a) Basis for Preparation of Financial Statements
 
 The financial statements have been prepared under historical cost
 convention on accrual basis and comply with notified accounting
 standards as referred to in Section 211(3C) and other relevant
 provisions of the Companies Act, 1956.
 
 b) Use of Estimates
 
 The preparation of financial statements in conformity with the
 generally accepted accounting principles requires estimates and
 assumptions to be made that affect the reported amounts of assets and
 liabilities on the date of financial statements and the reported
 amounts of revenues and expenses during the reported period.
 Differences between the actual results and estimates are recognised in
 the period in which the results are known / materialised.
 
 c) Fixed Assets – Tangible and Intangible Assets
 
 i. Tangible fixed assets are stated at cost (net of refundable taxes or
 levies) and include any other attributable cost for bringing the assets
 to working condition for their intended use.
 
 ii. Borrowing costs, if any, attributable to fixed assets, are
 capitalised.
 
 iii. Machinery specific spares other than those required for regular
 maintenance are capitalised as a part of the tangible fixed assets.
 
 iv. Expenditure incurred on acquisition or development of goodwill,
 technical know- how, software, patents, research and development and
 such other intangibles are recognised as Intangible Asset, if it is
 expected that such assets will generate sufficient future economic
 benefits.
 
 d) Depreciation
 
 i. Cost incurred on Leasehold land is amortised over the period of
 lease.
 
 ii. Depreciation on all tangible fixed assets is provided by the
 straight line method in the manner and at the rates prescribed in
 Schedule XIV to the Companies Act, 1956, except following :
 
 – in case of data processing equipments/ computers, which are
 depreciated at a higher rate of 33.33% as compared to 16.21% provided
 in Schedule XIV.
 
 – certain vehicle related to employee perquisites are depreciated at a
 higher rate of 15% / 13.45% as compared to 9.50% provided in Schedule
 XIV.
 
 iii. Depreciation in respect of capitalised machinery specific spares
 whose use is expected to be irregular is charged over the remaining
 useful life of the related item of plant and machinery. The written
 down value of such spares is charged to profit and loss account when
 issued for consumption.
 
 iv. Intangible assets are amortised by straight line method over the
 estimated useful life of such asset. The useful life is estimated based
 on the evaluation of future economic benefits expected of such assets.
 
 v. Depreciation on the entire plant and machinery of chemical division
 is charged considering the chemical plant as a “Continuous Process
 Plant”.
 
 e) Asset Impairment
 
 Provision for impairment loss, if any, is recognized to the extent to
 which the carrying amount of an asset exceeds its recoverable amount.
 Recoverable amount is the higher of an assets net selling price and
 its value in use. Value in use is determined on the basis of the
 present value of estimated future cash flows expected to arise from the
 continuing use of an asset and from its disposal at the end of its
 useful life.
 
 f) Investments
 
 Investments that are readily realisable and intended to be held for not
 more than a year are classified as current investments. All other
 investments are classified as long term investments.
 
 Current investments are carried at lower of cost and fair value
 determined on an individual investment basis. Long term investments are
 carried at cost. However, provision for diminution is made to recognize
 a decline, other than temporary in nature, in the carrying amount of
 such long term investments.
 
 g) Inventories
 
 i. Inventories are valued at lower of cost and estimated net realisable
 value.
 
 ii. Cost of raw materials, components, consumables, tools, stores &
 spares is arrived at on the basis of weighted average cost.
 
 iii. Cost of finished goods & work in progress is arrived at on the
 basis of weighted average cost of raw materials & the cost of
 conversion thereof for bringing the inventories upto their present
 location and condition.
 
 iv. Inventory obsolescence is provided for on the basis of standard
 norms.
 
 h) Employee Benefits
 
 i) Provident Fund
 
 Liability on account of the companys obligation under the employees
 provident fund, a defined contribution plan, is charged to profit and
 loss account on the basis of actual liability calculated as a
 percentage of salary.
 
 ii) Superannuation Fund
 
 Liability on account of the companys obligation under the employees
 superannuation fund, a defined contribution plan, is charged to profit
 and loss account on the basis of actual liability calculated as a
 percentage of salary.
 
 iii) Gratuity
 
 a.  Liability on account of companys obligation under the employee
 gratuity plan, a defined benefit plan, is provided on the basis of
 actuarial valuation.
 
 b.  Fair value of plan assets, being the fund balance on the balance
 sheet date with Life Insurance Corporation under group
 gratuity-cum-life assurance policy, is recognised as an asset.
 
 c.  Current service cost, interest cost and actuarial gains and losses
 are charged to profit and loss account.
 
 d.  Past service cost/effect of any curtailment or settlement is
 charged/ credited to the profit and loss account, as applicable.
 
 iv) Compensated Absences
 
 Liability on account of the companys obligation under the employees
 leave policy is provided on actual basis in respect of leave earned but
 not availed based on the number of days of carry forward entitlement at
 balance sheet date.
 
 v) Medical and Leave Travel Assistance benefits
 
 Liability on account of the companys obligation under the employees
 medical reimbursement scheme and leave travel assistance is provided on
 actual basis.
 
