a) Basis of preparation of financial statements
 
 The financial statements are prepared under the historical cost
 convention in accordance with the provisions of the Companies Act, 1956
 and materially comply with the mandatory Accounting Standards issued by
 The Institute of Chartered Accountants of India except to the extent
 disclosed in the following notes.
 
 B) Use of estimates
 
 The preparation of financial statements requires management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities and disclosures relating to contingent liabilities as
 at the Balance Sheet date and the reported amounts of income and
 expenses during the year.
 
 Contingencies are recorded when it is probable that a liability will be
 incurred and the amounts can reasonably be estimated. Differences
 between the actual results and estimates are recognized in the year in
 which the results are known / materialized.
 
 c) fixed assets and Depreciation
 
 1) tangible assets i) Gross Block
 
 a) Fixed Assets are stated at cost of acquisition inclusive of inland
 freight, duties, taxes and incidental expenses related to acquisition
 with due adjustments for Cenvat / Vat credits.
 
 b) Capital Work-in-progress includes Machinery to be installed,
 Construction & Erection Materials, advances and unallocated
 preoperative expenses etc.
 
 ii) Depreciation
 
 a) Leasehold land is amortized on straight-line method over the period
 of the lease.
 
 b) Depreciation is provided on fxed assets used during the year under
 Straight Line Method at the rates specifed in the Schedule XIV of the
 Companies Act, 1956.
 
 2) intangible assets
 
 Intangible assets are stated at cost of acquisition less accumulated
 amortization. This includes computer
 
 software packages (ERP and others). Amortization is done on straight
 line basis at the rates specifed in the Schedule XIV of the Companies
 Act, 1956.
 
 D) revenue recognition
 
 All expenses and income to the extent considered payable and receivable
 respectively unless specifcally stated to be otherwise are accounted
 for on mercantile basis.
 
 e) Sales
 
 Sales include excise duty, wherever applicable and rebate, discounts,
 claims, expenses incurred on consignment sales etc. are excluded there
 from. Sales on consignment and expenses there against are being
 accounted for based on account sales from the respective consignee.
 
 f) investments
 
 Long Term Investments are stated at cost less permanent diminution, if
 any, in value. Current Investments are carried at lower of cost or fair
 value.
 
 G) inventories
 
 i) Inventories are valued at lower of the cost or net realizable value.
 Cost in respect of raw materials, Stores and Spares have been
 calculated on weighted average basis, which includes expenses
 incidental to procurement of the same.
 
 ii) By-Products are valued at net realizable value.
 
 iii) Cost in respect of fnished goods includes manufacturing expenses,
 factory and administrative overheads and excise duty.
 
 iv) Cost in respect of work in progress represents, cost incurred upto
 the stage of completion.
 
 h) foreign currency transactions
 
 Foreign currency assets and liabilities are translated at exchange
 rates prevailing at the year end. The loss or gain thereon and also on
 exchange differences on settlement of the foreign currency transactions
 during the year are adjusted to the Proft and Loss Account. The
 difference between the forward rate and exchange rate at the date of
 transaction is recognized as income or expense over the life of the
 contracts.
 
 i) retirement Benefits
 
 i) Provident & Family Pension Fund: In accordance with the provisions
 of the Employee Provident Funds and Miscellaneous Provisions Act, 1952,
 eligible employees of the Company are entitled to receive Benefits with
 respect to provident fund, a defned contribution plan, in which both
 the Company and employee contribute monthly to Provident Fund Scheme,
 by the Central Government at a determined rate and the Companys
 contribution is charged off to the Proft & Loss Account.
 
 ii) Leave Encashment Benefits: Leave encashment Benefits payable to
 employees while in service, retirement and death while in service or on
 termination of employment with respect to accumulated leaves
 outstanding at the year end are accounted for on basis of actuarial
 valuation at the balance sheet date. The present value of such
 obligation is determined by the projected unit credit method as at the
 balance sheet date through which the obligations are settled. The
 resultant actuarial gain or loss on change in present value of defned
 beneft obligation or change in return of the plan assets is recognized
 as an income or expense in the Proft and Loss Account.
 
 iii) Gratuity: Contributions under the scheme for defned beneft under
 the Payment of Gratuity Act, 1972, is determined on the basis of
 actuarial valuation and are funded to Life Insurance Corporation of
 India and recognized as years expenditure.
 
 J) miscellaneous expenses
 
 Preliminary Expenses and expenditure in connection with issue of shares
 are being written off over a period of ten years or earlier.
 
 K) Borrowing costs
 
 Borrowing costs that are attributable to the acquisition, construction
 or production of a qualifying asset are capitalized as part of cost of
 such asset till such time as the asset is ready for its intended use or
 sale. A qualifying asset is an asset that necessarily requires a
 substantial period of time to get ready for its intended use or sale.
 All other borrowing costs are recognized as an expense in the period in
 which they are incurred.
 
 L) contingent Liabilities
 
 Contingent liabilities are generally not provided for and are disclosed
 by way of notes to the accounts.
 
 m) Segment reporting
 
 The accounting policies adopted for segment reporting are in line with
 the accounting policies adopted in financial statements.
 
 n) export Benefits
 
 Export Benefits arising on account of entitlement for duty free imports
 are accounted for through import of materials. Such Benefits under Duty
 Entitlement Pass Books are accounted for on accrual basis.
 
 o) Government Grants & other claims
 
 Revenue grants including subsidy / rebates, refunds, claims etc. are
 credited to Proft and Loss Account under ‘Other Income or deducted
 from the related expenses. Grants relating to fxed assets are credited
 to Capital Reserve Account or adjusted in the cost of such assets as
 the case may be, as and when the ultimate realizability of such grants
 etc. are established/ realized.
 
 p) income tax
 
 Provision for Tax is made for both current and deferred taxes. Current
 tax is provided on the taxable income using the applicable tax rates
 and tax laws. Deferred tax assets and liabilities arising on account of
 timing differences, which are capable of reversal in subsequent periods
 are recognized using tax rates and tax laws, which have been enacted or
 substantively enacted.
 
 Q) Derivative instruments
 
 Derivative transactions of Interest and Foreign Currency Swap and
 Option contracts are accounted for on their settlement and accordingly
 the gains / losses arising there from are recognized in the Proft &
 Loss Account as and when the settlement takes place in accordance with
 the terms of respective contracts.