a) BASIS OF PREPARATION OF ACCOUNTS
 
 The accounts have been prepared under the historical cost convention on
 the basis of going concern and comply in all material aspects with
 applicable accounting principles in India and relevant provisions of
 the Companies Act,1956.
 
 b) SYSTEM OF ACCOUNTING
 
 The Company follows the Mercantile System of accounting and recognises
 Income and Expenditure on accrual basis.
 
 c) USE OF ESTIMATE
 
 The presentation of financial statements in conformity with the
 generally accepted accounting principles requires the management to
 make estimates and assumptions that affect the reported amount of
 assets and liabilities, revenues and expenses and disclosure of
 contingent liabilities. Such estimates and assumptions are based on
 management''s evaluation of relevant facts and circumstances as on the
 date of financial statements. The actual outcome may diverge from these
 estimates.
 
 d) FIXED ASSETS AND DEPRECIATION
 
 i) Fixed Assets :
 
 1.  Fixed Assets are stated at cost of acquisition less accumulated
 depreciation. Cost is inclusive of borrowing cost, pilot plant batch
 expenses and other incidental charges incurred upto the date of
 installation / put to use.
 
 2.  Cenvat Credit availed on purchase of fixed assets is reduced from
 the cost of respective assets.
 
 3.  Adjustments arising from foreign exchange rate fluctuation relating
 to liabilties atttributable to fixed assets are taken to the Profit and
 Loss account.
 
 ii) Depreciation :
 
 1.  Depreciation on Plant & Machinery and Factory Building is provided
 on Straight Line Method (SLM) at the rates specified in Schedule XIV to
 the Companies Act,1956.
 
 2.  Depreciation on other assets is provided on Written Down Value
 Method (WDV) at the rates specified in Schedule XIV to the Companies
 Act,1956.
 
 3.  Depreciation on Fixed Assets added / disposed off during the year
 is provided on pro - rata basis with reference to the month of addition
 /disposal.
 
 e) INVESTMENTS
 
 Investment intended to be held for not more than a year are classified
 as current Investment. These are valued at Lower of cost or fair value.
 
 Long term Investments are stated at Cost. Provision for diminution in
 value is made only if, in the opinion of management such a decline is
 other than temporary.
 
 f) INVENTORIES
 
 Items of inventories are measured at lower of cost or net realisable
 value. Cost of Raw Materials, Stores & Spares and Packing Materials is
 determined using First in First out (FIFO) method. Cost of
 Work-in-Process and Finished Goods is determined on absorption costing
 method.
 
 g) RESEARCH AND DEVELOPMENT EXPENSES
 
 1) Revenue Expenditure on Research and Development is charged to Profit
 and Loss Account under respective heads of account in the year in which
 it is incurred.
 
 2) Capital Expenditure is included in Fixed Assets under the respective
 heads.  h) FOREIGN EXCHANGE TRANSACTIONS
 
 1) Transactions in foreign currency are recorded at the exchange rate
 prevailing as on the date of transaction.
 
 2) Foreign currency assets / liabilities as on the balance sheet date
 are translated at the exchange rate prevailing on the date of balance
 sheet.
 
 3) The exchange difference arising out of settlement and restatement of
 Foregin currency monetary items including those arising on repayment
 and translation of liabilities relating to fixed assets are taken to
 Profit and Loss account.
 
 i) REVENUE RECOGNITION
 
 1.  Sales of Products and Services
 
 Sales comprise of sale of goods and services, net of trade discounts
 and include excise duty.
 
 2.  Export Benefits
 
 The unutilised Export Benefits under DEPB Scheme / Advance License
 against export as on the balance sheet date are recognised as income on
 accrual basis.
 
 3.  Dividend
 
 Dividend is recognised when the company''s right to receive the payment
 is established . Dividend from subsidiaries is recognised even if same
 are declared after the balance sheet date but pertains to period on or
 before the date of balance sheet as per the requirment of schedule VI
 of the Compaines Act, 1956.
 
