A) Method of accounting :
 
 i) The Financial Statement are prepared under the historical cost
 convention or on the basis of going concern and as per applicable
 Indian Accounting Standards. The Company follows the mercantile system
 of accounting and recognises income and expenditure on accrual basis
 except certain items of income such as insurance claims, overdue
 interest from debtors etc., have been considered to the extent the
 amount is ascertainable / accepted by the parties. All assets &
 Liabilities have been classified as current & non current as per
 company''s normal cycle and other criteria set out in Schedule VI of the
 Companies Act 1956.
 
 ii) Use of Estimates : The preparation of the financial statement in
 conformity with Generally Accepted Accounting Principles (GAAP)
 requires the management to make estimates and assumptions that affect
 the reported balances of assets and liabilities and disclosures
 relating to contingent liabilities as at the date of the financial
 statements and reported amounts of income and expenses during the
 period. Examples of such estimates include provision of doubtful debts,
 future obligations under employees retirement benefit plans, income
 taxes and useful lives & impairment of fixed assets and intangible
 assets.
 
 Accounting estimates could change from period to period. Actual results
 could differ from those estimates.  Appropriate changes in estimates
 are made as the management becomes aware of changes in circumstances
 surroundings the estimates. Any revision to accounting estimates is
 recognised prospectively in current and future periods.
 
 iii) Inflation : Assets and Liabilities are recorded at historic cost
 as a going concern basis. These costs are not adjusted to reflect the
 changes in the purchasing power of money.
 
 B) Fixed assets :
 
 Fixed Assets are stated at cost (net of modvat availed) which includes
 all expenses for commissioning / putting the assets into use. Financing
 cost relating to borrowed funds, adjustment arising consequent to
 fluctuation in foreign exchange rate & other expenses attributable to
 acquisition of fixed assets are capitalised and included in the gross
 book value of fixed assets to which they relate. Impairment loss, if
 any, are reduced from the gross block of the assets.
 
 C) Depreciation :
 
 i) Lease hold Land is amortised over the period of lease.
 
 ii) In respect of the assets, for which loss on account of impairment
 is accounted, depreciation is provided on Straight Line method at
 revised rates so as to allocate the reduced carrying amount of these
 assets over their remaining useful life. In respect of other assets,
 the depreciation is provided on Straight Line method at the rates
 prescribed under Schedule XIV of the Companies (Amendment) Act, 1988.
 
 D) Impairment of assets :
 
 An asset is treated as impaired, if the carrying amount of fixed assets
 exceeds the recoverable amount on the reporting date and in such case
 the carrying amount is reduced to the recoverable amount. The
 recoverable amount is measured as the higher of the net selling price
 and the value in use determined by present value of estimated future
 cash flows.
 
 E) Investment :
 
 i) Investments are stated at cost inclusive of all expenses incidental
 to their acquisition.
 
 ii) Investments in shares of companies registered outside India are
 stated at cost by converting the rate of exchange prevalent at the time
 of acquisitions thereof.
 
 iii) Appropriate provision has been made in the accounts for diminution
 in the value of investments in accordance with AS-13 issued by the
 Institute of Chartered Accountants of India.
 
 F) Inventories :
 
 Items of inventories are measured at lower of cost and net realisable
 value after providing for obsolescence and deterioration, if any. Cost
 of semi finished goods and finished goods comprises of chemical cost
 (weighted average) plus overheads wherever applicable and that of
 trading finished goods comprises of cost of purchase. Excise duty on
 manufactured finished goods lying in the inventory is included as a
 part of valuation of finished goods as per Accounting standard - 2
 (Revised). Cost Formulae used are ''first in first out'', ''average cost''
 or specific identification, as applicable.
 
 G) Recognition of income and expenditure :
 
 i) Sales turnover includes sale value of goods, excise duties and other
 recoveries, such as insurance, transport and packing charges excluding
 VAT/CST
 
 ii) Scrap sale is accounted for on sale basis. No inventory is taken as
 the amount is not material.
 
 iii) Revenue is recognised and expenditure is accounted for on their
 accrual.
 
 iv) Income from interest on deposits, loan and interest bearing
 securities is recognized on the time proportion basis.
 
 H) Excise duty :
 
 i) Excise duties recovered are included in the sale of products. Excise
 duty paid on dispatches is shown separately as an item of manufacturing
 expenses.
 
 ii) The Modvat Credit is accounted by crediting the amount to cost of
 purchases on receipt of goods and is used on dispatch by debiting
 Excise Duty Account.
 
 I) Employee benefits :
 
 i) Short term employee benefits are recognised as an expense at the
 undiscounted amount in the Profit & Loss account in the year in which
 the related services are rendered.
 
 ii) Contribution to Provident Fund & Employee Pension Scheme are
 accounted on accrual basis.
 
 iii) Provision for gratuity liability is made based on actuarial
 valuation as at the balance sheet date which is in accordance with
 Accounting Standard No. 15 issued by the Institute of Chartered
 Accountants of India.
 
 iv) Company''s liabilities towards compensated absences to employees are
 determined on the basis of valuations as at balance sheet date carried
 out by an independent actuary using Projected Unit Credit Method.
 Actuarial gains & losses comprise experience adjustments and the effect
 of changes in actuarial assumptions are recognised immediately in the
 profit and loss Account.
 
 J) Foreign currency transactions :
 
 i) Transaction denominated in foreign currency are converted into
 Indian rupees at the exchange rate prevailing on the date of
 transaction.
 
 ii) Gains and losses on settlement of the transaction are recognised in
 profit and loss account.  
 
 iii) Monetary assets or liabilities in foreign currencies at the year
 end are restated in Indian currency at the exchange rate prevailing on
 the date of balance sheet and the resultant gain or loss is recognised
 in profit and loss account, 
 
 iv) Investments in shares of foreign subsidiary company is stated in
 Indian currency at the rate of exchange prevailing at the time when the
 original investments was made.
 
 K) Provisions and contingent liabilities :
 
 Provisions are recognised for liabilities that can be measured only by
 using a substantial degree of estimation, if:
 
 a) the Company has a present obligation as a result of a past event
 
 b) a probable outflow of resources is expected to settle the obligation
 
 c) the amount of the obligation can be reliably estimated
 
 Reimbursement expected in respect of expenditure required to settle a
 provision is recongnised only when it is virtually certain that the
 reimbursement will be received.  
 
 Contingent liability is disclosed in case of:
 
 a) a present obligation arising from past events, when it is not
 probable that an outflow of resources will be required to settle the
 obligation
 
 b) a present obligation when no reliable estimate is possible
 
 c) a possible obligation arising from past events where the probability
 of outflow of resources is not remote Contingent Assets are neither
 recognised, nor disclosed.
 
 Provisions, Contingent Liabilities and Contingent Assets are reviewed
 at each balance sheet date.
 
 L) Taxation :
 
 i) Current Taxation : Provision for current tax is made on the basis of
 estimated tax liability as per applicable provisions of the Income Tax
 Act, 1961. No provision for taxation is made in view of the losses.
 
 ii) Deferred Taxation : Deferred Tax Assets are recognised to the
 extent there is reasonable certainty that these assets can be realised
 in future. In absence of virtual certainty of sufficient future taxable
 income, deferred tax has not been recognised as a matter of prudence.
 
 M) Earnings per share :
 
 The basic and diluted earnings per share is computed by dividing the
 net profit/(loss) after tax attributable to equity shareholders for the
 year, by the weighted average number of equity shares outstanding
 during the year.