1.  General
 
 The financial statements are prepared on historical cost convention and
 on the accounting principles of going concern, in accordance with
 Generally Accepted Accounting Principles (''GAAP''), comprising of the
 mandatory Accounting Standards, Guidance Notes, etc. issued by the
 Institute of Chartered Accountants of India and the provisions of the
 Companies Act, 1956, on accrual basis, as adopted consistently by the
 Company.
 
 2.  Revenue recognition
 
 a) Sales revenue is recognised when property in the goods with all
 significant risk and rewards as well as the effective control of goods
 usually associated with ownership are transferred to the buyer, at a
 price and includes excise duty.
 
 b) Promotional Benefits, Export Incentives and Export Growth Incentives
 are accounted for on accrual basis when virtual certainty and their
 probable use within reasonable time in the normal course of business,
 is established.
 
 c) Claims and refunds due from Government authorities and parties,
 though receivable / refundable are not recognised in the accounts, if
 the amount thereof is not ascertainable. These are accounted for as and
 when ascertained or admitted by the concerned authorities / parties in
 favour of the Company.
 
 d) Claims lodged with insurance companies are recognised as Income on
 acceptance by the Insurance Company. The Excess / Shortfall of claims
 passed are adjusted in the year of receipt.
 
 e) The Government subsidies and Interest Subsidy under TUFS are
 recognised on accrual basis and adjusted against the respective
 expenses.
 
 3.  Government capital grants
 
 The Capital Subsidy under TUFS from Ministry of Textiles on specified
 processing machinery is recognised on a systematic and rational basis
 by adopting Deferred Income Approach in proportion of the applicable
 depreciation over the useful life of the respective assets and is
 adjusted against the depreciation in the Profit and Loss Account.
 
 4.  Inventory valuation
 
 a) Inventories are valued at historical cost and net realisable value
 whichever is lower on a consistent basis. Historical cost is determined
 on FIFO / Weighted Average basis on relevant categories of Inventories
 and net realisable value, after providing for obsolete, slow moving and
 defective inventories, wherever necessary.
 
 b) The cost of Inventories comprise all costs of purchase, costs of
 conversion and other costs incurred in bringing the inventories to
 their present location and condition.
 
 5.  Investments
 
 Long Term Investments are stated at cost. In case of diminution in
 value other than temporary, the carrying amount is reduced to recognise
 the decline. Current Investments are carried at cost or fair value
 whichever is lower.
 
 6.  Fixed assets, intangible assets and capital work in progress
 
 a) Cost of Fixed Assets comprises of its purchase price including
 import duties and other non-refundable taxes or levies, foreign
 exchange fluctuation on loans against Fixed Assets up to 31st March,
 2003, expenditure incurred in the course of construction or
 acquisition, Start-up, Reconditioning, Commissioning, test runs &
 experimental production and other attributable costs of bringing the
 assets to its working conditions for the purpose of use for the
 business.
 
 b) Borrowing cost directly attributable and/or funds borrowed generally
 and used for the purpose of acquisition/construction of an asset that
 necessarily takes a substantial period of time to get ready for its
 intended use are capitalised, at its capitalisation rate to expenditure
 on that assets, for the period, until all activities necessary to
 prepare qualifying assets for its intended use are complete.
 
 c) Assets retired from active use and held for disposal are stated at
 the lower of their net book value and / or realisable value and are
 shown separately.
 
 d) Expenditure incurred on acquisition of Intangibles are accounted for
 as Intangible Assets on completion, being identifiable non- monetary
 assets without physical substance, at the acquisition cost, in
 accordance with AS 26 on Intangible Assets.
 
 7.  Depreciation and amortisation
 
 Depreciation on Fixed Assets and Amortisation on Intangible Assets has
 been provided as follows:- a) On fixed assets existing on 30th
 September,1987, on straight line method at the rates specified in
 circular No.1/86 of 21st May, 1986, issued by the Department of Company
 Affairs.
 
 b) On other fixed assets acquired and put to use after 1st October,
 1987 on straight-line method at the revised rates and in the manner
 specified in Schedule XIV to the Companies Act, 1956, as amended, vide
 Notification No.GSR-756 (E) dated 16th December, 1993 issued by the
 Department of Company Affairs, except: -
 
 i) On Plant and Machinery in the Power Generation Division on Straight
 Line Method at the rates specified in Schedule XIV to the Companies
 Act, 1956 considering the same as ''Continuous Process Plant''.
 