 4.  Other Income
 
 Other Income is accounted on accrual basis except where the receipt of
 income is uncertain in which case it is accounted on receipt basis.
 
 j) Employee Benefits :
 
 a) Defined Contribution Plan : Company''s contribution paid / payable
 during the year to Provident Fund, ESIC and Labour Welfare Fund are
 charged to Profit and Loss Account.
 
 b) Defined Benefit Plan : Company''s liabilities towards gratutity and
 leave encashment are determined using the projected unit credit method
 which considers each period of service as giving rise to an additional
 unit of benefit entitlement and measures each unit separately to build
 up the final obligation. Past services are recognised on a straight
 line basis over the average period until the amended benefits become
 vested. Actuarial gain and losses are recognised immediately in the
 statement of Profit and Loss account as income or expense. Obligation
 is measured at the present value of estimated future cash flow using a
 discounted rate that is determined by the reference to market yields at
 the Balance Sheet date on Government bonds where the currency and terms
 of Government bonds are consistent with the currency and estimated
 terms of the defined benefit obligation.
 
 k) EXCISE AND CUSTOMS DUTY
 
 1.  Excise and Customs duty payable in respect of Finished Goods lying
 at factory / bonded premises are provided for and included in the
 valuation of inventory.
 
 2.  CENVAT credit of Excise Duty availed during the year is accounted
 for by reducing purchase cost of the materials and is adjusted against
 excise duty payable on clearance of goods produced.
 
 l) BORROWING COSTS
 
 Borrowing costs directly attributable to the acquisition or
 construction of fixed assets are capitalised as part of the cost of the
 assets, upto the date the asset is put to use. Other costs are charged
 to the Profit and Loss account in the year in which they are incurred.
 
 m) PRIOR PERIOD ITEMS
 
 Prior period expenses / income is accounted under the respective head
 of expenses / income account, Material items, if any, are disclosed
 separately by way of a note.
 
 n) EARNING PER SHARE
 
 In accordance with the Accounting Standard -20 (AS-20) Earning Per
 Share issued by the Institute of Chartered Accountants of India,
 earning per share is computed by dividing the profit after tax with the
 weighted average number of shares outstanding, at the year end.
 
 o) INCOME TAX
 
 Tax expense comprises of current tax, deferred tax charge or credit.
 Current tax is measured at the amount expected to be paid to the tax
 authorities in accordance with the Indian Income Tax Act. The deferred
 tax charged or credit is recognised using prevailing enacted or
 substantatively annexed tax rate where there is unabsorbed depreciation
 or carry forward losses, deferred tax assets are recognised only if
 there is virtual certainty of realisation such assets. Other deferred
 tax assets are recognised only to the extent there is reasonable
 certainity of realisation in future. Deferred tax assets / liabilities
 are reviewed as at each Balance Sheet date based on developments during
 the period.
 
 p) INTANGIBLE ASSETS
 
 Intangible assets are recognised only when it is probable that the
 future economic benefits that are attributable to the asset will flow
 to the Company and the cost of such assets can be measured reliably.
 Intangible assets are stated at cost less accumulated amortization and
 impairment loss, if any. All costs relating to the acquisition are
 capitalized. Intangible assets are amortized over the useful life of
 the asset.
 
 q) IMPAIRMENT OF ASSETS
 
 An asset is impaired when the carrying cost of assets exceeds its
 recoverable value. An impairment loss is charged to the Profit and Loss
 account in the year in which an asset is identified as impaired. The
 impairment loss recognised in prior accounting periods is reversed, if
 there has been a change in the estimate or recoverable amount.
 
 r) CONTINGENCIES AND PROVISIONS
 
 A provision is recognised when the Company has a present obligation as
 a result of past event. It is probable that an outflow of resources
 embodying economic benefit will be required to settle the obligation in
 respect of which a reliable estimate can be made. Provisions are not
 discounted to its present value and are determined based on the best
 estimate of the expenditure 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 estimate.
 
 s) OTHER ACCOUNTING POLICIES
 
 These are consistent with the generally accepted accounting practices.