1. Significant Accounting Policies
 
 a) General
 
 1. The financial statements are prepared on the historical cost
 convention, in accordance with the applicable accounting standards and
 on the accounting principles of a going concern.
 
 2. Accounting policies not specifically referred to otherwise, are
 consistent and in consonance with the applicable accounting standards.
 
 3. All expenses and income to the extent considered payable and
 receivable respectively are accounted for on accrual basis except those
 with significant uncertainties.
 
 b) Fixed Assets
 
 Fixed assets are stated at cost less accumulated depreciation. Cost
 includes taxes, duties, freight and other incidental expenses incurred
 in relation to acquisition and installation of the fixed assets.
 Interest and pre-operative expenses incurred and as reduced by income
 earned during the construction period up to the date the assets are put
 to use, are capitalised as cost of fixed assets.
 
 c) Depreciation
 
 (i) The value of leasehold land is amortised over the period of lease.
 
 (ii) Depreciation on other assets is provided for on straight-line
 method at the rates and in the manner specified in Schedule XIV to the
 Companies Act, 1956.
 
 (iii) Depreciation on Plant and Machinery including certain electrical
 installations which on a technical assessment have been considered as
 Continuous Process Plant as defined in the above referred schedule is
 provided accordingly.
 
 d) Borrowing Costs
 
 Borrowing Costs attributable to acquisition and construction of
 qualifying assets are capitalised as part of the cost of such asset
 upto the date when such asset is ready for its intended use. Other
 borrowing costs are recognised as expenses in the year in which they
 are incurred.
 
 e) Inventories
 
 (i) Inventories are valued at lower of cost and net realisable value.
 Obsolete, defective and unserviceable stocks are provided for.
 
 (ii) Cost of Raw Materials, Packing Materials, Stores, Spare Parts and
 Fuel are assigned on FIFO basis.
 
 (iii) Cost of Finished Goods and Semi-finished Goods includes
 conversion and other costs incurred in bringing the inventories to
 their present location and condition.
 
 f) Foreign Currency Transactions
 
 (i) Transactions in foreign currency are recorded at the rates of
 exchange prevailing on the date of the transactions.
 
 (ii) Foreign Currency loans for acquiring fixed assets and outstanding
 at the close of the financial year are accounted at the rate of
 exchange prevailing at the close of the year. The gain or loss due to
 increase/decrease on rupee liability on account of fluctuations in
 rates of exchange is adjusted to the cost of assets acquired through
 these loans.
 
 (iii) Current assets/liabilities existing at the year-end are restated
 at the rate of exchange prevailing at the year-end and the resultant
 loss/gain is charged/credited to the profit and loss account.
 
 g) Retirement Benefits
 
 (i) Contributions for Provident Fund and Family Pension Fund are
 charged to the Profit and Loss Account.
 
 (ii) Liability for leave encashment is provided on the basis of an
 actuarial valuation.
 
 (iii) Gratuity liability is provided for on actual basis.
 
 h) Income Tax
 
 Provision for current tax is made On the basis of estimated taxable
 income for the current accounting year in accordance with the Income
 Tax Act, 1961.
 
 The 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 substantively enacted as of the balance sheet date.
 Deferred tax assets arising from timing differences are recognised to
 the extent there is reasonable certainty that these would be realised
 in future.