1.   Method of Accounting
 
 Company generally maintains its accounts on accrual basis, except in
 case of certain items of Income/Expenditure where recovery/payment is
 uncertain. Accordingly, estimated benefits against exports remaining to
 be utilised / liability for duty free raw materials excess utilised as
 at the end of the year has been accounted for in arriving at the
 consumption of raw materials.
 
 2.  Inventory Valuation
 
 (a) Stores, Spares Parts and Loose Tools At weighted average cost.
 
 (b) Raw Materials At weighted average cost.
 
 (c) Finished Goods Lower of Cost or net realisable value.
 
 (d) Goods-in-process Lower of Cost or net realisable value.
 
 (e) Scrap and Wastage At estimated selling price.
 
 In respect of Finished goods and Goods in process, the cost is
 determined by considering '' material, related labour & overheads and
 duty thereon.
 
 3. Depreciation
 
 Plant and Machinery on straight-line method and other Fixed Assets on
 reducing balance method at the rates specified in Schedule XIV of the
 Companies Act, 1956. Plant and Machinery are depreciated to the extent
 of 95% of its gross value considering the shelf life of 18 years.
 
 4. Sales
 
 Sales comprise sale of goods, net of trade discount and include excise
 duty but exclude goods dispatched pending for retirement where the
 titles of the goods remain with the company till retirement of
 documents.
 
 5. Fixed Assets
 
 All Fixed Assets are stated at cost less depreciation. Interest on
 borrowed funds attributable to acquisition of Fixed Assets and revenue
 expenses incurred prior to installation are capitalised as part of
 assets cost. Own manufactured assets are capitalised at cost including
 estimated overheads.
 
 6. Research & Development
 
 Revenue expenditure on research and development is charged as expense
 in the year in '' which it is incurred. Capital expenditure on
 research and development is shown as an addition to fixed assets.
 
 7. Investments
 
 Investments are stated at Cost. In respect of investment of a long-term
 nature (including in subsidiaries), provision is made for any
 diminution in the value wherever it is permanent in nature.
 
 8. Foreign Exchange Transactions
 
 Foreign currency transactions are accounted at exchange rates
 prevailing on the date of transaction. Current Assets and Liabilities
 denominated in foreign currency as at the Balance Sheet date are
 reconverted at rates prevailing at the year-end and the resultant net
 gains or losses are adjusted in the Account.
 
 9. Retirement Benefits
 
 Retirement benefits are dealt with in the following manner:
 
 a) Contributions to Provident Fund are accounted on accrual basis with
 corresponding contribution to recognised funds for staff on actual
 duty.
 
 b) Provision for Gratuity liability is made on the basis of actuarial
 valuation, with corresponding contribution to recognised fund for staff
 on actual duty.