 ii) Leased Assets are depreciated over the operating period of lease.
 
 iii) Acquired Intangible Assets are amortised from the date of the
 assets are available for use on Straight Line basis over useful life
 determined by the Management on Technical evaluation at the following
 rates:
 
 1.  Computer Software - 16.21% p.a.
 
 2.  Enabling Assets - 5.28% p.a.
 
 8.  Impairment of fixed assets
 
 Factors giving rise to any indication of Impairment of the carrying
 amounts of the Company''s Assets are appraised at each Balance Sheet
 date by the Management to determine and provide/reverse an impairment
 loss following Accounting Standard (AS- 28)- ''Impairment of Assets''.
 
 9.  Foreign exchange
 
 a) Foreign exchange transactions relating to Imports and Exports are
 recognised at the applicable forward cover rate or exchange rates
 prevailing on the date of transactions / negotiation of documents.
 
 b) Borrowings in Foreign Currency have been recorded initially at the
 prevailing exchange rate on the date of availment. The Gain/ Loss on
 Renewal / Payment of the Forward contract booking is accounted for in
 the Profit and Loss Account for the period.  Premium or discounts
 arising on amount covered under Forward Contracts / Fixed Rate
 Contracts are amortised as expenses or income over the life of such
 contracts. The exchange gain / loss on un-hedged exposure are valued at
 the exchange rates prevailing at the each balance sheet date.
 
 c) Exchange gain or loss on outstanding derivatives transactions are
 computed on mark to market basis on the closing dates and accounted for
 as expense or income of the period.
 
 10. Miscellaneous expenditure
 
 a) Share and debenture issue Expenses are amortised equally over a
 period of five years or earlier on annual appraisal / impairment/
 redemption.
 
 b) Premium paid on prepayment / resetting of interest liability on term
 loans is amortised over remaining period of respective term loans.
 
 11. Replenishment
 
 Indigenous raw materials had to be used on occasions, for exports, to
 be subsequently replenished under Duty Free Entitlement Schemes of the
 Government of India. Therefore, the cost of such indigenous raw
 materials has been accounted for at its equivalent imported / duty free
 prices by adjusting the value of such entitlements granted for
 neutralisation of the import duties and levies.
 
 12. Employee benefits
 
 a) Defined Contribution Plan:
 
 The Company makes defined contribution to Provident Fund and
 Superannuation Fund, which are accounted on accrual basis.
 
 b) Defined Benefit Plan:
 
 The Company''s Liabilities on account of Gratuity and Earned leave on
 retirement of employees are determined at the end of each financial
 year on the basis of actuarial valuation certificates obtained from
 Registered Actuary in accordance with the measurement procedure as per
 revised AS-15. (These liabilities are funded on year-to-year basis by
 contribution to respective funds).
 
 13. Taxes on income
 
 a) Taxes on Income are computed using Tax Deferral Assets or Liability
 Method where taxes accrue in the same period, the respective revenues
 and expenses arises. The differences that result between the profit
 offered for Income Tax and the profit as per financial statements are
 identified and Deferred Tax Liability is recognised for timing
 difference, that originate in one accounting period and reverse in
 another, based on the tax effect of the prevailing enacted regulations
 in force.
 
 b) Deferred Tax Assets are recognised subject to prudence, only if
 there is virtual certainty that they will be realised and are subject
 to appropriate reviews at each balance sheet date. For the purpose of
 measurement of Deferred Tax Liability or Assets, the applicable tax
 rates and enacted regulations expected to apply in the year in which
 the temporary differences are expected to be recovered or settled are
 applied and due consideration of the relief available under the
 provisions of Chapter VI A of the Income Tax Act, are appropriately
 considered.
 
 c) The Minimum Alternate Tax credits available has been adjusted
 against the Deferred Tax Liability / Current Tax payable as per
 provision of the Income Tax Act.
 
 14. Provisions and contingent liabilities / assets
 
 a) Provisions are made 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 Liability is disclosed after careful evaluation of facts,
 uncertainties and possibility of reimbursement, unless the possibility
 of an outflow of resources embodying economic benefits in remote.
 
 c) Provisions and Contingent Liabilities / Assets are reviewed at each
 Balance Sheet date and adjusted to reflect the current best estimates.
 
 15. Others
 
 Besides debit / credit in previous year adjustment account, amounts
 related to previous years, arisen / settled during the year have been
 debited / credited to respective heads of accounts.