1) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
 The financial statements have been prepared under the 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.  All income & expenditure items having a
 material bearing on the financial statements are recognized on accrual
 basis, except in respect of insurance claims, Liquidated damages, and
 derivative transactions, where the exact quantum can not be
 ascertained.
 
 2) SALES
 
 a) The Sales are inclusive of Excise Duty but net of Sales Tax.
 
 b) Materials returned/rejected are accounted for in the year of return
 /rejection.
 
 c) Revenue in respect of Service/ Works Contracts is recognized based
 on the Work performed and invoiced as per the terms of specific
 Contracts.
 
 d) Revenue in respect of sale of goods is recognized either on deliver/
 or on transfer of significant risk and rewards of ownership of the
 goods.
 
 e) Incentives on exports and other Government Incentives are recognized
 in Books after due consideration of certainty of utilization/ receipt
 of such incentives.
 
 3) FIXED ASSETS
 
 a) VALUATION OF FIXED ASSETS
 
 i) Tangible Fixed Assets are stated at cost of acquisition (net of
 Cenvat/ Value Added Tax credit) inclusive of al incidental expenses
 related thereto except Land, Building and Plant & Machinery in respect
 of Pipe Division, at Kos, Kalan, Mathura which have been stated at
 revalued amount as a result of their revaluation.
 
 ii) Software which is not an integral part of related hardware is
 classified as an intangible asset and is stated at cost.
 
 b) DEPRECIATION & AMORTIZATION
 
 i) Deprecation on Fixed Assets is provided on Straight Line Method at
 the rates prescribed in Schedule XIV to the Companies Act, 1956, as
 amended up to date.
 
 ii) Deprecation on revalued fixed assets is computed on Straight Line
 Method at the rates prescribed in Schedule XIV to the Companies Act,
 1956, as amended up to date and additional deprecation on account of
 revaluation is adjusted to Revaluation Reserve Account.
 
 iii) Leasehold assets are amortized over the lease period.
 
 v) Intangible fixed assets are amortized over a period of 5 years.
 
 c) EXPENDITURE DURING CONSTRUCTION PERIOD FOR NEW PROJECTS/EXPANSION
 cum MODERNIZATION PROJECTS
 
 Expenditures which are directly attributable to identified assets and
 incurred during the construction period are included under capital
 work-in-progress, till the completion of the project. Expenditures
 which are not directly attributable to an identified asset forming part
 of a project, including interest on borrowed funds, are earned to
 preoperative expenses, till the completion of the project. On
 completion of the project, capital work in progress along with
 preoperative expenses is earned to respective fixed assets.
 
 d) IMPAIRMENT OF ASSETS
 
 An asset is considered as impaired when at the date of Balance Sheet
 there are indications of impairment and the carrying amount of the
 asset, or where applicable the cash generating unit to which the asset
 belongs exceeds its recoverable amount (i.e the higher of the net asset
 selling price and value in use). The carrying amount is reduced to the
 recoverable amount and the reduction is recognized as an impairment
 loss in the Profit and Loss Account. The impairment loss recognized in
 the prior accounting period is reversed if there has been a change in
 the estimate of recoverable amount. Post impairment, deprecation is
 provided on the revised carrying value of the impaired asset over its
 remaining useful life.
 
 4) VALUATION OF INVENTORIES
 
 Inventories are valued at the lower of cost and net realizable value
 except scrap, which is valued at net realizable value.  The cost of
 inventories comprises of cost of purchase, cost of conversion and other
 costs incurred in bringing the inventions to their respective present
 location and condition. Cost is computed on the weighted average basis.
 
 5) INVESTMENTS
 
 Long-term investments are stated at cost. When there is a decline other
 than temporary in their value, the carrying amount is reduced on an
 individual investment basis and decline is charged to the Profit and
 Loss Account. Appropriate adjustment is made in carrying cost of
 investment in case of subsequent rise in value of investments. Current
 investments are earned at lower of cost or Fair market value.
 
 6) BORROWING COSTS
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized (net of income on
 temporarily deployment of funds) as part of the cost of such assets and
 other borrowing costs are recognized as expense in the period in which
 these are incurred.
 
 7) FOREIGN EXCHANGE TRANSACTIONS
 
 Foreign currency transactions are recorded at the exchange rate
 prevailing at the date of transaction. Monetary foreign currency assets
 and liabilities are translated at the year end exchange rates. All
 exchange differences are dealt with in the Profit and Loss Account,
 except (,) to the extent that they are regarded as an adjustment to the
 interest cost and the resultant balance for new projects ,till the date
 of capitalization, are earned to pre-operative expenses. In case of
 forward foreign exchange contracts, exchange difference are dealt
 within the Profit and Loss Account over the life of the contract,
 except as mentioned in (i) supra. Non monetary foreign currency items
 are earned at historic costs.
 
 In the case of foreign branches, being non-integral foreign operations,
 revenue items are converted at the average rate prevailing during the
 year. All assets and liabilities are converted at rates prevailing at
 the end of the year. Exchange Game arising on conversion is recognized
 in the exchange fluctuation reserves and in case of loss, the same is
 charged to Profit and Loss Account.
 
 Game or loss on reinstatement on the forward exchange transaction or on
 cancellation of forward exchange contracts, if any, is reflected in the
 Profit and Loss Account or capitalized till the date of installation of
 such fixed asset.
 
 Derivative transactions are considered as Off-Balance Sheet items and
 cash flows arising there from are recognized in the Books of Account as
 and when the settlements take place in accordance with the terms of the
 respective contracts over the tenure thereof.
 
 8) CONTINGENT LIABILITIES
 
 Contingent liabilities are not provided for in the Accounts but are
 separately disclosed by way of a note.
 
 9) EMPLOYEE BENEFITS
 
 i) Short term employee benefits are recognized as an expense at the
 undiscounted amount in the Profit and Loss Account of the year in which
 the related services are rendered.
 
 ii) Contributions to Provident Fund, a defined contribution plan are
 made in accordance with the statute, and are recognized as an expense
 in the year in which the employees have rendered service.
 
 iii) The cost of providing leave encashment and gratuity, defined
 benefit plans are determined using the Projected Unit Credit Method, on
 the basis of actuarial valuations earned out by third party actuaries
 at each Balance Sheet date.  Actuarial games and losses are recognized
 as and when incurred.
 
 10) GOVERMENT GRANTS
 
 Grants and subsidies from the Government are recognized when there is a
 reasonable assurance that the grant/subsidy will be received and all
 attaching conditions will be complied with.
 
 Government Grant of the nature of promoter''s contribution are credited
 to capital reserve and treated as a part of shareholders funds.
 
 11) MISCELLANEOUS EXPENDITURE
 
 i) Preliminary & Shares and Convertible Bonds issue expenses are
 adjusted from Securities Premium Account.
 
 12) TAXATION
 
 i) Current tax provision is computed for Income calculated after
 considering allowances and exemptions under the provisions of the
 applicable Income Tax Laws.
 
 ii) Deferred tax is computed at the current rate of tax to the extent
 of temporary timing differences that originate in one period and are
 capable of reversal in one or more subsequent periods.