1 Basis of accounting and preparation of financial statements
 
 The Company maintains its accounts on accrual basis following the
 historical cost convention in accordance with generally accepted
 accounting principles [GAAP] except for the revaluation of certain
 fixed assets, in compliance with the provisions of the Companies Act,
 1956 including the Accounting Standards specified in the Companies
 (Accounting Standards) Rules, 2006 prescribed by the Central
 Government. However, certain escalation and other claims, which are not
 ascertainable / acknowledged by customers, are accounted on receipt
 basis.
 
 The preparation of financial statements in conformity with GAAP
 requires that the management of the Company makes estimates and
 assumptions that affect the reported amounts of income and expenses of
 the period, the reported balances of assets and liabilities and the
 disclosures relating to contingent liabilities as of the date of the
 financial statements.  Examples of such estimates include the useful
 lives of tangible and intangible fixed assets, provision for doubtful
 debts / advances, future obligations in respect of retirement benefit
 plans, provision for inventory obsolescence, etc. Difference, if any,
 between the actual results and estimates is recognised in the period in
 which the results are known.
 
 2 Inventories
 
 Inventories are valued, after providing for obsolescence, as under:
 
 a) Raw materials, stores, spares, packing materials, loose tools and
 traded goods at weighted average cost or net realisable value,
 whichever is lower.
 
 b) Work-in-progress at lower of weighted average cost including
 conversion cost or net realisable value.
 
 c) Finished goods at lower of weighted average cost including
 conversion cost and excise duty paid / payable on such goods or net
 realisable value.
 
 3 Depreciation and Amortisation
 
 a) Tangible assets:
 
 i) Depreciation on revalued fixed assets is provided on the revalued
 amount derived based on valuation carried out by independent valuers.
 The depreciation on revalued portion of the fixed assets is transferred
 from revaluation reserve to Profit and Loss Account.
 
 ii) Depreciation on fixed assets is provided on straight line method at
 the rates and in the manner prescribed under Schedule XIV to the
 Companies Act, 1956.
 
 iii) In the case of fixed assets where the technological progress and
 upgradation is faster, the Company has provided accelerated
 depreciation at rates higher than the rates specified in Schedule XIV
 to the Companies Act, 1956.  Accordingly, the useful life of such
 assets has been recomputed and depreciation has been provided at the
 following rates with effect from 1st July, 2003:
 
 iv) Extra shift depreciation is provided on location basis.
 
 v) Leasehold land is amortised over the primary period of the lease.
 
 vi) Leasehold Building is depreciated at rates prescribed for buildings
 under Schedule XIV of the Companies Act, 1956 or rates derived based on
 lease term for the leasehold building, whichever is higher. Leasehold
 building improvements are written off over the period of lease or their
 estimated useful life, whichever is earlier, on a straight line basis.
 
 b) Intangible assets:
 
 i) a) Technical Know-how acquired prior to the year 2001 is amortised
 as per the rates applicable to plant and machinery prescribed under
 schedule XIV to the Companies Act, 1956.
 
 b) Technical Know-how acquired during and after the year 2001 is
 amortised over a period of five years.
 
 ii) Computer software is amortised over a period of four years.
 
 4 Research and Development
 
 Revenue expenditure on research and development is charged under
 respective heads of expenditure in the Profit and Loss Account. Capital
 expenditure on research and development is included as part of fixed
 assets and depreciated on the same basis as other fixed assets.
 
 5 Revenue Recognition
 
 a) i) Revenue from sale of products is recognised when all the
 significant risks and rewards of ownership of the products are passed
 on to the customers, which is generally on despatch of goods.
 
 ii) Revenue in respect of services is recognised when services are
 performed in accordance with the terms of contract with customers.
 
 b) Sales include excise duty and direct sales compensation but exclude
 Value Added Tax (VAT) and Service Tax.
 
