1. SIGNIFICANT ACCOUNTING POLICIES :
 
 a) Accounting convention:
 
 The accounts are prepared on accrual basis under the historical cost
 convention in accordance with the applicable accounting standards and
 relevant provisions of the Companies Act, 1956.
 
 b) Sales:
 
 The value of sales is inclusive of excise duty.
 
 c) Fixed assets:
 
 All fixed assets are stated at historical cost less depreciation.
 
 d) Depreciation:
 
 Depreciation on fixed assets has been provided on Written Down Value
 Method, except Arham Spinning Mills, Lalru where depreciation has been
 provided on Straight Line Method, at rates prescribed in Schedule XIV
 to the Companies Act, 1956.
 
 e) Inventories:
 
 Inventories have been valued as under:
 
 a) Raw materials, stores and spares - at cost.
 
 b) Finished goods - at cost or market value whichever is lower.
 
 c) Waste - at realisable value.
 
 d) Work in process - at estimated historical cost.
 
 e) Cost of raw materials, stores and spares are generally ascertained
 on the weighted average method.
 
 f) Investments:
 
 Long term investments are carried at cost less provisions, if any, for
 permanent diminution in the value. Current investments are carried at
 tower of cost or market value.
 
 g) Foreign Exchange transactions:
 
 Transactions in foreign currency are recorded at the exchange rates
 prevalent at the time of transactions. Foreign Currency Assets and
 Liabilities are stated at the exchange rates prevailing at the date of
 balance sheet or at forward contract rates wherever so covered.
 Realised gains or losses on foreign exchange transaction other than
 those relating to fixed assets are recognised in the profit and loss
 account. The difference in foreign exchange in the case of fixed assets
 is adjusted to the cost of fixed assets.
 
 h) Borrowing costs directly attributable to the acquisition or
 construction of qualifying fixed assets are capitalised as part of the
 assets, upto the date the asset is put to use. Other borrowing costs
 are charged to the profit and loss account in the year in which they
 are incurred.
 
 i) Retirement benefits:
 
 1. Gratuity :
 
 The liability in respect of employees covered under the scheme is
 provided through a policy taken from Life Insurance Corporation of
 India by the approved trust formed for the purpose.
 
 2. Leave with salaries/wages.
 
 Provision is made for value of unutilised leaves due to employees at
 the end of the year.
 
 j) Provision for Tax for current year has been made on the basis of
 estimated taxable income computed in accordance with the provision as
 per Income Tax Act, 1961. Deferred Tax resulting from all timing
 differences between book profit and profit as per Income Tax Act, 1961
 is accounted for, at the enacted rate of Tax, to the extent that the
 timing differences are expected to crystallise. Deferred tax assets are
 recognised only to the extent that there is a reasonable certainity
 that sufficient future taxable profits will be available against which
 such deferred tax assets can be realised.