I.  Accounting conventions:
 
 a) The accounts are prepared on historical cost basis treating the
 entity as a going concern. Accounting policies unless referred to
 otherwise are consistent with generally accepted accounting principles.
 
 b) The Company generally follows mercantile system of accounting and
 recognises significant items of income and expenditure on accrual
 basis,except:- i) Additional demand for taxes arising on completion of
 assessments are accounted for as and when paid.
 
 ii) Refunds on account of octroi,excise duty,custom duty,income tax and
 insurance claims are accounted for on settlement.
 
 iii) Customer claims, recoveries, liquidated damages and penal interest
 for delay in execution of the contracts are provided for as and when
 settled.
 
 iv) Ex-gratia payments to employees are accounted for as and when
 incurred.
 
 v) The claims for price escalation on sales are accounted for on
 settlement.
 
 vi) Expenditure on warranty and guarantee of satisfactory performance
 of equipments is accounted for when incurred.
 
 II.  Fixed Assets and Depreciation:
 
 i.  Fixed Assets:
 
 Fixed assets are stated at cost of acquisition net of CENVAT credit,
 but inclusive of duties, taxes, freight, incidental expenses and
 erection / commissioning expenses.
 
 ii.  Depreciation :
 
 a) Depreciation on fixed assets is provided for on Written Down
 Value(WDV) method at the rates specified in Schedule XIV to the
 Companies Act, 1956. Changes in historical cost of fixed assets on
 account of fluctuations in exchange rate of liabilities for acquisition
 of fixed assets are accounted for by the amounts being amortised over
 the residual useful life of respective assets.
 
 b) Depreciation also includes amount written off in respect of
 leasehold properties and assets over the respective lease period.
 
 c) Calculation of depreciation on the additions during the year is done
 on pro-rata basis from the date of its receipt plus 10 days for
 installations.
 
 iii.  Impairment:
 
 As mandated by Accounting Standard 28 Impairment of Assets, the
 carrying values of assets are reviewed at each reporting date to
 determine if there is an indication of any impairment of an asset. If
 such an indication exists, the asset''s recoverable amount is estimated.
 An impairment loss is recognised wherever the carrying amount of an
 asset exceeds its recoverable amount. The impairment loss is reversed,
 if there has been any change in the estimates used to determine the
 recoverable amount.
 
 III.  Technical know-how fee:
 
 Technical know-how fees are amortized in accordance with the provisions
 of the Accounting Standard-AS 26 (Intangible Assets) issued by the
 Institute of Chartered Accountants of India.
 
 IV.  Inventories:
 
 a) Inventories are valued at the lower of cost or estimated net
 realisable value.  Inventories are valued according to FIFO method of
 valuation.
 
 b) Cost of Work in process includes cost of material plus direct
 labour.
 
 c) Cost of Finished sub assemblies includes cost of material plus
 overheads apportioned on the basis of actual stage of completion as at
 year end.
 
 d) Finished goods are valued at lower of cost or net realisable value.
 
 e) Goods received after the cut off date (for physical verification as
 at the year end) and goods for which the documents are retired are
 treated as goods in transit.
 
 f) Any Shortage/excess in Raw Material detected at the time of physical
 verification is included in consumption of goods.
 
 g) CENVAT on inputs is reduced from purchases; inventories are valued
 at net of CENVAT credit.
 
 V.  Sales:
 
 Sales are accounted for at the time of despatch and are inclusive of
 excise duty but exclusive of sales tax.
 
 VI.  Investments:
 
 Long term investments are carried at cost less provision for permanent
 diminution in value of such investments.  Current investments are
 carried at lower of cost and fair value.
 
 VII.  Transactions in Foreign currency
 
 Current assets and liabilities in foreign currencies are recorded at
 the exchange rate prevailing at the time of transaction and converted
 at exchange rate prevailing at the year end. Resultant loss/gain is
 charged to P&L account .
 
 VIII.  Retirement benefits
 
 Gratuity, Superannuation and Leave encashment benefits payable to
 employees are covered under the Policies of Life Insurance Corporation
 of India.
 
 IX.  Borrowing Costs
 
 Borrowing Costs are treated in accordance with Accounting Standard 16
 issued by the Institute of Chartered Accountants of India.