(1) Basis of Accounting
 
 Financial statements are prepared under the historical cost convention,
 in accordance with generally accepted Accounting Standards applicable
 in India and the provisions of Companies Act, 1956.
 
 The Company follows the mercantile system of accounting and recognizes
 income and expenditure on accrual basis except in case of significant
 uncertainties relating to income.
 
 (2) Revenue Recognition
 
 (i) Sales are recognized on completion of sale of goods and are
 recorded gross of excise but net of trade discounts & rebates.
 
 (ii) Export entitlements under the duty entitlement pass book (DEPB)
 Scheme are recognized in the Profit & Loss Account on the basis of
 despatch.
 
 (3) Fixed Assets
 
 Fixed Assets are stated at cost less accumulated depreciation. The
 Company capitalizes all costs relating to acquisitions and
 installations of fixed assets. Direct financing cost, if any, incurred
 during construction period in respect of major projects is also
 capitalized.
 
 (4) Depreciation
 
 Depreciation is provided on straight line method on all Fixed Assets at
 the rates prescribed in Schedule XIV of the Companies Act, 1956. In
 respect of assets acquired during the financial year, depreciation is
 provided on Pro-rata basis with reference to the period each assets was
 put to use during the financial year.
 
 (5) Investments
 
 Investments are valued at cost.
 
 (6) Inventories
 
 (i) All inventories are valued at cost or market value whichever is
 lower.
 
 (ii) For arriving cost of Finished Goods and stock in process all
 production expenses and depreciation except financing and marketing
 cost are considered.
 
 (iii) In respect of raw materials, stores and spares cost is computed
 on weighted average basis.
 
 (iv) Fixed overheads are allocated for inclusion in the cost of
 conversion on the basis of normal levels of production capacity.
 Conversion cost is apportioned to finished goods in process on the
 basis of estimated values and proportions arrived at by the cost sheet
 of the last month of financial period in which production had taken
 place.
 
 (7) Foreign Currency Transactions
 
 Foreign currency transactions are accounted at exchange rates
 prevailing on the date of the transaction. Any exchange variation
 realized in subsequent Financial Year is shown separately on
 realization.
 
 (8) Retirement Benefits
 
 (i) Liabilities in respect of gratuity and leave encashment are
 provided on the basis of actual calculations.  
 
 (ii) Contributions to Employees Provident Fund Scheme are payable to
 Regional Commissioner of Provident Fund.