A.  BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
 Financial statements have been prepared as a going concern basis under
 historical cost convention, in accordance with the generally accepted
 accounting principles and the provisions of the Companies Act, 1956 as
 adopted consistently by the Company.
 
 B.  USE OF ESTIMATE
 
 The preparation of financial statements in conformity with the
 generally accepted accounting principles requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual result and estimates are recognised in the period in
 which the results are known/ materialized.
 
 C.  FIXED ASSETS
 
 Fixed assets are stated at cost of acquisition or construction, net of
 cenvat/Value added Tax, less accumulated depreciation and impairment
 loss, if any All costs, including finance cost till commencement of
 commercial production & net charges on forward exchange contracts
 attributable to the fixed assets are capitalised.
 
 D. ASSETS TAKEN ON LEASE
 
 The lower of the fair value of the assets and present value of the
 minimum lease rentals is capitalized as fixed assets with corresponding
 amount shown as lease liability. The principal component in the lease
 rental is adjusted against the lease liability and the interest
 component, if any, is charged to profit and loss account.
 
 E.  INTANGIBLE ASSETS
 
 Intangible assets are stated at cost of acquisition less accumulated
 amortization. Computer Software is amortized over a period of five
 years.
 
 F.  DEPRECIATION
 
 i.  Depreciation is provided on straight line method at the rates and
 in the manner prescribed in Schedule XIV, of the Companies Act, 1956.
 ii. Depreciation on addition during the year has been provided on pro
 rata basis succeeding to the month of addition.  iii. The leasehold
 land has been amortised over the lease period.
 
 iv. Depreciation has been provided over the residual life of the
 respective fixed assets for additions arising on account of translation
 of foreign currency liabilities, insurance spares and on additions or
 extensions forming an integral part of existing plants.
 
 G. IMPAIRMENT OF ASSETS :
 
 An asset is treated as impaired when the carrying cost of the asset
 exceeds its recoverable value. An impairment loss is charged to the
 profit & loss account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting periods is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 H. INVESTMENTS
 
 Current investments are carried at lower of cost and market value/NAV,
 computed individually. Long Term investments are stated at cost.
 Provision for diminution in the value of long-term investments is made
 only if such decline is other than temporary in the opinion of the
 management.
 
 I. INVENTORIES
 
 In general, all inventories of Finished Goods, Work-in-Process etc.,
 are stated at lower of cost or net realisable value. Cost of
 inventories comprise of all cost of purchase, cost of conversion and
 other cost incurred in bringing the inventory to their present location
 and condition.- Raw Materials & Stores and Spares are stated at cost on
 FIFO Basis. Waste, by products and trial run products are valued at net
 realisable value. Inventories of Finished Goods and Waste include
 excise duty, wherever applicable.
 
 J. TRANSACTION IN FOREIGN CURRENCY
 
 i.  Transactions denominated in foreign currencies are normally
 recorded at the exchange rate prevailing at the date of the
 transaction.
 
 ii. Monetary Items denominated in foreign currencies at the year end
 are restated at year end rates. In case of those items, which are
 covered by forward exchange contracts, the difference between the year
 end rate and spot rate on the date of the contract is recognized as
 exchange difference in the profit and loss account and the premium paid
 on forward contracts has been recognized over the life of the contract.
 
 iii. Exchange difference relating to long term monetary items, arising
 during the year, in so far as they relate to the acquisition of
 depreciable fixed asset is adjusted to the carrying cost of the fixed
 asset. In other cases such difference are accumulated in a  Foreign
 Currency Monetary Item Translation Difference Account and amortised to
 the profit and loss account over the balance life of the long term
 monetary item, however that the period of amortization does not extend
 beyond 31st March, 2012.
 
 iv.  All other exchange difference are dealt with in the profit & loss
 account.
 
 v.  Non monetary foreign currency items are carried at cost.
 
