a.  Basis of Accounting
 
 The financial statements are prepared under the historical cost
 convention in accordance with applicable mandatory accounting standards
 and presentation requirements of the Companies Act, 1956. Accounting
 policies not specifically referred to otherwise are consistent with
 generally accepted accounting principles are followed by the company.
 
 b.  Fixed Assets
 
 Fixed assets are stated at cost less accumulated depreciation. Cost of
 acquisition or construction is inclusive of freight and taxes. The
 capital expenditure is inclusive of direct expenses and proportionate
 indirect expenses attributable to the project and is inclusive of
 modification expenditure of plant and machinery. The expenses have been
 capitalised proportionately till the date of installation of plant and
 machinery and capital work in progress.  Capital work in progress
 includes advances for capital equipments.
 
 c.  Depreciation
 
 Depreciation is provided on straight line method at the applicable
 rates prescribed in Schedule XIV of the Companies Act, 1956. Except for
 items for which 100% depreciation rates are applicable, depreciation on
 assets added/disposed off during the year is provided on pro rata basis
 with reference to the date of addition/disposal.
 
 d.  Borrowing Cost
 
 Borrowing cost attributable to acquisition, construction or production
 of qualifying assets (assets which require substantial period of time
 to get ready for its intended use) are capitalised as part of the cost
 of such assets. All other borrowing costs are charged to the revenue.
 
 e.  Investments
 
 All Investments are considered as long term and are stated at cost.
 Provision for permanent diminution in value, in the perceptions of the
 Management, will only be considered at the appropriate time.
 
 f.  Inventories
 
 Inventories are valued as under:
 
 a) Raw Material At Weighted Average Cost
 
 (Including stores & components)
 
 b) Finished Goods
 
 Valued at cost inclusive of manufacturing and other overhead or at
 realisable value whichever is lower.
 
 c) Work in Progress
 
 Valued at cost inclusive of manufacturing and other overhead or at
 realisable value whichever is lower.
 
 d) Scrap
 
 At Realisable Value
 
 g.  Foreign Currency Transaction
 
 Foreign currency transactions are converted into Indian rupees at the
 rate of exchange prevailing on the date of the transaction. All
 exchange differences in respect of the foreign currency transactions
 are dealt with in the Profit & Loss Account. 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 and
 difference is dealt with the Profit & Loss Account. All liabilities in
 foreign currency, for which forward cover has been taken, have been
 stated at the forward value i.e. the value at which the liability will
 be settled in future.
 
 h.  Employees Retirement Benefits
 
 Contribution made towards Provident Fund (under the Employees Provident
 Fund and Miscellaneous Provisions Act, 1952) is charged to the Profit &
 Loss Account.
 
 Gratuity Liability is charged to the Profit & Loss Account on the basis
 of actuarial valuation carried out by an approved Actuary as on 31st
 March of each Accounting Year.
 
 Provision is made in Accounts for unutilized leaves due to the
 employees at the year end as per the leave encashment policy of the
 company.
 
 i.  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 bonded warehouse within the factory.
 
 j.  Revenue Recognition
 
 Sale of goods is recognised at the point of dispatch of fnished goods
 to the customers. All expenses and revenue are accounted for on accrual
 basis .All export benefits are accounted for on accrual basis. Sale is
 accounted for net of returns. Returns are accounted for on receipt of
 the rejected material. Services include excise duty. Price escalation
 claims from customers and discounts from suppliers are accounted for in
 the year under audit only.  Leave Travel Assistance to employees are
 accounted on payment basis.
 
 k.  Lease
 
 i) Finance Lease
 
 Finance lease, which effectively transfer substantially all the risks
 and benefits incidental to ownership of the leased assets to the
 company are capitalized at the fair market value. Lease payments are
 apportioned between the finance charges and reduction of lease
 liabilities so as to reflect a constant rate of interest on the
 remaining balance of the liability. Finance charges are charged to the
 Profit & Loss Account.
 
 ii) Operating Lease
 
 Operating lease payments are recognized as an expense in the Profit &
 Loss Account.
 
 l.  Research & Development
 
 Expenditures of capital nature are debited to the respective Fixed
 Assets and depreciation at applicable rate and revenue expenditures are
 charged to Profit & Loss Account.
 
 m.  Miscellaneous Expenditure
 
 The cost of development of new samples and other Deferred Revenue
 Expenditures are amortised over a period of five years.
 
 Upto 31 March 2010, revenue expenses incurred on sample development
 were recognized as deferred revenue expenses which were written off in
 5 equal yearly instalments (On pro-rata basis). However with effect
 from 1 April 2010, the policy has been reviewed and revenue expenditure
 on sample development incurred during the year has been charged to
 Profit & Loss Account.
 
 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 IFCI Limited shall be written off and charged to Profit & 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
 IFCI Limited for payment of Present Value of interest differential.
 
 n.  Taxation
 
 i) Provision for current tax is made in accordance with and at the
 rates specified under the Income Tax Act, 1961 as amended.
 
 ii) In accordance with Accounting Standard 22 - ''Accounting for taxes
 on Income'', issued by the Institute of Chartered Accountants of India,
 the deferred tax for timing differences between the book and tax
 profits for the year is accounted for using the tax rates and law that
 have been enacted or substantively enacted as on the Balance Sheet
 date.
 
 Deferred tax assets arising from the timing differences are recognized
 to the extent there is virtual certainty that the assets can be
 realized in future.
 
 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.  Impairment of Assets
 
 The carrying amount 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 exists, 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 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 Accounting Standard- 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 Accounting Standard-28.
 
 p Intangible Assets (Goodwill & Software)
 
 Acquisition cost of Goodwill and Software is being amortised over a
 period of five years.
 
 q.  Expansion Project Expenses
 
 All items of direct expenditures in relation to the expansion project
 being implemented by the company are treated as preoperative
 expenditure pending capitalization. Such expenditures are capitalized
 to various assets in the year of the commencement of the production of
 the 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.