The financial statements have been prepared in accordance with the
 historical cost convention and generally accepted accounting
 principles.  A summary of the important accounting policies, which have
 been followed consistently is set out below :
 
 (a) Basis of Accounting
 
 i) Accrual method of accounting is followed with regard to income and
 expenses.
 
 ii) Sales are inclusive of excise duty and exclusive of sales tax/value
 added tax, returns and trade discounts.
 
 iii) Raw material consumption is net of sale and the profit / loss on
 sale is charged to the consumption account. Consumption quantities
 exclude materials used as fuels/sales and disposals.
 
 iv) Insurance claims, duty drawback on exports and other claims and
 refunds have been accounted for where there is reasonable certainty
 with regard to the ultimate collection.
 
 (b) Fixed Assets
 
 i) Fixed Assets are stated at Cost which is net of Cenvat/Tax Credit,
 inclusive of freight, duties, taxes and other incidental expenses
 relating to acquisition and installation except certain revalued assets
 which are stated at revalued amount less accumulated depreciation.
 
 ii) Expenditure incurred during the period of construction are carried
 forward as Capital-Work in Progress and on completion, the costs are
 allocated to the respective Fixed Assets.
 
 iii) Preoperative expenditure comprising of revenue expenses incurred
 in connection with project implementation during the period upto
 commencement of commercial production are treated as part of project
 costs and are capitalized. Such expenses are capitalized only if the
 project to which they relate involve substantial expansion of capacity
 or upgradation.
 
 iv) In order to reflect the book value of the fixed assets of the
 Company to conform to the present replacement cost, Plant & Machinery
 of certain divisions as on 31st March, 2005 have been revalued by an
 approved valuer using the standard indices and accordingly amount has
 been transfered to Revaluation Reserve.
 
 (c) Depreciation
 
 i) Depreciation is provided for at the rates and in the manner
 prescribed in Schedule XIV to the Companies Act, 1956 on Straight Line
 method.
 
 ii) Depreciation on Plant & Machinery of certain divisions which were
 revalued as on 31st March, 2005 has been provided on straight line
 method at rates based on the useful life as certified by valuer.
 
 iii) Depreciation on the incremental amount added to the cost of fixed
 assets on Revaluation is being adjusted against the Revaluation reserve
 on the basis of estimated remaining useful life of the assets.
 
 (d) Inventory
 
 Raw Materials and Stores & spares are valued at lower of cost, computed
 on FIFO basis, and net relisable value. Finished goods & work in
 process are valued at lower of cost or net realisable value and scrap &
 waste at estimated realisable value.  Cost of raw materials and Stores
 & spares includes transport and handling costs and are net of
 cenvat/vat credits wherever applicable. The cost of finished goods
 includes materials, labour and related factory overheads including
 depreciation. Excise duty is included in finished goods valuation,
 where applicable.The material in transit are valued at cost.
 
 (e) Foreign Currency Transactions
 
 Foreign Currency Transactions are recorded in the accounts at the rates
 existing at the time of transaction and any exchange difference arising
 at the time of realisation is dealt within the Profit & Loss Account.
 Outstanding Foreign Currency monetary items are translated at the year
 end rates. The amount of Exchange rate difference credited to Capital
 work in progress during the year is Rs 280.50 lacs (Rs 22.06 lacs).
 
 (f) Investments
 
 Current Investments are stated at lower of cost and fair value. Any
 reduction in the carrying amount and any reversal of such reduction are
 charged or credited to the Profit and Loss Account. Long term
 Investments are stated at cost. Provision is made to recognize a
 decline, other than temporary, in the value of such investments.
 
 (g) Employee Benefits
 
 In respect of Defined Contributions Scheme, Contribution to Provident
 Fund & Family Pension and Employee State Insurance Scheme are charged
 to the Profit & Loss account as incurred.
 
