i) Accounting Convention
 
 The financial statements are prepared under the historical cost
 convention in accordance with the Accounting Standards referred to in
 sub-section (3C) of Section 211 of the Companies Act 1956 and relevant
 presentational requirements of the Companies Act, 1956.
 
 ii) Fixed Assets
 
 Fixed assets are stated at cost (net of CENVAT) less accumulated
 depreciation. Cost of acquisition is inclusive of freight, duties,
 taxes and other incidental expenses and interest on loan taken for the
 acquisition of qualifying assets up to the date of commissioning of
 assets.  The exchange differences arising on reporting of long term
 foreign currency monetary items at rates different from those at which
 they were initially recorded during the period, or reported in previous
 financial statements, in so far as they relate to the acquisition of a
 depreciable capital asset, have been added to or deducted from the cost
 of the asset and shall be depreciated over the balance useful life of
 the asset.
 
 Die Tooling, developed in-house, includes cost of material, taxes and
 duties and other direct/ incidental expense on in-house development.
 
 iii) Depreciation/ amortization
 
 a.  Depreciation on fixed assets (other than those referred to in b and
 c below) is provided on straight line method in accordance with
 Schedule XIVtotheCompaniesAct,1956.
 
 b.  Depreciation on assets costing Rs. 5,000 or less is provided 100%
 on prorata basis for days put in use.
 
 c.  The leasehold land is amortized over the period of lease.
 
 d.  Difference of Exchange Rate fluctuation on imported plant and
 machineries procured out of long term foreign currency loans is
 amortized over the residual life of relevant plant and machineries.
 
 iv) Inventories
 
 a.  Raw materials lying at Factory and job workers have been valued at
 cost.
 
 b.  Stocks in process have been valued at Raw material cost plus
 proportionate of conversion cost.
 
 c.  Finished goods lying at factory have been valued at Raw material
 cost plus conversion cost including excise duty payable.
 
 d.  Scrap has been valued at net realizable value.
 
 e.  Stores and Spares have been valued at cost.
 
 v) Investments
 
 Long-term investments are carried at cost less provision, if any, for
 diminution in value which is other than temporary. Current investments
 are carried at lower of cost and fairvalue.
 
 vi) Transactions in Foreign Currency
 
 i) Foreign currency transactions are recorded at the exchange rate
 prevailing as at the date of transactions except export sales which are
 recorded at a rate notified by the customs for invoice purposes. Such
 rate is notified in the last week of the month and is adopted for
 recording export sales of the next month. The exchange fluctuation
 arising as a result of negotiation of export bill is accounted for as
 difference in exchange rates.
 
 ii) Monetary items denominated in a foreign currency are reported at
 the closing rate as at the date of balance sheet. The reinstatement
 difference is charged to profit and loss account.
 
 ill) Non-monetary items (fixed assets and loans) denominated in a
 foreign currency are reinstated as at the date of balance sheet. The
 difference on re-instatement is carried to relevant non-monetary items.
 
 vii) Employee Benefits
 
 The Company has various schemes of retirement benefits such as
 provident fund, gratuity and leave encashment, which is dealt with as
 under
 
 i) Contributions to provident fund are made in accordance with the
 provisions of Employees'' Provident Fund and Miscellaneous Provisions
 Act, 1952 and are charged to revenue every year.
 
 ii) Provision for Gratuity is made based on actuarial valuation.  The
 gratuity liability in respect of employees of the Company is covered
 through a policy taken by a trust from Life Insurance Corporation of
 India. The contribution towards premium of the policy to the trust is
 charged to revenue every year.
 
 ill) Provision for leave encashment is made based on actuarial
 valuation. The leave encashment liability is covered through a policy
 taken from Life Insurance Corporation of India The contribution towards
 premium of the policy is charged to revenue every year.
 
 viii) Borrowing costs
 
 Borrowing costs that are attributable to acquisition or construction of
 a qualifying asset are capitalized as part of cost of such assets.
 Qualifying asset is one that necessarily takes substantial period of
 time to get ready for its intended use. All other borrowing costs are
 recognized as expenses in the period in which they are incurred.  
 
 ix) Cenvat
 
 The balance in the Service Tax and Modvat account is shown as current
 asset.
 
 x) Revenue Recognition
 
 Sales revenue is recognized as and when goods are handed overto
 carrier.
 
 - Insurance claim is recognized on actual receipt basis.
 
 - Interest from bank is recognized on accrual basis.
 
 xi) Recognition of expenses
 
 Expenses are recognized on accrual basis except Technical know-how fees
 and Royalty on sales which is recognized on cash basis.
 
 xii) 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
 asset exceeds its recoverable amount is provided in the books of
 account.  
 
 xiii) Accounting for taxes on income
 
 Provision for taxation for the year is ascertained on the basis of
 assessable profits computed in accordance with the provisions
 ofthelncome-taxAct,1961.
 
 Deferred tax is recognized, subject to the consideration of prudence,
 on timing differences, being the difference between taxable income and
 accounting income that originates in one period and are capable of
 reversal in one or more subsequent periods. In respect of carry forward
 of losses and unabsorbed depreciation, deferred tax assets are
 recognized based on virtual certainty that sufficient future taxable
 income will be available against which such deferred tax asset can be
 realized.
 
 MAT credit entitlement is recognized as an asset and carried Under
 Loans and advances.