1.1 GENERAL
 
 (i) These accounts are prepared on the historical cost basis and on the
 accounting principles of a going concern.
 
 (ii) Accounting policies not specifically referred to otherwise are
 consistent and in consonance with generally accepted accounting
 principles and mandatory Accounting Standards as per Company
 (Accounting Standard) Rules, 2006.
 
 1.2 REVENUE RECOGNITION
 
 (i) Revenue represents the net invoice value of goods and services
 provided to third parties after deducting discounts, volume rebates,
 outgoing sales taxes and duties, and are recognized usually when all
 significant risks and rewards of ownership of the asset sold are
 transferred to the customer and the commodity has been delivered to the
 shipping agent.
 
 (ii) Revenues from sale of material by-products are included in
 revenue.
 
 (iii) Interest income is recognized on an accrual basis in the income
 statement.
 
 1.3 VALUATION OF INVENTORIES
 
 (i) Inventories are valued at lower of Cost and Net Realizable Value
 except for scrap and by-products which are valued at net realizable
 value.
 
 (ii) Cost of inventories of finished goods and work-in-process includes
 material cost, cost of conversion and other related overhead costs.
 
 (iii) Cost of inventories of raw material, work-in-process and stores &
 spares is determined on weighted average cost method.
 
 1.4 INVESTMENTS
 
 Long Term Investments are stated at cost. Provision for diminution in
 long term investments is made only if such decline is other than
 temporary. Current investments are carried at lower of cost or market
 price.
 
 1.5 FIXED ASSETS
 
 Fixed assets are stated at cost of acquisition (net of canvas credit) &
 are inclusive of freight, duties, taxes and installation expenses less
 accumulated depreciation and impairment loss, if any.
 
 1.5 DEPRECIATION/ AMORTISATION/ IMPAIREMENT LOSS
 
 (a) Depreciation on fixed assets is provided on Straight Line Method by
 applying rates given in Schedule XIV of the Companies Act, 1956.
 (except leasehold land which is amortization over the period of lease).
 
 (b) Depreciation on certain plant & machinery is provided as per the
 rates applicable to the continuous process plant on the basis of
 technical evaluation.
 
 (c) Depreciation on addition/sale is provided Pro-rata with reference
 to the month of addition/sale.
 
 (d) In case, the recoverable amount of the fixed assets is lower than
 its carrying amount a provision for the impairment loss, depreciation
 on impaired assets is provided based on the reassessed life of the
 assets.
 
 (e) Capital Expenditure on assets not owned are written off over the
 duration of contract or ten years, whichever is lower.
 
 (f) Fixed assets costing Rs.5000 or less has been depreciated fully in
 the year of purchase.
 
 1.6 BORROWING COST
 
 Interest and other costs in connection with the borrowing of the funds
 to the extent related/attributed for acquisition/ construction of
 qualifying fixed assets are capitalized till the date of intended
 commercial use of the assets and other borrowing costs are charged to
 the Profit & Loss Account.
 
 1.7 GOVERNMENT GRANTS
 
 (i) Grants other than capital subsidy under TUFS relating to fixed
 assets are shown as deduction from the gross value of fixed assets and
 those of the nature of project subsidy are credited to Capital
 Reserves.
 
 (ii) Other Government Grants including incentive are credited to Profit
 & Loss Account or deducted from the related expenses.
 
 (iii) Capital Subsidy under TUFS from the Ministry of Textiles on
 specified processing machinery has been treated as deferred income
 which is recognized on systematic and rational basis in proportion of
 the applicable depreciation over the useful life of the respective
 assets and is adjusted against the depreciation / credited to the
 Profit and Loss account.
 
 1.8 FOREIGN CURRENCY TRANSACTIONS
 
 Foreign Currency transactions are recorded in the reporting currency,
 by applying to the foreign currency amount the exchange rate prevailing
 at the time of transaction. Monetary items denominated in foreign
 currencies and outstanding at the year-end are translated at year-end
 rates. Exchange difference arising on settlement of monetary items at
 rates different from those at which they were initially recorded are
 recognized as income or as expenses in the year in which they arise. In
 case of forward contracts, the exchange difference are dealt within the
 Profit & Loss account over the period of the contracts.
 
 1.9 EXPENDITURE DURING CONSTRUCTION PERIOD
 
 All pre-operative project expenditure (net of income accrued) incurred
 upto the date of commercial production is capitalized and the same are
 allocated to the respective fixed assets on the completion of the
 construction period.
 
 1.10 EMPLOYEE BENEFITS:-
 
 (I) Defined Contribution Plan
 
 Employee benefits in the form of Provident Fund are considered as
 defined contribution plan and the contributions are charged to the
 Profit and Loss Account of the year when the contributions to the
 respective funds are due.
 
 (II) Defined Benefit Plan
 
 A retirement benefit in the form of Gratuity is funded every year under
 group policy of Life Insurance Corporation of India. Long Term
 compensated leaves are considered as defined benefit obligations and
 are provided for on the basis of an actuarial valuation, using the
 projected unit credit method, as at the date of the Balance Sheet.
 
 (III) Other short term absences are provided based on past experience
 of leave availed.
 
 Actuarial gain/losses, if any, are immediately recognised in the Profit
 and Loss Account.
 
 1.11 TAXES ON INCOME
 
 Provision for In come Tax for the period comprises of Current Tax and
 Deferred Tax. Provision for current tax has been made on the basis of
 estimated taxable income in accordance with the provisions of Income
 tax Act, 1961.  Deferred Tax is recognized, subject to consideration of
 prudence, at the prevailing tax rates on timing differences between
 taxable and accounting income/ expenditure that originate in one period
 and are capable of reversal in one or more subsequent periods.
 
 1.12 CONTINGENT LIABILITIES, CONTINGENT ASSETS & PROVISIONS
 
 Contingent liabilities if material, are disclosed by way of notes,
 contingent assets are not recognized or disclosed in the financial
 statements. Provision is recognized when an enterprise has a present
 obligation as a result of past event(s) and it is probable that an
 outflow of resources embodying economic benefits will be required to
 settle the obligation(s), in respect of which a reliable estimate can
 be made for the amount of obligation.