I.  Basis of Accounting
 
 The financial statements have been prepared on an accrual basis under
 the historical cost convention and in accordance with the generally
 accepted accounting principles in India and materially comply with the
 mandatory Accounting Standards notified by the Central Government of
 India under the Companies (Accounting Standards) Rules, 2006 and with
 the relevant provisions of the Companies Act, 1956.
 
 II.  Revenue Recognition
 
 i) Income from sale of goods is recognised upon transfer of significant
 risk and rewards of ownership of the goods to the customer which
 generally coincides with delivery and acceptance of goods sold. Sales
 are recorded net of sales tax/value added tax. Turnover includes
 related export benefits. The excise duty recovered is presented as a
 reduction from gross turnover.
 
 ii) Interest income is recognised on accrual basis.
 
 iii) Dividend income is accounted when the right to receive the payment
 is established.
 
 iv) Claims which are not of material nature/ Insurance Claims, Export
 benefits, Government Grants, refund of Sales Tax/ Excise/ Customs duty
 are accounted for when no significant uncertainties are attached to
 their eventual receipt.
 
 v) The Company is entitled to refund of Special Additional Duty (SAD)
 paid on imported traded goods on sale of such goods within the
 prescribed time. Accordingly the refund is accrued on sale of such
 goods. Till such time it is treated as part of inventory cost.
 
 III.  Fixed Assets and Depreciation
 
 i) Fixed Assets are stated at cost of acquisition or construction, net
 of modvat/ cenvat, less accumulated depreciation and accumulated
 impairment losses, if any. Cost of acquisition comprises of all costs
 incurred to bring the assets to their location and working condition up
 to the date assets are put to use. All costs, including financing costs
 till commencement of commercial production, net charges on foreign
 exchange contracts and adjustment arising from exchange rate variations
 upto 31st March, 2007 attributable to the fixed assets acquired from a
 country outside India are capitalised.
 
 ii) Machinery/ Insurance spares which are specific and identifiable to
 the assets are capitalised.
 
 iii) Pre-operative expenditure during construction period/ trial run,
 direct expenses as well as clearly identifiable indirect expenses
 incurred on the projects during the period of construction are being
 capitalised along with the respective assets.
 
 iv) The company provides depreciation as under:
 
 a) For assets acquired on or after 01/01/1987 on straight line method,
 in accordance with Schedule XIV of the Companies Act, 1956.
 
 b) For assets acquired prior to 01/01/1987 on Written Down Value basis,
 in accordance with Schedule XIV of the Companies Act,1956.
 
 c) Accelerated depreciation has been provided on Fixed Asset which have
 become obsolete, to reduce the value to estimated realisable value.
 
 d) Capital items costing less than Rs.5000 have been charged to Profit
 and Loss Account at the time of purchase itself.
 
 e) Leasehold Land is amortised over the period of lease.
 
 f) The Company capitalises software where it is reasonably estimated
 that the software has an enduring useful life.  Software is depreciated
 over an estimated useful life of 5 years.
 
 IV.  Impairment of Assets
 
 An asset is considered as impaired in accordance with Accounting
 Standard (AS)-28 on Impairment of Assets.  Impairment is ascertained
 at each balance sheet date in respect of Cash Generating Units. An
 impairment loss is recognised whenever the carrying amount of an asset
 exceeds its recoverable amount. Recoverable amount is the greater of
 net selling price and value in use. In assessing value in use, the
 estimated future cash flows are discounted to their present value based
 on an appropriate discount factor.
 
 V.  Investments
 
 Investments are classified as current or long-term in accordance with
 Accounting Standard (AS)-13 on Accounting for Investments.
 
 Current Investments are stated at lower of cost and fair value. Any
 reduction in the carrying amount and any reversal of such reductions
 are charged or credited to the Profit and Loss Account.
 
 Long-term investments are stated at cost. Provision is made to
 recognise a decline, other than temporary, in the value of such
 investments.
 
 VI.  Accounting for Taxes on Income
 
 Tax expenses are charged to Profit and Loss account after considering
 deferred tax impact for the timing difference between Accounting Income
 and Tax Income.
 
 Deferred Tax Assets on timing differences are recognised when there is
 a reasonable certainty that they will be realised.
 
 Deferred Tax Assets relating to unabsorbed business losses are
 recognised when there is a virtual certainty that there will be
 sufficient taxable profits to utilise them.
 
 VII.  Inventories
 
 Stock-in-trade is valued at lower of cost and net realisable value.
 Stock of Consumable stores, spares and furnace oil are valued at cost.
 
 Cost is computed based on moving weighted average in respect of all
 procurred materials and comprises of materials and appropriate share of
 utilities and other overheads in respect of work-in-process and
 finished goods. Costs also includes all charges incurred for bringing
 the inventories to their present location and condition.
 
 VIII. Sales Promotion
 
 Articles procured for sales promotion are charged to the Profit and
 Loss Account at the time of purchase itself.  
 
 IX.  Foreign Currency Transactions
 
 Transactions in foreign currency are recorded at the exchange rate
 prevailing at transaction date.
 
 i) Exchange differences relating to fixed assets arising during the
 year has been charged off to the Profit and Loss Account pursuant to
 the notification issued by ICAI.
 
 ii) Monetary foreign currency assets and liabilities are translated
 into rupees at the exchange rate prevailing at the Balance sheet date.
 Exchange differences are dealt with in the Profit and Loss Account.
 
 iii) Non-monetary items such as investments are carried at historical
 cost using exchange rates on the date of transaction.
 
 iv) In case of forward contracts (for hedging purposes) the premium or
 discount arising at inception is amortised as expense or income over
 the life of the contract. Exchange differences on such contracts are
 recognised in the Profit and Loss account.
 
 Transactions relating to overseas branch have been translated as
 follows:
 
 i) Additions to fixed assets are capitalised at rates prevailing on the
 date of acquisition. Depreciation is charged on the value at which
 assets are converted.
 
 ii) Monetary assets and liabilities at the rates prevailing on the
 balance sheet date.
 
 iii) Revenue items at the weighted average rate for the month.
 
 X.  Research and Development
 
 Revenue expenditure on research and development is charged to the
 Profit and Loss Account.  Capital expenditure on research and
 development is shown as an addition to fixed assets.
 
 XI.  Retirement benefits
 
 Provident Fund - The Company has a statutory scheme of Provident Fund
 with the Regional Provident Fund Commissioner.
 
 Gratuity and Leave Encashment- Gratuity and Leave Encashment has been
 provided in accordance with Accounting Standard (AS) -15 Employee
 Benefits.
 
 Superannuation - Superannuation is provided on the basis of premium
 paid on the policy taken under Group Superannuation Scheme from Life
 Insurance Corporation of India.
 
 XII.  Borrowing cost
 
 Borrowing cost that are attributable to the acquisition or construction
 of qualifying asset are capitalised as part of such asset.