Secured loans comprising :- 1 Nil (Previous year 12,804,000) Zero
 Coupon Premium Bonds (ZCPBs) of Rs.100/- each, Term loan of Rs. 791,043
 (Previous year Rs. 791,043) from financial institution and Funded interest
 term loan of Rs. 450,022 (Previous year Rs. 443,289) are secured on pari
 passu basis by way of first charge on all the immovable properties, both
 present and future, by way of equitable mortgage and first charge on the
 entire sales proceeds of the contracts covered under the above said
 loan to be credited to the Escrow/designated account.
 
 2 Nil (Previous year 10,937,000 ) Zero Coupon Premium Bonds (ZCPBs) of
 Rs. 100/- each, Term loan of Rs. Nil (Previous year Rs. 266,300) from
 financial institution and Funded interest term loan of Rs. Nil (Previous
 year Rs.230,625) are required to be secured by way of first charge on all
 the immovable properties, both present and future, on pari-passu basis,
 by way of equitable mortgage and hypothecation of moveable assets, both
 present and future, subject to the prior charge of the Company’s
 bankers on specified moveable assets for securing the borrowings for
 working capital requirements. Term loan is further secured by way of
 pledge of certain shares.
 
 3 Nil (Previous year 2,900,000) Zero Coupon Premium Bonds (ZCPBs) of Rs.
 100/- each, Term loan of Rs. 233,541 (Previous year Rs. 259,477) from a
 bank, Working capital term loan of Rs. 105,604 and Funded interest term
 loan of Rs. 361,614 (Previous year Rs.116,808) are secured by way of pledge
 of shares/Bonds/Units and also secured on pari passu basis by way of
 hypothecation of stocks of raw materials, finished and semi- fnished
 goods, stores and spares, book debts etc. as well as by way of second
 charge on immovable properties pertaining to the Company.
 
 4 Working capital term loan of Rs.134,940 from bank and Funded interest
 term loan of Rs. 143,900 are secured on pari passu basis by way of
 hypothecation of stocks of raw materials, finished and semi- fnished
 goods, stores and spares, book debts etc. as well as by way of second
 charge on immovable properties pertaining to Wireline, Wireless and
 Cable divisions of the Company.
 
 5 Working capital loans from banks aggregating to Rs. 529,360 (Previous
 year Rs. 1,262,419) are secured on pari passu basis by way of
 hypothecation of stocks of raw materials, finished and semi- fnished
 goods, stores and spares, book debts etc. as well as by way of second
 charge on immovable properties pertaining to Wireline, Wireless and
 Cable divisions of the Company.
 
 6 Term loans are inclusive of Working Capital Term Loan of Rs. 240,545
 (previous year Rs. Nil)
 
 7 Other loans amounting to Rs.123 (Previous year Rs. 619) are secured by
 way of hypothecation of assets under hire purchase agreements.
 Installment of loans falling due for repayment within one year Rs. 123
 
 8 All the secured loans except as stated in 3 & 6 above are also
 personally guaranteed by some of the directors of the Company.
 
 9 Term Loans repayable within one year Rs. Nil (Previous year Rs. 323,339).
 
 1.  Method of Accounting
 
 (a) The financial statements are prepared on the historical cost
 convention and in accordance with the Generally Accepted Accounting
 Principles (‘GAAP’).
 
 (b) The Company follows accrual system of accounting in the preparation
 of accounts except where otherwise stated.
 
 (c) The preparation of the financial statements in conformity with GAAP
 requires that the management of the Company makes estimates and
 assumptions that affect the reported accounts of income and expenses of
 the period, reported values of assets and liabilities and disclosures
 relating to contingent assets and liabilities as of date of the
 financial statements. Examples of such estimates include provision for
 doubtful debts, provision for doubtful loans and advances, provisions
 for diminution in value of investments, estimated period of utility of
 software package, provision for value of obsolete/non moving
 inventories etc. Actual results may differ from these estimates.
 
 2.  Fixed Assets
 
 (a) Fixed Assets are stated at actual cost less accumulated
 depreciation and impairment loss. Actual cost is inclusive of freight,
 installation cost, duties, taxes and other incidental expenses for
 bringing the asset to its working conditions for its intended use but
 net of CENVAT.
 
 (b) Capital Work-in-Progress
 
 All expenses incurred for acquiring, erecting and commissioning of fixed
 assets including interest on long term loans utilized for meeting
 capital expenditure and incidental expenditure incurred during
 construction of the projects are shown under capital work-in-progress
 and are allocated to the fixed assets on the completion of the
 respective projects. The advances given for acquiring fixed assets are
 also shown along with capital work in progress.
 
 (c) Intangible Assets- Revenue expenditure of specialized R&D Division
 including its depreciation incurred for DEVELOPMENT and improvement of
 technology, products and designs etc which will generate probable
 future economic benefits are recognised as intangible assets.
 
