(a) Basis of Preparation of Financial Statements
 
 These Financial Statements have been prepared under the historical cost
 convention [other than for revaluation of certain fixed assets as
 detailed in i(b)(ii) and i(b)(iv) below] and in compliance with all
 the applicable accounting principles in India, the applicable
 accounting standards notified under section 211(3C) of the Companies
 Act, 1956 (the Act) and the relevant provisions of the Act. A summary
 of significant accounting policies which have been applied is set out
 below.
 
 (b) Fixed Assets and Depreciation
 
 (i) Fixed Assets are stated at cost of construction/acquisition [except
 for items mentioned in (b) (ii) below] inclusive of inward freight, non
 refundable duties/taxes, incidental expenses directly related to
 acquisition and borrowing cost where applicable and adjustments for
 exchange difference referred to in Note 1 (f) below. In respect of
 projects involving construction, related pre-operational expenses form
 part of the value of assets capitalised. An impairment loss is
 recognised wherever the carrying amount of fixed assets of a cash
 generating unit exceeds its recoverable amount (i.e. higher of net
 selling price and value in use).
 
 (ii) Land, buildings and certain plant and machineries of Rayon and
 Transparent Paper Unit as at 31 st March, 1982 and of Cement (at
 Basantnagar) and Spun Pipes & Foundries Units as at 31st March, 1983
 are stated at valuation made by the professional valuers in 1982-83 at
 the then current value.
 
 (iii) Capital work in progress is stated at cost [including borrowing
 cost, where applicable and adjustment for exchange difference referred
 to in Note 1(f) below], incurred during
 construction/installation/pre-operative period relating to items or
 projects in progress.
 
 (iv) Depreciation on revalued items of fixed assets referred to in (b)
 (ii) above is calculated on their respective revalued amounts at rates
 considered applicable by the valuers on straight line method as against
 the methods/rates/bases which would have otherwise been adopted for the
 purpose of the annual accounts of the Company and accordingly includes
 additional depreciation charge. An amount equivalent to the aforesaid
 additional depreciation charge is transferred to the credit of the
 Profit and Loss Account from Capital Reserve - Revaluation of Fixed
 Assets.
 
 (v) Depreciation on fixed assets acquired up to 31st March, 1983 and
 not covered by revaluations referred to in (b)(ii) above pertaining to
 Transparent Paper Division of Rayon & Transparent Paper Unit and fixed
 assets of Bharat General Unit (except those pertaining to Malkapur
 Extraction Division) is calculated under reducing balance method at
 applicable rates as per Schedule XIV to the Companies Act, 1956 as
 revised during 1993-94.
 
 (vi) Leasehold land is amortised over the lease period.
 
 (vii) Software are capitalised where they are expected to provide
 future enduring economic benefits and amortised on a straight line
 basis over a period of three years from the date of capitalisation.
 Capitalisation costs include license fees and the cost of
 implementation/system integration services. The costs are capitalised
 in the year in which the relevant software is implemented for use.
 
 (viii) Depreciation on fixed assets acquired up to 31st March, 1993
 other than items covered in (b)(iv) to (b)(vi) above is calculated
 under straight-line method at the rates considered adequate to amortise
 the depreciable book value over the remaining part (as at 1st April,
 1993) of the specified period recomputed by applying the Schedule XIV
 rates as revised during 1993-94 in keeping with the Circular No.14/93
 dated 20rh December, 1993 of the Department of Company Affairs,
 Government of India.
 
 (ix) Depreciation on additions to fixed assets from 1st April, 1993
 [except for deferral of annual depreciation charge for three years from
 1999-2000 to 2001-2002 on certain fixed assets of Cement Units as
 indicated in (b)(x) below and items covered in b(vii) above], fixed
 assets of Hindusthan Heavy Chemical Unit, Assam Cotton Mills Unit and
 those pertaining to Malkapur Extraction Divisions of Bharat General
 Unit [referred to in (b)(v) above], is calculated under straight-line
 method at applicable rates as per Schedule XIV to the Companies Act,
 1956 as amended during 1993-94.
 
 (x) Pursuant to Central Governments approval under Section 205 (2) (c)
 of the Act, depreciation not provided in 1999- 2000, 2000-2001 and
 2001-2002 accounts on certain fixed asset items of Cement Units is
 amortised over the remaining part of specified period (as at 1st April,
 2000,1st April, 2001 and 1st April, 2002 respectively) based on the
 prescribed rates.
 
