a) Basis of preparation of financial statements:
 
 The accounts are prepared on accrual basis under the historical cost
 convention in accordance with the applicable accounting standards
 referred to in section 211(3C) and other relevant provisions of the
 Companies Act, 1956.
 
 b) Use of Estimates:
 
 The preparation of financial statements, in conformity with the
 generally accepted accounting principles, requires estimates and
 assumptions to be made that affect the reported amount of assets and
 liabilities as of the date of the financial statements and the reported
 amount of revenues and expenses during the reporting period. Difference
 between the actual results and estimates are recognized in the period
 in which the results materialise.
 
 c) Revenue Recognition:
 
 i) Sales:
 
 Sales comprise sale of goods, services and export incentives. Revenue
 from sale of goods is recognized:
 
 i) when all the significant risks and rewards of ownership are
 transferred to the buyer and the company retains no effective control
 of the goods transferred to a degree usually associated with ownership;
 and
 
 (ii) no significant uncertainty exists regarding the amount of the
 consideration that will be derived from the sale of goods.  
 
 (iii) Revenue in respect of the export incentives is recognized on post
 export basis.
 
 ii) Interest:
 
 Interest income is recognized on a time proportion basis taking into
 account the amount outstanding and the rate applicable.
 
 iii) Dividend:
 
 Dividend income is recognized when the right to receive the payment is
 established.
 
 iv) Insurance and Other Claims :
 
 Revenue in respect of claims is recognized when no significant
 uncertainty exists with regard to the amount to be realized and the
 ultimate collection thereof.
 
 d) Employees Benefits:
 
 (a) Short Term Employee Benefits :
 
 Short Term Employee Benefits are recognized as an expense on an
 undiscounted basis in the profit and loss account of the year in which
 the related service is rendered.
 
 (b) Post Employment Benefits :
 
 i) Defined Contribution Plans:
 
 (1.1) Superannuation :
 
 The liability in respect of eligible employees covered under the scheme
 is provided through a policy taken from Life Insurance Corporation of
 India by an approved trust formed for the purpose. The premium in
 respect of such policy is recognized as an expense in the period in
 which it falls due.
 
 (1.2) Provident Fund :
 
 Contribution to Provident Fund is made in accordance with the
 provisions of the Employees Provident Fund and Miscellaneous Provisions
 Act, 1952 and is recognized as an expense in the profit and loss
 account.
 
 ii) Defined Benefit Plans :
 
 (1.1) Gratuity :
 
 Provision for gratuity liability to employees is made on the basis of
 actuarial valuation as at the close of the year.
 
 (1.2) Leave with Wages :
 
 Provision for leave with wages is made on the basis of actuarial
 valuation as at the close of the year.
 
 iii) The actuarial gain/loss is recognized in statement of profit and
 loss account.
 
 e) Fixed Assets:
 
 i.  Fixed Assets are stated at historical cost less accumulated
 depreciation.
 
 ii. Cost of fixed assets comprises its purchase price and any
 attributable expenditure (both direct and indirect) for bringing an
 asset to its working condition for its intended use.
 
 f) Intangible Assets:
 
 Intangible assets are stated at cost less accumulated amount of
 amortization.
 
 g) Depreciation:
 
 i) Depreciation on all assets except computers is provided on straight
 line method in accordance with and in the manner specified in Schedule
 XIV to the Companies Act, 1956. In case of computers, depreciation is
 provided on systematic basis to each accounting period during the
 estimated useful life thereof.
 
 ii) Depreciation on assets costing Rs. 5,000/- or below is charged @
 100% per annum on proportionate basis.
 
 h) Amortization:
 
 i) Intangible assets are amortized on straight line method over their
 estimated useful life.
 
 ii) Expenditure on Power Lines is amortised on straight line method
 over their estimated useful life.
 
 i) Investments:
 
 Long term Investments are carried at cost less provision, if any, for
 decline in value which is other than temporary. Current investments are
 carried at lower of cost and fair value.
 
 j) Inventories:
 
 Inventories are valued at cost or net realizable value, whichever is
 lower. The cost in respect of the various items of inventory is
 computed as under:
 
 - In case of raw materials at weighted average cost plus direct
 expenses.
 
 - In case of stores and spares at weighted average cost plus direct
 expenses.
 
 - In case of work in process at raw material cost plus conversion costs
 depending upon the stage of completion.
 
