a.  Basis of preparation of financial statements:
 
 The financial statements of The West Coast Paper Mills Ltd., have been
 prepared and presented in accordance with Indian Generally Accepted
 Accounting Principles (GAAP) under the historical cost convention on
 the accrual basis. GAAP comprises accounting standards notified by the
 Central Government of India under section 211 (3C) of the Companies
 Act, 1956, other pronouncements of Institute of Chartered Accountants
 of India, the provisions of Companies Act, 1956 and guidelines issued
 by Securities and Exchange Board of India.
 
 The Company has prepared these financial statements as per the format
 prescribed by Revised Schedule VI to the Companies Act, 1956 (The
 Schedule'') issued by Ministry of Corporate Affairs. Previous periods''
 figures have been recasted/restated to conform to the classification
 required by the Revised Schedule VI.
 
 b.  Use of Estimates:
 
 The preparation of the financial statements in conformity with the
 generally accepted accounting principles requires management to make
 estimates and assumptions that affect the reported amount of assets and
 liabilities and disclosure of contingent liabilities as on 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
 are known/ materialized.
 
 c.  Fixed Assets:
 
 a) Fixed Assets are stated at cost of acquisition (net of Cenvat and
 VAT wherever applicable) or construction less accumulated depreciation
 and impairment loss, if any. Cost includes any directly attributable
 cost of bringing each asset to its working condition for intended use.
 
 b) Assets under installation or under construction as at balance sheet
 date are shown as Capital work in progress together with project
 expenses and advances to suppliers/contractors.
 
 c) Machinery spares which can be used only in connection with a
 particular item of fixed asset and the use of which is irregular, are
 capitalized at cost net of Modvat / Cenvat.
 
 d.  Depreciation:
 
 a) On the fixed assets, is provided at the rates and in the manner
 specified in Schedule XIV to the Companies Act, 1956 on the written
 down value method, other than on plant and machinery, effluent
 treatment plant, roads and drainage on which depreciation is provided
 on Straight Line Method.
 
 b) On the Plant & Machinery of [FTC/Control Cable at Mysore Division
 and Duplex Board Plant, New Fibreline & Chemical Recovery Island at
 Paper Division at Dandeli is provided at the rates and in the manner
 specified in schedule XIV to the Companies Act, 1956 on Written Down
 Value Method.
 
 e.  Impairment of Assets:
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 if there is any indication of impairment based on internal / external
 factors. An impairment loss is recognized 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 the
 value in use, the estimated future cash flows are discounted to their
 present value based on an appropriate discount factor. The impairment
 loss recognized in the prior accounting years is reversed if there has
 been a change in the estimate of recoverable amount.
 
 f.  Investments:
 
 Current investments are carried at the lower of cost or quoted/ fair
 value, computed category-wise. Long term investments are stated at cost
 and provision is made for any diminution in such value, which is not
 temporary in nature.
 
 g.  Valuation of Inventories:
 
 a) Inventories of raw materials, stores, spares, machinery parts,
 building materials, loose tools etc. are valued at weighted average
 cost, after providing for obsolescence, if any.
 
 b) Work in process is valued at cost.
 
 c) Finished goods & Stock-in-trade are valued at lower of cost or net
 realizable value.
 
 d) Stock of scrap is valued at realizable value.
 
 e) Standing crops intended for captive use are valued at the total
 amount of expenditure incurred comprising of material, labour, interest
 & overheads, less any incidental revenue realized.
 
 h.  Revenue recognition:
 
 a) Turnover is recognized when goods are dispatched to customers and
 are adjusted for Discounts (net), Sales Tax/ VAT and foreign exchange
 differences. Turnover is inclusive of Excise Duty.
 
 b) DEPB & Duty drawback income is recognized on accrual basis for the
 licenses to be received.
 
 c) Interest income is recognized on time proportion basis taking into
 account the amount outstanding and rate applicable.
 
 i.  Research and Development Expenditure:
 
 Revenue expenditure on research & development is charged to Profit &
 Loss account and capital expenditure is added to the cost of fixed
 assets in the year in which it is incurred.
 
 j.  Employee Benefits:
 
 a) Contribution to Provident Fund is accounted for on accrual basis.
 The Provident Fund contributions are made to a Trust administered by
 the Company. The interest rate payable to the members of the Trust is
 not lower than statutory rate of interest declared by the Central
 Government under the Employees Provident Funds and Miscellaneous''
 Provisions Act, 1952 and shortfall, if any, is made good by the
 Company. Such shortfall on account of interest, if any, is recognized
 in the Profit and Loss account.
 
 b) Company''s defined contributions made to Pension Fund of Government
 and Superannuation Scheme of Life Insurance Corporation of India are
 charged to the Profit and Loss account on accrual basis.
 
 c) Contribution to Gratuity Fund and provision for Leave Encashment is
 based on actuarial valuation carried out as on the Balance Sheet date
 as per Projected Unit Credit Method.
 
 k.  Foreign Currency Transactions:
 
 Foreign currency transactions are accounted at the exchange rates
 prevailing on the date of transactions. Foreign currency current assets
 and current liabilities outstanding at the Balance Sheet date are
 translated at the exchange rate prevailing on that date and the
 resultant gain or loss is recognized in the Profit & Loss account. In
 cases where they relate to the acquisition/construction of fixed
 assets, they are adjusted to the carrying cost of fixed assets.
 
 l.  Borrowing Cost:
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalized as part of the cost
 of such assets upto the date when they are ready for their intended use
 and other borrowing costs are charged to Profit & Loss account.
 
 m.  Taxation:
 
 Provision for Taxation is determined on the basis of the Taxable
 profits computed for the current accounting period in accordance with
 the Income Tax Act, 1961.
 
 Deferred Tax resulting from timing difference between book profit and
 taxable profit for the year is accounted for using the tax rates and
 laws that have been enacted or substantially enacted as on the Balance
 Sheet date. The deferred tax asset is recognized and carried forward
 only to the extent that there is a certainty that the asset will be
 adjusted in future.
 
 n.  Contingent Liabilities:
 
 Claims against the Company not acknowledged as debts are treated as
 Contingent Liabilities. Provision in respect of contingent liabilities
 if any, is made when it is probable that a liability may be incurred
 and the amount can be reasonably estimated.
 
 o.  Earnings per share:
 
 The basic earnings per share (EPS) is computed by dividing the net
 profit after tax for the year by the weighted average number of equity
 shares outstanding during the year. For the purpose of calculating
 diluted earnings per share, net profit after tax for the year and the
 weighted average number of shares outstanding during the year are
 adjusted for the effects of all dilutive potential equity shares. The
 dilutive potential equity shares are deemed converted as of the
 beginning of the period, unless they have been issued at a later date.
 The diluted potential equity shares have been adjusted for the proceeds
 receivable had the shares been actually issued at fair value (i.e. the
 average market value of the outstanding shares).