 6 Fixed assets (including Capital Work-In-Progress)
 
 a) Tangible assets:
 
 Tangible fixed assets are stated at original cost net of Cenvat availed
 less accumulated depreciation except in case of certain freehold land
 and buildings which are stated at revalued amounts as at 31st May,
 1987, based on valuation carried out by independent valuers, less
 accumulated depreciation. Own manufactured assets are capitalised at
 factory cost. Cost includes inward freight, taxes and expenses
 incidental to acquisition and installation, up to the point the asset
 is ready for its intended use. Certain project related direct expenses,
 incurred at site for the period upto the date of commencement of
 commercial production are capitalised. (Also refer to accounting policy
 on borrowing costs infra).
 
 b) Intangible assets:
 
 Intangible assets are stated at cost of acquisition less amortisation.
 
 c) Capital Work-in-Progress:
 
 Capital Advances in respect of Capital Work-in-Progress or towards
 procurement of fixed assets and assets acquired but not ready for use
 are classified as Capital Work-in-Progress.
 
 7 Foreign currency transactions
 
 a) The reporting currency of the Company is Indian Rupee.
 
 b) Foreign currency transactions are recorded on initial recognition in
 the reporting currency using the exchange rates prevailing at the date
 of the transaction.
 
 c) Monetary assets and Monetary liabilities denominated in foreign
 currencies (other than those relating to foreign branch) are converted
 at rate of exchange prevailing on the date of the Balance Sheet.
 
 d) Exchange differences on settlement/conversion are included in the
 Profit and Loss Account in the period in which they arise.
 
 e) Foreign exchange differences arising on marking forward contracts to
 market rates are recognised in the Profit and Loss Account in the
 period in which they arise and the premium paid/received is accounted
 as expense/income over the period of the contract.
 
 f) Translations relating to foreign branch are recorded as under:
 
 i) Monetary assets and Monetary liabilities are converted at period-end
 rates as applicable.
 
 ii) Revenue items are translated at the average rate for the period.
 
 iii) All differences arising on translation of foreign currency
 balances are included in the Profit and Loss Account.
 
 8 Investments
 
 Long term investments are carried at cost after providing for any
 diminution in value, if such diminution is of a permanent nature.
 
 Current Investments are carried at lower of cost or market value.
 
 9 Employee benefits
 
 a) Short Term Employee Benefits:
 
 All employee benefits falling due wholly within twelve months of
 rendering the service are classified as short term employee benefits.
 The benefits like salaries, wages, short term compensated absences,
 expected cost of bonus, ex- gratia etc. are recognised on undiscounted
 basis in the period in which the employee renders the related service.
 
 b) Post-employment benefits:
 
 i) Defined contribution plans: The Companys contribution to the
 state-administered provident fund and employees pension scheme and the
 employees superannuation scheme are defined contribution plans. The
 contribution paid/payable under the schemes based on a fixed percentage
 of the eligible employees salary is recognised during the period in
 which the employee renders the related service. The Company has no
 further obligation beyond these contributions.
 
 ii) Defined benefit plans: The employees gratuity fund schemes managed
 by Trusts are the Companys defined benefit plans. The present value of
 the obligation is determined based on actuarial valuation using the
 projected unit credit method which recognises each period of service as
 giving rise to additional unit of employee benefit entitlement and
 measures each unit separately to build up the final obligation.
 Actuarial gains and losses are recognised immediately in the Profit and
 Loss Account. In case of funded plans, the fair value of the plan
 assets is reduced from the gross obligation, to recognise the
 obligation on a net basis.
 
 iii) Long-term employee benefits: The obligation for long term
 compensated absences is recognised in the same manner as in the case of
 defined benefit plans as mentioned in (b) (ii) above.
 
 10 Borrowing costs
 
 Borrowing costs that are attributable to the acquisition, construction
 or production of qualifying assets are capitalised as part of the cost
 of such assets till such time the asset is ready for its intended use
 or sale. A qualifying asset is an asset that necessarily requires a
 substantial period of time to get ready for its intended use or sale.
 All other borrowing costs are recognised as an expense in the period in
 which they are incurred.
 
