a) Basis of Accounting: 
 
 The financial statements are prepared under the historical cost
 convention, in accordance with generally accepted accounting principles
 and the provisions of the Companies Act, 1956 as adopted consistently
 by the Company.
 
 Accounting policies not specifically referred to otherwise are
 consistent with generally accepted accounting principles and 
 followed by the Company.
 
 b) Revenue Recognition:
 
 Revenue from the sale of goods is recognized at the point of
 despatch of finished goods to the customers. All expenses & revenue are
 accounted for on accrual basis , except lease hold land acquired in
 earlier years consideration of which is to be paid in installments in
 accordance with past practice and leave travel assistant to employees
 are accounted on payment basis.
 
 c) Fixed Assets and Depreciation:
 
 Fixed assets are stated at cost of acquisition or construction and
 installation less accumulated depreciation.  Depreciation on Fixed
 Assets (other than leasehold land, which is not amortized) is provided
 at the rates and in the manner provided by Schedule XIV to the
 Companies Act, 1956 under the straight line method in case of Building
 and Plant & Machinery and under the written down value method in other
 cases.
 
 d) Foreign Exchange Transactions:
 
 Foreign currency transactions are accounted at exchange rates
 prevailing on the date the transaction takes place. All exchange
 differences in respect of foreign currency transactions are dealt with
 in the Profit & Loss Account (except those relating to .acquisition of
 Fixed Assets which are adjusted in the cost of the assets). All foreign
 currency assets and liabilities, if any, as at the Balance Sheet date
 are restated at the applicable exchange rates prevailing at that date.
 
 e) Investments:
 
 Long Term investments are valued at cost and provision for diminution
 in value of such investment is made, if considered permanent in nature
 by the management.
 
 f) Inventories: 
 
 Raw material and stores (including components and spares) are valued at
 cost (Weighted Average) Work in process and finished goods are valued
 at cost, which includes cost of production and overheads and is lower
 than the net realizable value.  
 
 g) Excise Duty .
 
 Excise duty is accounted for when paid on the clearance of goods from
 bonded premises but is accounted for on accrual basis. Accordingly
 provision for excise duty is made in the accounts for goods
 manufactured and lying in the bounded warehouse with in the factory.
 
 h) Sales
 
 Sales comprise of goods (net, of returns and discount) and services,
 scrap, waste and includes excise duty. 
 
 i) Employees Retirement Benefits
 
 Contributions made towards provident fund (under the Employees
 Provident Fund and Miscellaneous Provisions Act, 1952) and
 superannuation fund (administeredwith the Life Insurance Corporation
 of India Ltd.) are charged to the Profit and Loss Account.
 
 Gratuity contribution are charged to the Profit & Loss Account on the
 basis of actuarial valuation carried out by the Life Insurance
 Corporation of India Limited in terms of their scheme as at February
 28th of each accounting year.
 
 Provision is made in the Accounts for value of unutilized leave due to
 employees at the end of each year.  
 
 j) Research and Development Expenses
 
 Expenditure related to capital items are debited to fixed assets and
 depreciated at applicable rates and revenue expenditure charged to the
 Profit and Loss Account.
 
 k) Goodwill .
 
 The Goodwill is being amortized over a period of five years commencing
 from the year immediately following the year of its acquisition.  
 
 1) Miscellaneous Expenditure
 
 Preliminary expenses Share/ Debenture issue expenses and cost of
 development of new samples are written off to the Profit and Loss
 Account in six equal installments.  
 
 Technical Know how fee and Total Quality Management expenditure
 incurred relating to ISO 9001/ QS 9000 certification is written off to
 the Profit and Loss Account in six equal installments.
 
 Write off of differential amount of technical know how fee on
 conversion of related foreign currency liability is made in the Profit
 and Loss Account in six equal annual installments. Technical know-how
 relating to the construction of plant is added to the value of the
 plant.
 
 The Company also treats the expenditure incurred on deputation of
 foreign technicians by its collaborators as deferred revenue
 expenditure. Such expenditure is written off in the Profit and Loss
 Account in six equal installments.
 
 Share issue expenses, relating to capital issue are charged to Profit
 and Loss Account, in accordance with the above policy commencing in the
 year of subscription of the issue.
 
 The amount of deferred revenue expenditure recognized on account of
 Present Value of Interest differential due to resetting of interest
 rates in terms of restructuring package approved by Financial
 Institutions shall be written off and charged to profit and loss
 account to the extent of 6.25% p.a., as the same shall be amortized
 over a period of 16 years i.e. the total number of years stipulated by
 the institutions for payment of Present Value of Interest differential.
 
 m) Expansion Project Expenses
 
 All items of direct expenditure in relation to the expansion project
 being implemented by the Company are treated as preoperative
 expenditure pending capitalization. Such expenditure are capitalized to
 various assets in the year of the commencement of the production of
 expansion project depreciation on assets put to use for expansion as
 also on capitalized assets is charged in the year of commencement of
 commercial production.
 
 n) Deferred Tax .
 
 Income tax expense comprises of current tax provisions and the net
 change in deferred tax account.
 
 Current tax is computed as per the provisions of Income Tax Act,
 1961. Net outstanding balance in current tax account is recognized as
 current tax liability / asset.
 
 In accordance with Accounting Standard 22- Accounting of Taxes on
 Income, issued by The Institute of Chartered Accountants of India, the
 deferred tax for timing difference between the book and tax profits for
 the year is accounted for using the tax rates and laws that have been
 enacted or substantively enacted as of the Balance Sheet date.
 
 Deferred Tax assets arising from timing difference as recognized to the
 extent there is reasonable virtual certainty that the 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.
 
 Net outstanding balance in Deferred tax account is recognized as
 deferred tax liability / asset. The deferred tax account is used solely
 for reversing timing difference as and when crystallized.
 
 o) Borrowing Cost
 
 Borrowing cost attributable to acquisition, construction or production
 of qualifying assets (assets which requires substantial period of time
 to get ready for its intended use) are capitalized as part of the cost
 of such assets. All other borrowing costs are charged to revenue.
 
 p) Impairment
 
 The carrying amounts of assets, other than inventories is reviewed at
 each Balance sheet date to determine whether there is any indication of
 impairment. If any such indication exits, the recoverable amount of the
 asset is estimated.
 
 An impairment loss is recognized whenever the carrying amount of an
 asset or its cash generating units exceeds its recoverable amount. The
 recoverable amount is the greater of the assets net selling price and
 the value in use which is determined based on the estimated future cash
 flow discounted to their present values. All impairment losses are
 recognized in compliance with AS-28 .
 
 An impairment loss is reversed if there has been a change in the
 estimates used to determine the recoverable amount and recognized in
 compliance with AS-28.