I.  Profit and Loss Account
 
 a) All income and expenses are accounted on accrual basis.
 
 b) Sales are recognized on passing of property in goods i.e. delivery
 as per terms of sale or on completion of auction in case of auction
 sale. In the case of Rosewood sale, income is recognized on completion
 of auction sale and confirmation of receipt of money by the auctioneer.
 Export incentives are estimated and accrued on completion of export
 sales
 
 c) The sale value of own timber and value added timber products are
 credited to revenue. Capital profits on such sale, including capital
 profit on value added timber products determined at estimated market
 value of actual timber input, are transferred to General Reserve No. II
 through Appropriation account.
 
 d) Depreciation on Fixed Assets is provided at the rates stated in
 Schedule XIV of the Companies Act, 1956, on written down value method
 except that Fixed Assets at Instant Coffee Division, Anamallais,
 Corporate Office and certain Fixed Assets at the Curing Works are under
 the straight-line method. Leasehold improvements are being depreciated
 over the lease period. In respect of certain assets, depreciation has
 been provided at the rates arrived at based on their estimated useful
 life or as per the Rates prescribed in Schedule XIV whichever is higher
 (Refer Schedule 4). Increase in value of Fixed Assets upto 31.03.2007
 due to Foreign exchange fluctuations is depreciated over the balance
 residual life of the Asset.
 
 e) The Employee benefits are provided in accordance with the revised AS
 15 and are dealt with in the following manner:- 
 
 - Contribution to Provident Fund and Defined Contribution
 Superannuation Funds are accounted on accrual basis.
 
 - Gratuity, Leave encashment and post retirement health scheme
 liabilities are determined by actuarial valuation done at the end of
 the year and the current year charge is debited to the Profit and Loss
 Account.
 
 f) Transactions in foreign currency are recorded using the spot rate at
 the beginning of each fortnight and exchange differences resulting from
 settled transactions are taken in the Profit and Loss account. Current
 Assets and Liabilities covered by Forward Cover are stated at Forward
 Cover rates, while those not covered by Forward Cover are restated at
 the rates prevailing at the year-end. The resulting Exchange
 differences are dealt with, in the Profit and Loss Account. Premium or
 discount on forward contracts is amortized over the life of the
 contract.
 
 Gain or loss on hedging instruments in respect of effective portion of
 cash flow hedges of highly probable transactions is recognized in the
 hedging reserve account. The portion of the gain or loss on the hedging
 instruments if determined to be an ineffective cash flow hedge is
 recognized in the profit and loss account.
 
 g) Deferred tax is recognized using the liability method, on all timing
 differences to the extent that it is possible that a liability or asset
 will crystallize. As at the balance sheet date, unless there is
 evidence to the contrary, deferred tax assets where there is business
 loss are only recognized to the extent of virtual certainity of future
 taxable profits.
 
 II.  Balance Sheet
 
 a) Assets and Liabilities are recorded at cost to the Company.
 
 b) Fixed Assets are stated at cost less depreciation. Interest on
 qualifying assets (i.e. Assets that take substantial time to be ready
 for intended use) is capitalized at the applicable borrowing cost on
 the funds used for
 
 acquiring such assets. Roll over charges, and exchange differences,
 relating to foreign currency borrowings attributable to Fixed Assets
 are capitalized upto 31.03.2007 and charged to P&L Account afterwards.
 The Fixed assets are tested for impairment and wherever required,
 provision is made.
 
 c) Investments of long-term nature are stated at cost. A provision for
 diminution in value is made to recognize a decline, other than
 temporary. Current investments are stated at lower of cost and market
 value.
 
 d) Valuation of Stock is dealt as under: -
 
 - Raw Materials and Stores & Spares     At weighted average cost
 
 - Coffee, Instant Coffee, Tea, Pepper, 
   Plywood and Trading Stock             At lower of cost and net 
                                         realizable value 
 
 - Work-in-Progress                      At lower of cost and net 
                                         realizable value
 
 - Cardamom and Other Produces           At since realized/estimated 
                                         realizable value
 
 B.  NOTES ON ACCOUNTS
 
 1.  Disclosure regarding Derivative instruments:
 
 i. The Company uses foreign currency hedges to manage its risks
 associated with foreign currency fluctuations relating to certain firm
 commitments and highly probable forecasted transactions. The Company
 does not use derivative instruments for speculative purposes.
 
 ii. The following are outstanding Currency Option contracts and other
 Hedging instruments, which have been designated as Cash flow Hedges as
 per the provisions of Hedge Accounting of Accounting Standard -30.
 
 The Foreign Currency exposures that are not hedged by a derivatives
 instrument or otherwise, aggregates to USD 7.29 million towards
 receivable and USD 4.83 million and Euro 0.01 million toward payable
 (Previous year USD 0.05 million) as at the Balance Sheet date.
 
 2.  Rights issue of Partly Convertible Debentures
 
 The Company had raised Rs. 24,833.32 lakhs by way of Rights issue of
 Partly Convertible Debentures in 2006-07.  Against this, the Company
 had utilized Rs. 23,587.98 lakhs as per the Objects of the Issue. The
 balance amount of Rs. 1,245.34 lakhs meant for projects have been used
 for reducing the Companys working capital borrowings and will made be
 available when needed for the projects.
 
 3.  Disclosure as per AS 15 - Retirement Benefits:
 
 Post Retirement Employee Benefits:
 
 The Company operates defined contribution schemes like provident fund
 and defined contribution superannuation schemes. For these schemes,
 contributions are made by the Company, based on current salaries, to
 recognized funds maintained by the Company and for certain categories
 contributions are made to State Plans. In case of Profident fund
 schemes, contributions are also made by the employees. An amount of Rs.
 652.30 Lakhs (Rs. 750.05 Lakhs) has been charged to the Profit and Loss
 Account of defined contribution schemes.
 
 a) Description of Plan
 
 i) Gratuity
 
 The Company has covered its gratuity liability by a Group Gratuity
 Policy named Employee Group Gratuity Assurance Scheme issued by LIC
 of India. Under the plan the eligible employees are entitled to
 Gratuity under a defined benefit plan.
 
 ii) Post Retirement Medical Benefit:
 
 The Companys retired staff/sub-staff, Junior Officers and Management
 staffs are covered by a medical insurance policy. The Medical Insurance
 scheme is a defined benefit plan and is non-funded. Hence, there are no
 plan assets attributable to the obligation.
 
 iii) Pension:
 
 The Companys retired Management Staffs pension, except periodical
 increases, are met through annuity issued by LIC of India. The pension
 increase component which has become applicable from the year 2009- 10
 onwards, is a non-funded scheme and hence there are no plan assets
 attributable to the obligation.