 - In case of finished goods at raw material cost plus conversion costs,
 packing cost, excise duty (if applicable) and other overheads incurred
 to bring the goods to their present location and condition.
 
 k) Cenvat Credit:
 
 Cenvat credit of excise duty paid on inputs, capital assets and input
 services is recognised in accordance with the Cenvat Credit Rules,
 2004.
 
 l) Subsidy:
 
 Government grants available to the company are recognised when there is
 a reasonable assurance of compliance with the conditions attached to
 such grants and where benefits in respect thereof have been earned and
 it is reasonably certain that the ultimate collection will be made.
 Government subsidy in the nature of promoters contribution is credited
 to capital reserve. Government subsidy received for a specific asset is
 reduced from the cost of the said asset.
 
 m) Borrowing Costs:
 
 Borrowing costs that are directly attributable to the acquisition,
 construction or production of a qualifying asset are capitalized as
 part of the cost of the asset. Other borrowing costs are recognized as
 an expense in the period in which they are incurred.
 
 n) Segment Information :
 
 Segment information is prepared in conformity with the accounting
 policies adopted for preparing and presenting the financial statements
 of the enterprise as a whole.
 
 o) Operating Leases :
 
 Assets acquired on leases wherein a significant portion of the risks
 and rewards of ownership are retained by the lessor are classified as
 operating leases. Lease rentals paid for such leases are recognised as
 an expense on systematic basis over the term of lease.
 
 p) Foreign Currency Transaction :
 
 i) Foreign currency transactions are recorded on initial recognition at
 the rate prevailing on the date of the transaction.  Where export bills
 are negotiated with the bank, the export sales are recorded at the rate
 on the date of negotiation as the said rate approximates the actual
 rate at the date of the transaction.  
 
 ii) Foreign currency monetary items are reported using the closing
 rate. Exchange differences arising on the settlement of monetary items
 or on reporting the same at the closing rate as at the balance sheet
 date are recognized as income or expense in the period in which they
 arise.
 
 iii) The premium or discount arising at the inception of forward
 exchange contract is amortized as an expense or income over the life of
 the contract. Exchange difference on such a contract is recognised in
 the statement of profit and loss in the reporting period in which the
 exchange rates change. Profit or loss arising on cancellation or
 renewal of such contract is recognized as income or expense in the
 period in which such profit or loss arises.
 
 iv) The exchange difference to the extent of loss, arising on forward
 contracts to hedge the transactions in the nature of firm commitments
 and/or highly probable forecast transactions is recognised in the
 Profit and Loss Account. The profit, if any arising thereon is ignored.
 
 q) Accounting for Taxes on Income :
 
 The accounting treatment followed for taxes on income is to provide for
 Current Tax and Deferred Tax. Current Tax is the aggregate amount of
 income-tax determined to be payable in respect of taxable income for a
 period. Deferred tax is the tax effect of timing differences between
 taxable income and accounting income that originate in one period and
 are capable of reversal in one or more subsequent periods.
 
 r) Earning per Share :
 
 Basic earning per share is computed by dividing the net profit or loss
 for the period attributable to equity shareholders by the weighted
 average number of equity shares outstanding during the period. Diluted
 earning per share is computed by taking into account the aggregate of
 the weighted average number of equity shares outstanding during the
 period and the weighted average number of equity shares which would be
 issued on conversion of all the dilutive potential equity shares into
 equity shares.
 
 s) Impairment of Assets :
 
 At each balance sheet date an assessment is made whether any indication
 exists that an asset has been impaired. If any such indication exists,
 an impairment loss i.e. the amount by which the carrying amount of an
 asset exceeds its recoverable amount is provided in the books of
 account.
 
 t) Provision and Contingent Liabilities :
 
 i) Provision is recognized (for liabilities that can be measured by
 using a substantial degree of estimation) when:
 
 a) the company has a present obligation as a result of a past event;
 
 b) a probable outflow of resources embodying economic benefits is
 expected to settle the obligation; and
 
 c) the amount of the obligation can be reliably estimated.  ii)
 Contingent liability is disclosed in case there is :
 
 a) possible obligation that arises from past events and existence of
 which will be confirmed only by the occurrence or non-occurrence of one
 or more uncertain future events not wholly within the control of the
 enterprise; or
 
 b) a present obligation arising from past events but is not recognised
 
 (i) when it is not probable that an outflow of resources embodying
 economic benefits will be required to settle the obligation; or 
 
 (ii) a reliable estimate of the amount of the obligation cannot be
 made.