 3.  Leases
 
 (a) Finance Lease or similar arrangements, which effectively transfer
 to the Company substantially all the risks and benefits incidental to
 ownership of the leased item, are capitalized and disclosed as leased
 assets. Finance charges are charged directly against income.
 
 (b) Leases where the lessor effectively retains substantially all the
 risks and benefits of ownership of the leased items are classified as
 operating leases. Operating lease payments are recognized as an expense
 in the Profit and loss account or on a basis, which reflect the time
 pattern of such payment appropriately.
 
 4.  Depreciation, Amortisation and Impairment
 
 (a) Depreciation is provided for on Buildings (including buildings
 taken on lease) and Plant & Machinery on straight line method and on
 other fixed assets on written down value method at the rates prescribed
 in the Schedule XIV of the Companies Act, 1956.
 
 (b) Depreciation due to increase or decrease in the liability on
 account of exchange fluctuation or on account of rollover charges on
 forward exchange contract is provided prospectively over the residual
 life of the assets.
 
 (c) On assets acquired on lease (including improvements to the
 leasehold premises), depreciation has been provided for on Straight
 Line Method at the rates as per Schedule XIV of the Companies Act, 1956
 or at the rates worked out on the basis of remaining useful life of the
 assets, whichever is higher.
 
 (d) Premium on leasehold land is amortised over the period of lease.
 
 (e) The Technical Know-how fees is written off over a period of six
 years from the year of the commencement of commercial production of the
 respective projects. Where the production has not commenced and the
 benefit of know- how is unlikely to accrue, the fee paid therefore is
 fully written off in the year in which it is so determined.
 
 (f) Intangible assets are amortised over a period of five years or life
 of the product considered at the end of each financial year whichever is
 earlier. Amortisation commences when the asset is available for use.
 
 (g) At the balance sheet date, an impairment loss is recognized
 whenever the carrying amount of an asset exceeds its recoverable
 amount.
 
 5.  Investments
 
 (a) The cost of an investment includes incidental expenses like
 brokerage, fees and duties incurred prior to acquisition.
 
 (b) Long term investments are shown at cost. Provision for diminution
 is made only if, in the opinion of the management such a decline is
 other than temporary.
 
 Investments which are intended to be held for less than one year are
 classified as current investments and are carried at lower of cost and
 fair value determined on an individual investment basis.
 
 Advance against share application money are classified under the head
 Investments.
 
 6.  Inventories
 
 (a) Raw Materials, Materials in transit, Packing At cost or net
 realizable value whichever is lower.  Materials, Stores & Spares and
 Components
 
 (b) Finished Goods and Work-in-Process At lower of cost and net
 realizable value Note : Cost of Inventories is ascertained on First in
 First out (FIFO) basis.
 
 (c) Stock in trade – Quoted At lower of cost and market value
 
 – Unquoted At lower of cost and break up value
 
 (d) Contract Work in Progress At cost
 
 (e) Loose Tools After write-off at 27.82% p.a.
 
 7.  Revenue Recognition
 
 (a) Sales & services include sales during trial run and excise duty
 recoverable. Liquidated damages are accounted for as and when they are
 ascertained.
 
 (b) Revenue in respect of long term turnkey works contracts is
 recognised under percentage of completion method subject to such
 contracts having progressed to a reasonable extent. Revenue in respect
 of other works contracts and services is recognised on completed
 contract method.
 
 (c) Insurance claims are accounted for as and when admitted by the
 concerned authority.
 
 8.  Foreign Currency Transactions
 
 (a) Transactions denominated in foreign currency are normally recorded
 at the exchange rate prevailing at the time of the transactions.
 
 (b) Monetary items denominated in foreign currency at the year end and
 not covered under forward exchange contracts are translated at the year
 end rates.
 
 (c) Any income or expense on account of exchange difference between the
 date of transaction and on settlement or on translation is recognised
 in the Profit and loss account as income or expense.
 
 (d) In case of forward exchange contracts, the premium or discount
 arising at the inception of such contracts, is amortised as income or
 expense over the life of the contract, further exchange difference on
 such contracts i.e. difference between the exchange rate at the
 reporting /settlement date and the exchange rate on the date of
 inception of contract/ the last reporting date, is recognized as
 income/expense for the period except where the foreign currency
 liabilities have been incurred in connection with fixed assets acquired
 up to March, 2004 and subsequent thereto in case of fixed assets
 acquired from a country outside India, where the exchange differences
 are adjusted in the carrying amount of concerned fixed assets.
 
 9.  Provisioning/Write off of Doubtful Debts
 
 The sundry debtors which are outstanding for more than three years from
 their respective due dates are written off to Profit and loss account.
 The debtors which are outstanding for more than two years but less than
 three years are provided for at 100% whereas debtors outstanding for
 more than one year but less than two years are provided for at 30% of
 the amount outstanding. No write off or provisions are made for Specific
 cases where management is of the view that the amounts are recoverable
 even if falling under the ageing as mentioned above.
 
