a) The financial statements are prepared under the historical cost
 convention. These statements have been prepared in accordance with
 applicable mandatory accounting standards and relevant presentation
 requirements of the companies Act, 1956.
 
 b) Fixed assets are stated at cost less accumulated depreciation. Cost
 of acquisition or construction is exclusive of modvat under central
 excise availed by the company on account of purchases and is inclusive
 of freight, duties, taxes and incidental expenses and interest on loans
 attributable to the acquisition of the assets upto the date of
 commissioning of the assets. No write-off is being made in respect of
 leasehold land as the lease is a long base.
 
 c) Inventories of raw materials, stock-in-process, stores, packing
 materials, spares and loose tools are valued at cost inclusive of
 excise and inventories of finished goods are valued at lower of cost or
 realisable value.
 
 d) Sales are recognised at the time of despatch of goods. Other income
 and interest are accounted on accrual basis.
 
 e) The company has the Provident fund scheme for all eligible
 employees. The contributions to the same are charges to revenue each
 year.
 
 f) Liabilities in respect of gratuity are provided on the basis of the
 Payment of Gratuity Act.
 
 g) Provision is made for value of unutilised leave due to employees at
 the end of the year.
 
 h) Depreciation is provided on straight line method at the Rates as
 specified in schedule XIV to the companies Act, 1956.
 
 i) Preliminary expenses and Public issue expenses are being written off
 over a period of ten years equally.
 
 During the year the company has introduced two new products the
 deferred revenue expenditure related to the technical plants has been
 amortised over a period of five years in accordance with the provisions
 of section 35D of the Income Tax Act, 1961.
 
 j) The Government grants are recognised only on the assurance that the
 same will be received. State Investment Subsidy from State Government
 are treated as Capital receipts and shown under Reserve and Surplus
 under Capital Reserves.
 
 k) Transactions in foreign currencies are recorded at the exchange
 rates prevailing on the date of the transaction.