a) General:
 
 i) The financial statements are prepared on the basis of historical
 cost convention, in accordance with the applicable accounting standards
 and on the accounting principles of a going concern. All expenses and
 income to the extent ascertainable with reasonable certainty are
 accounted for on accrual basis.
 
 ii) Export benefit in terms of duty free imports of raw materials is
 accounted for in the year of exports.
 
 b) Use of estimates:
 
 The preparation of financial statements to be in conformity with
 generally accepted accounting principles (GAAP) requires management to
 make estimates and assumptions that affect the reported amounts of
 assets and liabilities and the disclosures of contingent liabilities on
 the date of financial statements and reported amounts of revenue and
 expenses for that year. Actual result could differ from these
 estimates. Any revision to accounting estimates is recognized
 prospectively.
 
 c) Revenue recognition:
 
 i) Revenue from sale of goods is recognized when significant risks
 and rewards of ownership are transferred to the customers and their 
 logistics. Sales are net of sales returns and trade discounts.
 
 ii) Interest is accrued over the period of loan /investment.
 
 iii) Dividend is accrued in the year in which it is declared, whereby
 right to receive is established.
 
 d) Fixed assets:
 
 i) Fixed assets are stated at cost less accumulated depreciation. Costs
 comprise the purchase price, related pre-operational expenses,
 borrowing cost and any attributable cost of bringing the assets to its
 working condition for its intended use.
 
 ii) Impairment of Assets:
 
 The Company assesses at each Balance Sheet date whether there is any
 indication that any asset may be impaired. If any such indication
 exists, the carrying value of such asset is reduced to its recoverable
 amount and the impairment loss is charged to profit and loss account.
 If at the Balance Sheet date there is any deduction that a previously
 assessed impairment loss no longer exists, then such loss is reversed
 and the asset is restated to that effect.
 
 e) Depreciation:
 
 Depreciation on fixed assets is provided on straight line method at the
 rates (except for the following) and in the manner specified in
 Schedule XIV to the Companies Act, 1956:
 
 Buildings:      Rate applied      Rates prescribed under 
                                   Schedule XIV
 
 a) Factory      3.5%              3.34%
 
 b) Office       3.0%              1.63%
 
 c) Residential  3.0%              1.63%
 
 Depreciation on the fixed assets added/disposed off/discarded during
 the year is provided on pro-rata basis with reference to the month of
 addition/disposal/discarding.
 
 Depreciation on spares purchased for specific machinery and having
 irregular use is provided prospectively over the residual life of the
 specific machinery.
 
 Leasehold Land-long term is being amortized at the rate of 2.5% per
 annum on the original cost.
 
 Intangible Assets :- Technical Know-How is depreciated, over a period
 of ten years in accordance with the requirements of Accounting Standard
 26.
 
 f) Investments:
 
 i) Long term investments are stated at cost less amortised premium. No
 adjustment is made in the carrying cost for temporary decline in the
 value of long term investments.
 
 ii) Current investments are carried at the lower of the cost and fair
 value.
 
 g) Inventories:
 
 Inventories are valued at the lower of the cost (computed on weighted
 average basis) and estimated net realizable value after providing for
 obsolescence and other anticipated losses, if any. Finished goods and
 work-in-progress include costs of conversion and other costs incurred
 in bringing the inventories to their present location and condition.
 
 h) Employee benefits:
 
 i) Provident Fund and Superannuation Fund:
 Retirement benefits in the form of Provident fund / Superannuation fund
 is a defined contribution scheme and the contributions are charged to
 the Profit & Loss Account of the year when the contributions to the
 respective funds are due.
 
 ii) Gratuity:
 
 Gratuity liability is defined benefit obligation. The company has taken
 an Insurance policy under the Group Gratuity Scheme with the Life
 Insurance Corporation of India to cover the gratuity liability of all
 its employee up to the sixty years of age and the amount paid /payable
 in respect of present value of liability of past services is provided
 for, on the actuarial valuation at the yearend.
 
 iii) Leave Entitlement:
 Liability for leave entitlement is provided on the basis of the
 actuarial valuation at the year end.
 
 iv) Deferred Revenue Expenditure:
 Compensation paid to employees who retire under the Early Voluntary
 Retirement Scheme is amortized over a period of 36 months from the
 month following the end of the scheme.
 
 i) Research and Development Expenditure:
 
 Revenue expenditure is charged to the Profit & Loss Account and Capital
 expenditure is added to the cost of Fixed Assets in the year in which
 it is incurred.
 
 j) Translation of foreign currency:
 
 Foreign currency transactions are recorded at the rate of exchange
 prevailing on the date of the transaction. Current assets and Current
 liabilities are stated at the rate of exchange prevailing at the year
 end and resultant gains/losses are recognised in the profit and loss
 account.
 
 In case of forward contracts, the exchange differences are dealt with
 in the profit and loss account over the period of the contracts.
 
 k) Borrowing costs:
 
 Borrowing costs attributable to acquisition or construction of
 qualifying assets are capitalized as part of the cost of such assets
 upto the date when such asset is ready for its intended use. Other
 borrowing costs are charged to the Profit and Loss Account.
 
 l) Accounting for Taxes on Income:
 
 i) Income Tax expenses comprises current tax (i.e. amount of tax for
 the period determined in accordance with the income tax law) and
 deferred tax charge or credit (reflecting the tax effects of timing
 differences between accounting income and taxable income for the year).
 
 ii) Deferred tax assets are recognized only to the extent that there is
 reasonable certainty that the assets can be realized in future; however
 where there is unabsorbed depreciation or carry forward loss under
 taxation laws, deferred tax assets are recognized only if there is a
 virtual certainty of realization of such assets. Deferred tax assets
 are reviewed at each balance sheet date and written down or written up
 to reflect the amount that is reasonably / virtually certain as the
 case may be to be realized.
 
 iii) Credit Entitlement in respect of Minimum Alternate Tax ( MAT) is
 considered on management estimation of regular taxation in future.
 
 m) Provisions, Contingent Liabilities and Contingent Assets:
 
 Provisions are recognised only when there is a present obligation as a
 result of past events and when a reliable estimate of the amount of the
 obligation can be made. Contingent liability is disclosed for (i)
 Possible obligations which will be confirmed only by future events not
 wholly within the control of the company or (ii) Present obligations
 arising form past events where it is not probable that an outflow of
 resources will be required to settle the obligation or a reliable
 estimate of the amount of the obligation can not be made. Contingent
 Assets are not recognised in the financial statements since this may
 result in the recognition of income that may never be realised.