1.  Basis of accounting :
 
 Accounting policies not specifically referred to otherwise are
 consistent and in consonance with generally accepted accounting
 principles and Accounting Standard issued by the Institute of Chartered
 Accountants of India.
 
 2.  The Company generally follows mercantile System of Accounting
 recognizing significant items of income & expenditure on accrual basis.
 
 3.  Going Concern Basis :
 
 The Canara Bank has auctioned immovable properties and Stock of the
 company and recovered part of defaulted term loan and working capital
 loan due to that the company''s going concern assumption is affected
 substantially.
 
 4.  Fixed assets :
 
 i.  Fixed assets are stated at cost less accumulated depreciation and
 impairment loss, if any.
 
 ii.  Depreciation on fixed assets have been provided on Straight Line
 Method and at the rates and in the manner prescribed in the Schedule
 XIV of the Companies Act, 1956.
 
 iii. Depreciation on assets added/deducted during the year has been
 provided on pro rata from/to the month of addition/deduction.
 
 5.  inventories
 
 Items of inventories are measured at lower of cost or net realizable
 value. Cost of inventories comprise of all cost of purchases, cost of
 conversion and other costs incurred in bringing them to their
 respective present location and condition. Cost of raw materials,
 process chemicals, stores and spares and packing materials and trading
 products are determined on FIFO basis. Cost of finished products in
 determined on absorption costing method.
 
 6.  Investments are stated at cost.
 
 7.  Sales have been shown gross of sales tax but net of excise duty and
 recognized at the time of dispatch of goods to the customers.
 
 8.  Excise duty is accounted at the stage of removal of goods from
 bonded warehouse.
 
 9.  Gratuity and other retirement benefits will be accounted & paid on
 cash basis.
 
 10.  Borrowing Costs :
 
 Borrowing costs, if attributable to qualifying assets (i.e., assets
 that necessarily take substantial period of time to get ready for its
 intended use or sale) are capitalized, otherwise charged to Profit &
 Loss account.
 
 11.  Taxes on Income :
 
 Current tax is determined on the basis of estimated taxable income of
 the current year in accordance with provisions of the Income Tax Act,
 1961.
 
 The Company has substantial unabsorbed depreciation and business losses
 in Books as well as under Income Tax Act 1961. However, as the
 availability of sufficient future taxable income against which such
 losse can be set of cannot be stated to be virtually certain, the
 deferred tax asset has not been recognized. Deferred tax of earlier
 years has also been reserved. Current tax provision made as per
 applicable tax rates under IT Act, 1961.
 
 12.  Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions involving substantial degree of estimations in measurements
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent liabilities are not recognized but are disclosed in the
 notes. Contingent assets are neither recognized nor disclosed in the
 financial statements.
 
 13.  Impairment of Assets
 
 An asset is treated as impaired when the carrying cost for assets
 exceeds its recoverable value, an impairment loss is charged to the
 Profit & Loss account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting periods is
 reversed if there has been a change in the estimates of recoverable
 amount.