(a) Accounting Convention
 
 These accounts are prepared on the basis of historical cost (except in
 the case of revaluation of certain fixed assets in earlier years as
 indicated below), applicable Accounting Standards issued by the
 Institute of Chartered Accountants of India and relevant provisions of
 the Companies Act, 1956.
 
 (b) Basis of Accounting
 
 (i) Income and expenses are recognized on accrual basis except dividend
 and interest on investment and separation benefits to employees or as
 otherwise stated.
 
 (ii) Income from sales of land-buildings-development rights under the
 sanctioned Scheme as made operative by the Delhi High Court (Note 2,
 Schedule 17) is recognized when the same is accrued.
 
 (c) Fixed Assets and Depreciation
 
 (i) Fixed assets are stated at cost except in the case of certain items
 of land, buildings, railway sidings and plant and machinery which are
 stated on the basis of their revaluations being inclusive of resultant
 write-ups.
 
 (ii) Depreciation on fixed asset items are being recognized on straight
 line method (single shift basis) in accordance with the rates given in
 Schedule XIV to the Companies Act, 1956 as it stood before the 1993
 amendments. In respect of assets acquired thereafter, the rates as per
 revised Schedule XIV have been adopted.
 
 (iii) Impairment of Assets
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 if there is any indication of impairment based on internal/external
 factors.  An impairment loss is recognized wherever the carrying amount
 of an asset exceeds its recoverable amount. The recoverable amount is
 the greater of the assets net selling price and value in use. In
 assessing value in use, the estimated future cash flows are discounted
 to their present value at the weighted average cost of capital. After
 impairment, depreciation is provided on the revised carrying amount of
 the asset over its remaining useful life.
 
 (d) Investments
 
 Long-term investments are stated at cost of acquisition. Provision for
 diminution is made to recognise a decline, other than temporary, in the
 value of Long-term investments. Current investments are valued at lower
 of cost and fair value.
 
 (e) Inventories
 
 (i) Finished goods are valued at lower of cost and market value and
 inclusive of excise duty payable on their subsequent clearance
 
 (ii) Raw materials, stores and spares are valued at cost.
 
 (iii) Work-in-progress is valued at cost (inclusive of appropriate
 overheads).
 
 (f) Transaction in Foreign Currency
 
 Transactions in foreign currency are accounted for at the rates
 prevailing at the date of the transaction. Current assets and
 liabilities are translated at the ruling rate of exchange at the
 Balance Sheet date and the resultant exchange gains or losses are
 reflected in the Profit and Loss Account.
 
 (g) Employee Benefits
 
 (i) Provident Fund
 
 The Company contributes to the Metal Box Company of India Provident
 Fund for its employees. The Companys contributions are charged to the
 Profit and Loss Account every year.
 
 (ii) Gratuity
 
 Gratuity is accounted on accrual basis.
 
 (h) Income Tax
 
 The accounting treatment for Income Tax in respect of the Companys
 income is based on the Accounting Standard on Accounting for Taxes on
 Income (AS -22) issued by the Institute of Chartered Accountants of
 India. The provision made for Income Tax in the Accounts comprises
 both, the current tax and the deferred tax. The deferred tax assets and
 liabilities for the year, arising on account of timing differences, are
 recognized in the Profit and Loss Account and the cumulative effect
 thereof is reflected in the Balance Sheet. The major components of the
 respective balances of deferred tax assets and liabilities are
 disclosed in the Accounts.
 
 (i) Provision for Contingencies
 
 The Companys policy is to carry adequate amounts in the Provision for
 Contingencies account to cover the amounts outstanding in respect of
 doubtful assets and also to meet all other contingencies in the
 business to the extent such amounts are as per the sanctioned Scheme as
 made operative by the Delhi High Court ( Note 2, Schedule 17).