(a) Accounting Convention
 
 These accounts are prepared under the historical cost convention and on
 the basis of going concern. All expenses and income to the extent
 considered payable and receivable respectively, unless stated
 otherwise, have been accounted for on mercantile basis.
 
 (b) Fixed Assets and Depreciation
 
 1) Fixed Assets are stated at cost of acquisition less accumulated
 depreciation. Direct costs are capitalised till the assets are ready to
 be put to use, except freight & insurance, which are capitalised @ 1%
 and 0.05% respectively of invoice value exceeding Rs 1.00 lac. These
 costs also include financing costs relating to specific borrowing,
 attributable to fixed assets.
 
 When an asset is scrapped, or otherwise disposed off, the cost and
 related depreciation are removed from the books of account and
 resultant profit (including capital profit) or loss, if any, is
 reflected in Profit and Loss Account.
 
 2) Depreciation on all fixed assets is provided on Straight Line
 Method, Pro-rata with monthly rests, at the rates prescribed in
 Schedule XIV of the Companies Act, 1956 except for the fixed assets
 mentioned in para 3 below.
 
 3) In the following cases the rates are higher than the rates
 prescribed in Schedule XIV of the Companies Act, 1956:
 
 Nature of Assets                        Rate Adopted in Accounts(%)
 
 a)  Building - Non Factory                         3.34
 b)  Electrical Installations                       7.42
 c)  Office Equipments                             15.00
 d)  Vehicles                                      25.00
 e)  Hi-Life Tools                                 30.00
 f)  Data Processing Equipments                    30.00 
 
 4) Assets individually costing upto Rs.5,000/- are depreciated at 100%
 in the year of purchase.
 
 5) Capital spares are amortised in a systematic manner over the useful
 life of the asset to which it relates.
 
 (c) Intangible Assets
 
 Software expenditure capitalised during the year is amortised over 36
 months, from the month in which it is capitalised.
 
 (d) Investments
 
 All long term investments are valued at cost. However, provision for
 diminution in value is made to recognise a decline other than temporary
 in the value of investments. Current Investments are valued at the
 lower of cost and fair value, determined by category of investment.
 
 (e) Inventories
 
 Items of inventories are valued at lower of cost and estimated
 realisable value. Cost of Stores and Spares, Loose Tools, Raw Materials
 are determined on monthly Weighted Average basis.
 
 Cost of Work-in-Progress and Finished Goods includes material cost, an
 appropriate portion of production and administrative overheads and
 other costs incurred in bringing the inventories to their present
 location and condition and excludes interest, research & development
 and marketing expenses.
 
 Goods-in-Transit are valued at cost.
 
 Finished Goods includes excise duty, where ever applicable.
 
 (f) Sales are recognised at the time of despatch to customers and
 include excise duty where ever applicable.
 
 (g) Employee Benefits
 
 Defined Contribution Plan
 
 i) Companys Contribution paid/payable during the year towards
 Provident Fund Scheme, Superannuation Scheme & Employee State Insurance
 Scheme are recognised in the Profit & Loss Account.
 
 ii) Defined Benefit Plan
 
 Companys liability towards gratuity and leave encashment are
 determined by the independent actuary, using the Projected Unit Credit
 Method. Obligation is measured at the present value of estimated future
 cash flows using a discounted rate that is determined by reference to
 the market yields at the Balance Sheet date on Government Bonds where
 the currency and terms of the Government Bonds is consistent with the
 currency and estimated terms of the defined benefit obligations.
 Actuarial gains and losses are recognised immediately in the statement
 of Profit & Loss Account as income or expense.
 
 Gratuity liability has been covered by master policy of Life Insurance
 Corporation of India under irrevocable trust.
 
 (h) Research & Development
 
 All Research & Development expenses including design and production of
 Proto-types are written off as incurred.  All capital expenditure on
 R&D are shown as additions to Fixed Assets.
 
 (i) Foreign Currency Transactions
 
 Foreign currency transactions during the year are recorded at rates of
 exchange prevailing on the date of transaction.  Foreign currency
 denominated assets and liabilities are translated into rupees at the
 rates of exchange prevailing on the date of balance sheet. All exchange
 differences are dealt with in the statement of profit and loss, except
 those relating to acquisition of fixed assets, which are adjusted in
 the cost of the assets. Premium for forward contracts is recognised as
 income or expenditure over the period of contract.
 
 (j) Taxes on Income
 
 Current tax is the tax payable for the period determined as per
 provisions of the Income Tax Act, 1961.
 
 The provision for deferred tax has been made in accordance with
 Accounting Standard -22 Accounting for Taxes on Income issued by the
 Institute of Chartered Accountants of India and quantified using tax
 rates & laws that have been enacted or substantively enacted as on the
 Balance Sheet date.
 
 (k) Accounting policies not specifically referred above are consistent
 with generally accepted accounting practices.