i) The Company generally follows mercantile system of accounting and
 recognizes significant items of income and expenditure on accrual
 basis.
 
 ii) Financial statements have been prepared under the historical cost
 convention in accordance with the generally accepted accounting
 principles.  These costs are not adjusted to reflect the impact of
 the changing value in the purchasing power of money.
 
 iii) Sales are recognized at the point of dispatch of goods, at the
 agreed rates. Adjustments arising out of price variation claims are
 accounted on acceptance of claims by customers. Export benefits are
 accounted In the year of exports.
 
 iv) Interest and other income are accounted on accrual basis except
 those sums, which are not reasonably certain of realization, are
 recognized on cash basis.
 
 b. Fixed Assets & Capital Work In Process :
 
 i) Fixed Assets are stated at cost of acquisition or construction
 including incidental expenses related to acquisition and installation
 on concerned assets, less modvat and accumulated depreciation (except
 on free hold land). All cost including financing costs till
 commencement of commercial production, net charges on foreign exchange
 contracts and adjustments arising from exchange rate variations
 relating to borrowings attributable to the fixed assets are
 capitalized.
 
 ii) Assets under erection/installation on existing project together
 with advance payment made are shown as capital work in progress.
 
 c.  Depreciation :
 
 Depreciation has been provided on straight line method in accordance
 with the provision of Section 205(2)(b) of the Companies Act, 1956 at
 the rates prescribed in Schedule-XIV to the Companies Act, 1956. In
 case of addition, depreciation is being provided on pro-rata basis with
 reference to the date of acquisition/installation.
 
 d. Investments :
 
 Investments are long term nature and are valued at the acquisition
 cost. Provision for diminution in the value of long term Investments is
 made only if, such a decline is other than temporary, in the opinion of
 the management.
 
 e. Valuation of Inventories :
 
 i) Raw Materials are valued at cost or market value whichever is lower.
 The cost includes basic price, custom duty and ocean freight. Excise
 duty is not included in the raw materials inventory as the modvat
 benefits is credited to purchase account on accrual basis and goes to
 reduce the cost of purchased materials. Cost is arrived at on First in
 First out basis.
 
 ii) Materials in process are valued at manufacturing cost and finished
 goods are valued at total cost or market value, whichever is lower.
 
 iii) Stock of trading goods are valued at cost or market value,
 whichever is lower.
 
 iv) Stores and spare parts have been consistently written off as and
 when purchased.
 
 iv) Goods in transit are stated at actual cost to the date of Balance
 Sheet
 
 f.  Borrowing cost :
 
 Borrowing cost attributable to the acquisition or construction of
 qualifying assets are capitalized as part of the cost of such assets.
 All other borrowing cost are charged to revenue in the year in which
 it is incurred.
 
 g.  Foreign Currency Transactions :
 
 Any income or expense on account of exchange difference either on
 settlement or on transaction Is recognized in the profit or loss
 account except in cases where they relate to the acquisition of fixed
 assets in which case they are adjusted to the carrying cost of such
 assets.
 
 h.  Employee retirement benefits :
 
 Companys contribution to Provident Fund and Pension Fund Scheme is
 charged to Profit & Loss Account. The Gratuity, Superannuation Fund and
 Leave Encashment are accounted on cash basis.
 
 I.  Preliminary and Share / Debenture Issue Expenses :
 
 Preliminary and Share / Debenture issue expenses are written off over
 a period of ten years.
 
 1.  General
 
 Accounting policies not specifically referred to are consistent with
 generally accepted accounting policies.