(a) General
 
 (i) The financial statements are prepared under the historical cost
 convention on the accounting principle of a going concern and comply
 with the applicable accounting standards issued by the Institute of
 Chartered Accountants of India and the relevant provisions of the
 Companies Act, 1956, except otherwise stated.
 
 (ii) The Company follows Mercantile system of accounting and recognizes
 Income & Expenditure on accrual basis except dividend, which is
 accounted when the right to receive the same is established, and those
 with significant uncertainties and in accordance with the applicable
 accounting standards.
 
 (iii) Advances are classified as Performing Assets and Non
 Performing Assets as per the directions issued by the Reserve Bank of
 India. Provision for Advances is made as per the directions issued by
 the Reserve Bank of India.
 
 (b) Fixed Assets
 
 Fixed assets are stated at cost of acquisition, including any
 attributable cost for bringing the assets to its working conditions for
 its intended use, less accumulated depreciation.
 
 (c) Depreciation
 
 The Company provides depreciation on assets on the written down value
 method on pro-rata basis at the rates prescribed in Schedule XIV to the
 Companies Act, 1956.
 
 (d) Investments
 
 Long term Investments are stated at cost. In case, there is a
 diminution in the value of investments other than temporary in nature,
 a provision for the same is made in the accounts.
 
 (e) .  Employee Retirement Benefits
 
 (i) 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.
 
 (ii) Gratuity liability are defined benefit obligations and are
 provided for on the basis of an actuarial valuation as per AS 15
 (Revised) made at the end of each financial year based on the projected
 unit credit method.
 
 (iii) Long term compensated absences are provided for based on
 actuarial valuation.
 
 (iv) Actuarial gains/losses are immediately taken to the profit and
 loss account and are not deferred.
 
 (f) Taxes on Income
 
 Current tax Is determined as the amount of tax payable in respect of
 taxable income for the year in accordance with the Income Act, 1961.
 
 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 substantively enacted as of the Balance Sheet date. Deferred tax
 assets arising from timing differences are recognized to the extent
 there is reasonable certainty that this would be realized in future.
 
 (g) Impairment of Fixed Assets
 
 Consideration is given at each balance sheet date to determine whether
 there is any indication of impairment of the carrying amount of the
 Companys fixed assets. If any indication exists, an assets recoverable
 amount is estimated. An impairment loss is recognized whenever the
 carrying amount of an asset exceeds its recoverable amount. The
 recoverable amount is
 
 greater of the net selling price and value in use. In assessing value
 in use, the estimated future cash flows are discounted to their present
 value based on an appropriate discount factor.
 
 (h) Contingent Liabilities
 
 The Company creates a provision when there is a present obligation as a
 result of a past event that probably requires an outflow of resources
 and a reliable estimate can be made of the amount of the obligation.
 
 A disclosure for a contingent liability is made when there is a
 possible obligation or a present obligation that may, but probably will
 not, require outflow of resources. When there is a possible obligation
 or present obligation in respect of which the likelihood of outflow of
 resources is remote, no provision or disclosure is made.
 
 (i) Miscellaneous Expenditure
 
 Preliminary Expenses and Share Issue Expenses are charged to the Profit
 & Loss Account in the year in which they are incurred.
 
 (j) Stock Based Compensation
 
 The compensation cost of stock options granted to employees is
 calculated using the intrinsic value of the stock options. The
 compensation expense is amortized uniformly over the vesting period of
 the option.