1. Significant Accounting Policies followed by the Company :
 
 a) Convention
 
 The accounts are prepared under the historical cost convention in
 accordance with the provisions of the Companies Act, 1956 and
 materially comply with mandatory Accounting Standards issued by The
 Institute of Chartered Accountants of India except to the extent
 disclosed in the notes below.
 
 b) Sales
 
 Sales comprise sale of goods, utilities and services.
 
 c) Income
 
 The income is accounted for on accrual basis except claims, which are
 accounted for on cash basis.
 
 d) Expenses
 
 Expenses are accounted for on accrual basis.
 
 e) Fixed Assets
 
 All Fixed Assets are stated at historical cost less depreciation except
 Land, Building and Plant & Machinery which have been revalued in the
 year 1997 as per Note No.6.
 
 f) Depreciation
 
 i) The Company has been following the straight line method for
 providing the depreciation.
 
 ii) The depreciation has been calculated in accordance with circular
 No.1/86 dated 21.08.1986 issued by the Company Law Board for the assets
 acquired prior to 02.04.1987.
 
 iil) The depreciation has been provided in accordance with the rates
 and the manner specified in Schedule XIV of the Companies Act, 1956.
 
 iv) The assets costing Rs.5,000/- or less acquired during the year are
 depreciated at 100%.
 
 v) Depreciation on Co-generation & Recovery Plant has been provided @
 20% on the basis of technological evaluation from a Chartered engineer
 & management's estimate of the balance useful life of these plants.
 Consequent to this there is an additional charge for depreciation
 during the year of Rs 3,59,47,907/-. Had there been no change, the
 charge for the year would have been lower by a similar amount.
 
 g) Inventories
 
 Inventories are valued at cost or net realizable value, whichever is
 lower. The cost in respect of various items of inventory is computed as
 under:
 
 In case of raw material, at weighted average cost plus direct expenses.
 In case of stores & spares, at weighted average cost plus direct
 expenses.
 
 In case of work-in process, at raw material cost plus conversion cost
 depending upon the stage of completion.
 
 In case of finished goods, at raw material cost plus conversion cost,
 packing cost, excise duty and other overheads incurred to bring the
 goods to their present condition & location.
 
 h) Investments
 
 Long term investments are carried at cost less provision, if any for
 diminution in value, other than temporary.  
 
 i) Cenvat
 
 Cenvat credit on excise duty paid goods, except on inputs, which are
 used in the manufacturing of finished goods which do not attract excise
 duty, is accounted for by reducing the cost price of the related goods.
 
 j) Miscellaneous Expenditure
 
 Preliminary expenses and share issue expenses are treated as deferred
 expenditure and amortized equally over a period of ten years.
 
 k) Retirement Benefits Gratuity
 
 The Company has entered into an agreement with Smt Mayadevi Trust for
 the discharge of the gratuity liability to the employees of the
 Company. The employees of the Company have acquired membership of the
 said Trust. The said Trust has taken a policy under group gratuity
 scheme of LIC and the Company is contributing on monthly basis to the
 Trust towards the payment of premium for such policy. The accrued
 liability in respect of gratuity payable to employees is covered in the
 manner aforesaid.
 
 Superannuation
 
 The liability in respect of employees covered under the Scheme is
 provided through a policy taken from Life Insurance Corporation of
 India by Smt Mayadevi Trust. The premium paid for such policy on
 monthly basis through the said Trust is treated as revenue expenditure.
 
 Provident Fund
 
 Contribution to Provident Fund is made in accordance with the
 provisions of the Employees Provident Fund (Miscellaneous Provisions)
 Act, 1952 and is charged to revenue.