A.  FIXED ASSETS AND DEPRECIATION
 
 (a) (i) All tangible fixed assets are stated at their historical cost
 less accumulated depreciation.  Depreciation on fixed assets, except on
 leasehold land, EO Derivative unit, is provided on straight line method
 at the rates and in the manner provided in Schedule XIV to the
 Companies Act, 1956.  Depreciation on fixed assets of EO Derivative
 unit is provided on written down value method (WDV) at the rates and in
 the manner provided in Schedule XIV to the Companies Act, 1956.
 Depreciation on additions/disposals is provided with reference to the
 month of addition/disposal.
 
 (ii) Certain Plant and Machinery considered as continuous process plant
 based on technical evaluation.
 
 (iii) Leasehold land is amortised over the period of lease.
 
 (b) Intangible assets: Computer software are accounted for at their
 cost of acquisition and amortised over the estimated useful life i.e.
 not exceeding six years.
 
 B.  EXPENDITURE DURING CONSTRUCTION
 
 Expenditure during construction period is being included under capital
 work-in progress and the same is allocated to fixed assets on
 completion of installation /construction.
 
 C.  INVESTMENTS
 
 Long term investments are stated at cost. When there is a decline other
 than temporary in their value, the carrying amount is reduced on
 individual investment basis and is charged to Profit & Loss Account.
 Current Investments are valued at lower of cost or fair value.
 
 D.  VALUATION OF INVENTORIES
 
 Inventories are valued ‘at lower of cost or net realisable value’
 except stock of residual products and scrap which are valued at net
 realisable value. The cost is computed on the weighted average basis.
 In case of finished goods and stock in process, cost is determined by
 considering material, labour, related overheads and duties thereon.
 
 E.  FOREIGN EXCHANGE & DERIVATIVE TRANSACTIONS
 
 a) Foreign currency transactions are recorded at the rate of exchange
 prevailing at the date of transaction.  Foreign Currency Assets and
 Liabilities are converted at the exchange rates prevailing at the
 yearend except those covered under firm commitment which are stated at
 contracted rate. Exchange difference is charged to the revenue account
 except arising on account of such conversion related to (i) the
 purchase of fixed assets is adjusted therewith, and (ii) other long
 term monetary items is adjusted in the “Foreign Currency Monetary Item
 Translation Difference”.
 
 b) Transactions covered by derivative contract are adjusted with
 variations, if any, are recognised on reinstatement and settlement
 whereas gains are recognised only on settlement. The premium on
 derivative contract is expensed out over the terms of contract.
 
 F.  MANAGEMENT OF RAW MATERIAL (GUAR GUM) PRICES
 
 Risk associated with fluctuation in the prices of Guar Gum (Raw
 Material) is mitigated by hedging on futures/ options market. The
 result of this hedging contract/transactions are recorded upon their
 settlement as part of Raw Material cost. Portion of Cash flow to the
 extent of underlying transactions having not been completed is carried
 forward as receivable/payable.
 
 G.  EMPLOYEES BENEFITS
 
 (a) Defined Contribution Plan:
 
 Employee benefits in the form of Provident Fund (with Government
 Authorities) are considered as defined contribution plan and the
 contributions are charged to the Profit and Loss Account of the year
 when the contributions to the respective funds are due.
 
 (b) Defined Benefit Plan:
 
 Retirement benefits in the form of Gratuity and Long term compensated
 leaves are considered as defined benefit obligations and are provided
 for on the basis of an actuarial valuation, using the projected unit
 credit method, as at the date of the Balance Sheet.  Actuarial
 gain/losses, if any, are immediately recognised in the Profit and Loss
 Account.
 
 (c) Other short term absences are provided based on past experience of
 leave availed.  
 
 H.  GOVERNMENT GRANTS
 
 Grants in the nature of Project Capital Subsidy are credited to Capital
 Reserves. Other Government grants are deducted from the related
 expenses.
 
 I.  BORROWING COST
 
 Interest and other costs in connection with the borrowing of funds are
 capitalised up to the date when such qualifying assets are ready for
 its intended use and other borrowing costs are charged to profit and
 loss account.
 
 J. PROVISION FOR CURRENT TAX AND DEFERRED TAX
 
 Provision for current tax has been made on the basis of estimated
 taxable income computed in accordance with the provisions of Income Tax
 Act, 1961.
 
 Deferred Tax resulting from all timing differences between book profit
 and profit as per Income Tax Act, 1961 is accounted for, at the enacted
 /substantially enacted rate of Tax, to the extent that the timing
 differences are expected to crystallise. Deferred tax assets are
 recognised only to the extent that there is a reasonable / virtual
 certainty that sufficient future taxable profits will be available
 against which such deferred tax assets can be realised.
 
 K.  IMPAIRMENT
 
 Where the recoverable amount of fixed assets is lower than its carrying
 amount, a provision is made for the impairment loss. Post impairment,
 depreciation is provided on the revised carrying value of the asset
 over its remaining useful life.
 
 L. USE OF ESTIMATES AND ASSUMPTIONS
 
 The presentation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual result and the estimates are recognised in the
 period in which the results are known / materialised.
 
 M.  PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 Provisions involving substantial degree of estimation in measurement
 are recognised when there is a present obligation as a result of past
 events and it is probable that there will be an outfow of resources.
 Contingent liabilities are not recognized but are disclosed in the
 notes. Contingent assets are neither recognised nor disclosed in the
 financial statements.