1.1 Basis for preparation of Financial Statements :
 
 The Financial Statements are prepared in accoardance with Generally
 Accepted Accounting Principles (''GAAP'') in India under the historical
 cost convention on accrual basis.
 
 1.2 Accounting Policies :
 
 a.  Fixed Assets :
 
 Fixed Assets are stated at cost or revalued amount wherever applicable.
 Cost comprises of cost of acquistion, cost of improvements, borrowing
 costs and any other cost attributable in bringing assets to the
 condition for its intended use.
 
 b.  Depreciation and Amortization :
 
 i) Depreciation on fixed assets has been provided on written down value
 method at the rates specified in Schedule XIV of the Companies Act,
 1956.
 
 ii) Depreciation and amortization on the revalued portion of Fixed
 Assets is adjusted against the Revaluation Reserve.
 
 c.  Borrowing Cost :
 
 Borrowing costs includes interest and other charges incurred in
 connection with the borrowing of funds and is recognised as an expense
 for the year in which it is incurred, except for borrowing costs
 attributable to the acquistion/construction of qualifying assets and
 incurred till the commencement of the commercial use of the assets,
 which are capitalised as the cost of that asset.
 
 d.  Investments :
 
 Long term investments are stated at Cost less permanent diminution in
 value, if any. Current investments are stated at the lower of cost or
 fair value.
 
 e.  Foreign Currency Transactions :
 
 i) Transactions denominated in foreign currencies are recorded at the
 exchange rate prevailing on the date of the transaction.
 
 ii) Monetary items denominated in foreign currencies at the year end
 are restated at year end rates.
 
 iii) Non monetary foreign currency items are carried at cost.
 
 iv) Any income or expense on account of exchange difference either on
 settlement or on translation is recognised in the Statement of Profit
 and Loss.
 
 f.  Inventory Valuation :
 
 Stores and spares, are valued at cost on a weighted average basis.
 
 g.  Taxes on Income: Current Tax
 
 Provision for Income Tax is determined in accordance with the
 provisions of Income Tax Act, 1961.
 
 Deferred Tax
 
 Deferred tax is recognised on timing differences, being the difference
 between the taxable income and accounting income that originates in one
 period and is capable of reversal in one or more subsequent periods.
 
 h.  Employee Benefits :
 
 i) Defined Benefit Plan
 
 The Company provides for gratuity liability based on the actuarial
 valuation by an independent actuary which is determined using the
 projected unit credit method.
 
 ii) Defined Contribution Plans
 
 The Company''s contribution paid/payable for Provident Fund, ESIC and
 Pension Fund for the year is recognised in the Statement of Profit and
 Loss.
 
 iii) Long Term Employee benefits
 
 Long term compensated absences are provided as per the actuarial
 valuation by an independent actuary which is determined using the
 projected unit credit method.
 
 iv) Short Term Employee benefits
 
 Short term benefits are recognised as an expense in the Statement of
 Profit and Loss of the year in which the related services are rendered.
 
 v) Actuarial gains/losses
 
 Actuarial gains/losses are immediately recognised in the Statement of
 Profit and Loss and are not deferred.
 
 i.  Revenue Recognition:
 
 i) License fee income and income incidental to it, are accounted for on
 an accrual basis.
 
 ii) Insurance claims and scrap sales are accounted for in the books on
 an accrual basis.
 
 iii) Interest income is accounted on an accrual basis.
 
 iv) Processing charges received include excise duty recovered.
 
 j. Leave & License :
 
 Leave & License payments are recognised as an expense in the Statement
 of Profit and Loss.
 
 Leave & License income is recognised based on the terms of the
 agreement.
 
 Initial direct costs incurred specifically to earn revenue from Leave &
 License agreements are amortised over the lock in period of the
 respective license agreements.