 vi) Bonus & Employees Short-Term Incentive Plan
 
 Liability on account of the companys obligation under the statutory
 regulations, agreement with trade union and employees short term
 incentive plan, as applicable, is provided on actual basis as per the
 relevant terms as determined.
 
 i) Provisions and Contingent Liabilities
 
 i. Provisions in respect of present obligations arising out of past
 events are made in the accounts when reliable estimates can be made of
 the amount of the obligation.
 
 ii. The company provides for warranty obligations on substantial
 completion of contracts based on technical evaluation and past
 experience.
 
 iii. Contingent liabilities are disclosed by way of note to the
 financial statements, after careful evaluation by the management of the
 facts and legal aspects of the matter involved.
 
 j) Revenue Recognition
 
 i. Revenue in respect of products is recognised on dispatch of goods to
 the customer or when they are unconditionally appropriated to the
 contract.
 
 ii. Revenue in respect of projects for construction of plants and
 systems, involving designing, engineering, fabrication, supply,
 erection (or supervision thereof), commissioning, guaranteeing
 performance thereof etc., execution of which is spread over different
 accounting periods is recognized on the basis of percentage of
 completion method.
 
 iii. Stage of completion is determined by the proportion that contract
 costs incurred for work done till date bears to the estimated total
 contract costs.
 
 iv. Difference between costs incurred plus recognised profits / less
 recognised losses and the amount of invoiced sale is disclosed as
 contract in progress.
 
 v. Determination of revenues under the percentage of completion method
 
 necessarily involves making estimates by the Company (some of which are
 of a technical nature) concerning the costs to completion, the expected
 revenue from the contract (adjusted for probable liquidated damages, if
 any) and the foreseeable losses to completion.
 
 vi. Supply of spare parts and services are accounted on ‘as billed
 basis.
 
 vii. Revenue in respect of long-term service contracts / maintenance
 contracts is recognised on the basis of stage of completion.
 
 viii. Dividend from investments is recognized when the companys right
 to receive is established.
 
 ix.  Government Grants
 
 – Government Grant is accounted when there is reasonable certainty of
 compliance with its conditions and its ultimate collection.
 
 – Revenue expenses (net of government grants, if any) incurred during
 research and development phase of internal projects are recognised as
 and when incurred.
 
 – Any Intangible asset (net of government grants, if any) arising from
 the development phase of such projects is recognised to the extent
 there is reasonable certainty of generating sufficient future economic
 benefits through commercial exploitation of such asset.
 
 k) Borrowing Costs
 
 i. Borrowing costs on working capital is charged to profit and loss
 account in the year of incurrence.
 
 ii. Borrowing costs that are attributable to the acquisition of
 tangible fixed assets are capitalized till the date of substantial
 completion of the activities necessary to prepare the relevant asset
 for its intended use.
 
 iii. Borrowing costs that are attributable to the acquisition or
 development of intangible assets are capitalised till the date they are
 put to use.
 
 l) Foreign Currency Transactions
 
 i. Transactions in foreign currencies are recorded at the exchange
 rates prevailing on the respective dates of the transactions.
 
 ii. Exchange difference on settlement of transactions in foreign
 currencies is recognised in the profit & loss account.
 
 iii. Foreign currency monetary items are translated at the closing
 exchange rates and the resulting exchange difference is recognised in
 the profit & loss account.
 
 iv. Non-monetary items which are carried in terms of historical cost
 denominated in a foreign currency are reported using the exchange rate
 at the date of the transaction.
 
 v. Revenue items of foreign branches are translated at average rate.
 
 m) Hedge Accounting
 
 The company uses foreign currency forward contracts to hedge its risk
 associated with foreign currency fluctuations. In terms of the risk
 management strategy, the company does not use forward cover contracts
 for trading or speculative purposes.
 
 Foreign currency forward contracts are initially measured at fair value
 and are re-measured at subsequent reporting dates. Changes in the fair
 value of such contracts, which are designated and effective, are
 recorded in the Hedging Reserve account.
 
 The accumulated changes in fair value recorded in the hedging reserve
 account are transferred to profit and loss account in the same period
 during which the underlying transactions affect profit and loss account
 and / or the foreign currency forward contract expires or is exercised,
 terminated or no longer qualifies for hedge accounting.
 
 n) Taxes on Income
 
 i. Current tax is provided on the basis of estimated tax liability,
 computed as per applicable provisions of the Income Tax Act, 1961.
 
 ii. Deferred tax is recognised, subject to the consideration of
 prudence, in respect of deferred tax assets, on 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.
 
 o) Others
 
 i. Liability for liquidated damages is recognised when it is deducted /
 claimed by the customer or when a reasonable estimate of the likely
 obligation can be made.
 
 ii. Provision for doubtful debts is made on the basis of standard norms
 in respect of debtors outstanding beyond predefined period and also,
 where required, on actual evaluation.
 
 iii. Annual fees payable under a License Agreement for acquisition of a
 right to use Licensed Marks are recognised and charged to profit and
 loss account on payment.