ACCOUNTING CONVENTION
 
 The financial statements are prepared under the historical cost
 convention, in accordance with applicable mandatory accounting
 standards prescribed under the Companies (Accounting Standards) Rules,
 2006 and the relevant provisions of the Companies Act, 1956.
 
 SALES
 
 Sale of goods is recognised at the point of dispatch to the customer.
 Sales include excise duty but exclude value added tax/sales tax. In
 order to comply with Accounting Standards on Revenue Recognition (AS-
 9), gross sales (including excise duty) and net sales (excluding excise
 duty) is disclosed in the profit and loss account.
 
 INVENTORIES
 
 Stores and spare parts are stated at cost or under. Stock-in-trade is
 valued at cost or net realisable value, whichever is lower. The bases
 of determining cost for various categories of inventories are as
 follows:
 
 Raw and packing materials      : First-in-first out
 
 Stores and spare parts         : Weighted average
 
 Work-in-progress and 
 finished goods                 : Material cost plus appropriate
                                  share of production overheads and 
                                  excise duty, wherever applicable.
 
 EMPLOYEE BENEFITS
 
 Contributions to the provident fund and provision for pension and
 gratuity are charged to revenue every year. Provision for pension is
 made on the basis of an actuarial valuation carried out by an
 independent actuary as at the year-end. Provision for gratuity is made
 on the basis of actuarial valuation after taking into account the net
 result of gratuity trust fund. Recognition of other long term employee
 benefits, comprising largely of long service awards and compensated
 absences, is done on a discounted, accrual basis over the expected
 service period until the benefits become vested. Actuarial gains and
 losses are recognised immediately in the profit and loss account.
 
 Liability on account of short term employee benefits, including
 performance incentives, is recognised on an undiscounted, accrual basis
 during the period when the employee renders service / vesting period of
 the benefit.
 
 DEPRECIATION / AMORTISATION
 
 Depreciation is provided as per the straight-line method at rates
 provided in Schedule XIV to the Companies Act, 1956, except for the
 following
 
 classes of fixed assets, where the useful life has been estimated as
 under: -
 
 Information technology equipment       : 3 years
 
 Furniture and fixtures and Vehicles    : 5 years
 
 Leasehold land and improvements        : Lease period
 
 Intangible fixed assets                : Over their estimated economic   
                                          life.
 
 IMPAIRMENT OF FIXED ASSETS
 
 Regular review is done to determine whether there is any indication of
 impairment of the carrying amount of the Company''s fixed assets. If any
 indication exists, an asset''s recoverable amount is estimated. An
 impairment loss is recognised whenever the carrying amount of an asset
 exceeds its recoverable amount. The recoverable amount is the greater
 of the net selling price and value in use. In assessing value in use,
 the estimated future cash flows are discounted to their present value
 based on an appropriate discount factor.
 
 Reversal of impairment losses recognised in prior years is recorded
 when there is an indication that the impairment losses recognised for
 the asset no longer exist or have decreased. However, the increase in
 carrying amount of an asset due to reversal of an impairment loss is
 recognised to the extent it does not exceed the carrying amount that
 would have been determined (net of depreciation) had no impairment loss
 been recognised for the asset in prior years.
 
 TAXATION
 
 The provision for taxation for the period comprises the residual tax
 liability for the assessment year 2011-2012 relevant to the period
 April 1, 2010 to March 31, 2011 and the liability, which has accrued on
 the profit for the period April 1, 2011 to December 31, 2011 under the
 provisions of the Indian Income tax Act, 1961.
 
 Deferred tax is recognised, subject to the consideration of prudence,
 on timing difference, being the difference between taxable income and
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods.
 
 CONTINGENT LIABILITIES AND PROVISIONS
 
 Contingent liabilities are disclosed after a careful evaluation of the
 facts and legal aspects of the matter involved, in line with the
 provisions of Accounting Standard (AS) 29. Provisions are recognised
 when the Company has a legal/constructive obligation and on management
 judgement as a result of a past event, for which it is probable that a
 cash outflow may be required and a reliable estimate can be made of the
 amount of the obligation.
 
 FIXED ASSETS
 
 Fixed assets are stated at cost (net of CENVAT, wherever applicable)
 less accumulated depreciation. Cost is inclusive of freight, duties,
 levies and any directly attributable cost of bringing the assets to
 their working condition for intended use.
 
 (Also refer to accounting policies on Borrowing Costs and Foreign
 Exchange Transactions).
 
 INVESTMENTS
 
 Investments are classified into current and long-term investments.
 Current investments are stated at the lower of cost or fair value.
 Long-term investments are stated at cost.
 
 FOREIGN EXCHANGE TRANSACTIONS
 
 Transactions in foreign currency are recorded on initial recognition at
 the exchange rate prevailing on the date of the transaction.
 
 Monetary items (i.e. receivables, payables, loans etc.) denominated in
 foreign currency are reported using the closing exchange rate on each
 balance sheet date.
 
 The exchange difference arising on the settlement of monetary items or
 on reporting these items at rates different from rates at which these
 were initially recorded/reported in previous financial statements are
 recognised as income/expense in the period in which they arise.
 
 In line with Notification No. G.S.R. 225(E) dated March 31, 2009
 (further amended by notification no. G.S.R.378 (E) dated 11.05.2011)
 issued by the Ministry of Corporate Affairs, Government of India, the
 Company has opted for adjusting the exchange differences, arising on
 long term foreign currency monetary items relating to acquisition of
 depreciable capital asset to the cost of the capital asset and, to
 depreciate over the balance useful life of the asset.
 
 (Also refer Schedule E on ''Fixed Assets'', Schedule L on ''Interest and
 Financing Expenses'' and note 20 and 21 of Schedule O)
 
 In case of forward exchange contracts, the premium or discount arising
 at the inception of such contracts, is amortised as income or expense
 over the life of contract as well as exchange difference on such
 contracts i.e. difference between the exchange rate at the
 reporting/settlement date and the exchange rate on the date of
 inception/the last reporting date, is recognised as income/expense for
 the period except those relating to fixed assets in which case they are
 capitalised with the cost of respective fixed assets.
 
 BORROWING COSTS
 
 Borrowing costs directly attributable to acquisition or construction of
 those fixed assets which necessarily take a substantial period of time
 to get ready for their intended use are capitalised. Other borrowing
 costs are charged to the profit and loss account.