a) System of Accounting
 
 i) Financial statements are based on historical cost and in accordance
 with applicable accounting standards relevant to presentational
 requirements of the Companies Act, 1956.
 
 ii) The Company, generally, follows the mercantile system of accounting
 and recognizes income and expenditure on accrual basis except those
 with significant uncertainties.
 
 b) Fixed Assets
 
 Fixed Assets are stated at cost (net of Cenvat) less accumulated
 Depreciation.
 
 c) Depreciation
 
 Depreciation is provided in accordance with the rates prescribed in
 schedule XIV of the Companies Act, 1956. at the straight line method in
 respect of all assets (except plant & machineries) commissioned on or
 after 1.4.1989. On Plant & Machineries depreciation is provided on
 Written Down Value method.
 
 In case of sale/disposal of assets, no depreciation is charged in the
 year of such sale/ disposal. Depreciation on assets purchased/installed
 during the year has been provided on pro-rata basis with reference to
 the date of additions
 
 d) Expenditure During the Period of Construction
 
 All direct expenses during the period of construction and till the
 completion of capital and modernization project including pre-operative
 expenses and interest incurred during the said period are capitalized.
 
 e) Investments
 
 Investments are valued at cost of acquisition. Diminution in value is
 shown separately.
 
 f) Inventories
 
 Inventories are valued at cost or net realisable value whichever is
 lower.
 
 g) Sales & Excise Duty
 
 Sales is net of Excise Duty charged to customers and rate differences,
 returns and shortages.
 
 h) Export Benefits / Incentive
 
 Export benefits / incentives are accounted on accrual basis, i) Foreign
 Currency Transaction
 
 Export sales are accounted for at the rate of exchange considered by
 the Customs for clearance purpose. Exchange differences on
 realization/discounting of Bills of Foreign Exchange are recognized in
 the Profit & Loss Account at the time of realization/ negotiation.
 
 Payments made in foreign currency are recorded at the rate prevailing
 on the date of payment.
 
 The transactions in foreign currencies remaining outstanding at the end
 of the year are translated at the exchange rate prevailing on the date
 of the Balance Sheet.
 
 j) Retirement Benefits
 
 Contribution to Provident Fund is paid and charged to Profit & Loss
 Account as incurred. Liability for Gratuity is estimated and provided
 for. Liability for accrued leave is accounted for as and when paid, k)
 Treatment for Prior Period and Extraordinary Items
 
 i) All prior period items which arise in the current period as a result
 of error or omission in the preparation of prior periods'' financial
 statement are separately disclosed in the current statement of Profit &
 Loss.
 
 ii) All extraordinary items, if any, i.e. income or expenditure which
 arise from events or transactions which are distinct from the ordinary
 activities of the Company and which are material, are separately
 disclosed in the statement of accounts.
 
 I) Amortization of Expenses
 
 Share Issue expenses and Deferred Revenue expenses are amortized over a
 period of ten years/eight years, respectively.
 
 m) Research & Development
 
 Revenue expenses on Research & Development are charged to respective
 heads of expenses in the year in which it is incurred. Capital
 expenditure, if any, are capitalized along with other assets and
 depreciation is charged at the rates prescribed as per Companies Act,
 1956.  
 
 n) Borrowing Cost
 
 Borrowing cost other than on qualifying asset is charged to revenue
 account.