1.  Accounting Convention:
 
 The financial statements are prepared on the basis of going concern,
 under the historical cost convention, in accordance with the generally
 accepted principles and provisions of the Companies Act, 1956, with
 revenues recognised and expenses accounted on accrual basis unless
 otherwise stated.
 
 2.  Use of Estimates:
 
 In preparing the financial statements in conformity with accounting
 principles generally accepted in India, management is required to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities and the disclosure of contingent liabilities as at the
 date of financial statements, the amounts of revenue and expenses
 during the reported period. Actual results could differ from those of
 estimates. Any revision to such estimates is recognized in the period
 the same is determined.
 
 3.  Fixed Assets:
 
 a) Fixed assets are stated at historical cost. (Net of Modvat / Cenvat
 Credit availed), less accumulated depreciation and impairment loss if
 any.
 
 b) Capital Work-in-progress is stated at amount expended (including
 advances) upto the date of the Balance Sheet.
 
 c) Expenditure during construction period other than those directly
 related to an asset is included under Expenditure pending allocation
 to be allocated to various fixed assets at the time of commencement of
 commercial production, as determined in accordance with the generally
 accepted accounting policies.
 
 4.  Depreciation:
 
 Depreciation is provided on straight line method at the rates specified
 in Schedule XIV of the Companies Act, 1956 (as amended from time to
 time). Depreciation on impaired assets is provided by a systematic
 allocation of the depreciable amount over the remaining useful life of
 such assets.
 
 5.  Intangibles:
 
 a) Goodwill is amortised over a period of Ten years.
 
 b) SAP Upgrade License/ Implementation fees is amortised over a period
 of Twenty four months.
 
 6.  Investments:
 
 Investments are stated at cost less any diminution in their value,
 which is other than temporary.
 
 7.  Inventory:
 
 The method of valuation of various categories of Inventories is as
 follows:-
 
 a) Raw materials - at lower of cost and net realizable value.
 
 b) Work-in-process - at cost.
 
 c) Finished goods - at lower of cost and net realisable value. Cost
 includes cost of direct material, labour, factory overheads inclusive
 of excise duty.
 
 d) Stores & Spares, Packing material - at lower of cost and net
 realizable value.
 
 e) Traded goods - at lower of cost and net realizable value.  
 Cost is ascertained on the Weighted Average basis.
 
 8.  Foreign Currency Transactions:
 
 Transactions in foreign currency are recorded at the exchange rate
 prevailing at the dates of the transaction. Monetary items are
 translated at the year end foreign exchange rates. Resultant exchange
 differences arising on payment or conversion of liabilities/ assets are
 recognized as income or expense in the year in which they arise.
 
 9.  Capital Subsidy:
 
 Capital investment subsidy not specifically related to any fixed asset
 is credited to a specific reserve upon receipt and retained till the
 requisite conditions are fulfilled. On fulfillment of such conditions,
 the subsidy is transferred to Capital Reserve.
 
 10.  Revenue:
 
 a) Revenue is recognized to the extent it is probable that the economic
 benefits will flow to the company and the revenue can be reliably
 measured.
 
 b) Sales are recognized at the point of despatch of materials to
 customers from plant and/or stocking points.
 
 c) Revenue from processing/ conversion services is recognized when the
 underlying goods are manufactured and ready for delivery i.e., on
 completion of service.
 
 11.  Employee benefits:
 
 a) Provident Fund is administered through Regional Provident Fund
 Commissioner. Contributions to the above fund are charged to the Profit
 & Loss Account.
 
 b) Provision for Gratuity is made on the basis of an actuarial
 valuation at the Balance Sheet date carried out by an independent
 actuary The Gratuity Fund is administered through a scheme of Life
 Insurance Corporation of India / ING Vysya Life insurance Company
 Private Limited. The contribution to the said fund is charged to the
 Profit & Loss Account.
 
 c) Provision for Leave encashment cost is made on the basis of an
 actuarial valuation at the Balance Sheet date carried out by an
 independent actuary.
 
 12.  Borrowing Costs:
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. Interest on Bank Borrowings and other short term and
 long term borrowings is recognised as an expense in the year in which
 they are incurred.
 
 13.  Deferred Tax:
 
 Deferred Tax is recognized on the timing differences and accounted at
 the current rate of tax. Deferred Tax Asset is recognized only if there
 is virtual certainty of its realization.
 
 14.  Impairment of Assets:
 
 Impairment of an asset is reviewed and recognized in the events of
 changes and circumstances indicate that the carrying amount of an asset
 is not recoverable. Difference between the carrying amount of an asset
 and the recoverable value is recognized as impairment loss in the
 statement of profit and loss in the year of impairment.
 
 15.  Contingencies:
 
 The Company recognizes provisions when there is present obligation as a
 result of past event and it is probable that there will be an outflow
 of resources and reliable estimate can be made of the amount of
 obligation. A disclosure for Contingent Liabilities is made in the
 notes to accounts when there is a possible obligation or a present
 obligation that may, but probably will not, require an outflow of
 resources. Contingent assets are neither recognized nor disclosed in
 the financial statements.
 
 16.  Earnings per Share:
 
 Earnings per Share are calculated by dividing the net profit or loss
 for the year attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the year.
 
 17.  Segment Reporting:
 
 Segments are identified in line with AS 17 Segment Reporting and
 taking into consideration that difference in risk and returns of the
 segment.
 
 18.  Research and Development:
 
 Revenue expenditure on research and development is charged under
 respective heads of account in the year in which it is incurred.
 Capital expenditure on research and development is included as part of
 fixed assets.