1) GENERAL
 
 a) The financial statements are prepared in accordance with Indian
 Generally Accepted Accounting Principles (GAAP) under the
 historical cost convention (except for certain revalued fixed assets)
 on the accounting principles of a going concern and the Company follows
 mercantile system of accounting and recognises income and expenditure
 on accrual basis except those with significant uncertainties.
 
 b) The preparation of financial statements in conformity with GAAP
 requires management to make estimates and assumptions that affect the
 reported amount of assets, liabilities, revenues and expenses and
 disclosure of contingent liabilities on the date of financial
 statements. The recognition, measurement, classification or disclosure
 of an item or information in the financial statements are made relying
 on these estimates. Any revision to accounting estimates is recognised
 prospectively.
 
 2) FIXED ASSETS
 
 a) All fixed assets are stated at cost net of CENVAT / Value Added Tax
 adjusted by revaluation in case of certain Land, Building, Plant &
 Machinery and Electrical Installations, less accumulated depreciation
 and impairment loss, if any.  Expenditure during construction period in
 respect of new project/ expansion is allocated to the respective fixed
 assets on their being ready for intended use.
 
 b) In accordance with AS 28 on ''Impairment of Assets'', where there is
 an indication of impairment of the Company''s assets related to cash
 generating units, the carrying amounts of such assets are reviewed at
 each Balance Sheet date to determine whether there is any impairment.
 The recoverable amount of such assets is estimated as the higher of its
 net selling price and its value in use. An impairment loss is
 recognised in the Statement of Profit and Loss whenever the carrying
 amount of such assets exceeds its recoverable amount.
 
 3) INVESTMENTS
 
 Long term Investments are stated at cost and provision is made to
 recognise any decline, other than temporary, in the value of such
 investments.
 
 4) INVENTORIES
 
 Inventories are valued at lower of cost and net realisable value. Cost
 of raw material is computed by using Specific Identification
 method and for other inventories Weighted Average method.
 
 The cost in case of finished goods includes cost of purchase, cost of
 conversion and other costs (on the basis of normal operating capacity)
 incurred in bringing the inventories to their present location and
 condition.
 
 5) SALES
 
 Revenue is recognised when the property and all the significant risks
 and rewards of ownership are transferred to the buyer and no
 significant uncertainty exists regarding the amount of consideration.
 Export Sales are inclusive of deemed exports.  Local sales are
 inclusive of excise duty, wherever applicable and net of sales tax.
 
 6) BORROWING COST
 
 Borrowing Costs directly attributable to acquisition and construction
 of qualifying assets are capitalised as a part of the cost of such
 asset upto the date when such asset is ready for its intended use.
 Other borrowing costs are charged to statement of Profit & Loss.
 
 7) DEPRECIATION
 
 Depreciation is provided at the rates and in the manner prescribed in
 Schedule XIV to the Companies Act, 1956. Plant & Machinery and
 Electrical Installations have been, on technical assessment, considered
 as continuous process plants as defined in the said Schedule and
 depreciation has been provided accordingly.
 
 Depreciation in respect of various units is provided as below:
 
 a) MEDAK SPINNING UNIT: Depreciation on Plant & Machinery and
 Electrical Installations (including revalued assets) installed upto
 31st March, 1992 has been charged under Written Down Value Method and
 on additions thereafter under Straight Line Method. In respect of other
 assets (including revalued assets) depreciation has been charged under
 Written Down Value Method.
 
 b) MEDAK DOUBLING UNIT: Depreciation is provided on Written Down Value
 Method.  1
 
 c) Other Units (Nagpur Spinning Unit, Shadnagar Yarn Processing Unit
 and Knitting Unit): Depreciation is prbvided o''n Straight Line Method.
 
 8) EMPLOYEE BENEFITS
 
 a) Provident Fund
 
 Provident Fund is a defined contribution scheme and the contributions
 are charged to Statement of Profit and Loss as incurred.
 
 b) Superannuation
 
 Superannuation is a defined contribution plan and contribution is made
 to Life Insurance Corporation of India for eligible employees who have
 opted for the same as a percentage of salaries. The Company has no
 further obligations to the scheme beyond its monthly / annual
 contributions. ''
 
 c) Gratuity
 
 Gratuity is a defined retirement benefit plan. The Company contributes
 to the Scheme with Life Insurance Corporation of India based on
 actuarial valuation done by them as at the close of the financial year.
 
 d) The employees are entitled to accumulate leave as per the rules of
 the Company for future encashment / availment.  Liability for leave
 encashment is provided for on the basis of the such eligible leaves at
 the close of the year.
 
 9) FOREIGN CURRENCY TRANSACTIONS
 
 Transactions in foreign currency are recorded at the rate of exchange
 in force at the date of transactions. Gains and losses resulting from
 settlement of such transactions and from the transaction of monetary
 assets and liabilities denominated jn foreign currencies are recognised
 in Statement of Profit and Loss. Premium in respect of forward foreign
 exchange contract is recognised over the life of the contracts. In
 respect of Derivative Contracts, premium paid, provision for losses on
 restatement and gains/ losses on settlement are recognised alongwith
 the underlying transactions and charged to Statement of Profit and
 Loss.  , s
 
 10) TAXATION
 
 Income tax expenses comprise current tax (i.e., amount of tax for the
 year determined in accordance with the income tax law) and deferred tax
 charges or credit (reflecting the tax effects of timing differences
 between accounting income and taxable income of the year). The deferred
 tax charge or credit and the corresponding deferred tax liabilities or
 assets are recognised using the tax rates that have been enacted or
 substantively enacted by the Balance Sheet date. Deterred tax on assets
 are recognised and carried forward only if there is a virtual /
 reasonable certainty of realisation of such assets in near future and
 are reviewed for their appropriateness of their respective carrying
 value at each Balance Sheet date. Tax credit is recognised in respect
 of Minimum Alternate Tax (MAT) paid in terms of Section 115JAA of the
 Income Tax Act, 1961 based on convincing evidence that the Company will
 pay normal tax within the statutory time frame and the same is reviewed
 at each Balance Sheet date.
 
 11) PROVISIONS, CONTINGENT LIABILITIES AND CONTINQENT.ASSET, ira s,
 
 A provision is made based on a reliable estimate when if is probale
 that an! out low of resources embodying economic benefits will be
 required to settle an obligation. Contingent liabilities are disclosed
 in the notes to accounts and are determined based on the management
 perception that these liabilities are not likely to materialise.
 Contingent assets are not recognised or disclosed in the financial
 statements.