A. ACCOUNTING POLICIES
 
 I. BASIS OF ACCOUNTING The company follows the mercantile system of
 Accounting & recognizes income & expenditure on accrual basis unless
 specifically stated otherwise.
 
 The accounts are prepared on historical cost basis as a going concern.
 Accounting policies not referred to otherwise are consistent with
 generally accepted accounting principles.
 
 II. FIXED ASSETS
 
 Fixed Assets are stated at cost of acquisition or construction. They
 are stated at historical cost less accumulated depreciation.
 
 III. DEPRECIATION:
 
 Depreciation on fixed assets is provided on Straight line Method as per
 provisions under section 205(2) of Companies Act, 1956 at rates and in
 the manner specified in schedule XIV of the said Act.
 
 IV. INVENTORIES
 
 Items of Inventory are valued on the basis given below:
 
 Raw & Packing Materials - At cost including incidental expenses like
 Freight, etc.
 
 Semi Finished Goods - At estimated Cost
 
 Finished Goods - At Cost or Market Value whichever is lower
 
 Scrap - At realization value
 
 V. SALES:
 
 Sales are accounted at the invoice price of dispatches made and are
 accounted inclusive of excise duty & net of sales return.
 
 VI. ACCOUNTING OF MODVAT/CENVAT
 
 Modvat/Cenvat credit available on materials are accounted by recording
 material purchases inclusive of excise duty.
 
 Modvat/Cenvat credit on Capital Goods are accounted net of Excise Duty
 and depreciation is claimed accordingly.
 
 VII. CONTINGENT LIABILITIES
 
 Contingent liabilities are not provided in the accounts but are
 separately disclosed in the notes on accounts.
 
 VIII. MISCELLANEOUS EXPENDITURE
 
 It has been consistent practice of the company of amortizing the
 preliminary expenses & other Misc. Expenditure over a period often
 years.