1.  Accounting convention
 
 Financial statements are prepared in accordance with the generally
 accepted accounting principles including accounting standards in India
 and under historical cost convention.
 
 2.  Use of estimates
 
 The preparation of the financial statements in conformity with the
 generally accepted accounting principles requires management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities on the date of the financial statements, disclosure of
 contingent liabilities and reported amounts of revenues and expenses
 for the year. Estimates are based on historical experience, where
 applicable and other assumptions that management believes are
 reasonable under the circumstances. Actual results could vary from
 these estimates and any such differences are dealt with in the period
 in which the results are known/ materialize.
 
 RESTILE CERAMICS LIMITED
 
 3.  Fixed assets and depreciation
 
 Cost of all assets, where the cost exceeds Rs. 10,000 and the estimated
 useful life is two years or more, is capitalised. Cost of fixed assets
 is net of eligible credits under Cenvat / Vat Scheme.  Expenditure
 directly related and incidental to construction are capitalised up to
 the date of attainment of commercial production. Interest and other
 related costs, including amortised cost of borrowings attributable only
 to qualifying assets are capitalised as part of the cost of the
 respective assets. Expenses incurred on major refurbishment extending
 the life of Plant and Machinery has been capitalized to the respective
 Asset.
 
 Assets are depreciatedon straight line basis, over their estimated
 useful lives or lives derived from the rates prescribed in Schedule XIV
 to the Companies Act, 1956, whichever is lower and in the manner
 described.in Schedule XIV to the Companies Act, 1956.
 
 Assets subject to impairment, on the asset''s revised carrying amount,
 over its remaining useful life.
 
 4.  Investments
 
 Long term investments are stated at cost less provision for diminution
 other than temporary, if any.
 
 5.  Inventories
 
 Inventories are valued at lower of cost and net realisable value; cost
 being ascertained on the following basis:
 
 Stores, spares, consumable tools, and raw materials: on weighted
 average cost basis. Work-in- progress, finished goods: under absorption
 costing method with the cost of incomplete Work at the end of the year,
 being estimated.
 
 Cost includes taxes and duties and is net of eligible credits under
 Cenvat / Vat Schemes.
 
 Obsolete / slow moving inventories are adequately provided for.
 
 6.  Foreign currency transactions and derivatives
 
 Foreign currency transactions are recorded at the rates prevailing on
 the date of the transaction.  Monetary assets and liabilities in
 foreign currency are translated at closing rate. Exchange differences
 arising on settlement or translation of monetary items are recognized
 as income or expense in the Profit and Loss Account.
 
 7.  Amortization of deferred expenditure
 
 Expenditure incurred on raising capital and other preliminary expenses
 are amortised over a period of five years. AN identifiable amounts
 spent on Brand Building resulting in long term benefits are amortized
 over the period the benefit is expected to enure.
 
 8.  Revenue recognition
 
 Revenue from sale of products is recognised on despatch to customers
 and is inclusive of excise duty.
 
 9.  Research and Development Costs
 
 Expenditure on- research is charged to revenue as incurred. Product
 development costs, including on new variants of existing products are
 recognised as Intangible assets and amortised.
 
 10. Employee benefits
 
 (a) Short term employee benefit obligations are estimated and provided
 for.
 
 (b) Post employment benefits and other long term employee benefits
 
 Defined contribution plans:
 
 Company''s contribution to provident fund, employee state insurance and
 other funds are determined under the relevant schemes and / or statute
 and charged to revenue.
 
 Defined benefit plans and compensated absences:
 
 Company''s liability towards gratuity, other retirement benefits and
 compensated absences are actuarially determined at each balance sheet
 date using the projected unit credit method. Actuarial gains and losses
 are recognised in revenue.
 
 11.  Deferred tax
 
 (a) Deferred tax is recognized on timing differences, being the
 difference between taxable income and accounting income that originate
 in one period and are capable of reversing in one or more subsequent
 periods.
 
 (b) Deferred tax assets on unabsorbed depreciation and carry forward of
 losses are recognized only to the extent there is a virtual certainty
 of its realization.