1.  System of Accounting:
 
 (a) The Company follows mercantile system of accounting and recognizes
 income and expenditure on an accrual basis. Financial Statements are
 prepared under historical cost convention, in accordance with the
 Generally Accepted Accounting Principles in India (GAAP) and comply in
 all material aspects, with mandatory accounting standards as notified
 by the Companies (Accounting Standard) Rules 2006, relevant provisions
 of the Companies Act 1956 and statements issued by the Institute of
 Chartered Accountants of India. The significant accounting policies
 followed by the Company are set out below. Management has made certain
 estimates and assumptions in conformity with the GAAP in the
 preparation of these financial statements.  which are reflected in the
 preparation of these financial statements.
 
 (b) The Financial Statements are prepared to comply in all material
 aspects with all the applicable accounting principles in India, the
 applicable accounting standards notified under section 211 (3C) of the
 Companies Act, 1956 and relevant provisions of the Companies Act, 1956.
 
 (c) Fixed Assets
 
 Fixed assets are stated at cost of acquisition or construction together
 with resultant write-up due to revaluation, as there may be less
 depreciation and impairment, if any. Cost comprises the purchase price
 and other attributable costs, including interest and finance costs
 incurred till the asset is commissioned.
 
 (d) Depreciation
 
 Depreciation on revalued assets is calculated on their respective
 revalued amounts at rates considered applicable by the valuer on the
 straight-line method. In respect of other fixed assets, depreciation is
 calculated in the manner and at applicable rates specified in Schedule
 XIV of the Companies Act, 1956 or at such other rates and in the manner
 in accordance with the circular No. 1/86, dated 21st May, 1986 of the
 Department of Company affairs, Government of India under straight line
 method.
 
 Leasehold assets are amortized over the period of lease.
 
 (e) Inventories
 
 Raw materials are valued at cost (on weighted average basis) or net
 realizable value whichever is lower.
 
 Finished Goods are valued at cost or net realizable value whichever is
 lower.
 
 Work-in-progress is valued at cost or below.
 
 Stores and Spare parts are valued at cost (on weighted average basis)
 or below.
 
 Stores and Spare parts for specific machinery are valued at cost or
 below (cost of such spares are amortized over the unexpired useful
 lives of the related machinery as estimated by the management).
 
 Scrap Stock is valued at estimated net realizable value.
 
 (f) Foreign Currency Transactions
 
 Transactions in foreign currency are recorded at exchange rates
 prevailing on the dates of respective transactions. The difference in
 translation and realized gains and losses on foreign exchange
 transactions are recognized in the Profit and Loss Account.
 
 (g) Employee Benefits
 
 Short-term employee benefits (i.e. benefits payable within one year)
 are recognized in the period in which the employee service is rendered.
 
 Years accrued liability on account of gratuity and leave encashment
 benefit payable to employees under defined benefit plan is ascertained
 on the basis of actuarial valuation made on the Balance Sheet date and
 provided in the accounts.
 
 Contributions towards provident funds are recognized as expense.
 Contribution to Provident Fund in respect of certain employees is made
 to the Trusts administered by the Company, and in respect of other
 employees is made to the office of the Employees Provident Fund
 Commissioner, under Employees Provident Funds and Miscellaneous
 Provisions Act, 1952.  The interest rate payable to the members of the
 Trusts administered by the Company is not lower than the rate of
 interest declared annually by the Central Government under Employees
 Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall,
 if any, is made good by the Company.
 
 Years accrued liability on account of Pension Scheme for certain
 employees under defined benefit plan upto 31st December, 2000 is
 ascertained and provided for on the basis of actuarial valuation made
 on the Balance Sheet date. The said Pension Scheme was amended from
 defined benefit plan to defined contribution plan effective ,1st
 January 2001 and the benefits under the defined benefit plan were
 frozen as on 31st December, 2000. Years accrued liability in respect
 of the aforesaid defined contribution plan is ascertained as per the
 Companys policy and charged as expense for the year.
 
 (h) Revenue Recognition
 
 Revenue is recognized to the extent it is probable that the economic
 benefits will flow to the Company and the revenue can be reliably
 measured.  *
 
 i.  Domestic sales are accounted on dispatch of products to customers
 and export sales are accounted on the basis of dates of bill of lading.
 Sales are disclosed net of sales tax, discounts and returns-, as
 applicable.
 
 ii.  Export incentives / interest income and income-on investments are
 accounted on accrual basis.
 
 (i) Accounting for Taxes on Income
 
 Income Tax expense comprises current tax, fringe benefit tax and
 deferred tax charge. Deferred tax is recognised on timing differences;
 being the difference between taxable income and accounting income that
 originate in one period and are capable of reversal in one or more
 subsequent periods. Deferred tax assets in respect of unabsorbed
 depreciation and/or carry forward of losses are recognised only if
 there is virtual certainty that sufficient future taxable income will
 be available against which such deferred tax assets will be realised.
 Such assets are reviewed at each Balance Sheet date to reassess
 realisability thereof.
 
 (j) Borrowing Cost
 
 Borrowing costs that are attributable to the acquisition or
 construction of a qualifying assets are capitalized as part of cost of
 such assets till such time as the assets is ready for its intended use.
 A qualifying asset is an asset that necessarily requires a substantial
 period of time to get ready for its intended use. All other borrowing
 costs are recognized as expenses in the period in which they are
 incurred.
 
 (k) Provision, Contingent Liabilities and Contingent Assets
 
 Provisions involving substantial degree of estimation in measurement
 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.
 
 (l) Impairment of Assets
 
 The carrying amounts of assets are reviewed at each balance sheet date
 if there- is any indication of impairment based on internal \ external
 factors. An impairment loss will be recognized wherever the carrying
 amount of an asset exceeds its recoverable amount. A previously
 recognized impairment loss if further provided or reversed depending on
 changes in circumstances.  (m) Earnings Per Share
 
 Basic earnings per snare are cafcu/atecf 6y divicfing tfie net
 profit or foss for the period attributable to equity share holder by
 the weighted average number of equity shares outstanding during the
 period. For the purpose of calculating diluted earnings per share, the
 net profit or loss for the period attributable to equity share holders
 and weighted average number of shares outstanding during the period is
 adjusted for the effects of all dilutive potential equity shares.