 11 Segment accounting and reporting
 
 a) Segment accounting and reporting which is done in accordance with
 the accounting policies of the Company and the guidelines prescribed by
 Accounting Standard 17, Segment Reporting, as specified in the
 Companies (Accounting Standards) Rules, 2006 is reported as follows:
 
 i) Segment revenue includes sales and other income directly
 identifiable with/ allocable to the segment including inter-segment
 revenue.
 
 ii) Expenses that are directly identifiable with / allocable to
 segments are considered for determining the segment result. The
 expenses, which relate to the Company as a whole and not allocable to
 segments, are included under unallocable expenditure.
 
 iii) Income which relates to the Company as a whole and not allocable
 to segments is included in unallocable income.
 
 iv) Segment assets and liabilities include those directly identifiable
 with respective segments. Unallocable assets and liabilities represent
 the assets and liabilities that relate to the Company as a whole and
 not allocable to any segment.
 
 b) Inter-segment transfer pricing
 
 Segment revenue resulting from transactions with other business
 segments is accounted on the basis of transfer price agreed between the
 segments.
 
 12 Leases
 
 Assets acquired on lease where a significant portion of the risks and
 rewards of ownership are retained by the lessor are classified as
 operating leases. Lease rentals are charged to the Profit and Loss
 Account on a straight line basis.
 
 13 Taxes on income
 
 Tax on income for the current period is determined on the basis of
 taxable income and tax credits computed in accordance with the
 provisions of the Income Tax Act, 1961 and based on the expected
 outcome of assessments / appeals. The provision for tax is adjusted for
 Minimum Alternate Tax (MAT) paid in earlier years.
 
 Deferred tax is recognised on timing differences between the accounting
 income and the taxable income for the period and quantified using the
 tax rates and laws enacted or substantively enacted on the balance
 sheet date. Deferred tax assets which arise on account of unabsorbed
 business losses and unabsorbed depreciation are recognised and carried
 forward only to the extent that management is virtually certain that
 sufficient future taxable income will be available against which such
 deferred tax assets can be realised. Other deferred tax assets are
 recognised only to the extent there is a reasonable certainty of
 realisation in future. Such assets are reviewed at each balance sheet
 date to reassess realisation.
 
 14 Impairment of assets
 
 The carrying amount of assets, other than inventories is reviewed at
 each Balance Sheet date to determine whether there is any indication of
 impairment. If any such indication exists, the recoverable amount of
 the assets is estimated.
 
 An impairment loss is recognised whenever the carrying amount of an
 asset or a cash generating unit exceeds its recoverable amount. The
 recoverable amount is the higher of the assets net selling price and
 value in use determined based on the present value of estimated future
 cash flows. All impairment losses are recognised in the profit and loss
 account.
 
 After impairment, depreciation is provided on the revised carrying
 amount of the asset over its remaining useful life.
 
 A previously recognised impairment loss is increased or reversed
 depending on changes in circumstances. However, the carrying value
 after reversal is not increased beyond the carrying value that would
 have prevailed by charging usual depreciation if there was no
 impairment.
 
 15 Provisions, contingent liabilities and contingent assets
 
 a) Provisions are recognised for liabilities that can be measured only
 by using a substantial degree of estimation, if
 
 i) the Company has a present obligation as a result of a past event,
 
 ii) a probable outflow of resources is expected to settle the
 obligation and 
 
 iii) the amount of the obligation can be reliably estimated.
 
 b) Reimbursement expected in respect of expenditure required to settle
 a liability is recognised only when it is virtually certain that the
 reimbursement will be received.
 
 c) Contingent liability is disclosed in the case of
 
 i) a present obligation arising from a past event, when it is not
 probable that an outflow of resources will be required to settle the
 obligation
 
 ii) a present obligation when no reliable estimate is possible, and
 
 iii) a possible obligation, arising from past events where the
 probability of outflow of resources is remote.
 
 d) Contingent assets are neither recognised nor disclosed.
 
 e) Provisions, contingent liabilities and contingent assets are
 reviewed at each Balance Sheet date and updated as appropriate.