and any
 attributable cost of bringing the asset to its working condition for
 its intended use.
 
 4.  Foreign Currency Transactions:
 
 Foreign currency transactions are recorded at the exchange rate
 prevailing on the date of transaction.  Monetary assets and liabilities
 in foreign currency existing at Balance Sheet date are translated at
 the year-end exchange rates.
 
 Exchange differences, including premium or discount on forward exchange
 contracts, arising till the commissioning of fixed assets, relating to
 borrowed funds and liabilities in foreign currency for acquisition of
 the fixed assets, are adjusted to the cost of fixed assets. Other
 premium or discount on forward exchange contracts is amortised as
 expense or income over the life of the contract. All other exchange
 differences are recognised in the Profit and Loss Account.
 
 5.  Financial Derivatives:
 
 Financial derivative instruments, such as Swaps and Options, are used
 to hedge risks associated with fluctuations in foreign exchange and
 interest rates. The derivative contracts are closely linked with the
 underlying transactions and are intended to be held to maturity. The
 underlying transactions are recorded as per terms of the financial
 derivative contracts.
 
 6.  Treatment of Expenditure during Construction Period:
 
 Expenditure during construction period is included under Capital
 Work-in-Progress and the same is allocated to the respective fixed
 assets on the completion of construction.
 
 7.  Investments:
 
 Investments are classified as long term based on management intention,
 all other investments are classified as current investments. Current
 investments are stated at lower of cost and fair value. Long term
 investments are stated at cost after deducting provisions made, if any,
 for permanent diminution (i.e., other than temporary diminution) in
 value.
 
 8.  Inventories:
 
 Inventories, except scrap, are valued at the lower of cost and net
 realisable value. Waste/Scrap is valued at net realisable value. The
 cost is computed on weighted-average basis. Proceeds in respect of sale
 of raw material/stores are credited to their respective heads.
 
 Cost of Finished goods and process stock include cost of conversion and
 other costs incurred in bringing the inventories to their present
 location and condition.
 
 Obsolete, defective, slow moving and unserviceable inventories are duly
 provided for.
 
 9.  Research and Development Expenditure:
 
 Expenditure incurred during research phase is charged to revenue when
 no intangible asset arises from such research. Fixed Assets procured
 for research and development activities are generally capitalised.
 
 10.  Depreciation/Amortisation:
 
 Depreciation/Amortisation charge is provided for on the following
 basis:
 
 (a) On fixed assets on written-down-value method in respect of Viscose
 Staple Fibre Division, Nagda, Engineering Division, Nagda and Corporate
 Finance Division, Mumbai and on Straight Line Method in respect of
 assets of other Divisions including Power Plants at Nagda; applying the
 rates/useful life specified in Schedule XIV of the Companies Act, 1956,
 except as stated hereunder:
 
 Asset                        Estimated Useful Life
 
 Leasehold Land over the period of lease
 
 Motor Cars                       5 years
 
 Computer Software                3 years
 
 Computer and Other Electronic 
 Office Equipment                 4 years
 
 Furniture, Fixtures and 
 Electrical Fittings              7 years
 
 Continuous process plants as defined in Schedule XIV of the Companies
 Act, 1956, have been classified on technical assessment and
 depreciation provided accordingly.
 
 (b) In respect of Revalued Fixed Assets, on straight line method on the
 gross value of assets as increased by the amount of revaluation at
 lower rates, based on life of assets, as ascertained by the valuers.
 
 (c) In respect of fixed assets added/disposed off during the year on
 pro-rata basis with reference to the month of addition/deduction except
 in case of new projects where it is provided on the basis of days of
 use.
 
 (d) Individual assets costing less than Rs. 5,000 are depreciated in full
 in the year of acquisition.
 
 11.  Impairment of Assets:
 
 Carrying amount of assets is reviewed at the Balance Sheet date if
 there is indication of impairment based on the internal and external
 factors.
 
 The assets are treated as impaired when the carrying amount of asset
 exceeds its recoverable amount.  An impairment loss, if any, is charged
 to the Profit and Loss Account in the year in which the asset is
 identified as impaired. Reversal of impairment loss recognised in prior
 years is recorded when there is an indication that impairment loss
 recognised for the asset no longer exists or has decreased.
 
