1 Basis of Accounting
 
 The Financial Statements are prepared in accordance with historical
 cost convention and generally accepted accounting principles, thereby
 recognizing significant items of Income and Expenditure on accrual
 basis.
 
 2 Fixed Assets & Depreciation
 
 (a) Fixed Assets are stated at cost including all direct incidental
 expenses and pre-operative expenses are also capitalized and
 apportioned to fixed assets.
 
 (b) Depreciation on Fixed Assets is provided on straight line method at
 the rates and in the manner prescribed in Schedule XIV to the Companies
 Act, 1956. Assets acquired under lease agreements are written off over
 a period of lease proportionately.
 
 3 Income:
 
 (a) Domestic Sales are exclusive of Excise Duty
 
 (b) Export sales are inclusive of Exchange Rate Fluctuation on
 realization
 
 4 Inventories
 
 Inventories are valued on following basis:
 
 Raw Material At Cost
 
 Finished Goods At Cost
 
 Stocks, Spares & Packing Materials At Cost
 
 Work - In - Progress At Estimated Cost
 
 5 Miscellaneous Expenditure
 
 Quality Testing Fee has been treated as differed revenue expenditure
 and is being written off over a period of five years.
 
 6 Foreign Exchange Transaction
 
 Transaction involving Foreign Exchange are recorded at the rates
 prevailing on the date of transaction.  Exchange rate difference due to
 difference between recorded rates and net realized rates is booked in
 the respective head of account. The bank balance at the yearend are
 booked at the rates prevailing as on the close of the year. However,
 other current assets / liabilities continue to be shown at recorded
 rates.
 
 7 Bonus, Gratuity & Leave Encashment
 
 Bonus, Gratuity & Leave Encashment are accounted on cash basis.
 
 CST Reimbursement claims from NEPZ are recorded on acceptance of
 claims.