1.1 Basis of preparation of financial statements
 
 The accounts are prepared under the historical cost convention and are
 in accordance with the generally accepted accounting principles in
 India and the provisions of the Companies Act, 1956. The significant
 accounting policies followed by the Company are stated below:
 
 1.2 Fixed Assets
 
 a) Fixed Assets are stated at cost less accumulated depreciation. Cost
 of acquisition or construction is inclusive of freight, duties, taxes,
 financial costs and other related expenses up to the date of commission
 of the assets.
 
 b) The company is following the straight line method of depreciation in
 respect of all assets at the rates specified in Schedule XIV to the
 Companies Act, 1956 (as amended). Depreciation is not provided on
 assets sold, discarded etc. in the year of sale.
 
 c) Expenditure during construction period :
 
 Expenditure (including financing cost relating to borrowed funds for
 construction or acquisition of fixed assets) incurred on projects under
 implementation are treated as Pre-operative expenses pending allocation
 to the assets and are shown under Capital-work-in-progress.
 
 d) Lease hold land value is not amortized in view of the long term
 nature of the lease.
 
 1.3 Revenue Recognition
 
 a) Interest income is recognized on time proportion basis taking into
 account the amount outstanding and rate applicable.
 
 b) All other income are accounted for on accrual basis.
 
 1.4 Expenses
 
 All the expenses are accounted for on accrual basis.
 
 1.5 Insurance Claims
 
 Insurance claims are accounted for on the basis of claims
 admitted/expected to be admitted and to the extent that there is no
 uncertainty in receiving the claims.
 
 1.6 Taxes on Income
 
 Current income tax is measured at the amount expected to be paid to the
 tax authorities in accordance with the Income Tax Act, 1961.
 
 Deferred tax is recognized, subject to the consideration of prudence in
 respect of deferred tax assets, 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 are recognized only to the extent there is
 reasonable certainty that the assets can be realized in future;
 however, when there is a brought forward loss or unabsorbed
 depreciation under taxation laws, deferred tax assets are recognized
 only if there is virtual certainty of realization of such assets.
 
 1.7 Impairment of Assets
 
 Impairment loss, if any, is recognized to the extent, the carrying
 amount of assets exceed their recoverable amount.  Recoverable amount
 is higher of an asset''s net selling price and its value in use. Value
 in use is the present value of estimated future cash flows expected to
 arise from the continuing use of an asset and from its disposal at the
 end of its useful life.
 
 Impairment losses recognized in prior years are reversed when there is
 an indication that the impairment losses recognized no longer exist or
 have decreased. Such reversals are recognized as an increase in
 carrying amount of assets to the extent that it does not exceed the
 carrying amount that would have been determined (net of depreciation)
 had no impairment loss been recognized in previous years.
 
 After impairment, depreciation on assets is provided on the revised
 carrying amount of the respective asset over its remaining useful life.
 
 1.8 Provisions, Contingent Liabilities and Contingent Assets
 
 Provision is recognized in respect of obligations where, based on the
 evidence available, their existence at the Balance Sheet date is
 considered probable.
 
 A provision is recognized if, as a result of a past event, the Company
 has a present legal obligation that can be estimated reliably, and it
 is probable that an outflow of economic benefits will be required to
 settle the obligation.  Provisions are determined by the best estimate
 of the outflow of economic benefits required to settle the obligation
 at the reporting date.
 
 Provisions, contingent liabilities and contingent assets are reviewed
 at each balance sheet date.
 
 Re-imbursement expected in respect of expenditure to settle a provision
 is recognized only when it is virtually certain that the re-imbursement
 will be received.
 
 A Contingent Asset is not recognized in the Accounts.
 
 1.9 Earnings Per share
 
 Basic earnings per share is computed by dividing the profit/(loss)
 after tax (including the post tax effect of extra ordinary items, if
 any) by the weighted average number of equity shares outstanding during
 the year.
 
 Diluted earnings per share is computed by dividing the profit/(loss)
 after tax (including the post tax effect of any extra ordinary items,
 if any) by the weighted average number of equity shares considered for
 deriving basic earnings per share and also the weighted average number
 of equity shares which could be issued on the conversion of all
 dilutive potential equity shares.
 
 1.10 Cash flow statement
 
 Cash flows are reported using the indirect method, whereby profit
 before tax is adjusted for the effects of transactions of a non-cash
 nature, any deferrals or accruals of past or future operating cash
 receipts or payments and item of income or expenses associated with
 investing or financing flows. The cash flows from operating, investing
 and financing activities of the Company are segregated.