1.  Basis of Accounting
 
 The Company follows the mercantile system of accounting and recognises
 income and expenditure on accrual, basis except those with significant
 uncertainties.
 
 2.  Revenue Recognition
 
 Sale Revenue represents revenue earned (net of returns, discount and
 allowances) from the sale of products & services. Sale revenue is
 recorded when the goods are despatched. The sales value is exclusive of
 sales tax.
 
 3.  Capital Subsidy
 
 Amount received as capital subsidy from the government for setting up
 an industrial undertaking in a backward area is credited to Capital
 Reserve.
 
 4.  Fixed Assets & Depreciation
 
 Gross Block
 
 - All fixed assets except Land, Building and Plant & Machinery acquired
 before 1992 are stated at cost. Fixed Assets which are revalued by the
 company are stated at their revalued book value. The increase in the
 revalued amount over their historical cost was credited to Revaluation
 Reserve.
 
 All costs, relating to the acquisition and installation of fixed assets
 are capitalised and include financing costs relating to borrowed funds
 attributable to consturction or acquisition of fixed assets upto the
 date the industrial unit started production. Thereafter, all costs
 excluding financing costs relating to the acquisition and installation
 of fixed assets are capitalised upto the date the asset is put to use.
 
 Depreciation
 
 - The Company provides depreciation under written down value method (at
 rates prescribed under Schedule XIV of Companies Act, 1956) except in
 the case of Building and Plant & Machineries in which case depreciation
 is provided as per straight line method pursuant to section 205(2)(b)
 of Companies Act, 1956.
 
 - In the case of revalued assets, the additional charge of depreciation
 pertaining to revaluation amount is withdrawn from the Revaluation
 Reserve and adjusted to the depreciation charged in accounts.
 
 - Depreciation on addition to or sale/discardment of assets is
 calculated prorata from the date of such additions or upto the date of
 sale/discardment as the case may be.
 
 - Intangible Assets are stated at cost of acqusition less accumulated
 amortisation. Computer Software (Purchase cost, User licence fees
 etc.), Technical Know-how are amortised over a period of 4 years.
 Amortisation is done on Straight Line Method.
 
 5.  Impairment of Assets
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value. An impairment loss is charged to the
 Profit & Loss A/c in the year in which the asset is identified as
 impaired.
 
 6.  Investments
 
 Investments are stated at cost. Provision for diminution in the value
 of the long term investments are made only if in the opinion of the
 management, the decline is other than temporary.
 
 7.  Inventory
 
 - Raw and Packing Materials are valued at cost or market value
 whichever is lower. Cost includes taxes and duties other than credits
 under CENVAT.
 
 - Finished and Semi finished goods are valued at lower of cost and net
 realisable value. They include cost of conversion and other costs
 incurred in bringing them to their present condition. Stock against
 cancelled orders or without any sale orders are suitably depreciated as
 market value is not ascertainable
 
 - Machinery Spares & Tools are valued at lower of cost or market value.
 
 8.  Borrowing Cost
 
 Borrowing costs that are attributable to the acquisition, production or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is an asset that necessarily takes a
 substantial period of time to get ready for its intended use or sale.
 All other borrowing costs are recognised as an expense in the period in
 which they are incurred.
 
 9.  Excise & Customs Duty
 
 - Excise duty payable on the finished goods is accounted for on the
 clearance of goods from the factory and the liability .  is provided at
 the end of the year only on the finished goods stock lying in the
 factory.
 
 - Customs duty is accounted for on the clearance of goods from the port
 bonded warehouse and the liability of the same is provided at the end
 of the year on raw material stock in custom bonded warehouse or under
 clearance.
 
 - CENVAT allowed on the raw material consumed in production of finished
 goods and in semi finished goods is reduced in material consumption.
 
 10.  Foreign Exchange Transactions
 
 - Transactions in foreign currencies are recorded at the exchange rates
 prevailing on the date of the transaction or at the exchange rates as
 per related forward exchange contracts. Transactions not covered by
 forward exchange rate and outstanding at the year end are also
 translated at exchange rates prevailing at the year end and the profit
 / loss so determined and also the realised exchanged gains / losses are
 recognised in the Profit & Loss account.
 
 - Exchange differences arising either on settlement or on translation
 of monetary items are recognised as income or expenses in the year in
 which they arise, except in cases where they relate to acquisition of
 fixed assets in which case they are adjusted in the carrying cost of
 fixed assets.
 
 11.  Retirement Benefits
 
 - The Company has taken a policy under Group Gratuity Scheme with the
 Life Insurance Corporation of India and its contribution in terms of
 the policy adequately covers the liability for gratuity of employees
 covered therein. The company is liable to make up for the contribution
 in case funds in the hands of the trustees are insufficient to meet the
 actual claims of the employees under the rules of the fund. In case of
 remaining employees the same is accounted as and when liability arises.
 
 - Leave Encashment is accounted for on actual payment
 
 12.  Export incentives are accounted for on cash basis
 
 13.  Research and Development Expenditure
 
 Revenue Expenditure, including overhead on research and development, is
 charged to profit & loss a/c as expenditure through the natural heads
 of expenses in the year in which it is incurred.
 
 14.  Miscellaneous Expenditure (to the extent not written off or
 adjusted)
 
 -Share Issue expenses is written off in ten yearly instalments.
 
 15.  Taxation
 
 - Provision for taxation is made in accordance with the income tax laws
 and rules prevailing at the time of the relevant assessment years.
 
 - Deferred tax liability is recognised for all timing differences being
 the differences between taxable income and accounting income that
 originate in one period and are capable of reversal in one or more
 subsequent periods. It is quantified using the tax rates and laws
 enacted or substantively enacted as on Balance Sheet date.
 
 - Deferred tax assets are recognised and carried forward to the extent
 that there is a reasonable certainity that sufficient future taxable
 income will be available against which such deferred tax assets can be
 realised.
 
 - Wealth Tax is accounted for at the time of actual payment by debit to
 Prior Year Expenses in the year of payment and no provision is made in
 the accounts for the same.
 
 16.  Provisions & Contingent Liabilities
 
 Provisions are recognised in the accounts in respect of present
 probable obligations, the amount of which can be reliably estimated.
 
 Contingent Liabilities are disclosed in respect of possible obligations
 that arise from past events but their existence is confirmed by the
 occurance or non-occurance of one or more uncertain future events not
 wholly within the control of the company.