1.  Basis of preparation of Financial Statements
 
 a) The financial statements have been prepared under historical cost
 convention, in accordance with the generally accepted accounting
 principles and the provision of the Companies Act, 1956 as adopted
 consistently by the Company.
 
 b) Accounting policies not specifically referred to otherwise are
 consistent with the generally accepted accounting principles followed
 by the Company.
 
 c) The preparation of financial statements requires estimates and
 assumption to be made that effect the reported amount of assets and
 liabilities on the date of financial statements and the reported amount
 of revenue and expenses during the reporting period .The Difference
 between the actual and estimate are recognized in the period in which
 results are known/materialized.
 
 2.  Fixed Assets and Depreciation
 
 a) Fixed assets stated at cost of acquisition or construction or less
 accumulated depreciation. All costs, including financial cost till
 commencements of commercial production, net charges on Foreign Exchange
 Contracts and adjustments arising from exchange rate variations
 relating to specific borrowings attributable to the fixed assets are
 capitalized.
 
 b) Depreciation on fixed assets provided on straight-line method at the
 rates prescribed by Schedule XIV of the Companies Act, 1956.
 
 C) Leasehold Improvements are written off over the period of lease.
 
 3.  Foreign Exchange Transaction
 
 Transactions denominated in foreign currencies are normally recorded at
 the exchange rate prevailing at the time of the transaction.
 Outstanding balances are valued at the rate prevailing on the Balance
 Sheet date.
 
 4.  Investments
 
 The Investments are stated at cost. Provision for diminution in the
 value of long-term investments is made only if such a decline is other
 than temporary in the opinion of the management.
 
 5.  Inventories
 
 The inventories are valued as follows:
 
 a) Raw materials, Stores, Spares and Stock in transit are valued at
 cost.
 
 b) Stock in process is valued at cost.
 
 c) Finished goods are valued at cost or market value whichever is
 lower.
 
 6.  Sales
 
 Sales include Inter-division transfers, related services, and Taxes.
 
 7.  Government Grants & Subsidies
 
 a) The government grants received are accounted in the year of receipt.
 
 b) Interest subsidy on term loans under TUF scheme is provided on
 accrual basis only to the extent of certainty of receipt & filling of
 claim in respect thereof.
 
 8.  Customs and Excise Duty
 
 Custom Duty is accounted for as and when paid on the clearance of the
 goods for home consumption.
 
 9.  Employees Retirement and other benefits
 
 a) The contribution of the Company towards Provident Fund and Employee
 State Insurance, which are, defined contributions plans are charged to
 revenue.
 
 b) The Employee''s Gratuity and Leave Encashment are the company''s
 defined benefit plan. The present value of the obligation under such
 defined benefit plan is determined based on Acturial Valuation using
 the Projected Unit Credit Method.
 
 10. Contingent Liabilities
 
 Contingent liabilities are not provided for and are disclosed by way of
 notes.
 
 11.  Inter Divisional Transfers
 
 Inter divisional transfers of goods and services for internal use of
 captive consumption in plant located at different places/states are
 shown as contra items in the Profit and Loss Account to reflect the
 true economical value of the production inter-se the divisions. Any
 unrealized profit on unsold stocks is ignored while valuing
 inventories. This accounting treatment has no impact on the profit of
 the company.
 
 12. Provisions for Current and Deferred Tax
 
 Provision for current tax is made after taking into consideration
 benefits admissible under the provisions of the Income-tax Act, 1961.
 
 Deferred tax resulting from timing difference between book and
 taxable profit is accounted for using the tax rates and laws that have
 been enacted or substantively enacted as on the balance sheet date. The
 deferred tax assets is recognized and carried forward only to the
 extent that there is a reasonable and virtual certainty that the assets
 will be realised in future.
 
 13. Borrowing Cost
 
 Borrowing cost incurred in relation to the acquisition, constriction of
 assets are capitalized as the part of cost of such assets up to date
 which such assets are ready for intended use. Other borrowing costs are
 charged as an expense in the year in which they are incurred.
 
 14. Impairment of Assets
 
 An asset is treated as impaired when the carrying cost of asset exceeds
 its recoverable value. An impairment loss is charged to Profit and Loss
 Account in the year in which an asset is identified as impaired. The
 impairment loss recognized in prior accounting periods is reversed if
 there has been a change in the estimate of recoverable amount.
 
 15. Lease Rentals :
 
 Lease Rentals for assets taken on operating lease are recognized as on
 expenses in Profit and Loss Account over the lease term on accrual
 basis.