(A) General
 
 (I) The accounts of the Company are prepared under the historical cost
 convention using the accrual method of accounting. However, insurance
 claims and other than cash compensatory incentives are accounted on the
 basis of receipt.
 
 (II) Accounting policies not specifically referred to otherwise are
 consistent and in consonance with generally accepted accounting
 principles.
 
 (B) Use of Estimates
 
 The presentation of the financial statements in conformity with the
 generally accepted accounting principles requires the management to
 make estimates and assumptions that affect the reported amounts of
 assets and liabilities, revenues and expenses and disclosure of
 contingent liabilities. Such estimates and assumptions are based on
 management''s evaluation of relevant facts and circumstances as on the
 date of financial statement. The actual outcome may diverge from these
 estimates.
 
 (C) Fixed assets
 
 Fixed assets are stated at cost, net of modvat, less depreciation.
 Interest on borrowing attributable till commencement of commercial
 production is capitalised. Capital Work In Progress includes advances
 for capital goods, pre production expenses and expenditure on projects
 under implementation including interest and other expenses capitalized.
 
 (D) Depreciation
 
 (I) Depreciation, on fixed assets, has been provided in the accounts at
 the rates specified in Schedule XIV of the Companies Act, 1956.
 
 (II) Depreciation on fixed assets is provided on Written Down Value
 Method located at Mandali, Dhank, Chhatral, Trikampura, Caustic Soda
 Plant at Bhavnagar and Cepha, Beta, Oral, Injectable, F&D at Sachana.
 
 Depreciation on fixed assets is provided on Straight Line Method located
 at Alindra, Moraiya, Bhavnagar (other than Caustic Soda Plant),
 Udaipur, Mahuva, Sachana (other than Cepha, Beta, Oral, Injectable,
 F&D) and various Marketing depots.
 
 (III) Intangible assets and Software are amortised in 8 years and 6
 years respectively.
 
 (IV) Depreciation on additions is calculated pro rata from the month''s
 following month of addition.
 
 (V) Depreciation on assets sold/discarded, during the year, has been
 provided up to the preceding month of sale/discard.
 
 (E) Investments
 
 Long-term investments are stated at cost.
 
 (F) Current assets
 
 Inventories are valued at lower of cost or net realisable value.
 
 Stores & spares : At weighted average basis
 
 Raw materials : On FIFO basis
 
 Stock in process : At cost
 
 Finished goods : At lower of cost or net realisable value
 
 (G) Sales
 
 Sales, net of returns, include excise duty, sales tax and subsidy but
 trade discount and incentive schemes are separately booked as
 expenditure.
 
 (H) Prior period and extraordinary items
 
 Items of income and expenditure pertaining to prior period as well as
 extraordinary items, where material, are disclosed separately.
 
 (I) Impairment of Assets
 
 The Company identifies impairable assets based on cash generating unit
 concept at the year end for the purpose of arriving at impairment loss
 thereon, if any, being the difference between the book value and
 recoverable value of the relevant asset. Impairment loss when
 crystallizes is charged against revenue of the year.
 
 (J) Provisions and Contingent liabilities
 
 (I) Provisions are recognized in the accounts in respect of present
 probable obligations, the amount of which can be reliably estimated.
 
 (II) Contingent liabilities are disclosed by way of notes to the
 Balance Sheet in respect of possible obligations that arise from past
 events but their existence is confrmed by the occurrence or non-
 occurrence of one or more uncertain future events not wholly within the
 control of the Company.
 
 (K) Employee Benefits
 
 (I) Short-term employee Benefits are recognized as an expense at the
 undiscounted amount in the profit and loss account for the year in
 which the related service is rendered.
 
 (II) Post employment and other long-term employee Benefits are
 recognized as an expense in the profit and Loss Account for the year in
 which the employee has rendered services. The expenses are recognized
 at the present value of the amount payable determined using actuarial
 valuation techniques. Actuarial gains and loss in respect of post
 employment and other long-term Benefits are charged to the profit and
 Loss Account.
 
 (L) Export Benefits
 
 Duty - free imports of raw materials under advance license for imports,
 as per the Foreign Trade Policy, are matched with the exports made
 against the said licenses and the net beneft/obligations are accounted
 by making suitable adjustments in raw material consumption.
 
 (M) Foreign currency transactions
 
 (I) Ministry of Corporate affairs issued notification GSR 225 (E) on
 31st March 2009. In respect of long-term foreign currency monetary
 items, the Company has exercised option to accumulate the changes in
 foreign exchange rate to Foreign Currency Monetary Items Translation
 Difference Account and would be amortised up to 31st March, 2011.
 
 (II) Exchange difference for other monetary items are dealt with in the
 Company''s profit and Loss Account.
 
 (III) Transactions denominated in foreign currencies are normally
 recorded at the exchange rate prevailing at the time of transactions.
 
 (N) Borrowing cost
 
 Borrowing cost includes interest, commitment charges, discount,
 ancillary cost and other cost incurred for arrangement of borrowing.
 
 (O) Taxes on income
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the period.  Deferred tax is recognised, subject to
 the consideration of prudence in respect of deferred tax assets, 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.