A.  BASIS OF ACCOUNTING: Financial statements are prepared under
 historical cost convention on accrual basis in accordance with the
 generally accepted accounting principles in India and the provisions of
 the Companies Act, 1956 as adopted consistently by the Company.
 
 B.  USE OF ESTIMATES: The preparation of financial statements in
 confirmity with generally accepted accounting principles requires
 management to make estimates and assumptions that effect the reported
 amount of assets and liabilities and disclosure of contingent
 liabilities at the date of financial statements and the results of
 operations during the reporting period. Although these estimates are
 based upon managements best knowledge of current events and actions,
 actual results could differ from these estimates. Difference between
 the actual results and estimates are recognised in the period in which
 the results are known/materialised.
 
 C.  FIXED ASSETS: The Fixed Assets are shown at cost, net of tax/duty
 /credits availed, if any, and include expenses capitalised during
 construction period less accumulated depreciation and impairment
 losses, if any.
 
 D.  DEPRECIATION: The Company has provided depreciation on straight
 line method at the rates and the manner specified in Schedule XIV to
 the Companies Act, 1956. The amount of Long Term Lease hold land is
 amortised in equal installments during the last fifteen years of the
 residual lease period.
 
 E.  INVENTORIES: Inventories are valued at lower of cost or net
 realisable value except for Scrap. Scrap is valued at net realisable
 value. Cost is determined on FIFO (First-In-First Out) method.
 
 F.  REVENUE:
 
 a) Revenue is recognized only when it can be reliably measured and it
 is reasonable to expect ultimate collection. Sales & Income from
 operations represent the amounts receivable for goods sold including
 excise duty thereon, VAT/CST and Excise incentives in respect of Kutch
 Unit but excludes VAT/CST, trade discount & other taxes, adjustments
 for late delivery charges and material returned/rejected. Interest
 income is recognized on time proportion basis taking into account the
 amount outstanding and rate applicable.
 
 b) The Company accounts for pro forma credits, refunds of duty of
 customs or excise, or refunds of sales tax in the year of admission of
 such claims by the concerned authorities. Benefits in respect of Export
 Licenses are recognised on utilisation/ sale of the licenses.
 
 c) Dividend income is recongised when the right to receive is
 established.
 
 G.  EXCISE / CUSTOMS DUTIES: Excise Duty on manufactured goods
 remaining in the inventory is included as a part of valuation of
 finished goods. The customs duty on raw materials, stores, spares &
 components is accounted on clearance thereof.
 
 H.  EMPLOYEE BENEFITS:
 
 RETIREMENT BENEFITS: The Company contributes to group gratuity policy
 with Life Insurance Corporation of India as per actuarial valuation as
 on the Balance Sheet date for future payment of Gratuity to employees.
 Accrued liability towards leave encashment is provided on the balance
 of unutilized leaves on the Balance Sheet date.
 
 In respect of eligible employees, the Company contributes to approved
 superannuation fund under a definite contribution plan, under the
 policy of Life Insurance Corporation of India.
 
 ESOS - In respect of Employees Stock Options, the excess of fair price
 on the date of grant over the exercise price is recognized as deferred
 compensation cost amortised over the vesting period.
 
 I.  FINANCIAL DERIVATIVES AND FOREIGN CURRENCY TRANSACTIONS:
 
 a) Foreign currency transactions are accounted at exchange rates
 prevailing on the date the transactions take place. All exchange
 differences arising in respect of foreign currency transactions are
 dealt with in Profit & Loss Account except in respect of long term
 liabilities incurred for acquiring Fixed Assets, in which case such
 differences are adjusted in the carrying amount of the respective Fixed
 Assets.
 
 b) All foreign currency assets and liabilities, if any, as at the
 Balance Sheet date are restated at the applicable exchange rates
 prevailing on the date of financial statements.
 
 c) The Company is exposed to currency fluctuations on foreign currency
 transactions. With a view to minimize the volatility arising from
 fluctuations in the currency rates, the Company follows the formulated
 risk management policies including forwards contract and other
 derivative instruments. Profit/loss on such transactions including
 unsettled transactions at year end is recognised in the Profit and Loss
 account.
 
 d) In respect of forward contracts assigned to the foreign currency
 assets as at Balance Sheet date, the proportionate premium/discount for
 the period up to the date of Balance sheet is recognized in the Profit
 and Loss account. The exchange difference measured by the exchange rate
 between the inception of the forward contract and date of balance sheet
 is applied on foreign currency amount of the forward contract.
 
 J. INCOME TAXES : The expenses comprises of current and deferred tax.
 Current income tax is measured at the amount expected to be paid to the
 tax authorities in accordance with the Income-Tax Act,1961 enacted in
 India. Deferred income taxes reflects the impact of current year
 timining differences between taxable income and accounting income for
 the year and reversal of timing differences of earlier years.
 
 Deferred tax is measured based on the tax rates and the tax laws
 enacted or substantively enacted at the balance sheet date.  Deferred
 tax assets are recognised only to the extent that there is reasonable
 certainty that sufficient future taxable income will be available
 against which such deferred tax assets can be realised. In situations
 where the Company has unabsorbed depreciation or carry forward tax
 losses, all deferred tax assets are recognised only if there is virtual
 certainty supported by convincing evidence that they can be realised
 against future taxable profits.
 
 At each balance sheet date the Company re-assesses unrecognised
 deferred tax assets. It recognises unrecognised deferred tax assets to
 the extent that it has become reasonably certain or virtually certain,
 as the case may be that sufficient future taxable income will be
 available against which such deferred tax assets can be realised.
 
 The carrying amount of deferred tax assets are reviewed at each balance
 sheet date. The Company writes-down the carrying amount of a deferred
 tax asset to the extent that it is no longer reasonably certain or
 virtually certain, as the case may be, that sufficient future taxable
 income will be available against which deferred tax asset can be
 realised. Any such write-down is reversed to the extent that it becomes
 reasonably certain or virtually certain, as the case may be, that
 sufficient future taxable income will be available.
 
 K.  INVESTMENTS: Investments are stated at cost. Diminution in value,
 if any, which is of a temporary nature, is not provided.
 
 L. BORROWING COSTS: Borrowing costs that are directly attributable to
 the acquisition or construction of qualifying assets are capitalised as
 part of the cost of such assets. A qualifying asset is one that
 necessarily takes substantial period of time to get ready for intended
 use. All other borrowing cost are charged to Profit and Loss Account
 
 M. IMPAIRMENT OF ASSETS: The Company assesses at each Balance Sheet
 date whether there is any indication that an asset may be impaired. If
 any such indication exists, the Company estimates the recoverable
 amount of the assets. If such recoverable amount of the assets is less
 than its carrying amount, the carrying amount is reduced to its
 recoverable amount. The reduction is treated as an impairment loss and
 is recognized in the Profit and Loss account. If at the Balance Sheet
 date there is an indication that if a previously assessed impairment
 loss no longer exists, the recoverable amount is reassessed and the
 asset is reflected at the recoverable amount subject to a maximum of
 depreciated historical cost.
 
 N.  PROVISION AND CONTINGENT LIABILITIES :
 
 a) Provisions are recognized when the present obligation of a past
 event gives rise to a probable outflow, embodying economic benefits on
 settlement, and the amount of obligation can be reliably estimated.
 
 b) Contingent Liabilities are disclosed after a careful evaluation of
 facts and legal aspects of the matter involved.
 
 c) Provisions and Contingent Liabilities are reviewed at each Balance
 Sheet date and adjusted to reflect the current best estimates.