a) Accounting Convention
 
 The Company adopts the accrual concepts in preparation of accounts.
 
 b) Fixed Assets and Depreciation/Amortization
 
 i) Fixed assets are carried at cost of acquisition less depreciation.
 Cost of fixed assets includes interest of directly related loans upto
 the date of commissioning/installation.
 
 ii) Expenditure during construction period incurred on the projects
 under implementation are treated as preoperative expenses pending
 allocation to the assets and are included under Capital Work in
 Progress. These expenses will be apportioned to fixed assets on
 commencement of commercial production. Capital Work in Progress is
 stated at the amount expended upto the date of Balance Sheet.
 
 iii) Depreciation on fixed assets is provided on written down value in
 the manner and at the rates as per schedule XIV of the Companies Act,
 1956.
 
 iv) Technical know-how is amortized from the year in which commercial
 production commences on the written down value method.
 
 v) Leasehold Land is amortised over the period of lease.
 
 c) Valuation of Inventories
 
 Cost of inventories have been computed to include all cost of
 purchases, cost of conversion and other costs incurred in bringing the
 inventories to their present location and conditions.
 
 i) Raw material is valued at cost or net realisable value whichever is
 lower. Cost is calculated by applying the weighted average method.
 
 ii) Work in progress, Finished Goods and Trading Goods are valued at
 cost or net realisable value whichever is lower.
 
 iii) Scrap is valued at estimated selling price.
 
 iv) Stores and Spares are valued at cost. Tools and Instruments are
 valued at book value.
 
 d) Foreign Currency Transactions
 
 i) Transaction denominated in foreign currency are recorded at the rate
 of exchange prevailing at the time of transaction.
 
 ii) Current Liabilities / Assets not covered by forward contract are
 stated at the rates ruling at the year end and any exchange difference
 arising on such transaction is dealt with in the Profit and Loss
 Account.
 
 iii) Transactions completed during the year are adjusted at the
 prevailing rates.
 
 e) Sales
 
 Net operational income comprises of sale of goods and reconditioning,
 repairing and service income. Sale of goods is recognised on despatch
 to customers. Sale of goods is exclusive of Sales Tax. Sales excludes
 captive consumption of materials.
 
 f) Other Income
 
 Interest income is accounted on accrual basis.
 
 g) Research and Development
 
 Research and Development expenditure of revenue nature is charged to
 revenue and capital expenditure is treated as fixed assets.
 
 h) Employee Benefits
 
 i) Provident Fund is a defined contribution scheme established under
 State Plan. The contributions to the scheme are charged to Profit &
 Loss Account in the year when the contributions to the funds are due.  
 
 ii) Superannuation Fund is a defined contribution scheme and
 contribution to the scheme are charged to the Profit & Loss Account in
 the year when contributions are made in respect of employees covered
 under the scheme.  The scheme is funded with Life Insurance Corporation
 of India.
 
 iii) The Company provides for gratuity, a defined benefit retirement
 plan (Gratuity Plan) covering all employees. The Gratuity Plan provides
 a lumpsum payment to vested employees, at retirement or termination of
 employment, an amount based on the respective employees last drawn
 salary and the years of employment with the Company.  The liability in
 respect of employees is provided and contributed to Life Insurance
 Corporation of India under Group Gratuity (Cash Accumulation) Scheme
 except;
 
 a) In case of Chairman cum Managing Director and Executive Vice
 Chairperson, in whose cases the additional Gratuity liability in
 accordance with their terms of appointment, is provided in the books.
 
 b) In case of Nashik and Dehradun Division it is provided on the basis
 of actuarial valuation.
 
 iv) The Company has other long term employee benefits in the form of
 Leave Encashment. The liability in respect of Leave Encashment is
 provided for on the basis of actuarial valuation made at the end of the
 Financial Year.  The aforesaid Leave Encashment is not funded.  
 
 v) The undiscounted amount of short term employee benefits expected to
 be paid in exchange for the services rendered by the employees is
 recognised during the period when the employee renders the services.
 
 vi) Terminal Benefits: Compensation to employees who have opted for
 retirement under the Voluntary Retirement Scheme and termination of
 services of the employees by the Company is charged to Profit & Loss
 account in the year on actual basis.
 
 vii) Actuarial gains / losses are recognised immediately to the Profit
 & Loss account.