A.  BASIS OF ACCOUNTING:
 
 The financial statements are prepared under the historical cost
 convention on an accrual basis, in accordance with relevant
 requirements of the Companies Act, 1956 and applicable Accounting
 Standards notified by the Companies (Accounting Standards) Rules, 2006.
 
 B.  USE OF ESTIMATES:
 
 The preparation of financial statements in conformity with the
 generally accepted accounting principles requires estimates and
 assumptions to be made that affect the reported amounts of assets and
 liabilities on the date of financial statements and the reported
 amounts of revenues and expenses during the reported period. Difference
 between the actual results and estimates are recognised in the period
 in which the results are known or materialise.
 
 C.  FIXED ASSETS AND DEPRECIATION:
 
 a.  Fixed Assets are stated at cost net of credits under Cenvat/V AT
 Schemes. All costs relatingto the acquisition including freight and
 installation of Fixed Assets are capitalised and also include interest
 on borrowings upto the date of capitalisation.
 
 b.  Depreciation:
 
 (i) Depreciation on Buildings, Plant and Machinery, Moulds and a part
 of Other Assets has been provided on straight line method at the rates
 and on the basis as specified in Schedule XIV to the Companies Act,
 1956, and in respect of vehicles and a part of Other Assets where,
 based on management''s estimate of the useful life of the assets, higher
 depreciation has been provided on straight line method at the rate of
 20%.
 
 (ii) Assets acquired/purchased costing less than Rupees five thousand
 have been depreciated at the rate of 100%.
 
 (iii) Depreciation on Renewable Energy Saving Devices, viz., Windmills,
 is being charged on Reducing Balancing Method, as Continuous Process
 Plant at the rates and on the basis as specified in Schedule XIV to the
 Companies Act, 1956.
 
 (iv) Leasehold Land is amortised over the period of the lease.
 
 (v) Intangible Assets are amortised over 5 years commencing from the
 year in which the expenditure is incurred.
 
 D.  IMPAIRMENT OF ASSETS:
 
 The Company assesses at each Balance Sheet date whether there is any
 indication that an asset may be impaired. If any such indication
 exists, the Company estimates the recoverable amount of the asset. If
 such recoverable amount of the asset or the recoverable amount of the
 cash generating unit to which the asset belongs is less than its
 carrying amount, the carrying amount is reduced to its recoverable
 amount. The reduction is treated as an impairment loss and is
 recognised in the Profit and Loss Account. If at the Balance Sheet date
 there is an indication that if a previously assessed impairment loss no
 longer exists, the recoverable amount is reassessed and the asset is
 reflected at the recoverable amount.
 
 E.  INVESTMENTS:
 
 Long-term Investments are stated at Cost. Current investments are
 stated lower of cost and fair value. Diminution is provided to
 recognise a decline, other than temporary, in the value of long-term
 investments.
 
 F.  INVENTORIES:
 
 Inventories consisting of stores & spares, raw materials,
 work-in-progress and finished goods are valued at lower of cost and net
 realisable value.
 
 The cost is computed on FIFO basis except for stores & spares which are
 on Weighted Average Cost basis and is net of credits under Cenvat/ VAT
 Schemes.
 
 Work-in-Progress and Finished Goods inventories include materials,
 labour cost and other related overheads.
 
 G.  REVENUE RECOGNITION:
 
 Sale of goods and services are recognised when risks and rewards of
 ownership are passed on to the customers which generally coincides with
 delivery and when the services are rendered. Sales include Excise Duty
 but exclude VAT and warranty claims.
 
 H.  EXCISE DUTY:
 
 Excise Duty has been accounted on the basis of both payments made in
 respect of goods dispatched and also provision made for goods lying in
 bonded warehouses.
 
 I.  RESEARCH AND DEVELOPMENT:
 
 Revenue expenditure on Research and Development is charged to the
 Profit and Loss Account of the year in which it is incurred. Capital
 expenditure on Research and Development is included as additions to
 Fixed Assets.
 
 J.  TAXATION:
 
 Provision for Current Tax is made on the basis of estimated taxable
 income for the current accounting period and in accordance with the
 provisions of the Income Tax Act, 1961.
 
 Deferred Tax for timing differences between the book and tax profits
 for the year is accounted for, using the tax rates and laws that have
 been enacted or substantially enacted on the Balance Sheet date. The
 Deferred Tax Asset is recognised and carried forward only to the extent
 that there is a reasonable certainty except for carry forward losses
 and unabsorbed depreciation which is recognised on virtual certainty
 that the assets will be adjusted in future.
 
 K.  LEASES:
 
 Lease payments under operating leases are recognised as expenses on
 straight line basis over the lease term in accordance with the period
 specified in respective agreements.
 
 L.  EMPLOYEE BENEFITS:
 
 The Company''s contribution to the Provident Fund is remitted to a Trust
 established for this purpose based on fixed percentage of the eligible
 employees'' salary and charged to the Profit and Loss Account. The
 Company is liable for annual contributions and any shortfall in the
 fund assets, based on the Government specified minimum rate of return
 and recognises such contributions and shortfall, if any, as an expense
 in the year incurred. The Company also contributes to Regional
 Provident Fund on behalf of some of its employees who are not part of
 the above Trust and such contributions are charged to the Profit and
 Loss Account.
 
