i.  General
 
 The financial statements are prepared under the historical cost
 convention, on the basis of a going concern and as per applicable
 Indian Accounting Standards. The Company follows mercantile system of
 accounting and recognises income and expenditure on accrual basis
 (except as otherwise stated below).
 
 ii.  Revenue Recognition
 
 i.  Income from sale of goods is recognised upon transfer of
 significant risk and rewards of ownership of the goods to the customer
 which generally coincides with delivery and acceptance of the goods
 sold. Sales are net of Sales Tax/VAT, returns, rebates and discounts.
 
 ii.  Interest income is recognised on accrual basis.
 
 iii.  Claims which are not of material nature / Insurance Claim etc.
 are accounted for when no significant uncertainties are attached to
 their eventual receipt.
 
 iv.  Dividend is accounted for when right to receive dividend is
 established.
 
 iii.  Fixed Assets, Depreciation and Impairment Loss
 
 a.  Fixed Assets are stated at cost of acquisition or construction as
 reduced by accumulated depreciation and impairment loss, if any.
 
 b.  Preoperative expenditure during construction period / trial run :
 Direct expenses as well as clearly identifiable indirect expenses
 incurred on the projects during the period of construction are
 capitalised along with the respective assets.
 
 c.  The Company provides depreciation as under:
 
 1.  For assets acquired upto 30th June 1987, on Straight Line Method
 (SLM) basis.
 
 2.  For assets acquired after 30th June 1987 and before 31st March
 1993, on SLM basis at rates specified in Schedule XIV of the Companies
 Act, 1956.
 
 3.  For assets acquired after 31st March 1993, on SLM basis as per new
 rates prescribed under Schedule XIV vide notification no. GSR 756 (E)
 dated 16th December 1993 issued by the Department of Company Affairs.
 
 4.  For assets each costing Rs 5000 or less, depreciation is provided
 fully.
 
 5.  For additions made during the year, depreciation is provided on
 pro-rata basis
 
 6.  The Goodwill acquired by the Company is amortised over a period of
 5 years on SLM basis.
 
 7.  The Copyrights, Trademarks, Technical Knowhow, etc. acquired by the
 Company are amortised over a period of 10 years on SLM basis.
 
 d.  In case, the recoverable amount of the fixed assets is lower than
 its carrying amount, provision is made for the impairment loss.
 
 iv.  Method of Valuation of Inventories
 
 a.  Raw Materials and Packing materials are valued at cost on weighted
 average basis.
 
 b.  Finished goods, including traded goods and work in process are
 valued at lower of cost and net realisable value. Cost (arrived at on
 weighted average) for this purpose includes direct materials, direct
 labour, excise duty and appropriate overheads including freight costs
 upto the ports in respect of finished goods meant for exports.
 
 c.  Consumable stores and spares are valued at lower of cost or net
 realisable value, as estimated by the management.
 
 d.  Obsolete, defective, unserviceable and slow / non-moving stocks are
 duly provided for.
 
 v.  Research and Development Expenditure
 
 a.  Capital Expenditure is shown separately in Fixed Assets.
 
 b.  Revenue expenses including depreciation are charged to respective
 heads of accounts.  
 
 vi.  Investments
 
 a.  Long Term Investments are stated at cost. In case there is a
 diminution of permanent nature in value of Investments, the same is
 provided for.
 
 b.  i. Quoted current investments are stated at the lower of cost and
 market value.
 
 ii. Unquoted current investments are stated at the lower of cost and
 fair value where available.  
 
 vii.  Retirement Benefits
 
 a.  Contribution to Provident, Superannuation and Family Pension funds
 are funded as a percentage of salary/ wages.
 
 b.  Gratuity liability is funded as per group gratuity scheme of Life
 Insurance Corporation of India.
 
 c.  Gratuity and leave encashment are provided for on the basis of
 actuarial valuation as at the year end. 
 
 viii.  Transactions in foreign currencies
 
 a.  Transactions are recorded at the exchange rates prevailing on the
 date of transaction.
 
 b.  Foreign currency designated assets and liabilities are restated at
 the year end rates and the resultant gain or loss is taken to Profit
 and Loss Account, except in respect of fixed Assets which is being
 capitalised (Refer Schedule 12 note 10)
 
 ix.  Income Tax
 
 Provision for current tax is made on the basis of relevant provisions
 of the Income Tax Act,1961. The deferred tax for timing differences
 between the book and tax profits for the year is accounted for, using
 the tax rates and laws that have been substantively enacted as of the
 balance sheet date. Deferred tax assets arising from timing differences
 are recognised to the extent there is virtual / reasonable certainty
 that these would be realised in future.
 
 x.  Provisions, Contingent Liabilities and Contingent Assets
 
 A provision is made based on a reliable estimate when it is probable
 that an outflow of resources embodying economic benefits will be
 required to settle an obligation. Contingent liabilities, if material
 are disclosed by way of notes to accounts. Contingent assets are
 neither recognised nor disclosed in the financial statements.