1. Statement of significant accounting policies A. Basis of preparation
 of the financial statements
 
 a. The financial statements have been prepared under the historical
 cost convention, on accrual basis, as a going concern, in accordance
 with the generally accepted accounting principles, mandatory accounting
 standards issued by the ICAI and the provisions of the Companies Act,
 1956.
 
 b. Accounting policies not specifically referred to otherwise are in
 consonance with the generally accepted accounting principles.
 
 B. Fixed Assets and Depreciation
 
 a. Fixed assets are stated at cost less accumulated depreciation,
 subject to adjustment of exchange fluctuation where applicable.
 
 b. Depredation has been provided on the straight line method as per the
 rates and regulations prescribed under schedule XIV of the Companies
 Act, 1956.
 
 C. Valuation of inventory
 
 Raw materials (imported)     - at landed cost
 
 Raw materials (indigenous)   - at cost
 
 Work-in-Progress             - at cost
 
 Finished goods               - at lower of cost or market value
 
 Stores and Spares            - at cost
 
 D. Foreign currency transactions
 
 a. Export sales bills negotiated with bank are recorded at the exchange
 rates prevailing on the dates of negotiation and those sent for
 collection at exchange rate on the reporting date.  Correspondingly the
 sundry debtors are at the aforesaid exchange rate.
 
 b. Sundry creditors for imports are stated at the exchange rate
 prevailing on the reporting date and exchange fluctuations arising
 thereof has been recognised as revenue.
 
 E Revenue recognition
 
 All income and expenditure items having material bearing on the
 financial statements on accrual basis.
 
 F. Employees retirement benefits
 
 Company's contributions to Provident Fund are charged to revenue.
 
 G. Miscellaneous Expenditure
 
 Preliminary expenses have been amortized over a period often years.