1) System of Accounting
 
 i) The Company follows the mercantile system of accounting and
 recognizes income and expenditure on an accrual basis except in case of
 significant uncertainties.
 
 ii) Financial Statements are prepared under the historical cost
 convention.
 
 iii) Estimates and assumptions used in the preparation of the financial
 statements are based upon Management''s evaluation of the relevant facts
 and circumstances as of the date of the Financial Statements, which may
 differ from the actual results at a subsequent date.
 
 2) Revenue Recognition
 
 i) Sales
 
 Sales are accounted for on dispatch from the point of sale.
 
 ii) Income
 
 a) The Company recognizes income on accrual basis.
 
 b) Interest is accrued over the period of investment and net of
 amortization of premium/discount with respect to fixed income
 securities, thereby recognizing the implicit yield to maturity, with
 reference to coupon dates. However, income is accrued only where
 interest is serviced regularly and is not in arrears, as per the
 guidelines framed by the management.
 
 c) Dividends are accounted for when the right to receive the same is
 established.
 
 d) Profit/loss on sale of investment are recognized on the contract
 date.
 
 3) Fixed Assets and Depreciation
 
 i) Fixed Assets
 
 Fixed Assets except freehold land are carried at cost of acquisition or
 construction or at manufacturing cost in the case of self-manufactured
 assets, less accumulated depreciation and amortization. Borrowing Cost
 attributable to acquisition and installation of fixed assets is
 capitalized and included in the cost of fixed assets as appropriate.
 
 ii) Depreciation and Amortization
 
 a) On Leasehold land
 
 Premium on leasehold land is amortized over the period of lease.
 
 b) On other Fixed Assets
 
 Depreciation on all assets is provided on Straight Line basis in
 accordance with the provisions of Section 205(2)(b) of the Companies
 Act, 1956, in the manner and at the rates specified in Schedule XIV to
 the said Act.
 
 1.  Depreciation on additions is being provided on pro-rata basis from
 the month of such additions.
 
 2.  Depreciation on assets sold, discarded or demolished during the
 year is being provided at the rates up to the previous month in which
 such assets are sold, discarded or demolished.
 
 4) Impairment of Assets
 
 If the carrying amount of the fixed assets exceeds the recoverable
 amount on the reporting date, the carrying amount is reduced to the
 recoverable amount. The recoverable amount is measured at the higher of
 the net selling price and value in use, determined by the present value
 of estimated future cash flows.
 
 5) Investments
 
 i) Investments other than fixed income securities are valued at cost of
 acquisition.
 
 ii) Fixed income securities are carried at cost, less amortization of
 premium paid / discount received, as the case may be, and provision for
 diminution as considered necessary.
 
 iii) Investments made by the Company are of a long-term nature, hence
 diminutions in value of quoted investments are generally not considered
 to be of a permanent nature. However, current investments, representing
 fixed income securities with a maturity less than 1 year and investment
 not intended to be held for a period more than 1 year, are stated at
 lower of cost or fair value.
 
 6) Current Assets
 
 i) Inventories
 
 a) Inventories are valued at the lower of cost, computed on a weighted
 average basis, and estimated net realizable value. Finished Stocks and
 Work-in-Process include costs of conversion and other costs incurred in
 bringing the inventories to their present location and condition.
 Finished stocks lying in the factory includes provision for excise duty
 liability. Finished stocks in transit are valued inclusive of excise
 duty and insurance and those lying at the depots are valued inclusive
 of excise duty, insurance and inward freight.
 
 b) Cost for the purposes of valuation of raw-material, bought out parts
 and stores and tools is inclusive of duties and taxes, freight inward,
 octroi and inward insurance and is net of credit under the Cenvat/VAT
 scheme.
 
 c) Costs of conversion for the purposes of valuation of finished stock
 and work-in-process include fixed and variable production overheads
 incurred in converting materials into finished goods.
 
 d) Machinery spares and maintenance materials are charged out as
 expenses in the year of purchase.
 
 ii) Sundry Debtors
 
 Sundry Debtors & Loans and Advances are stated, after making adequate
 provision for doubtful debts, if any.
 
 7) Provisions
 
 Necessary provisions are made for present obligations that arise out of
 events prior to the balance sheet date entailing future outflow of
 economic resources. Such provisions reflect best estimate based on
 available information.
 
 8) Employee Benefits
 
 i) Privilege Leave Entitlements
 
 Privilege leave entitlements are recognized as a liability, in the
 calendar year of rendering of service, as per the rules of the company.
 As accumulated leave can be availed and/or encased at any time during
 the tenure of employment, the liability is recognized at the higher of
 the actual accumulated obligation or actuarially determined value.
 
 ii) Gratuity
 
 Payment for present liability of future payment of gratuity is being
 made to approved Gratuity Fund, which covers the same under Cash
 Accumulation Policy of the Life Insurance Corporation of India.
 However, any deficits in Plan Assets managed by LIC as compared to the
 actuarial liability is recognized as a liability.
 
 iii) Superannuation
 
 Contribution to Superannuation Fund is being made as per the Scheme of
 the Company under Cash Accumulation Policy of the Life Insurance
 Corporation of India.
 
 iv) Provident Fund
 
 Provident Fund Contributions are made to Company''s Provident Fund
 Trust.
 
 v) Employees Pension Scheme
 
 Contribution to Employees Pension Scheme 1995 is made to Government
 Provident Fund Authority.
 
 9) Foreign Exchange Transactions
 
 Transactions in Foreign currency are recorded in the financial
 statements based on the Exchange rate existing at the time of the
 transaction.
 
 10) Taxation
 
 i) Provision for Taxation is made for the current accounting period
 (reporting period) on the basis of the taxable profits computed in
 accordance with the Income-Tax Act, 1961.
 
 ii) Deferred Tax resulting from timing difference between Book Profits
 and Taxable Profits are accounted for to the extent deferred tax
 liabilities are expected to crystallize with reasonable certainty and
 in case of deferred tax assets with virtual certainty that there would
 be adequate future taxable income against which such deferred tax
 assets can be realized.  Deferred Tax provisions are reviewed for the
 appropriateness of their respective carrying values at each balance
 sheet date.
 
 11) Provisions and Contingent Liabilities
 
 The Company creates a provision when there is present obligation as a
 result of a past event that probably requires an outflow of resources
 and a reliable estimate can be made of the amount of the obligation. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that may, but probably will not,
 require an outflow of resources. When there is a possible obligation or
 a present obligation in respect of which the likelihood of outflow of
 resources is remote, no provision or disclosure is made.