1.01 Basis of accounting and preparation of financial statements
 
 The financial statements are prepared under the historical cost
 convention on accrual basis and in accordance with the standard on
 accounting issued by the Institute of Chartered Accountants of India
 and referred to in Section 211 (3C) of the Companies Act, 1956.
 Accounting Policies not specifically referred to otherwise are
 consistent with generally accepted accounting principles.
 
 1.02 Use of estimates
 
 The preparation of the financial statements in conformity with Indian
 GAAP requires the Management to make estimates and assumptions
 considered in the reported amounts of assets and liabilities (including
 contingent liabilities) and the reported income and expenses during the
 year. The Management believes that the estimates used in preparation of
 the financial statements are prudent and reasonable. Future results
 could differ due to these estimates and the differences between the
 actual results and the estimates are recognised in the periods in which
 the results are known / materialise.
 
 1.03 Inventories
 
 Stock of raw materials, consumable stores and fuel & oil are valued at
 lower of cost or market value on FIFO basis. Finished goods and work in
 process are valued at cost of production.
 
 1.04 Cash and cash equivalents (for purposes of Cash Flow Statement)
 
 Cash comprises cash on hand and demand deposits with banks. Cash
 equivalents are short-term balances (with an original maturity of three
 months or less from the date of acquisition), highly liquid investments
 that are readily convertible into known amounts of cash and which are
 subject to insignificant risk of changes in value.
 
 1.05 Cash flow statement
 
 Cash flows are reported using the indirect method, whereby profit /
 (loss) before extraordinary items and tax is adjusted for the effects
 of transactions of non-cash nature and any deferrals or accruals of
 past or future cash receipts or payments. The cash flows from
 operating, investing and financing activities of the Company are
 segregated based on the available information.
 
 1.06 Depreciation and amortisation
 
 Fixed assets are stated at cost. Attributable expenditure of bringing
 the respective assets to working condition for their intended use is
 capitalized. Depreciation in the accounts is charged on the Straight
 Line Method at the rates and in the manner prescribed by Schedule XIV
 of the Companies Act, 1956 on the cost, as reduced by the amount of
 Excise Cenvat & VAT claimed. Intangible assets are amortized over a
 period of 3 years.
 
 1.07 Revenue recognition Sale of goods
 
 Export Sales are recognized as per the date of the shipping bill. Local
 Sales are recognized on dispatch of goods to the customers. Sales are
 shown net of returns and include excise duty.
 
 Other income
 
 Dividend income is accounted for when the right to receive dividend is
 established.
 
 Interest income is accounted on accrual basis.
 
 Export Duty Drawback is accounted on cash receipt basis.
 
 1.08 Tangible fixed assets
 
 Fixed assets are stated at cost. Attributable expenditure of bringing
 the respective assets to working condition for their intended use is
 capitalized. Depreciation in the accounts is charged on the Straight
 Line Method at the rates and in the manner prescribed by Schedule XIV
 of the Companies Act, 1956 on the cost, as reduced by the amount of
 Excise Cenvat & VAT claimed.
 
 Intangible assets are amortized over a period of 3 years.
 
 Capital work-in-proaress:
 
 Projects under which assets are not ready for their intended use and
 other capital work-in-progress are carried at cost, comprising direct
 cost, related incidental expenses.
 
 1.09 Foreign currency transactions and translations
 
 (i) Transactions denominated in foreign currencies are normally
 recorded at the exchange rates prevailing at the time of the
 transactions or the applicable forward contracts.
 
 (ii) Foreign currency liabilities & assets are re-stated at the rate
 prevailing on the last day of the accounting year or the applicable
 forward contracts. Gains and losses arising out of such fluctuations
 are duly dealt with in the profit and loss account.
 
 1.10 Investments
 
 Investments are stated at cost or market value whichever is lower.
 Where investments have diminished in value the provision is made to the
 extent of diminution. Quoted, non traded shares are fully written off
 and not reflected in the investment schedule.
 
 1.11 Employee benefits
 
 (a) Short term employee benefit obligations are estimated and provided
 for.
 
 (b) Post employment benefits and other long term employee benefits
 
 - Defined contribution plans:
 
 Company''s contribution to provident fund and state employee insurance
 are determined under the relevant schemes and/or statute and charged to
 revenue.
 
 - Defined benefit plans:
 
 Gratuity:
 
 Company''s liability towards gratuity is actuarially determined at
 each renewal date using the projected unit credit method.  Actuarial
 gains and losses are recognized in revenue.
 
 Short term benefits (accumulated leave benefit):
 
 The expected cost of accumulating compensated absences (leave
 encashment) that the company expects to pay as a result of unused
 entitlement that has accumulated as at the Balance Sheet date is
 provided for on the basis of current salary payable to employees.
 
