A.  System of Accounting
 
 (a) The Company follows the mercantile system of accounting and recognises income and expenditure on accrual
basis and for this purpose, certain items of income such as insurance claims, overdue interest from debtors
etc., have been considered to the extent the amount is ascertainable/ accepted by the parties.
 
 (b) Financial statements are based on historical cost.  These costs are
 not adjusted to reflect the impact of the changing value in the purchasing power of money.
 
 B.  Fixed Assets and Depreciation
 
 (a) Fixed Assets
 
 Fixed Assets are stated at cost of acquisition except for Land,
 Buildings and Plant and Machinery acquired prior to 1st April, 1990,
 which are stated in the book of account at replacement cost as on 31st
 March, 1991 as certified by the Chartered Engineers.
 
 (b) Depreciation and Amortisation
 
 (I) Leasehold Land
 
 Premium on Leasehold Land has been amortised over the period of lease.
 
 (II) Other Fixed Assets
 
 Depreciation has been provided
 
 (a) In respect of additions to Buildings and Plant and Machinery upto
 31st March, 1993 on straight line basis in accordance with Section 205
 (2)(b) of the Companies Act, 1956 at the rates arrived at by
 recomputing the specified period pursuant to the amendment in the rates
 of depreciation in Schedule XIV to the Companies Act, 1956 and by
 allocating the unamortised value over the remaining part of the
 recomputed specified period.
 
 (b) In respect of additions to Buildings and Plant and Machinery after
 31st March, 1993 on straight line basis in accordance with Section
 205(2)(b) of the Companies Act, 1956 at the rates specified in Schedule
 XIV to the Companies Act, 1956.
 
 (c) In respect of all other Fixed Assets, on written down value basis
 in accordance with Section 205 (2) (a) of the Companies Act, 1956 at
 the rates specified in Schedule XIV to the Companies Act, 1956.
 
 (III) Depreciation on additions to/deletions from the Fixed Assets
 during the year has been provided on pro-rata basis with reference to
 the month of addition/deletion of the assets except for additions, made
 after 31st March.  1993, whose actual cost does not exceed Rs. 5,000,
 which have been fully written off.
 
 C.  Inventories
 
 Stocks of stores and packing materials and raw materials are valued at
 cost as determined on First In First Out basis.  Work in process is
 valued at cost while finished goods are valued at lower of cost or net
 realisation value, and for this purpose, cost is determined on
 absorption costing basis.
 
 D.  Accounting of Raw Material Consumption
 
 Duty free imports of raw materials under Advance Licence for Imports as
 per the Import and Export Policy are matched with the exports made
 against the said licences and the benefit/obligation is accounted by
 making suitable adjustments in raw material consumption.
 
 E.  Retirement Benefits
 
 Annual contribution towards the gratuity liability is funded with Life
 Insurance Corporation of India in accordance with their gratuity
 scheme.
 
 F. Foreign Currency Transactions
 
 Transactions in foreign currency are recorded by applying the exchange
 rate at the date of the transaction or at a standard rate.  Monetary
 items denominated in foreign currency remaining unsettled at the end of
 the year are reported using the closing rate.  Exchange difference
 arising as a result of the above are recognised as income or expenses
 in the Profit and Loss Account.
 
 G. Research and Development Costs
 
 Research and Development Costs (other than cost of fixed assets
 acquired) are charged as an expense in the year in which they are
 incurred and are reflected under the appropriate heads of account.
 
 H. Leases Assets
 
 Rentals and all other expenses in respect of leased assets are treated
 as revenue expenditure.
 
 I. Investments
 
 Investments are stated at cost.
 
 J.  Amortisation of Expenses
 
 Preliminary Expenses and Share Issue Expenses are amortised over a
 period of ten years.