1. The Financial Statement have been prepared in accordance with the
 standards of accounting specified by the Institute of Chartered
 Accountants of India. The Company has been consistently following the
 accrual method in accounting its income and expenditure, except bonus,
 gratuity, interest on bank and financial institution, hire purchase
 loan and interest on others. The accounting is on the basis of a going
 concern concept only.
 
 2. Revenue from sale transactions is recognised as and when the
 property in the goods sold is transferred to the buyer for a definite
 consideration. Revenue from service transactions and other sources is
 recognised on the completion of the contract and there is no
 uncertainty regarding the amount of consideration of collectability.
 
 3. a) Domestic sales as reported is exclusive of Excise Duty, Sales
 Tax, Insurance and Transport charges.
 
 b) Export Sales are accounted for at the rate prevailing on the date on
 which the transaction takes place. Gain or loss arising out of exchange
 rate fluctuation is recognised and accounted for the date of
 realisation.
 
 4. Inventories: Raw Materials valued at cost or market value whichever
 is lower, mixing and process stock valued at cost, finished goods at
 cost or net realisable value whichever is lower and waste at residual
 price.
 
 5. The cost of Fixed Assets is shown at historical cost.
 
 6. Depreciation has been calculated on the rate specified in Schedule
 XIV of the said act as amended by the Circular No. 14 dt. 16.12.1993 by
 the Department of Company affairs on straight line method on all
 assets.
 
 a) Written down value method all assets upto 31/3/1990 and straight
 line method all assets from 1/4/1990 and onwards.
 
 b) For Machinery and Electrical Machinery depreciation has been
 provided at the rate applicable to continuous process plant as per
 Schedule XIV of the Companies Act, 1956.
 
 c) In respect of all assets purchased during the year, depreciation has
 been provided on the above rates on Prorata basis from date of
 purchase.
 
 d) In respect of all assets sold during the year depreciation has not
 been provided at the above rates on Prorata basis upto date of sale.
 
 7. In regard to Research and Development activities, being a member of
 South India Textile Research Association, the Company avails the
 services of the Association on need basis.
 
 8. CENVAT
 
 a) The value of CENVAT benefits eligible is being reduced from the
 value of purchase of materials, consumption of materials is arrived at
 accordingly.
 
 b) The value of CENVAT benefits eligible in respect of Capital items is
 being reduced from the value of purchase.
 
 9. Investments are shown at cost less any permanent diminution in
 value. Interest received on investment and dividend will be accounted
 on receipt basis.
 
 10. The Company's liability towards Gratuity to Employees is covered by
 a Group Gratuity Scheme with Life Insurance Corporation of India.
 
 11. It is the policy of the Company to amortise expenditure incurred on
 public issue expenses for a period of over 5 years.
 
 12. Borrowing Cost: Borrowing cost attributable to acquisition and
 construction of assets are capitalised as a part of the cost of such
 assets upto the date when such asset is ready for its intended use.
 Other borrowing costs are charged to Profit and Loss account.