 In respect of Defined Benefit Schemes, the post retirement benefits
 such as gratuity, leave encashment and other retirement benefits are
 accounted for, based on valuations, as at the Balance Sheet date, made
 by an independent Actuary. Actuarial gains/losses are charged to Profit
 & Loss Account and are not deferred.
 
 (h) Borrowing Costs
 
 The borrowing costs that are directly attributable to the acquisition,
 construction or production of a qualifying asset are capitalised on
 that asset. Other borrowing costs are charged to revenue account. The
 amount of borrowing cost charged to Capital work in progress during the
 year is Rs 3,327.79 lacs (Rs 443.95 lacs)
 
 (i) Miscellaneous Expenditure
 
 Expenditure incurred on development of a Coal mine is being written off
 over a period of 10 years.
 
 (j) Segment Reporting Policies
 
 Revenue and expenses are identified to segments on the basis of their
 relationship to the operative activities of the segment.  Revenue and
 expenses, which relate to the enterprise as a whole and are not
 allocable to segments on a reasonable basis, are included under
 “Unallocable Expenditure/Income”.
 
 (k) Earnings Per Share (EPS)
 
 Basic earning per share is computed by dividing net profit or loss for
 the period attributable to equity share holders by weighted average
 number of equity shares outstanding during the period. The Diluted
 earning per share is calculated on the same basis as Basic Earning per
 share, after adjusting for the effects of potential dilutive equity
 shares.
 
 (l) Taxes on Income
 
 i) Tax expense for the year comprise of current and deferred tax.
 Current Tax is measured at the amount expected to be paid to the tax
 authorities, using the applicable tax rates and tax laws. The Company
 has opted for tax exemption under section 80-I in respect of profits of
 Power and PVC divisions as per the provisions of the Income Tax Act,
 1961. The amount of exempted profit considered by the Company while
 making provision for its tax liability is subject to assessment by the
 concerned tax authorities. Deferred tax assets and liabilities are
 recognised for future tax consequences attributable to the timing
 differences between the taxable profit and the profit as per the
 accounts. Deferred tax assets and liabilities are measured using the
 tax rates and tax laws that have been enacted or substantively enacted
 by the Balance Sheet date. Deferred tax assets are not recognised
 unless in the opinion of the management there is virtual certainity
 that sufficient future taxable income will be available against which
 such deferred tax assets can be realised. The effect on deferred tax
 assets and liabilities of a change in tax rate is recognised in the
 year of change. Deferred tax assets/liabilities are reviewed at each
 balance sheet date. Pursuant to the approval of the shareholders and
 Hon''ble Punjab & Haryana High Court''s order dated 23rd August 2007
 Deferred tax liabilities (net) from the year 2007-08 and onwards are
 being met from Securities Premium Account. The taxable income of the
 Company being lower than the book profits under the provisions of the
 Income Tax Act, 1961, the Company is liable to pay Minimum Alternate
 Tax (MAT) on its income. As per the legal opinion obtained by the
 Company and various court judgements, due date for submission of return
 has been considered as due date for payment of MAT by the Company.
 
 ii) Considering the future profitability and taxable position in the
 subsequent years, the Company has recognized Minimum Alternate Tax(MAT)
 credit as an asset by crediting the Profit & Loss Account and including
 the same under Loans & Advances in accordance with the Guidance note on
 “Accounting for credit available in respect of Minimum Alternate Tax
 under Income Tax Act 1961” issued by the Institute of Chartered
 Accountants of India.
 
 (m) Impairment Of Assets
 
 When there is an indication that an asset is impaired, the recoverable
 amount is estimated and the impairment is recognised to the extent
 carrying amount exceeds its recoverable amount.
 
 (n) Provisions and Contingencies
 
 Provisions involving substantial degree of estimation in measurement
 are recognized when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent liabilities are not recognized but are disclosed in the
 notes. Contingent assets are neither recognized nor disclosed in the
 financial statement.