 The Company also contributes to a Government administered Pension Fund
 on behalf of its employees, which are charged to the Profit and Loss
 Account.
 
 Superannuation benefits to employees, as per Company''s Scheme, have
 been funded with Life Insurance Corporation of India (LIC) and the
 contribution is charged to the Profit and Loss Account.
 
 Liabilities with regard to Gratuity are determined under Group Gratuity
 Scheme with LIC and the provision required is determined as per
 Actuarial Valuation as at the Balance Sheet date, using the Projected
 Unit Credit Method.
 
 Short term employee benefits are recognised as an expense as per the
 Company''s Scheme based on expected obligation on undiscounted basis.
 Other long term employee benefits are provided based on the Actuarial
 Valuation done at the year end, using the Projected Unit Credit Method.
 
 Actuarial gains/loss are charged to the Profit and Loss Account and not
 deferred.
 
 M.  FOREIGN CURRENCY TRANSACTIONS:
 
 Transactions denominated in foreign currencies are recorded at the
 exchange rate prevailing at the time of the transaction.
 
 Monetary items denominated in foreign currencies at the year end are
 restated at year end rates. In case of monetary items which are covered
 by forward exchange contracts, the difference between the year end rate
 and the contracted rate is recognised as exchange difference. Premium
 paid on forward contracts has been recognised over the life of the
 contract. Non monetary foreign currency items are carried at cost.
 
 In respect of branches, which are integral foreign operations, all
 transactions are translated at rates prevailing at the time of
 transaction or that approximates the actual rate as at the date of
 transaction. Branch monetary assets and liabilities are restated at the
 year-end rates. Any income or expense on account of exchange rate
 difference either on settlement or on translation is recognised in the
 Profit and Loss Account.
 
 N.  DERIVATIVE TRANSACTIONS:
 
 The Company uses derivative financial instruments, such as Forward
 Exchange Contracts, Currency Swaps and Interest Rate Swaps, to hedge
 its risks associated with foreign currency fluctuations and interest
 rates. Currency and interest rate swaps are accounted in accordance
 with their contract. At every period end all outstanding derivative
 contracts are fair valued on a marked-to-market basis and any loss on
 valuation is recognised in the Profit and Loss Account, on each
 contract basis. Any gain on marked-to-market valuation on respective
 contracts is not recognised by the Company, keeping in view the
 principle of prudence as enunciated in AS-1 Disclosure on Accounting
 Policies.
 
 O.  BORROWING COSTS:
 
 Borrowing costs that are attributable to the acquisition of or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 P.  WARRANTY:
 
 Provision for product warranties is recognised based on management
 estimate regarding possible future outflows on servicing the customers
 during the warranty period. These estimates are computed on scientific
 basis as per past trends of such claims.
 
 Q.  PROVISIONS AND CONTINGENT LIABILITIES:
 
 A provision is recognised when there is a present obligation as a
 result of a past event where it is probable that an outflow of
 resources will be required to settle the obligation, in respect of
 which a reliable estimate can be made. Contingent liability is
 disclosed for (i) Possible obligations which will be confirmed only by
 future events not wholly within the control of the Company or (ii)
 Present obligations arising from past events where it is not probable
 that an outflow of resources will be required to settle the obligation
 or a reliable estimate of the amount of the obligation cannot be made.
 Contingent Assets are not recognised in the financial statements since
 this may result in the recognition of income that may never be
 realised.
 
 R.  CHANGE IN ACCOUNTING POLICY:
 
 Depreciation on building, plant and machinery, moulds and a part of
 other assets was hitherto provided on written down value method. Based
 on the past estimation, the use of such assets is expected to be
 relatively even over its estimated useful life and that there is no
 discernible pattern of decline in its service potential. Accordingly,
 the Company, in order to reflect a more appropriate presentation of
 financial statements, has changed the method of depreciation on such
 assets, existing as at 1st October, 2010, to straight line basis. The
 surplus arising from retrospective computation from the date of
 addition/installation of such assets, aggregating to Rs 404.23 crore has
 been accounted and disclosed under Exceptional Item. Had there been no
 change in the method of computing depreciation, the charge for the year
 would have been higher and the Profit for the year would have been
 lower by Rs 114.96 crore. Consequent to the change, the net block of
 fixed assets and the reserves and surplus as at the end of the year are
 higher by Rs 519.19 crore and Rs 391.61 crore respectively.
 
 b) Provision for Taxation has been made in respect of the income
 presently determined for the period 1st April, 2011 to 30th September,
 2011 which is subject to appropriate revision/adjustment on final
 determination of Income for the year to end on 31 st March, 2012,
 relevant to assessment year 2012-13. Further, provision for the
 assessment year 2011-12 has been determined and adjusted considering
 the provision already made in the accounts for the year ended 30th
 September, 2010.