1) Accounting Convention
 
 The accounts are prepared on historical cost basis and based on accrual
 method of accounting and applicable Accounting Standards.
 
 2) Use of Estimates
 
 The preparation of financial statements requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities on date of the financial statement and the reported amount
 of revenues and expenses during the reporting period. Difference
 between the actual result and estimates are recognised in the period in
 which the results are known/ materialized.
 
 3) Fixed Assets
 
 a) Tangible Fixed Assets are stated at cost of acquisition or
 construction less accumulated depreciation. The cost of fixed assets
 includes non-refundable taxes and levies, freight and other incidental
 expenses related to acquisition and installation of the respective
 assets.
 
 b) Certain computer software costs are capitalised and recognised as
 intangible assets in terms of Accounting Standard 26 on intangible
 assets based on materiality, accounting prudence and significant
 economic benefits expected to flow therefrom for a period longer than 1
 year. Capitalised cost include direct cost of implementation and
 expenses directly attributable to the implementation.
 
 c) The Company evaluates the impairment losses on the fixed assets
 whenever events or changes in circumstances indicate that their
 carrying amounts may not be recoverable. If such assets are considered
 to be impaired the impairment loss is then recognised for the amount by
 which the carrying amount of the assets exceeds its recoverable amount,
 which is the higher of an assets net selling price and value in use.
 For the purpose of assessing impairment, assets are grouped at the
 smallest level for which there are separately identifiable cash flows.
 
 4) Depreciation and Amortisation
 
 a) Depreciation on fixed assets is provided on Straight Line Method in
 accordance with Section 205(2)(b) of the Companies Act, 1956 at the
 rate and in the manner prescribed in Schedule XIV of the said Act.
 
 b) Computer software costs capitalised are amortised using the Straight
 Line Method over estimated useful life of 3 to 5 years, as estimated at
 the time of capitalisation.
 
 5) Investments
 
 a) Long Term investments are stated at cost and provision is made to
 recognise any dimunision in value, other than that of temporary nature.
 
 b) Current investments are carried at lower of cost and fair value.
 Diminution in value is charged to the profit and loss account.
 
 6) Inventories
 
 a) Raw materials, Process stock and Finished Goods are valued at lower
 of cost or net realisable value.
 
 b) Cost for Raw materials is determined on Weighted Average/FIFO basis,
 net of cenvat credit availed.
 
 c) Cost for Finished Goods and Process Stock is determined taking
 material cost [net of cenvat credit availed] labour and relevant
 appropriate overheads and cenvat duty.
 
 7) Revenue Recognition
 
 In appropriate circumstances, Revenue (income) is recognised when no
 significant uncertainty as to determination or realisation exists.
 
 8) Sales/Service Income
 
 Sales of product are recognised when risk and rewards of ownership of
 the products are passed on to the customers, which is generally on
 despatch of goods. Exports sales are accounted on the basis of date of
 Bill of lading. Sales value is inclusive of Cenvat Duty and but does
 not include other recoveries such as insurance charges, transport
 charges etc. Service income excludes service tax.
 
 9) Cenvat Credit
 
 Cenvat credit is accounted for on accrual basis on purchase of eligible
 inputs, capital goods and services.
 
 10) Foreign Currency Transactions
 
 a) Monetary items denominated in foreign currency are translated at the
 exchange rate prevailing on the last day of the accounting year.
 Foreign currency transactions are accounted at the rate prevailing on
 the date of transaction.
 
 b) 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 transaction.
 
 c) Gain or loss arising out of translation/conversion is taken credit
 for or charged to the profit and loss account.
 
 11) Prior Period Expenses/Income
 
 Material items of prior period expenses/income are disclosed
 separately.
 
 12) Employees Benefits
 
 a) Defined Contribution Plan
 
 The Companys contributions paid / payable for the year to Provident
 Fund are recognised in the profit and loss account.
 
 b) Defined Benefit Plan
 
 The Companys liabilities towards gratuity, and leave encashment are
 determined using the projected unit credit method which considers each
 period of service as giving rise to an additional unit of benefit
 entitlement and measures each unit separately to build up the final
 obligation. Past services are recognised on a straight line basis over
 the average period until the amended benefits become vested. Actuarial
 gain and losses are recognised immediately in the profit and loss
 account as income or expense. Obligation is measured at the present
 value of estimated future cash flows using a discounted rate that is
 determined by reference to market yields at the balance sheet date on
 Government bonds where the currency and terms of the Government bonds
 are consistent with the currency and estimated terms of the defined
 benefit obligation.
 
 13) Borrowing Cost
 
 Interest and other costs in connection with the borrowings of the funds
 to the extents related/attributed to the acquisition / construction of
 qualifying fixed assets are capitalised upto the date when such assets
 are ready fortheir intended use and other borrowing costs are charged
 to profit and loss account.
 
 14) Miscellaneous Expenditure
 
 Shares issue expenses incurred are amortised over a period of five
 years.
 
 15) Taxes on Income
 
 Current Tax is the amount of tax payable on the taxable income for the
 year as determined in accordance with provision of Income Tax Act,
 1961. Deferred tax resulting from timing difference between book and
 taxable profit is accounted for using the tax rates and laws that have
 been enacted or subsequently enacted as on the balance sheet date. The
 deferred tax asset is recognised and carried forward only to the extent
 that there is a reasonable certainty that the assets will be realised
 in future.
 
 16) Leases
 
 Lease transaction entered into on or after April 1, 2001:
 
 a) Assets acquired under lease where the company has substantially all
 risk and rewards incidental to ownership are classified as finance
 leases. Such assets are capitalised at the inception of lease at the
 lower of fair value or the present value of minimum lease payment and a
 liability is created for an equivalent amount. Each lease rental paid
 is allocated between the liability and the interest cost, so as to
 obtain a constant periodic rate of interest on the outstanding
 liability of each period.
 
 b) Assets acquired on lease where a significant portion of risk and
 rewards incidental to ownership is retained by the leasor are
 classified as operating lease. Lease rental are charged to the profit
 and loss account on accrual basis.
 
 17) Earnings Per Share
 
 The Company reports basic and diluted Earnings Per Share (EPS) in
 accordance with Accounting Standard 20 on Earnings Per Share. Basic EPS
 is computed by dividing the net profit or loss for the year by the
 weighted average number of equity shares outstanding during the year.
 
 18) Provisions, Contingent Liabilities and Contingent Assets
 
 Provisions involving substantial degree of estimation in measurement
 are recognised when there is a present obligation as a result of past
 events and it is probable that there will be an outflow of resources.
 Contingent liabilities are not recognised but are disclosed in the
 notes. Contingent Assets are neither recognised nor disclosed in the
 financial statements.