1.1 BASIS OF PREPARATION OF FINANCIAL STATEMENTS:
 
 The financial statements of the Company have been prepared under
 historical cost convention, in accordance with the Generally Accepted
 Accounting Principles (GAAP) applicable in India and the provisions of
 the Companies Act, 1956. The preparation of financial statements in
 conformity with GAAP requires management to make estimates and
 assumptions that affect the reported amounts of assets and liabilities,
 disclosure of contingent liabilities as at date of the financial
 statements, and the reported amounts of revenue and expenses during the
 reported period. Actual results could differ from those estimates.
 
 1.2 FIXED ASSETS:
 
 (i) Tangible Assets
 
 Fixed Assets (other than land which were revalued) are stated at cost
 of acquisition inclusive of freight, duties, taxes and incidental
 expenses relating to the acquisition, installation, erection and
 commissioning less depreciation.  A portion of the land owned by the
 Company has been revalued. Internally manufactured assets are valued at
 works cost.
 
 (ii) Intangible Assets
 
 Intangible assets are accounted at cost of acquisition.
 
 (Hi) Assets Held for Sale:
 
 Assets held for sale are stated at the cost or estimated net realizable
 value whichever, is lower.
 
 1.3 INVESTMENTS:
 
 Investments unless otherwise stated are considered as long term in
 nature and are valued at acquisition cost less provision for
 diminution, if any.
 
 1.4 INVENTORIES:
 
 1.  Raw materials, stores, spare parts and components are valued on
 first in first out basis/ weighted average at net landed cost or net
 realizable value whichever is lower.
 
 2.  Work in progress is valued at works cost or net realizable value
 whichever is lower.
 
 3.  Finished goods are valued at works cost or net realizable value
 whichever is lower.
 
 Material cost of work in progress and finished goods have been computed
 based on the weighted average/ average price/ latest estimated purchase
 price. At certain units, cost of finished goods has been computed by
 subtracting an estimated percentage from selling price to cover
 margins, further cost to be incurred to make the sale and excluded
 cost.
 
 1.5 DEPRECIATION:
 
 a) Depreciation is charged on the written down value of assets at the
 rates specified in schedule XIV to the Companies Act, 1956 or Income
 Tax Act, 1961, whichever is higher on assets as on 31st March 1994.
 
 b) In respect of other additions after 1st April 1994, depreciation on
 straight-line basis at the rates specified in schedule XIV to the
 Companies Act 1956 has been charged, except otherwise stated.
 
 c) Depreciation on furniture and fixtures above Rs. 5,000/- provided at
 the residences of the employees has been charged at the rate of 33.33%
 on the straight-line method irrespective of the quarter of addition.
 Furniture and fixtures whose cost is Rs. 5,000/- or below are fully
 depreciated in the year of addition.
 
 d) Depreciation on assets taken on finance lease is charged over the
 primary lease period.
 
 e) Depreciation on software is provided at 33.33% per annum.
 
 f) Depreciation on technical know-how fees and product development are
 written over a period of six years.
 
 g) Depreciation on assets (other than Furniture and Fixtures provided
 to employees and assets taken on finance lease) bought / sold during
 the year is charged at the applicable rates on a quarterly basis,
 depending upon the quarter of the financial year in which the assets
 are installed / sold. Assets whose individual value less than Rs. 5,000/-
 is depreciated fully. However, in certain units where SAP ERP software
 has been implemented depreciation has been provided on monthly prorata
 basis.
 
 1.6 RESEARCH AND DEVELOPMENT EXPENDITURE:
 
 Revenue expenditure in carrying out research and development activity
 is charged to the Profit and Loss Account of the year in which it is
 incurred. Capital expenditure in respect of research and development
 activity is capitalized as fixed assets and depreciation provided as
 detailed above.
 
 1.7 REVENUE RECOGNITION:
 
 a) Sale of goods is recognized on shipment to customers and excludes
 recovery towards sales tax.
 
 b) Interest income is recognized on time proportion basis.
 
 c) Dividend income is recognized, when the right to receive the
 dividend is established.
 
 1.8 EMPLOYEE BENEFITS:
 
 (i) Short Term Employee Benefits:
 
 Employee benefits payable wholly within twelve months of rendering the
 service are classified as short term. Benefits such as salaries, bonus,
 leave travel allowance etc. are recognised in the period in which the
 employee renders the related service.
 
 (ii) Post Employment Benefits:
 
 a) Defined Contribution Plans:
 
 The Company has contributed to provident, pension & superannuation
 funds which are defined contribution plans. The contributions paid/
 payable under the scheme is recognised during the year in which
 employee renders the related service.
 
 b) Defined Benefit Plans:
 
 Employees'' gratuity and leave encashment are defined benefit plans. The
 present value of the obligation under such plan is determined based on
 actuarial valuation using the Projected Unit Credit Method which
 considers each year of service as giving rise to an additional unit of
 benefit entitlement and measures each unit separately to build up the
 final obligation. Actuarial gain and losses are recognized immediately
 in the statement of profit and loss account as income or expense.
 Obligation is measured at the present value of estimated future cash
 flows using a discounted rate that is determined by reference to market
 yields at the balance sheet date on Government bonds where the currency
 and terms of the Government bonds are consistent with the currency and
 estimated terms of the defined benefit obligation. Gratuity to
 employees is covered under Group Gratuity Life Assurance Scheme of the
 Life Insurance Corporation of India.
 
 1.9 FOREIGN CURRENCY TRANSACTIONS:
 
 a) Foreign currency transactions are translated into rupees at the
 exchange rate prevailing on the date of the transaction.
 
 b) Monetary foreign currency assets and liabilities outstanding as at
 the year-end are restated at the exchange rates prevailing as at the
 close of the financial year. All exchange differences are accounted for
 in the profit and loss account.
 
 c) Non monetary items denominated in foreign currency, are valued at
 the exchange rate prevailing on the date of transaction.
 
 d) In respect of branches, which are integral foreign operations are
 translated as if the transactions of those foreign operations were the
 transactions of the Company itself.
 
 1.10 TAXES ON INCOME:
 
 Provision for current tax for the year is after taking cognizance of
 excess / short provision in prior years. Deferred tax assets/liability
 is recognized, subject to consideration of prudence, on timing
 differences.
 
 1.11 BORROWING COSTS:
 
 Interest and other borrowing costs on specific borrowings relatable to
 qualifying assets are capitalized up to the date such assets are ready
 for use / intended to use. Other interest and borrowing costs are
 charged to Profit & Loss Account.
 
 1.12 IMPAIRMENT OF ASSETS:
 
 An asset is treated as impaired when the carrying cost of asset exceeds
 its recoverable value. An impairment loss, if any, is charged to profit
 and loss account, in the year in which an asset is identified as
 impaired.
 
 1.13 PROVISIONS & CONTINGENT LIABILITIES:
 
 A provision is recognized when the group has a present obligation as a
 result of past event and it is probable that tan outflow of resources
 will be required to settle the obligation, in respect of which reliable
 estimate can be made. Provisions (excluding retirement benefits) are
 not discounted to its present value and are determined based on best
 estimate required to settle the obligation at the balance sheet date.
 These are reviewed at each balance sheet date and adjusted to reflect
 the current best estimates.Financial effect of contingent liabilities
 is disclosed based on information available upto the date on which
 financial statements are approved. However, where a reasonable estimate
 of financial effect cannot be made, suitable disclosures are made with
 regard to this fact and the existence and nature of the contingent
 liability.