(1) Basis of preparation of Financial Statements:
 
 The financial statements have been prepared under the historical cost
 convention in accordance with the generally accepted accounting
 principles and the provisions of the Companies Act, 1956.
 
 The Company follows the accrual system of accounting and recognises
 Income and expenditure on accrual basis.
 
 Accounting policies not referred to otherwise are consistent with the
 Generally Accepted Accounting Principles.
 
 (2) Fixed Assets:
 
 Fixed Assets are stated at cost of acquisition or construction and
 includes amounts added/ reduced on revaluation less accumulated
 depreciation. Impairment losses have been accounted as per the
 mandatory Accounting Standards issued by The Institute of Chartered
 Accountants of India as applicable and the relevant provisions of The
 Companies Act, 1956.
 
 Borrowing costs for acquisition or construction of a qualifying asset
 and revenue expenses incurred (including expenses on test runs and
 experimental production) for the period prior to the commencement of
 commercial production are capitalised proportionately as part of the
 asset cost in respect of machineries put to use.
 
 (3) Depreciation:
 
 (a) Depreciation on fixed assets other than lease-hold land is provided
 on straight-line method at the rates and in the manner specified in
 Schedule XIV to the Companies Act, 1956.
 
 (b) Depreciation on additions/deductions during the year has been
 provided on pro-rata basis with reference to the month of addition/
 deduction.
 
 (c) Effective from 01.10.2003, the Leasehold land is amortized over the
 balance period of unexpired lease period in equal installments.
 
 The leasehold land was acquired on 1.8.1989 for 30 years period at a
 premium of Rs. 599,678/-. Accordingly, the premium paid for acquiring
 the lease hold rights on the said leasehold land are being written off
 over the balance unexpired life of the lease.
 
 (4) Expenditure during construction period:
 
 As per the consistent accounting policy all expenditure related to the
 project construction/ implementation and income arising out of project
 activities and funds related to the project are capitalized and
 allocated to the respective fixed assets.
 
 (5) Investments:
 
 Long-term investments are valued at cost subject to reduction made for
 diminution in value-that is other than temporary in nature.
 
 (6) Inventories:
 
 In accordance with the revised Accounting Standard (AS-2), Inventories
 are valued at lower of cost or net realizable value after providing for
 obsolescence, if any.
 
 (a) Raw materials, stores, spares, consumables and construction
 materials: At lower of cost or net realizable value
 
 (b) Materials in process: At lower of cost or net realizable value
 
 (c) Finished Goods: At lower of cost or net realizable value.
 
 (7) Retirement Benefits:
 
 Defined Contribution Plan
 
 The Companys liability towards Employees Provident Fund scheme
 administered by the Employees Provident Fund Scheme, Govt, of India is
 considered as Defined Contribution Plan.  The Companys contributions
 paid/payable towards these defined contribution plan is recognized as
 expense in the Profit and Loss Account during the period in which the
 employees rendered the related service.
 
 Defined Benefit Plan
 
 Companys liabilities towards gratuity and leave encashment if any are
 considered as Defined
 
 Benefit Plans. The present value of the obligations towards gratuity is
 determined based on actuarial valuation using the projected unit credit
 method.  As regards the Leave encashment, it is calculated on the
 actual balance leave of each employee on the year-end. Provision of Rs.
 6,34,424 is accordingly made for leave encashment during the current
 year. This is done on the same basis as in the last accounting period.
 
 (8) Transactions of foreign currency items:
 
 Transactions in foreign currency are recorded at the rate of exchange
 in force at the date of transaction. Foreign currency assets and other
 liabilities other than for financing fixed assets are stated at the
 rate of exchange prevailing at the year-end and resultant gains/losses
 are recognized in the capital work in progress. Foreign currency loans
 for financing fixed assets (other than those where the company is
 protected against exchange fluctuations) are accounted for at the rate
 of exchange prevailing at the year end and the resultant exchange
 difference is adjusted to the cost of assets.
 
 (9) Government Grants:
 
 (a) Revenue grants are recognized in the Profit & Loss account.
 
 (b) Capital Grants relating to specific fixed assets are shown under
 capital reserve.
 
 (10) Provision for taxation:
 
 No provision for taxation is made as the profits and gains of units set
 up in North Eastern State are tax free under the Income Tax Act 1961
 and the company has also incurred losses during the year.
 
 (11) Events occurring after the Balance Sheet Date:
 
 In term of Corporate Debt Restructuring Scheme, the Company has issued
 8% Optionally Cumulative Convertible Debentures amounting to Rs. 57.52
 Crore to the Financial Institution, Banks and Insurance Companies on
 23rd March, 2011.
 
 (12) Revenue Recognition:
 
 (a) Sales are recognized on dispatch to customers and are net of
 returns, discounts and sales tax.
 
 (b) Other Income and Expenditure are recognized and accounted on
 accrual basis.