1.1 Accounting System
 
 1] The company follows the mercantile system of accounting and
 recognizes income and expenditure on accrual basis.
 
 2] Financial statements are based on historical cost. These costs are
 not adjusted to reflect impact of changing value In the purchasing
 power of money.
 
 1.2 Revenue Recognition
 
 Sale of goods is recognized on shipment or dispatch to customer, sale
 of goods on Consignment basis is recognized on sale of the relative
 goods by consignee. 
 
 1.3 Fixed Assets and Depreciation
 
 1] Fixed Assets are stated at cost less depreciation. Cost comprises
 cost of acquisition or construction and other attributable costs.
 Administrative Expenses and interest up to the date of commencement of
 production are capitalized in proportion of cost of major assets.
 
 2] Expenditure on leasehold land is amortized over the period of its
 tenure.
 
 1.4 Investment
 
 Investments are stated at cost.
 
 1.5 Inventories
 
 Stocks of raw materials, packing materials, stores, spares and fuel are
 stated at cost and are valued on FIFO basis. Goods in transit in bonded
 warehouse are valued at costs incurred till the year end. Goods in
 process are stated at estimated cost ascertained by reducing gross
 margin, if any from the estimated selling price.  Finished goods are
 valued at cost or selling price whichever is lower, wherein cost
 includes material costs, labour and Factory overheads.
 
 1.6 Sundry Debtors, Advances and Deposits
 
 Balances considered irrecoverable are written off and those considered
 doubtful are provided for.
 
 1.7 Contingent-liabilities:
 
 Contingent Liabilities are disclosed in the accounts by way of giving
 note and giving nature of liability and its quantum , if ascertained.
 
 1.8 Deferred Revenue Expenses
 
 Revenue expenses of a substantial magnitude which are expected to
 benefit for some years in future are charged to Profit & Loss Account
 over numbers of years considering relative benefit of the expenditure.
 
 2 Retirement benefits.
 
 Retirement benefits to employees are provided for by payments to
 provident fund and by payment of gratuity on retirement of employees
 after putting in qualifying years of service.
 
 3.  Taxation:
 
 Taxes include current taxes and deferred taxes. Current tax, based on
 tax payable in respect of taxable income for the year. 
 
 4. In view of uncertainty of realization, no provision for deferred
 tax asset has been made in the accounts.
 
 5. We have complied with the Auditing and Accounting Standard - 22 (
 Initial Engagement - Opening Balances) issue by the Institute of
 Chartered Accountants of India, in respect of verification of opening
 balances as stated in the previous years certified balance sheet by the
 Company.