A. Basis of preparation of financial statements:
 
 The accompanying financial statements are prepared in accordance with
 Indian Generally Accepted Accounting Principles (GAAP) under the
 historical cost convention on the accruals basis. GAAP comprises
 mandatory accounting standards issued by the Institute of Chartered
 Accountants of India (ICAI), the provisions of the Companies Act, 1956
 and guidelines issued by the Securities and Exchange Board of India.
 Accounting policies have been consistently applied and management
 evaluates all recently issued or revised accounting standards on an
 ongoing basis.
 
 1. Fixed Assets and Depreciation:
 
 Fixed Assets are stated at cost less accumulated depreciation. Cost
 includes all expenses related to acquisition and installation of the
 concerned assets and, any attributable cost of bringing the asset to
 the condition of its intended use.
 
 Depreciation is provided under the straight-line method based on useful
 life of assets as estimated by the Management. Depreciation is charged
 on a monthly pro-rata basis for assets purchased / sold during the
 year. Individual assets acquired for less than Rs. 5,000 are entirely
 depreciated in the year of acquisition.  Out of the total Depreciation
 on Assets, 50% is transferred to Product development expenses account
 as 50% of the assets is used for Product Development purpose. The
 Management''s estimate of useful life for various fixed assets is as
 under:
 
 Asset Useful life of Asset in years
 
 Buildings 30 Lab Equipment 15 Mis.Fixed Assets 20 Air Conditioners 15
 Office Equipment 15 Electrical Instillation 15 Generator 15 Furniture
 and Fixtures 15 Plant and Machinery 20 Vehicles|;10
 
 2.  REVENUE RECOGNITION
 
 Revenue for the company is from sales of products and medical
 diagnostic services. Revenue from sales and services are recognized on
 formal acceptance by the customer/patient.
 
 3.  INVENTORIES
 
 Jlaw Materials - Aicosi or the net realizablevalue whichever is less is
 considered. Cost is determined on a First in First out basis.
 
 Finished Goods - There are no closing stocks of finished goods.
 
 4.  Expenditure on the ongoing product development for Meningitis
 Vaccine, Erythropoietin, Tacrolimus, Statins (Orlistat, Lovastatin,
 Pravastatin), Cancer products and Oral Insulin will be capitalized and
 written off over a period of the expected useful life of the respective
 products after obtaining commercial license/commencement of commercial
 production of the same.
 
 The management is of the opinion that the product development
 expenditure incurred on the products is technically feasible to
 generate future economic benefits and the company has sufficient
 technical and financial resources to complete it.
 
 5.  RETIREMENT BENEFITS
 
 A) The Company is contributing to the Employees Provident fund
 maintained under the Employees Provident Fund Scheme by the Central
 Government.
 
 B) Leave encashment will be debited to profit and loss account as and
 when it has been paid.
 
 C) The Company is contributing to the Employees Gratuity fund
 maintained under the GGCA Fund Scheme by the LIC of India.
 
 6.  INTERNALLY GENERATED INTANGIBLE ASSETS
 
 Direct and indirect costs incurred during planning stage, and on
 operational activities charged to revenue in the year in which it has
 incurred.
 
 Direct cost incurred on application & infrastructure development,
 design and content development stages are capitalized if and only if
 (i) it is probable that the future economic benefits that are
 attributable to the asset will flow to the enterprise and (ii) the cost
 of the asset can be measured reliably. Indirect cost incurred during
 application, infrastructure, development stage are charged to revenue.
 
 7.  EARNINGS PER SHARE
 
 In determining earnings per share, the company considers the net profit
 after tax. The number of shares used in computing basic earnings per
 share is the weighted average number of shares outstanding at the
 beginning of the year. The number of shares used in computing diluted
 earnings per share comprises the weighted average shares outstanding
 during the year.
 
 8.  CASH FLOW STATEMENT
 
 Cash flows are reported using the indirect method, whereby net profit
 before tax is adjusted for the effects of transactions of a non-cash
 nature and any deferrals or accruals of past or future cash receipts or
 payments.  The cash flows from regular revenue generating, investing
 and financing activities of the company are segregated. Cash flows in
 foreign currencies are accounted at average monthly exchange rates that
 approximate the actual rates exchange prevailing at the dates of the
 transactions.
 
 9.  INCOME-TAX
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the year. Deferred tax is not provided as per AS-22,
 because of huge losses of the past year which have been carried forward
 to this year.