1.01 Basis of Accounting
 
 The financial statements have been prepared under the historical cost
 convention in accordance with generally accepted accounting principles
 in India, the accounting standards issued by the Institute of Chartered
 Accountants of India and the provisions of the Companies Act, 1956, as
 adopted consistently by the company.  The Company follows the
 Mercantile System of accounting and recognizes items of income and
 expenditure on accrual basis.
 
 1.02 Use of Estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires management to make estimates
 and assumptions that affect the reported amounts of assets and
 liabilities and disclosure of contingent assets and liabilities at the
 date of the financial statements and the reported amount of revenues
 and expenses for the years presented. Actual results could differ from
 those estimates.
 
 1.03 Recognition of Income and Expenditure
 
 Sales are recognized when goods are supplied and are recorded net of
 rebates and Sales Tax / VAT and inclusive of Excise Duty.
 
 Expenses are accounted for on accrual basis and provision is made for
 all known losses and expenses.  Revenue is recognized to the extent
 that it is probable that the economic benefits will flow to the Company
 and the revenue can be reliably measured.
 
 1.04 Fixed Assets and Depreciation
 
 The Fixed Assets are stated at cost (Net of CENVAT and VAT where
 applicable) less accumulated depreciation.  Depreciation is provided on
 additions and deletions on pro-rata basis on Straight Line Method at
 the rates provided in Schedule XIV of the Companies Act, 1956. Direct
 costs are capitalized. All pre-operative expenses, on the commencement
 of commercial production attributable to the fixed assets are
 capitalized.
 
 1.05 Impairment of Assets
 
 Whenever events indicate that assets may be impaired, the assets are
 subject to a test of recoverability based on estimates of future cash
 flows arising from continuing use of such assets and from its ultimate
 disposal.
 
 A provision for impairment loss is recognized where it is probable that
 the carrying value of an asset exceeds the amount to be recovered
 through use or sale of the asset.
 
 1.06 Inventories
 
 Inventories are valued at lower of cost and net realizable value.
 
 a.  Raw Materials : Average Cost Method
 
 b.  Finished Goods & Work in Progress : Includes conversion and other
 cost incurred in bringing the inventories to their present location and
 condition.
 
 1.07 Retirement Benefits
 
 a.  The company contributes to the employees provident fund maintained
 under the Employees Provident Fund Scheme of the Central Government and
 the same is charged to Profit & Loss A/c.
 
 b.  Provision for Retirement Benefits is provided on the basis of
 actuarial valuation carried out at the year end.
 
 1.08 Insurance Claims
 
 Insurance claims are accounted for at the time of lodging the claim
 with the Insurance company. In case claim amount is greater than the
 book value of the assets / damaged, the accounting of claim is
 restricted to the respective book values of the assets lost/damaged.
 
 1.09 Taxation
 
 Tax expense comprises of Current and Deferred Tax. Current Income Tax
 is measured at the amount expected to be paid to the tax authorities in
 accordance with the Indian Income Tax Act, 1961.
 
 Deferred Tax is measured based on the tax rates and the tax laws
 enacted or substantively enacted at the Balance Sheet date.
 
 Deferred Tax is recognized, subject to the considerations of prudence,
 on timing differences, being the difference between taxable income that
 originate in one period and are capable of reversal in one or more
 subsequent periods.
 
 1.10 Foreign Currency Transactions
 
 All transactions in foreign currency are recorded at the rates of
 exchange prevailing on the dates when the relevant transactions take
 place.
 
 Monetary items in the form of Current Assets and Current Liabilities in
 foreign currency, outstanding at the close of the year are converted in
 Indian Currency at the appropriate rates of exchange prevailing on the
 date of the Balance Sheet. Resultant gain or loss is accounted during
 the year.
 
 1.11 Contingent Liabilities
 
 Provision in respect of present obligation arising out of past events
 are made in Accounts when reliable estimates can be made of the amount
 of the obligation. Contingent Liabilities, if material, are disclosed
 by way of Notes to Accounts.
 
 1.12 Miscellaneous Expenditure
 
 Costs incurred in connection with raising capital are adjusted against
 the Securities Premium Account.
 
 1.13 Borrowing costs attributable to acquisition or construction of
 qualifying assets are capitalized as part of the cost of such assets up
 to the date when such asset is ready for its intended use. Other
 borrowing costs are charged to the Profit & Loss A/c.
 
 Cash Credit Limit from PNB (Lead Bank) of Rs.1241.67 Lacs (Previous
 Year [Canara Bank] Rs.1146.46 Lacs) with Other Member Banks viz. OBC of
 Rs. 776.50 Lacs (Previous Year Rs.801.39 Lacs), IDBI Bank of Rs.951.99
 Lacs including PC Limit of Rs.76.00 Lacs (Previous Year - Nil) and
 State Bank of Hyderabad of Rs.400.06 Lacs (Previous Year Nil), is
 secured by way of hypothecation of Current Assests both Current &
 Future, Factory Land & Building, Plant & Machinery and other Movable
 Fixed Assets of the Company on First Charge Pari-Passu basis with PNB
 (Lead Bank) and other Consortium Member Banks. Personal Guarantee of
 Directors of the Company viz. Mr. Sanjiv Agarwal, Mr. Rakesh Kumar
 Agarwal, Mrs. Rajni Maheshwari, Corporate Guarantee of M/s Ramdeo
 Polysters Pvt. Ltd. and additional Personal Guarantee of Mr. Rajeev
 Maheshwari.