i) Basis of Accounting:
 
 Financial Statements are prepared under the historical cost convention
 on the basis of a going concern in accordance with the mandatory
 accounting standards issued by the Institute of Chartered Accountants
 of India and the provisions of the Companies Act, 1956.
 
 ii) Revenue Recognition:
 
 Revenues and expenses are recognised on accrual basis with the
 exception of insurance claims, export incentives, interest on calls in
 arrears and interest on over due receivables which are accounted on
 cash basis.
 
 iii) Fixed Assets:
 
 Fixed Assets are stated at cost (Net of Cenvat, wherever applicable)
 less depreciation. Cost includes freight, duties and taxes and other
 expenses related to acquisition and installation. Pre-operative
 expenses incurred during the construction period in case of major
 acquisitions and installations are capitalised.
 
 iv) Depreciation:
 
 Depreciation on fixed assets has been provided on the straight line
 method and at the rates and in the manner specified in Schedule XIV to
 the Companies Act, 1956.
 
 v) Borrowing Costs:
 
 Borrowing Costs incurred during construction of an asset that takes a
 substantial period of time to get ready is capitalised over the cost of
 asset up to the date of use.
 
 vi) Investments:
 
 Investments are classified as long term and current investments. Long
 Term Investments are carried at cost less provision for other than
 temporary diminution, if any, in value of such investments. Current
 investments are carried at lower of cost and fair value.
 
 vii) Inventories:
 
 a) Consumables, Stores and Spares are valued at lower of cost or net
 realisable value on weighted average basis.
 
 b) Raw Materials are valued at cost on weighted average basis,
 work-in-process are valued at cost and finished goods are valued at the
 lower of cost or net realisable value.
 
 viii) Foreign Currency Transactions:
 
 a) Transactions denominated in foreign currencies are recorded at the
 exchange rate prevailing at the time of the transaction.
 
 b) Monetary items denominated in foreign currencies at the year end are
 translated at the year-end rates, the resultant gain or loss will be
 recognised in the profit and loss account.
 
 c) Any gain or loss arising on account of exchange difference on
 settlement of transaction is recognised in the profit and loss account.
 
 ix) Employee Benefits:
 
 a) Retirement benefits in the form of Provident Fund and Superannuation
 Fund are defined contribution schemes and the contributions are charged
 to the Profit and Loss Account of the year when the contribution to the
 respective funds are due. The Company has created an approved
 Superannuation Fund and accounts for the contribution made to LIC
 against an insurance policy taken with them. There are no other
 obligations other than the contribution payable to the funds.
 
 b) Gratuity liability is a defined benefit obligation and is provided
 for on the basis of an actuarial valuation on projected unit credit
 method made at the end of each financial year. The company has created
 an approved gratuity fund, which has taken a group gratuity cum
 insurance policy with Life Insurance Corporation of India (LIC), for
 future payment of gratuity to the employees. The Company accounts for
 gratuity liability of its employees on the basis of actuarial valuation
 carried out at the year end by LIC.
 
 c) Long term compensated absences are provided for based on actuarial
 valuation. The actuarial valuation is done as per projected unit credit
 method. The company has created an approved leave encashment fund with
 LIC, for future payment of leave encashment to the employees. The
 Company accounts for leave encashment liability of its employees on the
 basis of actuarial valuation carried out at the year-end by LIC.
 
 x) Taxes on Income:
 
 Deferred tax liabilities and deferred tax assets are recognized for the
 tax effect on the difference between taxable income and accounting
 income which are not permanent in nature subject to the consideration
 of prudence in the case of deferred tax assets.
 
 xi) Leases:
 
 Assets acquired under financial leases are recognized at the lower of
 the fair value of the leased asset at inception and the present value
 of minimum lease payment. The finance charge is allocated to periods
 during the lease term at a constant periodic rate of interest on the
 remaining balance of the liability.
 
 xiii) Provisions, Contingent Liabilities and Contingent Assets:
 
 Provisions are recognized when the Company has a legal and constructive
 obligation as a result of a past event, for which it is probable that a
 cash outflow will be required and a reliable estimate can be made of
 the amount of the obligation. Contingent Liabilities are disclosed when
 the Company has possible obligation or a present obligation and it is
 probable that a cash outflow will not be required to settle the
 obligation.