 (c) Investments
 
 Long-term Investments are stated at cost where applicable; provision
 for diminution is made or carrying amount is written down to recognise
 a decline other than temporary in the carrying amount of long term
 investments as determined by the Board of Directors on periodical
 review.
 
 Current investments are carried at lower of cost and fair value.
 Gains/losses on disposal of the investments are recognised as
 income/expenditure.
 
 (d) Inventories
 
 Inventories are stated at lower of cost and net realisable value. Cost
 is determined on weighted average/FIFO basis , as considered
 appropriate by the Company and includes expenditure incurred in the
 normal course of business in bringing inventories to its location and
 condition, appropriate overheads, where applicable. Provision is made
 for obsolete/slow moving/defective stocks, wherever necessary.
 
 (e) Borrowing Cost
 
 Borrowing costs attributable to qualifying assets (assets which require
 substantial period of time to get ready for their intended use) are
 capitalised as part of the cost of such assets. All other borrowing
 costs are charged to revenue.
 
 (f) Foreign Currency Translation as application under accounting
 standard 11 on The effect of Changes in Foreign Exchange Rates.
 
 Transactions in foreign currency are accounted for at the exchange
 rates prevailing on the date of transactions. Monetary assets and
 liabilities related to foreign currency transactions remaining
 unsettled at the end of the year are translated at year end exchange
 rates. Gains/losses (other than relating to reporting of long-term
 foreign currency monetary items) arising out of fluctuations in the
 exchange rates are recognised in Profit and Loss Account in the period
 in which they arise. Exchange differences arising on reporting of
 long-term foreign currency monetary items (i) relating to acquisition
 of depreciable capital assets are adjusted to the carrying amount of
 such assets (to be depreciated over the balance life of the related
 asset) and (ii) in other cases accumulated in a Foreign Currency
 Monetary Item Translation Difference Account (to be amortised over the
 balance period of the related long term monetary asset/liability but
 not beyond 31st March, 2011). Differences between the forward exchange
 rates and the exchange rates at the date of transactions are accounted
 for as income/expense over the life of the contracts.
 
 (g) Derivative Contracts
 
 In respect of derivative contracts (other than forward exchange
 contracts covered under Accounting Standard 11 on The Effects of
 Changes in Foreign Exchange Rates), gains/losses on settlement and
 mark to market loss (net) relating to outstanding contracts as at the
 Balance Sheet date is recognised in the Profit and Loss Account.
 
 Refer Note 1 (f) above for forward exchange contracts covered under
 Accounting Standard 11 on The Effects of Changes in foreign Exchange
 Rates.
 
 (h) Sales
 
 Sales represent value of goods sold and are net of trade
 discounts/allowances, sales return and excluding sales tax/value added
 tax.
 
 Sales are recognized on passing of property in goods.
 
 (i) Investment Income
 
 Income from investments is accounted for on accrual basis, inclusive of
 related tax deducted at source.
 
 (j) Employee Benefits
 
 Short-term Employee Benefits (i.e. benefits payable within one year)
 are recognised in the period in which employee services are rendered.
 
 Contributions towards superannuation at rates specified in related
 approved scheme covering eligible employees are recognised as expense
 and funded.
 
 Contributions towards provident funds are recognised as expense.
 Provident fund contributions in respect of certain employees are made
 to Trusts administered by the Company; the interest rate payable to the
 members of the Trusts is not lower than the statutory rate of interest
 declared annually by the Central Government under the Employees
 Provident Funds and Miscellaneous Provisions Act, 1952 and shortfall,
 if any, is to be made good by the Company. The remaining provident fund
 contributions are made to employer established provident funds (for
 other than covered employees)/ government administered provident fund
 towards which the Company has no further obligations beyond its monthly
 contributions. (Also refer Note 14A below).
 
 Liability towards gratuity, covering eligible employees, is provided
 and funded on the basis of year-end actuarial valuation.
 
 Accrued liability towards leave encashment benefits, covering eligible
 employees, evaluated on the basis of year-end actuarial valuation is
 recognised as a charge.
 
 Contribution to Central Government administered Employees State
 Insurance Scheme for eligible employees is recognised as charge.
 
 Actuarial gains/losses arising in Defined Benefit Plans are recognised
 immediately in the Profit and Loss Account as income/expense for the
 year in which they occur.
 
 (k) Taxes on Income
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the year. Deferred tax is provided/ recognised on
 timing differences between taxable income and accounting income using
 the liability method subject to consideration of prudence. Deferred tax
 assets on unabsorbed depreciation and carry forward of losses under tax
 laws are not recognised unless there is virtual certainty fhat there
 will be sufficient future taxable income available to realise such
 assets.