1.  BASIS OF PREPARATION OF FINANCIAL STATEMENTS 
 
 Accounting Convention:
 
 The Accounts have been prepared on accrual basis, unless stated
 otherwise, under the historical cost convention, in accordance with
 applicable Accounting principles in India, mandatory Accounting
 Standards issued by the Institute of Chartered Accountants ot India and
 the relevant provisions of the Companies Act, 1956.
 
 2.  FIXED ASSETS
 
 a) Fixed Assets are stated at historical cost less depreciation.
 
 b) The constructed/fabricated capital assets are capitalized as and
 when the same are installed in the plants.
 
 c) Machinery spares which are procured for use In connection with
 particular machinery/equipment and stand by equipments which are
 identified to a particular item of fixed asset and having irregular use
 are capitalized and written off over the remaining useful life or the
 machinery/equipment.
 
 d) In respect of Plant & Machinery, significant expenditure on Repairs,
 Renewals and Replacement having a separate identity and is capable of
 being used after the existing assets are disposed off or which are
 certified by the concerned Technical Department to have resulted in
 technical improvement, increased capacity or increased useful life of
 the assets, is capitalised. The estimated residual value of the
 replaced parts, determined on technical assessment is charged to Profit
 & Loss Account under Repairs & Maintenance.
 
 e) Impairment of Assets:
 
 An asset Is treated as impaired when the carrying cost of assets
 exceeds its recoverable value. An impairment loss is charged to the
 Profit and Loss Account in the year in which an asset is identified as
 impaired. The impairment loss recognised in prior accounting periods is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 3.  DEPRECIATION
 
 The classification of plant and machinery into continuous and
 non-continuous process is done as per technical certificate and
 depreciation thereon is provided accordingly.
 
 a) In case of continuous process plants and computer systems i.
 Acquired before 1.4.1993:
 
 The specified period has been recomputed by applying to the original
 cost, revised rates as prescribed in Schedule XIV as per notification
 GSR No. 756(E) dated 16.12.1993 and depreciation charge has been
 calculated on straight-line method by allocating the unamortized value
 as per books of account over the remaining part of the recomputed
 specified period. For this purpose the date of acquisition is taken as
 the last day of each year in which it is acquired/capitalized.  ii.
 Acquired after 1.4.1993:
 
 Depreciation is provided at the rates prescribed in Schedule XIV of the
 Companies Act, 1956,
 
 b) In case of other Fixed Assets:
 
 i. Acquired before 2.4.1987 depreciation is continued to be provided on
 Straight Line Method at the rates approved by the Board on technical
 assessment of useful life of assets or the rates prescribed under the
 then provisions of Income Tax Act, 1961 whichever is higher.
 
 H. Acquired from 2.4.1987 onwards and in existence as on 1.4.1993,
 depreciation is provided on straight-line method at old rates
 prescribed in the then Schedule XIV of the Companies Act, 1956.
 
 iii. Acquired after 1.4.1993 depreciation Is provided on straight-line
 method as per the rates given in the revised Schedule XIV to the
 Companies Act, 1956. Or on the basis of estimated life of the assets,
 whichever is higher.
 
 c) Lease premium paid on leasehold land is amortised over the life of
 lease.
 
 4.  EXPENDITURE DURING CONSTRUCTION PERIOD
 
 All revenue expenses including interest incurred on the funds
 used/Incurred for acquiring, erecting and commissioning Fixed Assets
 are transferred to Expenditure during Construction, which is
 allocated to capital cost of respective assets on their completion,
 except in case of assets held for disposal. All indirect revenue
 expenditures are apportioned as determined by the Management.
 
 5.  INVENTORIES
 
 a) Inventories are valued at lower of cost and net realizable value
 except in case of; 
 
 i.  Raw materials which are valued at cost, since finished goods which
 are produced using the same are expected to be sold at above cost.  
 
 ii.  Stores and spares, which are valued at cost, determined as per
 weighted average cost method, 
 
 iii.  By-products which are valued at estimated net realizable value,
 and
 
 iv.  Intermediate products which are valued at cost of production or
 net realizable value whichever is lower where cost is determined as per
 average cost of production.
 
 b) For the purpose of valuation of stock-in-process and stock of
 finished goods pending inspection, the same is converted into
 equivalent units of finisfwd products held for captive consumption
 depending upon stage of completion.
 
 c) The cost of Catalyst is amortised over their estimated useful lives.
 Balance unamortised portion has been shown under the head Stores and
 Sparese.
 
 6.  SUNDRY DEBTORS
 
 Provision for Doubtful debts/Loans/Advances: Full provision is made it)
 the books, in respect of Sundry Debtors outstanding for more than 3
 years (exgept in respect of receivables from Government
 departments/Companies) exsept where the Company has filed a cMI suit
 for recovery of dues and the suit it yet to be decided, other than
 wherever found necessary in the circumstances of the case.
 
 In respect of other Debtors, Loans & Advances the provisions are made
 to the extent considered not recoverable by the management.
 
 7.  REVENUE RECOGNITION
 
 a) The Sales are stated on the basis of invoices net of sales tax and
 trade discounts.
 
 b) Revenue from sale of Scrap and obsolete stores is accounted for at
 the time of disposal.
 
 c) Delayed payment charges due from customers other than Government
 Companies/Departments are accrued as income where Management is certain
 about its recoverability.
 
 d) Claims for delayed payment charges in case of Government
 Companies/Departments are referred to the Arbitrators as prescribed by
 the Government of India and reyenue is recognized upon receipts of
 award from the Arbitrators.
 
 e) Interest income is recognized when no significant uncertainty as to
 its realization exists.
 
 f) Benefit of Duty Credit are accounted for on the basis of actual
 utilization or transfer of credit.
 
 8.  FOREIGN CURRENCY TRANSACTIONS
 
 Transactions in Foreign currency are recorded in the reporting currency
 by applying currency rate as at the date of transaction. Receivables
 and Payables involving foreign currency are translated at the rates of
 exchange prevalent on the Balance Sheet date. Exchange differences
 (gains or losses) are treateq as Revenue and charged to the Profit &
 Loss Account.
 
 9.  BOND ISSUE EXPENSES
 
 Bond Issue Expenses are being charged off against Securities Premium
 Account as per the provisions of the Companies Act, 1956.
 
 10.  RETIREMENT BENEFITS
 
 a) Company''s contribution to provident fund is accounted for on accrual
 basis.
 
 b) Liability on Account of Gratuity and leave encashment to the
 employees at the end of the year is provided for on the basis of
 Acturial Vakifpon every year.
 
 11.  BONUS
 
 Bonus is provided under the Payment of Bonus Act, 1965, on the bas|s of
 profitability of each Unit.
 
 12.  INVESTMENTS
 
 a) Long term investments are stated at cost less decline, if any, other
 than temporary in value on individual investment basis.
 
 b) Investments intended to be held for not more than one year from the
 date of acquisition are classified as current investments and are
 carried at lower of cost or fair value determined on individual
 Investment bftsis.
 
 13.  PRIOR PERIOD/PREPAID EXPENSES
 
 Prepaid/Prior period expenses not exceeding Rs. 10,000/- In respect of
 each item, is accounted for under appropriate heads, at the time of
 payment.
 
 14.  CONTINGENT LIABILITIES
 
 Claims against the Company not acknowledged as debts relating to normal
 business transactions and show cause notices and demands rased by tax
 authorities disputed by the Company are treated as Contingent
 Liabilities and disclosure is made in accordance with AS-29.