 Long term benefits:
 
 The company does not offer any long term benefits such as pension, long
 service leave, sabbatical leave, long term disability benefits, profit
 sharing, bonuses and deferred compensation, etc. These are hence not
 quantified nor provided for.
 
 1.12 Borrowing costs
 
 Borrowing costs include interest, amortisation of ancillary costs
 incurred and exchange differences arising from foreign currency
 borrowings to the extent they are regarded as an adjustment to the
 interest cost. Costs in connection with the borrowing of funds to the
 extent not directly related to the acquisition of qualifying assets are
 charged to the Statement of Profit and Loss over the tenure of the
 loan. Borrowing costs, allocated to and utilised for qualifying assets,
 pertaining to the period from commencement of activities relating to
 construction / development of the qualifying asset upto the date of
 capitalisation of such asset is added to the cost of the assets.
 Capitalisation of borrowing costs is suspended and charged to the
 Statement of Profit and Loss during extended periods when active
 development activity on the qualifying assets is interrupted.
 
 1.13 Segment reporting
 
 Based on the guiding principles given by the Accounting Standard - 17
 Segment Reporting issued by the Institute of Chartered
 Accountants of India, the company''s business comprises of only one
 segment - pharmaceuticals. Hence segment wise analysis is not given as
 the same is not applicable.
 
 1.14 Earnings per share
 
 Basic earnings per share is computed by dividing the profit / (loss)
 after tax (including the post tax effect of extraordinary items, if
 any) by the weighted average number of equity shares outstanding during
 the year. Diluted earnings per share is computed by dividing the profit
 / (loss) after tax (including the post tax effect of extraordinary
 items, if any) as adjusted for dividend, interest and other charges to
 expense or income relating to the dilutive potential equity shares, by
 the weighted average number of equity shares considered for deriving
 basic earnings per share and the weighted average number of equity
 shares which could have been issued on the conversion of all dilutive
 potential equity shares. Potential equity shares are deemed to be
 dilutive only if their conversion to equity shares would decrease the
 net profit per share from continuing ordinary operations. Potential
 dilutive equity shares are deemed to be converted as at the beginning
 of the period, unless they have been issued at a later date. The
 dilutive potential equity shares are adjusted for the proceeds
 receivable had the shares been actually issued at fair v
 
 1.15 Taxes on income
 
 Income taxes are accounted for in accordance with Accounting Standard
 22  Accounting for Taxes on Income issued by the Institute of
 Chartered Accountants of India. Tax expense comprises both current &
 deferred tax. Current tax is measured at the amount expected to be paid
 to/recovered from the tax authorities using the applicable tax rates.
 Deferred tax assets and liabilities are recognized for future tax
 consequences attributable to timing differences between taxable income
 and accounting income that are capable of reversing in one or more
 subsequent periods and are measured using the relevant enacted tax
 rates. At each Balance Sheet date the company reassesses the
 unrecognized deferred tax assets to the extent they have become
 reasonably certain or virtually certain of realization, as the case may
 be.
 
 1.16 Impairment of assets
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 if there is any indication of impairment based on internal external
 factors. An impairment loss is recognized whenever the carrying amount
 of an asset exceeds its recoverable amount. The recoverable amount is
 greater of the assets net selling price and value in use. In assessing
 value in use, the estimated future cash flows are discounted to the
 present value by using weighted average cost of capital. A previously
 recognized impairment loss is increased or reversed depending on
 changes in circumstances.
 
 1.17 Provisions and contingencies
 
 Provision is recognized when the company has a present obligation as a
 result of past event, it is probable that an outflow of resources
 embodying economic benefit will be required to settle the obligation,
 in respect of which a reliable estimate can be made. Provisions except
 in respect of employee benefits are not discounted to its present value
 and are determined based on best estimate of the expenditure required
 to settle the obligation at the Balance Sheet date. These are reviewed
 at each Balance Sheet date and adjusted to reflect the current best
 estimate. A contingent liability is disclosed, unless the possibility
 of an outflow of resources embodying the economic benefit is removed.
 
 1.18 Research & Development
 
 All revenue expenses pertaining to research and development are charged
 to the profit and loss account in the year in which they are incurred
 and expenditure of capital nature is capitalized as fixed assets, and
 depreciated as per the company''s policy.
 
 1.19 Insurance claims
 
 Insurance claims are accounted for on the basis of claims admitted /
 expected to be admitted and to the extent that there is no uncertainty
 in receiving the claims.
 
 1.20 Service tax input credit
 
 Service tax input credit is accounted for in the books in the period in
 which the underlying service received is accounted and when there is no
 uncertainty in availing / utilising the credits.