1. SYSTEM OF ACCOUNTING:
 
 The company follows the mercantile system of accounting and generally
 recognises income and expenditure on accrual basis except involving
 significant uncertainty stated otherwise.
 
 2. FIXED ASSETS AND DEPRECIATION:
 
 (a) Fixed assets
 
 i) Fixed Assets are stated at cost of acquisition, net of CENVAT,
 Including any attributable cost for bringing the asset to its working
 conditions for its intended use, less accumulated depreciation. Cost of
 specific borrowing is capitalized and included in the cost of the Fixed
 Assets.
 
 ii) Exchange difference on account of Foreign Exchange fluctuations is
 adjusted in the carrying cost of the Fixed Assets.
 
 (b) Depreciation
 
 Depreciation on Fixed Assets is provided on Straight Une Method (SLM)
 at the rates specified in schedule XIV of the Companies Act, 1956,
 except on Paper Making Machineries on which depreciation has been
 provided on Written Down Value Method (WDV) at the rate specified in
 the schedule XIV of the Companies Act, 1956.
 
 (c) Depreciation on the assets added/disposed off during the year has
 been provided on pro-rata basis with reference to the month of addition
 /disposal.
 
 (d) Capital work in progress includes all expenses incurred for
 acquiring, erecting and commissioning of Fixed Assets including
 interest on long term loans utilized for meeting capital expenditure
 and incidental expenditure incurred. Capital work in progress also
 includes capital advance.
 
 (e) Expenditure during construction period is included under Capital
 work in progress and the same is allocated to the respective Fixed
 Assets on the completion of construction.
 
 3. INVESTMENTS;
 
 Investments are stated at cost, except where there is diminution in
 value, other than temporary, in which case the carrying value is
 reduced to recognize the diminution.
 
 4. VALUATION OF INVENTORIES ;
 
 (a) Raw Materials and Stores & Spares: at cost (Weighted Average Cost)
 or net realizable value, whichever is lower
 
 (b) Materials in process: at estimated cost or Net Realizable Value,
 whichever is lower.
 
 (c) Finished goods: at cost or net realizable value, whichever is
 lower.
 
 (d) Stock of shares: at cost or market value, whichever is lower.
 
 (e) Stock in transit: at cost incurred to date.
 
 5. RETIREMENT BENEFITS:
 
 I) Gratuity: The company has taken a group gratuity insurance policy
 with Life Insurance Corporation of India (DC) for future payment of
 gratuity to the employees. The Company accounts for gratuity liability
 equivalent to the premium amounts payable to the LIC every year, which
 together with annual contribution to subsequent years would be
 sufficient to cover the gratuity liability as and when it accrues for
 payment.
 
 II) Super Annuatlon: Contribution to super-annuation fund Is being paid
 to Life Insurance Corporation of India, for certain employees.
 
 III) The company accounts for leave encashment on Pay-as-
 you-go-basis.
 
 6. EXCISE AND CUSTOMS DUTY:
 
 In view of the revised Guidance Note on Accounting Treatment for
 Excise Duty issued by the Institute of Chartered Accountants of India
 In respect of bonded goods, effective from 01.04.1999, which requires
 that provision should be made for Excise/Customs
 
 Duty liability in respect of bonded goods.
 
 Excise Duty payable on production is accounted for at the time of
 removal of goods from the factory premises. Customs Duty payable on
 imports is accounted for at the time of clearance thereof.
 
 7. CENVAT
 
 a) CENVAT benefit availed on purchase of Fixed Assets is reduced from
 the carrying cost of the respective assets.
 
 b) CENVAT benefit availed on purchase of materials Is reduced from
 carrying cost of the materials and the CENVAT receivable is credited to
 Excise Duty Account.
 
 8. EXPORT INCENTIVES:
 
 The entitlement under Duty Entitlement Pass Book Scheme as per Exim
 policy against the exports made by the company during the year is
 recognized as Income for the year.
 
 9. INCOMETAX
 
 Income Tax comprises of the current year tax provision and the net
 change in the deferred tax assets or liabilities in the year.
 Therefore tax assets and/or liabilities are recognized for the future
 tax consequences of timing (temporary) difference between the carrying
 value of the assets and liabilities and then respective tax basis, and
 operating losses carried forward. Deferred tax assets and liabilities
 are measured using enacted tax rates expected to apply to taxable
 Income in the year in which the timing difference are expected to be
 received or settled.
 
 10. EARNING PER SHARE
 
 In accordance with the Accounting Standard - 20 (AS 20) Earning per
 share issued by the Institute of Chartered Accountants of India, basic
 earning per share is calculated using the weighted average, number of
 shares, outstanding during the period.
 
 11. BORROWING COST:
 
 a) Borrowing costs, which are directly attributable to acquisition of
 qualifying assets are capitalized as a part of cost of the assets.
 
 b) All the other borrowing costs are charged to Profit and Loss Account
 in the year in which they are incurred.
 
 12. OTHER INCOME:
 
 Dividend Income Is accounted on right to receive basis.
 
 13. CONTINGENT LIABILITIES:
 
 Contingent Liabilities, not provided for, are disclosed by way of
 notes.