 K. DERIVATIVE INSTRUMENTS
 
 Financial Derivative Contracts are accounted on the date of their
 settlement and realized gain/loss in respect of settled contracts are
 recognized in the Profit & Loss Account.
 
 L. ISSUE EXPENSES
 
 Equity Share/ Share Warrants / Bonds issue expenses are adjusted
 against Securities Premium account.
 
 M. PREMIUM ON REDEMPTION OF BONOS
 
 Premium payable on redemption of Bonds is provided for over the life of
 the Bonds. The Securities Premium Account is applied in providing for
 premium on redemption on Bonds in accordance with Section 78 of The
 Companies Act, 1956. On conversion''of the Bonds into equity shares & on
 cancellation of the same, the redemption premium is reversed.
 
 N. REVENUE RECOGNITION
 
 Revenue from sale of goods is recognised when significant risk and
 rewards of ownership of the goods have passed to the buyer. Turnover
 includes sate of goods, waste, export Incentive and excise duty and are
 net of sales tax, value added tax, discounts and claims. Dividend
 Income is recognised when right to receive the payment is established
 by the balance sheet date. Interest income is recognised onetime
 proportion basis taking into account the amount outstanding and rate
 applicable.
 
 0. BORROWING COST
 
 Borrowing Cost that are attributable to the acquisition or construction
 of qualifying assets are capitalised as part of the cost of such
 assets. A qualifying asset is one that necessarily takes substantial
 period of time to get ready for intended use. All other cost is charged
 to revenue.
 
 P. CUSTOMS
 
 Liability on account of Customs Duty on Imported materials in transit
 or in bonded warehouse is accounted in the year in which the goods are
 cleared from customs.
 
 0. EXPORT INCENTIVES
 
 i. Benefit on account of entitlement to Import duty free materials
 under the Duty Exemption pass book Scheme/Focus Market Scheme/Focus
 Product scheme is recognized as and when right to receive are
 established as per the terms of the scheme.
 
 ii. The Benefits in respect of Advance Licence received by the Company
 against the Export made by it are recognized as and when goods are
 imported against them.
 
 iii.  The Benefit in respect of Duty Drawback is recoginsed at the time
 of exports.
 
 R. EMPLOYEE BENEFITS
 
 i.  Short term employee benefits are charged off at the undiscounted
 amount in the year in which the related service is rendered.
 
 ii. Post employment and other long-term employee benefits are charged
 off in the year in which the employee has rendered services. The amount
 charged off is recognized at the present value of the amounts payable
 determined using actuarial valuation techniques based on Projected unit
 credit method. Actuarial gain/losses in respect of post employment and
 other long term benefits are charged to Profit and Loss Account.
 
 iii. In respect of employee''s stock options, the excess of market price
 on the date of grant over the exercise price is recognised as deferred
 employee compensation expenses amortised over vesting period.
 
 iv Retirement benefits in the form of Provident Fund is a defined
 contribution scheme and the contributions are charged to the Profit &
 Loss Account of the year when the contributions to the respective funds
 are due.
 
 S. PROVISION FOR CURRENT AND DEFERRED TAX
 
 Provision for current tax is made after taking into consideration
 benefits admissible under the provisions of the Income-tax Act, 1961.
 Deferred tax resulting from timing difference between book and
 taxable profit is accounted for using the tax rates and laws that have
 been enacted or substantively enacted as on the balance sheet date. The
 deferred tax asset is recognised and carried forward only to the extent
 that there is a reasonable certainty that the assets will be realised
 in future.  In the case of Unabsorbed depreciation and carry forward
 tax losses , all deferred tax asset are recognised only if there is
 virtual certainty that they can be realised against future taxable
 profits.
 
 T. PROVISION, CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 event and it is probable that there will be an outflow of resources.
 Contingent Liabilities are not recognised but are disclosed in the
 financial statements. Contingent assets are neither recognized nor
 disclosed in the financial statements.