1.  SYSTEM OF ACCOUNTING:
 
 The company generally follows mercantile system of accounting and
 recognizes income and expenditure on accrual basis.
 
 2.  FIXED ASSETS:
 
 Fixed Assets are stated at cost of acquisition inclusive of foreign
 exchange fluctuation, inland freight, duties and taxes and incidental
 expenses related to acquisition.
 
 3.  DEPRECIATION:
 
 Depreciation on the Assets of the company is provided on Straight Line
 Method as per Schedule XIV to the Companies Act, 1956.
 
 4.  SALES:
 
 Gross sales are stated net of Sales Tax and inclusive of Excise duty.
 
 5.  EMPLOYEE BENEFITS:
 
 Contribution to provident fund is remitted to the Provident Fund
 Commissioner and such paid/payable amounts are charged against revenue.
 
 Group Gratuity Scheme is administrated through Trustees for which
 policies are taken from LIC of India. The above payments/ provisions
 are charged to revenue. The liabilities towards such schemes are
 determined by an independent actuarial valuation as per the
 requirements of Accounting Standard-15.(Revised 2005) on Employee
 Benefits”.
 
 Encashment of leave is accounted for on accrual basis.
 
 6.  INVENTORIES:
 
 Inventories are valued at lower of cost or net realizable value. The
 cost is calculated on weighted average method. Cost comprises
 expenditure incurred in the normal course of business in bringing such
 inventories to its location and includes, where applicable, appropriate
 overheads based on normal level of activity,
 
 7.  INVESTMENTS:
 
 Long term investments are stated at cost. Any decline in the value of
 long term investment is recognized by providing for such diminution in
 the value of investments, unless the reduction is of temporary in
 nature.
 
 8.  RECOGNITION OF INCOME:
 
 Advance Licenses and Import Entitlements received against exports made
 by the company are accounted in the books on accrual basis.
 
 9.  FOREIGN EXCHANGE TRANSACTIONS:
 
 Foreign currency transactions are accounted at the exchange rates
 ruling on the date of transactions. The net gain/loss arising on
 revenue account during the year in respect of foreign exchange
 transaction is reckoned in the Profit and Loss Account.
 
 10.  BORROWING COSTS:
 
 Borrowing costs that are attributable to the acquisition or
 construction of long lead time capital assets are capitalized as a part
 of cost of the asset. All other borrowing costs are charged to revenue.
 
 11.  DEFERRED TAXATION:
 
 Deferred tax, being tax on timing difference between taxable income and
 accounting income that originate in one year and are capable of
 reversal in one or more subsequent years, has been recognized. Deferred
 tax assets, arising from temporary timing differences and out of
 unabsorbed loss or depreciation are recognized to the extent that there
 is reasonable certainty that the assets can be realized in future.
 
 12.  RESEARCH AND DEVELOPMENT:
 
 i.  Revenue expenditure is charged to Profit & Loss Account.
 
 ii.  Capital expenditure is shown as addition to fixed assets under
 natural heads.
 
 13.  CONTINGENT LIABILITIES:
 
 Contingent liabilities not provided for are indicated by way of a Note
 and will be provided/ paid on crystallization.