(Annexed to and forming part of the Accounts for the year ended 31st
 March, 2011)
 
 (A) BASIS OF PREPARATION OF FINANCIAL STATEMENTS
 
 The financial statements have been prepared on the accrual basis of
 accounting, under the historical cost convention, except for
 revaluation of certain fixed assets, in accordance with the accounting
 principles generally accepted in India and comply with the mandatory
 accounting standards issued by the Institute of Chartered Accountants
 of India, as applicable and the relevant provisions of the Companies
 Act, 1956. The accounting policies have been consistently applied by
 the Company.
 
 (B) USE OF ESTIMATES
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles (GAAP) requires management to make
 estimates and assumptions that affect the reported amounts of assets
 and liabilities and the disclosure of contingent liabilities as at the
 date of the financial statements and reported amounts of revenues and
 expenses during the reporting period. Actual results could differ from
 these estimates. Any revision to accounting estimates is recognized
 prospectively in current and future periods.
 
 II.  FIXED ASSETS
 
 (A) GROSS BLOCK
 
 All fixed assets (other than leasehold land ) are stated at cost, less
 accumulated depreciation (other than Freehold Land and Trademarks
 where no depreciation is charged). However, fixed assets which are
 revalued by the Company are stated at book values.
 
 (B) DEPRECIATION / AMORTISATION :
 
 i.  Depreciation on all fixed assets is provided on the Straight Line
 Method in terms of Section 205 (2) (b) of the Companies Act, 1956 at
 the rates specified from time to time in Schedule XIV to the said Act.
 
 ii.  Depreciation on additions to assets or on sale/ discardment of
 assets is calculated pro-rata from the date of such addition or up to
 the date of such sale/ discardment , as the case may be .
 
 iii.  Cost of leasehold land is amortised over the period of lease.
 
 (C) BORROWING COSTS
 
 Borrowing cost directly attributable to the acquisition or construction
 of qualifying assets are capitalized till the month in which the asset
 is ready to use, as part of the cost of that asset. Other borrowing
 costs are recognised as an expense in the period in which these are
 incurred.
 
 (D) IMPAIRMENT OF FIXED ASSETS
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 if there is any indication of impairment based on internal/external
 factors. An asset is impaired when the carrying amount of the assets
 exceeds the recoverable amount. An impairment loss is charged to the
 Profit and Loss Account in the year in which an asset is identified as
 impaired. An impairment loss recognized in prior accounting periods is
 reversed if there has been change in the estimates of the recoverable
 amount.
 
 III. INVESTMENTS
 
 Long term investments are stated at cost less provision, if any, for
 diminution in the value of such investments other than temporary.
 Current investments are valued at lower of cost and net realisable /
 fair value.
 
 IV.  INVENTORIES
 
 Stores, Spares, Fuel, Packing materials, Raw materials and
 Stock-in-process are valued at cost. Finished goods are valued at cost
 or market price whichever is lower. The cost of Inventories is arrived
 at on the following basis:
 
 A) Stores, Spares, Fuel, Packing materials - First in First out 
 Raw Materials
 
 B) Finished goods for trade                - First in First out
 
 C) Finished goods and Stock-in-process     - Material cost, Other 
                                              direct costs and an
                                              appropriate absorption of
                                              manufacturing and other
                                              overheads.
 
 V FOREIGN CURRENCY CONVERSION:
 
 I. Foreign currency exposure in respect of Long Term Foreign currency
 Monetary items, for financing fixed assets, outstanding at the close of
 the financial year are revalorized at the contracted and /or
 appropriate exchange rates at the close of the year. The gain or loss
 due to decrease / increase in Rupee liability due to fluctuation in
 rate of exchange is recognized in the Profit and Loss Account.
 
 ii. Current Assets and other Liabilities in foreign currency
 outstanding at the close of the financial year are valued at the
 contracts and/or appropriate exchange rates at the close of the year.
 The loss or gain due to fluctuation of exchange rates is charged to
 Profit and Loss Account.
 
 iii. Though the accounting policy detailed in (i) and (ii) above have
 been consistently followed in terms with the Accounting Standard 11,
 the policy followed in current year retrospectively w.e.f. 1stApril,
 2007, has been overridden by an amendment to the aforementioned
 accounting standard for limited period of time as stated in Note 20 in
 ScheduleXV to the Financial Statements.
 
 VI. RECOGNITION OF INCOME AND EXPENDITURE:
 
 i.  Revenues/ Incomes and Costs/ Expenditure are generally accounted on
 accrual basis as they are earned or incurred.  
 
 ii.  Domestic sales are recognised on despatch of goods to the
 customers. Sales include Excise duty but excludes Sales tax and are net
 of returns and claims.
 
 iii.  Claims for return of breakages, date expiry and damaged goods
 have been adjusted to sales by the Company as and when the same are
 settled.
 
 iv.  Export sales are accounted on the basis of dates of Bills of
 Lading or Mates Receipt, whichever is later.  
 
 v.  In respect of receipt of materials/stores, the Company follows the
 following practice :
 
 (i)Raw Materials in Transit (imported) shown in Balance Sheet as asset
 and liability.
 
 (ii) Others on receipt basis.
 
 However, this practice has no effect on the profitability of the
 Company.  
 
 vi.  Liability on account of Custom duty on imported materials in
 transit or in bonded warehouse is charged to the Profit and Loss
 Account only in the year in which the goods are cleared from Customs.
 Liability on account of Excise duty in respect of goods manufactured
 and liable to payment of Excise duty when cleared from the factory
 premises is accounted at the time of removal of goods from the place of
 manufacture, for sale or captive use.
 
 vii.  Expenditure incurred on technical literature of new products are
 written off in the year the products are launched.
 
 VII.RESEARCH AND DEVELOPMENT EXPENDITURE :
 
 Revenue expenditure on Research and Development is charged to revenue
 through the natural heads of expenses in the year in which it is
 incurred. Expenditure of a capital nature is debited to fixed assets
 and depreciation is provided on such assets as are depreciable.
 
 VIII. RETIREMENT BENEFITS :
 
 Defined Contribution Plans such as Provident Fund etc., are charged to
 the Profit & Loss Account as incurred.
 
 Defined Benefit Plans - The present value of the obligation under such
 plan, is determined based on an actuarial valuation using the Projected
 Unit Credit Method. Actuarial gains and losses arising on such
 valuation are recognized immediately in the Profit & Loss Account.
 
 In case of funded defined benefit plans, the fair value of the plan
 assets is reduced from the gross obligation under the defined benefit
 plans, to recognize the obligation on net basis.
 
 Other Long Term Employee Benefits are recognized in the same manner as
 Defined Benefit Plans.
 
 Termination benefits are recognized as and when incurred.
 
 IX.  EARNING PER SHARE (EPS) :
 
 The Basic Earnings per share is computed by dividing the Net Profit /
 (Loss) attributable to Equity Shareholders for the year by the Number
 of Equity shares outstanding during the year.
 
 X.  TAXATION :
 
 Deferred tax is recognised, subject to the consideration of prudence,
 on timing differences, being the difference between taxable income and
 accounting income that originate in one period and are capable of
 reversal in one or more subsequent periods.
 
 XI.  PROVISIONS AND CONTINGENCIES
 
 The Company creates a provision when there is present obligation as a
 result of a past event that probably requires an outflow of resources
 and a reliable estimate can be made of the amount of the obligation. A
 disclosure for a contingent liability is made when there is a possible
 obligation or a present obligation that may, but probably will not,
 require an outflow of resources, when there is a possible obligation or
 a present obligation in respect of which the likelihood of outflow of
 resources is remote, no provision or disclosure is made.