1.  Basis of preparation of financial statements - The financial
 statements are prepared in accordance with the generally accepted
 accounting principles including accounting standards in India under
 historical cost convention except in so far as they relate to
 revaluation of net assets.
 
 All assets and liabilities have been classified as current or
 non-current as per the company''s normal operating cycle and other
 criteria set out in the revised schedule VI to the Companies Act, 1956.
 Based on the nature of products and the time between the acquisition of
 assets for processing and their realization in cash and cash
 equivalents, the company has determined its operating cycle as twelve
 months for the purpose of current and non-current classification of
 assets and liabilities.
 
 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/materialise.
 
 3.  Revenue recognition - Revenue from sale of products is recognized
 on despatch of goods to customers in accordance with the terms of
 sales, Revenue from services is recognized in accordance with the
 specific terms of contract on performance. Other operating revenues
 comprise of income from ancillary.  activities incidental to the
 operations of the company and is recognized when the right to receive
 the income is established as per the terms of the contract.
 
 4.  Foreign currency transactions - Foreign currency transactions
 (including booking/cancellation of forward contracts) are recorded at
 the rates prevailing on the date of the transaction. Monetary assets
 and liabilities in foreign currency, other than those covered by
 forward exchange contracts, are translated at year end foreign exchange
 rates. Exchange differences arising on settlements are recognized in
 the Profit and Loss account. In case of forward exchange contracts,
 which are entered into hedge the foreign currency risk of a
 receivable/payable recognized in these financial statements, premium a
 discount on such contracts are amortised over the life of the contract
 and exchange differences arising thereon in the reporting period are
 recognised in the Profit and loss account. Forward exchange contracts
 which are arranged to hedge the foreign currency risk of a firm
 commitment is marked to market at the year end and the resulting
 losses, if any, are charged to the Profit and loss account.  
 
 5.  Employee benefits - (i) Short term employee benefit obligations are
 estimated and provided for; (ii) Post employment benefits and other
 long term employee benefits - (1) Company''s contribution to provident
 fund, labour welfare fund, employees state insurance corporation and
 other funds are determined under the relevant schemes and /or statute
 and charged to revenue; (2) Company''s liability towards gratuity 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.
 
 6.  Fixed Assets - All costs relating to acquisition of fixed assets
 net of value added tax and terminal excise duty refund under Export
 Promotion Capital Goods Scheme, subject to the economic life and the
 cost being in excess of certain limits, are capitalised. Expenditure
 directly related and incidental to construction are capitalized upto
 the date of attainment of commercial production. Interest and other
 related costs, including amortised cost of borrowings attributable only
 to major projects are capitalized as part of the cost of the respective
 assets, in the case of Wind energy converters, cost of land on which
 the converters have been erected is capitalised as cost of the said
 converters. Cost of structures on leasehold land, where the estimated
 useful life is more than ten years, is capitalized.
 
 7.  Depreciation/amortization - Fixed assets are depreciated/amortised
 in the following manner: (i) assets like (a) structures on lease hold
 land, ever their estimated useful life a ten years, whichever is lower,
 (b) computer software and trade name, over their estimated useful life
 or five years, whichever is lower; (ii) other assets, over their
 estimated useful lives or lives derived from the rates specified in
 Schedule XIV to the Companies Act, 1956, whichever is lower; (iii)
 depreciation/amortization is provided fa the period the asset is put to
 use, (iv) Cost of land pertaining to the Wind energy converters is
 amortised in the same manner as the cost of the said converters are
 depreciated. No depreciation is reckoned in the year of disposal.
 
 8.  Impairment of assets - The carrying amount of assets are reviewed
 at each balance sheet date if there is any indication of impairment
 based on internal/external factors. An impairment loss will be
 recognised wherever the carrying amount of an asset exceeds its
 estimated ,recoverabie amount. The recoverable amount is the greater of
 the asset''s net selling price and value in use. Provision to impairment
 will be reviewed periodically and amended depending on changes in
 circumstances.
 
 9.  Investments - Non-current investments are stated at cost. However,
 provision for diminution is made to recognize a decline, other than
 temporary, in the value of the investment, if any. Current investments
 are valued at lower of cost and fair value.
 
 10.  Inventories - The governing principle of valuation of Inventories
 (other than process waste) is the lower of cost and net realisable
 value. The cost to the said purpose (i) in the case of sates and spare
 parts, is the weighted average cost (net of Cenvat credit/Value added
 tax, if any), (ii) in the case of cotton in process and manufactured
 yarn, is the cost adopting the absorption costing method, and (iii) is
 without deduction of the adjustment made for power generated through
 Wind energy converters and adjusted against the cost of power purchased
 from state electricity board. Process waste is valued at net realizable
 value. Provision is made for obsolete, slow moving and damaged items of
 inventory, if any.
 
 11.  Government grants - Capital grants from government relating to
 depreciable assets are treated as deferred income and disclosed as a
 capital reserve and amortised over the useful life of the concerned
 asset. Cenvat credit relating to capital assets acquired is treated as
 capital reserve and amortised over the useful life of the concerned
 assets by transfer profit and loss account and considered under
 depreciation. Grants/incentives other than those mentioned above are
 reckoned in the profit and loss account in the year of eligibility.
 
 12.  Amortisation of loan raising expenditure - Major revenue
 expenditure incurred by way of/in connection with raising of borrowing
 is amortised over the period of the barrowings.
 
 13.  Research and development - Revenue expenditure on research and
 development is charged to the profit and loss account as incurred.
 Capital expenditure on research and development, where the same
 represents cost of plant, machinery, equipment and other tangible
 assets, if any, is given the same accounting treatment as applicable to
 other capital expenditure.
 
 14.  Deferred tax - Deferred income tax charge reflects the impact of
 the current period timing differences between taxable income and
 accounting income, other than differences capable of getting reversed
 during the lax holiday period, subject to consideration of prudence.
 Where there are unabsabed depreciation a carry forward losses, deferred
 tax assets are recognised only to the extent there is virtual certainty
 of realisation of such assets. Other deferred tax assets are recognised
 only to the extent there is reasonable certainly of realisation in
 future. Deferred tax assets/liabilities are reviewed as at each balance
 sheet date based on developments during the period and available case
 laws to reassess realisation/ liabilities.
 
 15.  Provisions and contingencies - To recognise a provision when (i)
 the company has a present obligation as. a result of a past event; (ii)
 it is probable that an outflow of resources embodying economic benefits
 will be required to settle the obligation; and (iii) a reliable
 estimate can be made of the amount of the obligation. A disclosure of a
 contingent liability is made when there is a possible obligation that
 may, but probably will not, require outflow of resources. Where there
 is possible obligation a a present obligation where the likelihood of
 outflow of resources is remote, no provision a disclosure is made.