 10. Borrowing Costs
 
 Borrowing costs that are directly attributable to the acquisition,
 construction or production of qualifying asset are capitalized as part
 of cost of such asset. Other borrowing costs are recognized as an
 expense in the period in which they are incurred.
 
 11.  Excise and Customs Duty
 
 Excise duty payable on production is accounted for on accrual basis.
 Provision is made in the books of account for customs duty on imported
 items on arrival and lying in bonded warehouse and awaiting clearance.
 
 12. CENVAT Credit
 
 The CENVAT credit available on purchase of raw materials, other
 eligible inputs and capital goods is adjusted against excise duty
 payable on clearance of goods produced. The unadjusted CENVAT credit is
 shown under the head Loans and advances.
 
 13. Employees benefits
 
 (Effective April 1, 2007, the Company has adopted the Revised
 Accounting Standard – 15(Revised-2005) ‘Employee benefits’. The relevant
 policies are:
 
 Short Term Employee benefits
 
 Short term employee benefits are recognised in the period during which
 the services have been rendered.
 
 Long Term Employee benefits
 
 a) Defined Contribution plan
 
 (i) Provident Fund and employees’ state insurance schemes
 
 All employees of the Company are entitled to receive benefits under the
 Provident Fund, which is a Defined contribution plan. Both the employee
 and the employer make monthly contributions to the plan at a
 predetermined rate (presently 12%) of the employees’ basic salary.
 These contributions are made to the fund administered and managed by
 the Government of India. In addition, some employees of the Company are
 covered under the employees’ state insurance schemes, which are also
 Defined contribution schemes recognized and administered by the
 Government of India.
 
 The Company’s contributions to both these schemes are expensed in the
 Profit and Loss Account. The Company has no further obligations under
 these plans beyond its monthly contributions.
 
 ( ii ) Gratuity
 
 The Company provides for gratuity obligations through a defined benefit
 retirement plan (the ‘Gratuity Plan’) covering all employees. The
 Gratuity Plan provides a lump sum payment to vested employees at
 retirement or termination of employment based on the respective
 employee salary and years of employment with the Company. The Company
 provides for the Gratuity Plan based on actuarial valuations in
 accordance with Accounting Standard 15 (revised), Employee Benefits
 The Company makes annual contributions to the HDFC Standard Life
 Insurance Company Ltd for the Gratuity Plan in respect of employees.
 The present value of obligation under gratuity is determined based on
 actuarial valuation using Project Unit Credit Method, which recognizes
 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.
 
 b) Other long term benefit
 
 Leave Encashment
 
 The Company has provided for the liability at period end on account of
 unavailed earned leave as per the actuarial valuation as per the
 Projected Unit Credit Method.
 
 c) Actuarial gains and losses are recognized as and when incurred.
 
 14. Preliminary, Securities issue expenses and Redemption premium
 Preliminary, Securities issue expenses and Redemption premium on bonds
 and debentures are adjusted against securities premium account.
 
 15. Research & DEVELOPMENT Costs
 
 Revenue expenditure on research phase is charged to Profit & Loss
 Account in the year in which it is incurred. Capital Expenditure is
 added to the cost of fixed assets.
 
 16. Taxes on Income
 
 Tax expense comprises of current, deferred and fringe benefit tax.
 Current income tax and fringe benefit tax is measured at the amount
 expected to be paid to the tax authorities in accordance with the
 Indian Income Tax Act. Deferred income taxes reflects the impact of
 current year timing differences between taxable income and accounting
 income for the year and reversal of timing differences of earlier
 years.
 
 Deferred tax is measured based on the tax rates and the tax laws
 enacted or substantively enacted at the balance sheet date.  Deferred
 tax assets are recognized only to the extent that there is a reasonable
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realized. Unrecognized
 deferred tax assets of earlier years are re-assessed and recognized to
 the extent it has become reasonably certain that future taxable income
 will be available against which such deferred tax assets can be
 realized.
 
 17. Segment Reporting
 
 Segments are identified in line with the Accounting Standard on Segment
 Reporting (AS-17) taking into account the organization structure as
 well as the differential risk and returns of the segments. The
 unallocable items include income and expenses items which are not
 directly identifiable to any segment and therefore not allocated to any
 business segment.
 
 18. Earnings Per Share
 
 In determining earnings per share, the Company considers the net Profit
 after tax and includes the post-tax effect of any extra ordinary items.
 The number of shares used in computing basic earnings per share is the
 weighted average number of shares outstanding during the period.
 
 19. Contingent Liabilities
 
 No provision is made for liabilities which are contingent in nature but
 if material, the same are disclosed by way of notes to the accounts.