 12.  Revenue Recognition:
 
 Sales revenue is recognised on transfer of the significant risks and
 rewards of ownership of the goods to the buyer and stated at net of
 sales tax, VAT, trade discounts and rebates but includes excise duty.
 
 Dividend income on investments is accounted for when the right to
 receive the payment is established.
 
 Interest income is recognised on time proportion basis.
 
 Income against claims of the Company, viz., export incentives,
 insurance and railway claims, etc., is recognised on accrual/right to
 receive basis. However, where the quantum of accrual cannot be
 ascertained with reasonable certainty, the same is accounted on
 acceptance basis.
 
 Profit on sale of investments is recorded on transfer of title from the
 Company and is determined as the difference between sale price,
 carrying value of Investment and other incidental Expenses.
 
 13.  Employee Benefits:
 
 (a) Short-term employee benefits and contribution to defined
 contribution plans are recognised as an expense on accrual at the
 undiscounted amount in the Profit and Loss Account.
 
 The contribution as specified under the law are paid to the Provident
 Fund set up as irrevocable trust by the Company or to the Regional
 Provident Fund Commissioner. The Company is generally liable for annual
 contribution and any shortfall in the fund assets based on the
 government specified minimum rates of return. Such contributions and
 shortfall, if any, are recognised in the Profit and Loss Account as an
 expense in the year incurred.
 
 (b) Post-employment and other long-term employee benefits are
 recognised as an expense, at the present value of the amounts payable
 determined using actuarial valuation techniques. Actuarial gains and
 losses in respect of post-employment and other long term benefits are
 charged to the Profit and Loss Account.
 
 (c) Employee Stock Option Scheme: The stock options granted are
 accounted for as per the accounting treatment prescribed by Employee
 Stock Option Scheme and Employee Stock Purchase Guidelines, 1999,
 issued by Securities and Exchange Board of India, whereby the intrinsic
 value of options is recognised as deferred employee compensation. The
 deferred employee compensation is charged to Profit and Loss Account on
 straight line basis over the vesting period of the option. The employee
 stock option outstanding account is shown net of any unamortised
 deferred employee compensation.
 
 14.  Government Grants:
 
 Government grants are recognised when there is reasonable assurance
 that the same will be received.  Capital grants relating to specific
 assets are reduced from the gross value of the fixed assets and capital
 grants for Project Capital Subsidy are credited to Capital Reserve.
 Revenue grants are recognised in the Profit and Loss Account.
 
 15.  Borrowing Cost:
 
 Interest and other costs in connection with the borrowing of the funds
 to the extent related/attributed to the acquisition/construction of
 qualifying fixed assets are capitalised upto the date when such fixed
 assets are ready for their intended use and all other borrowing costs
 are charged to Profit and Loss Account.
 
 16.  Provision for Current and Deferred Tax:
 
 Provision for Current Tax is made on the basis of estimated taxable
 income for the current accounting period in accordance with the
 provisions of the Income Tax Act, 1961. Deferred Tax resulting from
 timing difference between book and taxable profit for the year is
 accounted for using the tax rates and laws that have been enacted or
 substantively enacted as on the Balance Sheet date. The deferred tax
 asset is recognised and carried forward only to the extent there is a
 reasonable certainty that the deferred tax assets will be realised in
 future.
 
 17.  Operating Leases:
 
 Leases where significant portion of risk and reward of ownership are
 retained by the Lessor are classified as Operating Leases and lease
 rentals thereon are charged to Profit and Loss Account over the period
 of the lease.
 
 18.  Provisions/Contingencies:
 
 A provision is recognised when there is a present obligation as a
 result of past event, and it is probable that an outflow of resources
 will be required to settle the obligation, in respect of which a
 reliable estimate can be made. Provisions are determined (as
 provided/charged to Profit and Loss Account) based on best estimate of
 the amount required to settle the obligation at the Balance Sheet date.
 
 Contingent Liabilities are not recognised but are disclosed, and
 Contingent Assets are neither recognised nor disclosed, in the
 financial statements.