1.1 Accounting Convention:
 
 The financial statements are prepared under the Historical Cost
 Convention on a Going Concern basis The Company generally follows the
 Mercantile System of Accounting and recognises Income and Expenditure
 on Accrual basis excepts those with significant uncertainties and is
 consistent with generally accepted accounting principles. The
 significant accounting policies followed by the Company are stated
 below:
 
 1.2 Use of estimates:
 
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on the date of the financial statements and the reported
 amount of revenues and expenses during the reported period. Difference
 between the actual results and estimates are recognized in the period
 in which the results are known / materialized.
 
 1.3 Tangible fixed assets
 
 Fixed assets are carried at cost less accumulated depreciation and
 impairment losses, if any. The cost of fixed assets includes interest
 on borrowings attributable to acquisition of qualifying fixed assets up
 to the date the asset is ready for its intended use and other
 incidental expenses incurred up to that date. Exchange differences
 arising on restatement / settlement of long-term foreign currency
 borrowings relating to acquisition of depreciable fixed assets are
 adjusted to the cost of the respective assets and depreciated over the
 remaining useful life of such assets. Machinery spares which can be
 used only in connection with an item of fixed asset and whose use is
 expected to be irregular are capitalised and depreciated over the
 useful life of the principal item of the relevant assets. Subsequent
 expenditure relating to fixed assets is capitalised only if such
 expenditure results in an increase in the future benefits from such
 asset beyond its previously assessed standard of performance.
 
 Fixed assets acquired and put to use for project purpose are
 capitalised and depreciation thereon is included in the project cost
 till commissioning of the project.
 
 Capital work-in-proqress:
 
 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 and attributable interest.
 
 1.4 Depreciation:
 
 Depreciation of Fixed Assets is charged on ''Straight Line Method'' as
 per Schedule XIV to the Companies Act, 1956.
 
 Leasehold land is amortized over the period of lease
 
 1.5 Impairment of Assets:
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value. An impairment loss is charged to the
 profit and loss Account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting period is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 1.6 Investments:
 
 Long-term investments (excluding investment properties), are carried
 individually at cost less
 
 provision for diminution, other than temporary, in the value of such
 investments. Current investments are carried individually, at the lower
 of cost and fair value. Cost of investments include acquisition charges
 such as brokerage, fees and duties. Investment properties are carried
 individually at cost less accumulated depreciation and impairment, if
 any. Investment properties are capitalised and depreciated (where
 applicable) in accordance with the policy stated for Tangible Fixed
 Assets. Impairment of investment property is determined in accordance
 with the policy stated for Impairment of Assets.
 
 1.7 Inventories:
 
 Inventories are valued at the lower of cost or estimated net realizable
 value. Cost of finished goods includes cost of material; direct labour,
 direct expenses and production overheads except depreciation.
 
 1.8 Preliminary and Share Issue Expenses:
 
 Preliminary and Share Issue Expenses are amortised proportionately over
 a period of 5 years.
 
 Preoperative expenses have been amortised over a period of 5 years.
 
 1.9 Employee Benefits:
 
 i.  Gratuities liabilities are worked out as per own estimates.
 
 ii.  The provident fund Rules are not applicable to the Company.
 
 1.10 Taxes on Income:
 
 Current tax
 
 Provision for Income Tax is determined in accordance with the
 provisions of the Income Tax Act, 1961.
 
 Deferred tax Provision
 
 Deferred tax assets and liabilities arising on account of timing
 differences, being the difference between the taxable income and the
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods, are recognized using the
 tax rates and tax laws that have been enacted.
 
 1.11 Segment Reporting:
 
 The Company operates only in one segment viz. Bulk Drugs Intermediates
 and hence there are no other reportable segments as per the Accounting
 Standard 17.
 
 1.12 Borrowing Cost
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 1.13 Financial Derivatives:
 
 Financial derivatives contracts are accounted on the date of their
 settlement and realized gain / loss, if any, in respect of settled
 contract are recognized in the profit and loss account, along with the
 underlying transactions.
 
 1.14 Foreign Currency Transactions:
 
 Transactions in foreign currencies, to the extent not covered by
 forward contracts, are accounted at exchange rates prevailing at the
 time of the transactions are affected and expressed at the year-end
 exchange rates. Any other exchange differences except relating to Fixed
 Assets are dealt with in the Profit and Loss Account. Non-monetary
 foreign currency items, if any, are carried at cost.
 
 Export Incentive
 
 The export made through merchant exporter, the company is eligible for
 export incentive in the form of license, which company utilizes for
 import of raw materials, which is accounted for duty exemption. The
 unutilized part of the license is sold in the market. Company accounts
 such sale under the head other income. The accounting of export
 incentive is recognized on accrued basis. The sale of such license and
 benefit accrued thereon is accounted in sales.
 
 1.15 Provision, Contingent Liabilities and Contingent Assets:
 
 Provision involving substantial degree of estimation in measurement is
 recognized when there is present obligation as result of past events
 and it is probable that will be an outflow of resources. Contingent
 Liabilities are not recognized but are disclosed in the notes.
 
 1.16 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.
 
 1.17 Cash flow statement
 
 Cash flows are reported using the indirect method, whereby profit /
 (loss) before extraordi- nary 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.
 
 1.18 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 value
 (i.e. average market value of the outstanding shares). Dilutive
 potential equity shares are determined independently for each period
 presented. The number of equity shares and potentially dilutive equity
 shares are adjusted for share splits / reverse share splits and bonus
 shares, as appropriate.
 
 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.