A.  Accounting Convention
 
 The accounts are prepared on historical cost convention in accordance
 with the generally accepted accounting principles, the applicable
 accounting standards referred to in section 211 (3C) and other relevant
 provisions of the Companies Act, 1956.
 
 B.  Revenue Recognition 
 
 i) Sales
 
 Revenue from sale of goods is recognized: 
 
 i) When all the significant risks and rewards of ownership are
 transferred to the buyer and the company retains no effective control
 of the goods transferred to a degree usually associated with ownership:
 and
 
 ii) No significant uncertainty exists regarding the amount of the
 consideration that will be derived from the sale of goods.
 
 ii) Export Incentives
 
 Revenue in respect of the above benefits is recognized on post export
 basis.
 
 iii) Dividend
 
 Dividend income is recognized when the right to receive the payment is
 established.
 
 iv) Interest
 
 Interest Income is recognized on a time proportion basis taking into
 account the amount outstanding and the rate applicable.
 
 C.  Investments
 
 Long term Investments are carried at cost less provision, if any, for
 diminution in value which is other than temporary, and current
 investments are carried at lower of cost and fair value.
 
 D.  Inventories
 
 Inventories are valued at cost or net realizable value, whichever is
 lower except for waste which is valued at net realizable value. The
 cost in respect of the various items of inventory is computed as under:
 
 i) In respect of Raw Materials & Consumable Stores on FIFO basis.
 
 ii) In respect of Work in process and Finished Goods, at weighted
 average cost of raw material plus conversion cost & packing cost
 incurred to bring the goods to their present condition & location.
 
 iii) In respect of trading goods, on specific identification method.
 
 E.  Foreign Currency Transactions
 
 i) Foreign Branch (Integral)
 
 i) Fixed assets are translated at the rates on the date of
 purchase/acquisition of assets and Inventories are translated at the
 rates that existed when costs were incurred.
 
 ii) All foreign currency monetary items outstanding at the year end
 are translated at the year-end exchange rates. Income and expenses are
 translated at average rates of exchange and depreciation is translated
 at the rates referred to in (a)(i) above for fixed assets.  The
 resulting exchange gains & losses are recognized in the profit and loss
 account.
 
 ii) Other foreign currency transactions
 
 i) Transactions in foreign currency are accounted for at the exchange
 rate prevailing on the date of transaction except sales that are
 recorded at rate notified by the customs for invoice purposes.  Such
 rate is notified in the last week of every month and is adopted for
 recording export sales of next month.
 
 ii) Foreign currency monetary items are reported using the closing
 rate. Exchange differences arising on the settlement of monetary items
 or on reporting the same at balance sheet date are recognized as income
 or expenses in period in which they arise, except the exchange
 difference in case of fixed assets which have been adjusted to the cost
 of fixed assets.
 
 iii) Foreign currency non monetary items, which are carried in terms of
 historical cost, are reported using exchange rate at the date of
 transaction.
 
 F.  Fixed Assets
 
 i) Fixed Assets
 
 Fixed Assets are stated at acquisition cost including inward freight,
 duties, taxes and incidental expenses relating to acquisition net of
 subsidy relating to specific fixed asset and accumulated depreciation.
 
 ii) Capital work in progress
 
 Capital work in progress includes cost of assets at site, construction
 expenditure, advances made for acquisition of capital assets and
 pre-operative expenditure pending allocation to fixed assets.
 
 iii) Expenditure incurred during construction period
 
 In respect of new/major expansion, the indirect expenditure incurred
 during implementation period upto the date of commencement of
 commercial production, which is attributable to the construction of the
 project, is capitalized on various categories of fixed assets on
 proportionate basis. The unallocated expenses are shown in
 pre-operative expenses.
 
 G.  i) Cenvat Credit
 
 Cenvat Credit of excise duty paid on capital assets is recognized in
 accordance with the Cenvat Credit Rules, 2004.
 
 ii) Excise Duty
 
 Excise duty is accounted on production of finished goods.
 
 H.  Depreciation/Amortisation
 
 i) Depreciation has been provided under Straight Line Method at the
 rates specified in Schedule XIV of Companies Act, 1956.
 
 ii) The leasehold land is amortized over the lease period.
 
 I.  Borrowing Costs
 
 Borrowing costs attributable to the acquisition or construction of
 qualifying assets are capitalized as part of such assets, up to the
 date when such assets are ready for intended use. Other borrowing costs
 are charged as expenditure in the year in which they are incurred.
 
 J.  Employee Benefits
 
 i) Defined Contribution Plan
 
 Contribution to Provident Fund is made in accordance with the
 provisions of the Employees Provident Fund and Miscellaneous Provision
 Act, 1952 and is charged to the profit and loss account.
 
 ii) Defined Benefit Plans (Gratuity)
 
 The Company has a defined benefit Gratuity plan covering all its
 employees. Gratuity is covered under a scheme of Life Insurance
 Corporation of India (LIC) and contribution in respect of such scheme
 is recognized in the Profit & Loss Account. The liability/ asset as at
 the Balance Sheet date is provided for based on the actuarial valuation
 carried out in accordance with Accounting Standard 15 on Employee
 Benefit.
 
 iii) Leave with wages
 
 Provision for earned leave due for the year is made on the actual
 valuation as at the close of the year.
 
 K.  Miscellaneous Expenditure
 
 Preliminary Expenses are written off over a period of 5 years.
 
 L.  Accounting for Taxes on Income
 
 Current Tax is determined as the amount of tax payable in respect of
 taxable income for the period after considering tax allowances &
 exemptions. Deferred Tax is recognized, subject to consideration of
 prudence, on timing differences, being the difference between taxable
 income and accounting income that originate in one period and capable
 of reversal in one or more subsequent periods.
 
 M.  Impairment of Assets
 
 At each balance sheet date, an assessment is made whether any
 indication exists that an asset has been
 
 impaired. If any such indication exists, an impairment loss i.e. the
 amount by which the carrying amount of an asset exceeds its recoverable
 amount is provided in the books of account.
 
 N.  Provisions and Contingent Liabilities
 
 i) Provisions are recognized for liabilities that can be determined by
 using a substantial degree of estimation, if:
 
 1) The company has a present obligation as a result of a past event;
 
 2) A probable outflow of resources embodying economic benefits is
 expected to settle the obligation; and
 
 3) The amount of the obligation can be reliably estimated 
 
 ii) Contingent liability is disclosed in the case of:
 
 1) A present obligation arising from a past event when it is not
 probable that an outflow of resources embodying economic benefits will
 be required to settle the obligation or
 
 2) A possible obligation, unless the probability of outflow of
 resources embodying economic benefits is remote.
 
 O.  Earnings per share
 
 Basic earning per share is computed by dividing the net profit for the
 period attributable to equity shareholders by the weighted average
 number of shares outstanding during the period. Diluted earning per
 share is computed by taking into account the aggregate of the weighted
 average numbers of equity shares outstanding during the period and the
 weighted average number of equity shares which would be issued on
 conversion of all the dilutive potential equity shares into equity
 shares.
 
 P .  Basis of Incorporation of integral foreign operations
 
 Figures in respect of the Companys overseas branch in United Arab
 Emirates have been incorporated on the basis of Financial Statement
 audited by the auditors of the branch.
 
 Q.  Operating Leases
 
 Assets acquired on leases wherein a significant portion of the risks
 and rewards of ownership are retained by the lessor are classified as
 operating leases. Lease rentals paid for such leases are recognised as
 an expense on systematic basis over the term of lease.