I.  Significant Accounting Policies
 
 The Company follows accrual basis of accounting, recognising income and
 expenditure on accrual basis. The accounts are prepared on historical
 cost convention and in compliance with the Generally Accepted
 Accounting Principles in India and the relevant provisions of the
 Companies Act, 1956. The significant accounting policies followed by
 the Company are as stated below:
 
 a) Fixed Assets are stated at cost of acquisition or construction. All
 costs, relating to the acquisition and installation of fixed assets are
 capitalized up to the date the asset is put to use.
 
 b) Depreciation on assets acquired has been provided as per Schedule
 XIV of the Companies Act, 1956 on Straight Line Method and on related
 time basis.
 
 c) Foreign exchange transaction :
 
 i) Transactions denominated in foreign currency are recorded at the
 exchange rates prevailing on the date of transaction.
 
 ii) At the end of the year, monetary items denominated in foreign
 currency are restated at the year end rate.
 
 iii) Any income or expense on account of foreign exchange currency
 difference either on settlement or on transaction is recognised in
 Profit and Loss Account except in case of long term liabilities where
 they relate to acquisition of fixed assets, in which case, they are
 adjusted to carrying cost of such assets during construction period.
 
 d) Valuation of inventories :
 
 i) Finished and semi-finished goods in the warehouse and on the shop
 floor are valued at lower of cost (inclusive of excise duty, if paid)
 and net realizable value.
 
 ii) Raw Materials, Consumables, Stores, Packing Material and
 Work-in-Progress are valued at cost.
 
 iii) Cost is determined on a weighted average basis.
 
 e) All pre-operative expenditure including interest on borrowings for
 the project incurred up to the date of commencement of commercial
 production has been capitalized and added to the assets.
 
 f) Insurance claims are accounted on receipt or upon certainty of
 receipt of the claim.
 
 g) Employee Benefits have been provided on the basis of revised
 Accounting Standard 15 :
 
 i) Defined Benefit Plans: Retirement benefits in the form of gratuity
 are considered as defined benefit obligations and are provided for on
 the basis of an actuarial valuation, using the projected unit credit
 method, as at the date of Balance Sheet.
 
 ii) Other long Term Benefits: Long Term compensated absences are
 provided for on the basis of an actuarial valuation, using the
 projected unit credit method, as at the date of the Balance Sheet.
 
 iii) Actuarial gain/losses, if any, are immediately recognised in the
 Profit and Loss Account.
 
 h) Miscellaneous Expenditure :
 
 Business Promotional Expenses, Advertisement Expenses and Preliminary
 Expenses are amortised over a period of 10 years.
 
 i) Revenue Recognition
 
 i) Sales are recognised on delivery basis.
 
 ii) Export Incentives are recognised when the right to receive credit
 as per the Import and Export Policy is established in respect of the
 exports made and when there is no significant uncertainty regarding the
 ultimate collection of the relevant export proceeds.
 
 j) Provision for current tax is made and retained in accounts on the
 basis of estimated tax liability as per applicable provisions of Income
 Tax Act, 1961.
 
 k) Deferred Tax is recognised on timing differences between taxable and
 accounting income/expenditure that originates in one period and are
 capable of reversal in one or more subsequent period(s). Deferred Tax
 Asset for unabsorbed depreciation or carried forward losses, are
 recognised if there is virtual certainty that sufficient future taxable
 income will be available against which such asset can be realized.
 Other Deferred Tax Assets are recognised only to the extent there is
 reasonable certainty of realisation in future. Such assets are reviewed
 at each balance sheet date to re-assess the realisation. Minimum
 Alternative Tax (MAT) credit is recognised as an asset only when and to
 the extent there is convincing evidence that the Company will pay
 normal income tax during the specified period. In the year in which MAT
 credit becomes eligible to be recognised as an asset in accordance with
 the recommendations contained in the Guidance Note issued by the
 Institute of Chartered Accountants of India, the said asset is created
 by way of credit to the profit and loss account and shown as MAT credit
 entitlement. The Company reviews the same at each balance sheet date
 and writes down the carrying amount of MAT credit entitlement to the
 extent there is no longer convincing evidence to the effect that
 Company will pay normal Income Tax during the specified period.
 
 l) An asset is treated as impaired, when the carrying cost of asset
 exceeds its recoverable value. An impairment loss, if any, is charged
 to Profit and Loss Account, in the year in which an asset is identified
 as impaired.
 
 m) The Company reports basic and diluted earnings per share (EPS) in
 accordance with Accounting Standard 20 on Earnings Per Share.