i.  Basis of Accounting:
 
 The Company follows the Mercantile System of Accounting and recognizes
 Income and Expenditure on Accrual Basis. The financial statements are
 prepared under the historical cost convention and are in accordance
 with the requirements of Companies Act, 1956, applicable Accounting
 Standards and accepted accounting principles.
 
 ii.  Fixed Assets and Capital Work in Progress:
 
 Fixed Assets are stated at cost less accumulated Depreciation. Cost of
 acquisition or construction is inclusive of freight, duties, taxes and
 incidental expenses incurred during construction period.
 
 Capital Work-in-Progress comprises cost of fixed assets that are not
 ready for its intended use at the reporting date. Expenditure during
 construction period that are directly attributable to the cost of
 bringing the assets to its working conditions and all common costs
 allocated on rational basis are treated as ''Pre-Operative Expenses''
 pending allocation and are shown under ''Capital Work-in Progress'' and
 the same are allocated on pro-rata basis to the assets capitalized on
 commencement of commercial operations.
 
 Items of expenditure that meet the recognition criteria as mentioned in
 Accounting Standard are classified as intangible Assets.
 
 iii.  Depreciation/Amortization :
 
 Depreciation on fixed assets have been provided on Straight Line Method
 at the rates in the manner specified in Schedule XIV to the Companies
 Act, 1956. Low value items costing individually Rs. 5,000/- or less are
 fully depreciated in the year of purchase. Depreciation is charged on
 pro-rata basis in respect of assets acquired/sold during the year.
 
 Post impairment, depreciation is provided on the revised carrying value
 of the asset over its remaining useful life.
 
 Leasehold Developments are amortized at lower of period of lease or ten
 years.
 
 Intangible Assets are amortised over a period of economic benefits not
 exceeding ten years.
 
 iv.  Leases :
 
 Assets acquired under finance lease are recognized at the lower of the
 fair value of leased assets at inception and the present value of
 minimum lease payments, lease payments are apportioned between the
 finance charges and the reduction of the outstanding liability. The
 finance charges are allocated to the period during the lease term at a
 constant periodic rate of interest on the remaining balance of the
 liability.
 
 In respect of fixed assets taken on finance lease, when there is
 reasonable certainty that the Company will obtain ownership by the end
 of the lease term, depreciation is provided in accordance with the
 policy followed by the Company for owned assets.
 
 v.  Inventories:
 
 Inventories (other than By-products) are valued at lower of cost or net
 realizable value.
 
 Cost of inventories is determined on weighted average. Cost of finished
 goods and Work in Progress has been worked out on absorption cost
 basis.
 
 By- products and residuals are valued at net realizable value.
 
 vi.  Taxes on Income:
 
 a) Current tax is determined on the amount of tax payable in respect of
 taxable income for the year. Fringe Benefit Tax is determined at
 current applicable rates on expenses falling within the ambit of fringe
 benefits as defined under the Income Tax Act,1961.
 
 b) Deferred tax assets/liabilities are provided on significant timing
 differences arising from the different treat- ments in accounting and
 taxation of relevant items. Deferred tax assets/liabilities shall be
 reviewed as at each Balance Sheet date, based on development during the
 year, to reassess realization/liabilities.
 
 c) Deferred Tax Assets in respect of Accumulated Loss and Unabsorbed
 Depreciation are recognized and carried forward only if there is
 virtual certainty of its realization.
 
 d) Deferred Tax resulting from timing difference which originate during
 the tax holiday period but are expected to reverse after tax holiday
 period is recognized in the year in which the timing differences
 originate using the tax rates and laws enacted or substantively enacted
 by the balance sheet date.
 
 e) Minimum Alternate Tax (MAT) credit is recognized as an asset only
 when and to the extent there is convinc- ing evidence that the Company
 will be in a position to avail such credit under the provisions of the
 Income Tax Act, 1961.
 
 vii Sales :
 
 Sales include Excise Duty, Administrative Charges & Entry Tax etc and
 exclude Sales TaxA/alue Added Tax.
 
 viii. Borrowing Costs:
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as a part of the cost
 of such assets, when such asset is ready for its intended use. All
 other borrowing costs are charged to revenue.
 
 ix.  Impairment of Assets:
 
 An asset is treated as impaired when the carrying cost of assets
 exceeds its recoverable value and impairment loss is charged to profit
 and loss account in the year in which an asset is identified as
 impaired. The impairment loss recognized in prior accounting periods is
 reversed if there has been a change in the estimate of recoverable
 amount.
 
 x.  Foreign Currency Transactions:
 
 Transactions in foreign currency are recorded at the exchange rate
 prevailing on the date of transaction. Monetary items denominated in
 foreign currencies at the year end translated at the year end rates
 which is likely to be realized from, or required to disburse at the
 balance sheet date. Exchange differences arising on settlement of
 monetary items at rates different from those at which they were
 initially recorded / reported in financial statements are recognized as
 income or expense in the year in which they arise except exchange
 differences on liabilities/ assets incurred for acquisition of fixed
 assets from outside India which are capitalized/ decapitalised. Premium
 in respect of forward contract is accounted for over the period of the
 contract.
 
 xi.  Provisions, Contingent Liabilities and Contingent Assets:
 
 Provisions involving substantial degree of estimation in measurement
 are recognized 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 recognized but are disclosed in notes.
 Contingent assets are neither recognized nor disclosed in the financial
 statements.
 
 xii Employee Benefits :
 
 a) Short -term employee benefits are recognized as an expense at the
 undiscounted amount in the Profit & Loss Account of the period in which
 the related service is rendered.
 
 b) Long -term employee benefits are recognized as an expense in the
 Profit & Loss Account for the year in which the employee has rendered
 services. The expenses are recognized at the present value of the
 amount payable as per actuarial valuations, using Projected Unit Credit
 Method. Actuarial gains and losses in respect of such benefits are
 recognized in the Profit and loss Account.