1) System of Accounting:
 
 The accounts have been prepared and presented under the historical cost
 convention method on the accrual basis of accounting in accordance with
 the accounting principles generally accepted in India and comply with
 the Accounting Standards issued be The Institute of Chartered
 Accountants of India (ICAI) to the extent applicable.
 
 2) Fixed Assets:
 
 Fixed Assets are stated at cost less accumulated depreciation. Cost is
 inclusive of duties & taxes (net of CEN VAT/VAT), incidental expenses
 and erection / commissioning expenses.
 
 3) Depreciation:
 
 Depreciation on Fixed Assets is provided on Straight Line Method at the
 rates specified in Schedule XIV to the Companies Act, 1956.
 Depreciation on Assets bought / sold during the year is charged at
 applicable rates on monthly basis in the month the Asset is put to use
 /sold.
 
 4) Expenditure during construction period:
 
 Expenditure (including Finance cost relating to borrowed funds for
 construction or acquisition of fixed assets) incurred on projects under
 implementation are treated as preoperative expenses pending allocation
 to the assets and are shown under Capital Work in Progress.  These
 expenses will be apportioned to fixed assets on commencement of
 commercial production.
 
 5) Investments:
 
 Long term investments and investments in subsidiary companies are
 carried at cost. Provision for diminution in value is made whenever
 necessary in accordance with the Accounting Standards in force.
 
 6) Valuation of Inventories:
 
 a) Inventories are valued at the lower of weighted average cost or net
 realizable value. The weighted average value is calculated on the basis
 of net landed cost.
 
 b) Cost for the purpose of finished goods and material in process is
 computed on the basis of cost of material, labour and other related
 overheads.
 
 c) In all the cases necessary adjustments are made in respect of
 non-moving, slow moving, damaged and unserviceable goods.
 
 7) Foreign Exchange:
 
 Foreign Exchange transactions are recorded at the exchange rates
 prevailing at the time of transactions or at contracted rates. Current
 assets and current liabilities are translated at values prevailing at
 the Balance Sheet date. Gains/losses, if any, arising thereby are
 recognized in the Profit and Loss account.
 
 8) Revenue Recognition:
 
 a) Revenue from sales is recognized when significant risk and rewards
 in respect of ownership of the products are transferred.
 
 b) Revenue from domestic sales is recognized on dispatch of products
 from the factory of the Company.
 
 c) Revenue from export sales is recognized on the basis of dates of
 Bill of Lading.
 
 9) Employee Retirement Benefits:
 
 Contributions paid/payable to the defined contribution plan of
 Provident Fund for employees covered under the scheme are recognized in
 the Profit and Loss account each year. Gratuity has been provided on
 cash basis.
 
 10) Borrowing Costs:
 
 Borrowing costs incurred in relation to the acquisition and
 construction of assets is capitalized as part of the cost of such
 assets up to the date when such assets are ready for intended use.
 Other borrowing costs are charged as an expense in the year in which
 they are incurred.
 
 11) Income Tax Expenditure:
 
 a) Current Tax Expense: The current charge for income tax is calculated
 in accordance with the tax regulations.
 
 b) Deferred Tax Expense: Deferred income tax reflects the impact of
 timing difference between accounting income and tax income for the
 year/ period. Deferred tax is measured based on the tax rates and the
 tax laws enacted at the Balance sheet date. Deferred tax asset is
 recognized only to the extent of certainty of realization of the asset.
 
 c) Fringe Benefit Tax: Fringe Benefit Tax is calculated in accordance
 with the tax regulations.
 
 12) Miscellaneous Expenditure:
 
 Miscellaneous expenditure comprises of preliminary/public issue
 expenses and deferred revenue expenditure which are amortized over a
 period of ten years.