(1) Basis for Preparation of Accounts
 
 The Accounts have been prepared to comply in all material aspects with
 applicable accounting principles in India, the Accounting Standards
 issued by the Institute of Chartered Accountants of India and the
 presentational requirements of the Companies Act, 1956(the Act).
 
 (2) Revenue Recognition
 
 Sales are recognized when goods are supplied and are recorded net of
 returns, trade discounts and sales tax but include, where applicable,
 excise duty. It does not include inter divisional transfers.  Income
 from services rendered is accounted based on agreements / arrangements
 with the concerned parties.  Income in the form of export benefits is
 accrued in the year the exports occur and is netted against the cost of
 raw materials.
 
 (3) Expenditure
 
 Expenses are accounted for on accrual basis and provision is made for
 all known losses and liabilities.
 
 Revenue expenditure on research and development is charged to revenue
 in the year in which it is incurred.
 
 Capital expenditure on research and development is shown as an addition
 to fixed assets.
 
 (4) Fixed Assets
 
 Expenditure, which results in the creation of an asset with certain
 limits on economic life and cost, is capitalized. For the above
 purpose, expenditure on acquisition of technical know-how and cost of
 design and drawings is considered as an asset under Plant, machinery
 and equipments. Cost of an asset comprises its purchase price (net of
 modvat, where the modvat is availed and utilized) and expenses
 attributable to its acquisition including borrowing cost in respect of
 qualifying assets.  Depreciation is provided (except in case of lease
 hold land which is amortised over forty years and cost of design and
 drawings which is amortised over ten years) on the straight-line method
 at the rates and in the manner specified in schedule XIV to the Act. No
 depreciation is however provided in the year of disposal.
 
 (5) Inventories
 
 Inventories are valued at the lower of cost and estimated net
 realizable value, and after making due provision for obsolescence and
 other anticipated losses, wherever considered necessary. Cost includes
 excise duty and customs duty (net of modvat), where applicable and
 other costs incurred in bringing the inventories to their present
 location and condition. Cost is ascertained in respect of (a) Raw
 Materials, Components, Stores and Spares on FIFO basis and (b)
 Work-in-Progress and Finished Goods under absorption costing method and
 includes cost of conversion.
 
 (6) Retirement Benefits
 
 Contributions to defined contribution schemes such as provident fund
 and pension fund are charged to the profit and loss account as
 incurred. The Company also provides retirement benefits in the form of
 gratuity and leave encashment, the liability for which is estimated and
 provided for in the financial statements.
 
 (7) Foreign Currency transaction / translation
 
 Exchange differences relating to fixed assets are adjusted in the cost
 of the asset. Any other exchange differences are dealt with in the
 profit and loss account.
 
 (8) Claims
 
 Claims against the Company not acknowledged as debts, will be disclosed
 after a careful evaluation of the facts and legal aspects of the matter
 involved. Claims made by the company will be accrued as income only in
 the year the same is determined / accepted.