1. BASIS OF PREPARATION OF FINANCIAL STATEMENTS :
 
 The financial statements have been prepared under the historical cost
 convention and as a going concern and in accordance with the provisions
 of the Companies Act, 1956 as adopted consistently by the company.
 
 Also Accounting policies not specifically referred to otherwise are
 consistent with generally accepted accounting principles.
 
 2. RECOGNITION OF INCOME AND EXPENDITURE :
 
 Revenues/Income and Costs/Expenditure are generally accounted on
 accrual basis, as they are earned or incurred.
 
 3. FIXED ASSETS:
 
 Fixed Assets are stated at cost less depreciation.
 
 4. METHOD OF DEPRECIATION ;
 
 (i) Depreciation on Fixed Assets is provided on the Straight Line
 Method (S.L.M.), at the rates specified in Schedule XIV, to the
 Companies Act, 1956 (as amended up to date);
 
 (ii) Depreciation on additions to assets is calculated on pro-rata
 basis from the date of such addition. In case of sale of assets,
 depreciation is provided upto the date of sale.
 
 5. VALUATION OF INVENTORY:
 
 (i) Inventories of raw materials, stores & spares and packing materials
 are valued at direct historical cost. Cost includes freight inward
 also.
 
 (ii) Inventories of work-in-progress are valued at estimated historical
 cost. Cost includes proportionate production overheads.
 
 (iii) Inventories of finished goods, are valued at historical cost or
 market value whichever is less. Cost includes production overheads
 incurred to put the inventories in their present condition and
 location.
 
 (iv) Weighted average cost formula is used for determining historical
 cost.
 
 6. EXPENDITURE ON NEW PROJECT
 
 All expenses (other than those directly related to specific fixed
 assets) pertaining to expansion/diversification project including
 interest on borrowing for such project are treated as pre-operative
 expenses pending allocation and carry forward for capitalisation of
 the same to relative fixed assets on completion of the respective
 project.
 
 7. PRELIMINARY AND DEFERRED REVENUE EXPENDITURE AND AMORTISATION
 
 The Preliminary expenses, incurred in connection with the incorporation
 of the company and raising of share capital are amortised over a period
 of 10 years.
 
 Expenses incurred by the Company, the benefits of which are expected to
 accrue over a number of years, are treated as deferred revenue expenses
 with appropriate write-off during each year.