I.  ACCOUNTING CONVENTION
 
 The financial statements are prepared under the historical cost
 convention, in accordance with applicable accounting standards and
 relevant presentational requirements of the Companies Act, 1956.
 
 II.  FIXED ASSETS, DEPRECIATION AND AMORTISATION Tangible Assets:
 
 Fixed assets are stated at cost of acquisition less accumulated
 depreciation. Cost of Acquisition or Construction is inclusive of
 freight,duties,taxes,and other incidental expenses but excluding CENVAT
 in so far as this is available for set off against excise duty.
 Depreciation is charged on pro-rata basis at the Straight Line Method
 rates prescribed in Schedule XIV of the Companies Act, 1956 except
 leasehold land which is amortised over the lease period Items costing
 Rs. 5,000/- or less have been fully depreciated in the year of
 purchase.
 
 Intangible Assets:
 
 Acquired intangible assets are valued at cost less accumulated
 amortisation and any impairment losses and amortised over a period of
 five years on the basis of estimated economic life.
 
 III.  INVENTORY VALUATION
 
 Raw Materials,Stores & Spares are stated at lower of cost or net
 realisable value.
 
 Work in Progress and Stock of Finished & Trading goods are stated at
 lower of cost or net realisable
 
 value.
 
 In determining the cost of raw materials, stores & spares weighted
 average cost method is used
 
 while in the case of trading goods FIFO method is used.
 
 Work in progress and finished goods include cost of conversion and
 other costs incurred in bringing
 
 the inventories to their present location and condition.
 
 IV.  RESEARCH & DEVELOPMENT
 
 Revenue expenditure incurred for R&D is charged to the Profit and Loss
 Account. Fixed assets purchased for R&D activities are capitalised in
 the year the same are put to use.
 
 V.  EMPLOYEE BENEFITS
 
 i) Defined Contribution Plan :
 
 Employees benefits in the form of Provident Fund, Employee State
 Insurance and Labour Welfare Fund are considered as defined
 contribution plans and the contributions are charged to the Profit and
 Loss Account of the year when the contribution to respective funds are
 due.
 
 ii) Defined Benefit Plan :
 
 Retirement benefits in the form of Gratuity is considered as defined
 benefit obligations and are provided for on the basis of an actuarial
 valuation, using the projected unit credit method, as at the date of
 the Balance Sheet.
 
 Actuarial gain/losses are immediately recognized in the Profit and Loss
 Account.  iii) Other Long Term Benefits :
 
 Long term compensated abscences are provided for on the basis of actual
 liability as at the date of the Balance Sheet.
 
 VII.  DEFERRED TAX
 
 Deferred tax is recognised, subject to consideration of prudence,on
 timing differences,representing the difference between the taxable
 income/(loss) and the accounting income/(loss) that originated in one
 period and are capable of reversal in one or more subsequent
 periods.Deferred tax assets and
 
 liabilities are measured using tax rates and the tax laws that have
 been enacted or substantively enacted by the Balance Sheet
 date.Deferred tax assets viz. unabsorbed depreciation and carry forward
 losses are recognised if there is virtual certainty that sufficient
 future taxable income will be available against which such deferred tax
 assets can be realised.
 
 VIII.  BORROWING COST
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalised as part of cost of
 such assets upto the date the assets are ready for their its intended
 use. All other borrowing costs are recognised as an expense in the year
 in which they are incurred.
 
 IX.  PROVISIONS AND CONTINGENT LIABILITIES AND CONTINGENT ASSETS
 
 Provisions are recognised for liabilities that can be measured only by
 using a substantial degree of estimation, if
 
 a) the Company has a present obligation as a result of a past event,
 
 b) a probable outflow of resources is expected to settle the obligation
 and
 
 c) the amount of obligation can be reliably estimated.
 
 Reimbursements expected in respect of expenditure required to settle a
 provision is recognised only when it is virtually certain that the
 reimbursement will be received.
 
 Contingent Liability is disclosed in case of
 
 a) a present obligation arising from the past event, when it is not
 probable that an outflow of resources will be required to settle the
 obligation
 
 b) a possible obligation, of which the probability of outflow of
 resources is remote.  Contingent Assets are neither recognised nor
 disclosed.
 
 Provisions, Contingent Liabilities and Contingent Assets are reviewed
 at each Balance Sheet date.
 
 X.  IMPAIRMENT OF ASSETS
 
 Impairment is ascertained at each balance sheet date in respect of Cash
 Generating Units. An impairment loss is recognised whenever the
 carrying amount of an asset exceeds its recoverable amount. The
 recoverable amount is the greater of the net selling price and value in
 use. In assessing value in use, the estimated future cash flows are
 discounted to their present value based on an appropriate discount
 factor.
 
 In respect of item (iii) to (v) future cash outflows in respect of
 contingent liabilities is determinable only on receipt of judgement
 pending at various forums/authorities.