i) Basis of Preparation of Financial Statements
 
 The financial statements are prepared on a historical cost convention
 on the accrual basis and materially comply with the accounting standard
 notified by Companies (Accounting Standards) Rules, 2008 and relevant
 provisions of the Companies Act, 1956.
 
 ii) Fixed Assets
 
 Fixed assets are stated at cost of acquisition less accumulated
 depreciation. All costs including financial costs till commencement of
 commercial production are capitalized. In case of net charges arising
 from exchange rate variations relating to borrowings attributable to
 the fixed assets were capitalized till 31.03.2005 and on revision of
 Accounting standard 11 The Effects of Changes in Foreign Exchange
 Rates (Revised 2003) the same are being charged to Statement of Profit
 & Loss.
 
 iii) Depreciation
 
 Depreciation on fixed assets (excluding intangible assets) of the
 Company is provided on straight-line method at the rates and in the
 manner specified in schedule XIV of the Companies Act, 1956, so as to
 write-off 95% of the original cost of the assets, except depreciation
 on incremental cost arising on account of translation of foreign
 currency liabilities for fixed assets capitalized upto 31.03.2005,
 which is being amortized over the residual life of the assets. The
 company has, on the basis of technical opinion, treated the Plant &
 Machinery as continuous process plant and charged the depreciation
 accordingly.  Depreciation on intangible assets is provided on
 straight-line method, equivalent to cost of assets over a period of 10
 years.
 
 iv) Inventories
 
 a) Inventories are valued at the lower of cost or net realizable value.
 Net realizable value is the estimated selling price in the ordinary
 course of business less the estimated cost of completion and selling
 expenses. Cost in respect of raw material and store & spares parts are
 computed on FIFO basis. Cost in respect of process and finished goods
 are computed on weighted average basis method. Finished goods and
 process stock includes cost of conversion and other costs incurred in
 acquiring the inventory and bringing them to their present location and
 condition.
 
 b) Waste is valued at estimated net realizable value.
 
 v) Excise Duty
 
 In view of the excise duty exemption route adopted by the Company from
 13.07.2004 vide notification no. 30/2004 - dated 09.07.2004 of Central
 Excise Act, 1944 Exemption to specified goods of public interest, the
 Company does not have obligation for payment of excise duty from that 
 date.
 
 vi) Revenue Recognition
 
 a) Sales are shown inclusive of export benefits, job receipts and are
 net of returns, discount, rebates and claims.
 
 b) Export benefits are recognized in the Profit & Loss account when the
 right to receive credit as per the terms of the scheme is established
 in respect of the exports made.
 
 vii) Borrowing Cost
 
 Borrowing costs, which are attributable to acquisition or construction
 of qualifying assets, are capitalized as part of cost of such assets
 till such assets are ready for its intended use. A qualifying asset is
 one, which necessarily takes substantial period of time to get ready
 for intended use. All other borrowing costs are charged to revenue.
 
 viii) Retirement Benefits
 
 a) The Employee and Company make monthly fixed contribution to
 Government of India employee''s provident fund equal to a specified
 percentage of the covered employee''s salary, provision for the same is
 made in the year in which services are rendered by the employee.
 
 b) The Liability of gratuity to employees, which is a defined benefit
 plan, is determined on the basis of actuarial valuation based on
 projected unit credit method. Actuarial gain/loss in respect of the
 same is charged to the profit and loss account.
 
 c) Leave encashment benefits to eligible employees has been ascertained
 on actuarial basis and provided for. Actuarial gain/loss in respect of
 the same is charged to the profit and loss account.
 
 ix) Foreign Currency Transactions/Exchange Fluctuation
 
 a) Monetary transactions related to foreign currency are accounted for
 at the equivalent rupee converted at the rates prevailing at the time
 of respective transactions and outstanding in respect thereof are
 translated at year end rates except for the debts which are doubtful of
 recovery.
 
 b) Non-monetary foreign currency items are carried at cost.
 
 x) Provisions, Contingent Liabilities and Contingent Assets.
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent liabilities are not recognized but are disclosed in the
 notes on financial statement. Contingent assets are neither recognized
 nor disclosed in the financial statement.