(a) Basis of Accounting
 
 The Financial statements are prepared under the historical cost
 convention in accordance with the generally accepted accounting
 principles, the applicable mandatory Accounting Standards and the
 relevant provisions of the Companies Act 1956.
 
 (b) Use of Estimates
 
 The preparation of financial statements in conformity with generally
 accepted accounting principles requires estimates and assumptions to be
 made that affect the reported amounts of assets and liabilities on the
 date of the financial statements and the reported amounts of revenues
 and expenses during the reporting period. Differences between actual
 results and estimates are recognised in the period in which the results
 are known.
 
 (c) Fixed Assets:
 
 (i) Gross Block:
 
 All Fixed Assets are stated at cost less accumulated depreciation
 except free hold land. However, Fixed Assets, which are revalued by the
 Company, are stated at their revalued book values.
 
 (ii) Depreciation/Amortisation:
 
 a) The Company provides depreciation on the Straight Line Method over
 the useful life of assets or at the rates and in the manner specified
 in Schedule XIV of the Companies Act, 1956.
 
 b) Cost of leasehold land is amortised over the period of lease.
 
 
 (d) Borrowing cost:
 
 Interest and other borrowing costs attributable to acquisition of
 qualifying assets are capitalized. Other interest and borrowing costs
 are charged to revenue.
 
 (e) Investments:
 
 Investments are stated at cost of acquisition or at book value in case
 of diminution in value. Current investments are stated at lower of cost
 and fair value.
 
 (f) Inventories:
 
 (i) Raw Material, Raw Material in Process, Semi-Finished Goods,
 Finished Goods, Goods for Trade and Stores, Spares etc. are valued at
 cost or net realisable value, whichever is lower.
 
 (ii) Goods in Transit are valued at cost to date.
 
 (iii) Industrial scrap is valued at estimated realisable value.
 
 (iv) ‘Cost’ comprises all costs of purchase, costs of conversion and
 other costs incurred in bringing the inventory to their present
 location and condition. Cost formulae used is weighted average cost.
 
 (v) Due allowances are made for obsolete inventory based on technical
 estimates made by the Company.
 
 (g) Recognition of Income and Expenditure:
 
 (i) Revenues/incomes and cost/expenditure are generally accounted on
 accrual basis as they are earned or incurred except in case of
 significant uncertainties.
 
 (ii) Sale of goods is recognised on transfer of significant risks and
 rewards of ownership which is generally on the dispatch of goods.
 Export sales are accounted for on the basis of the dates of ‘On Board
 Bill of Lading‘.
 
 (iii) Export Benefits are recognised in the year of export.
 
 (h) Research and Development Expenditure:
 
 Expenditure on Research and Development is charged to revenue through
 the natural heads of expenses in the year in which it is incurred. Such
 expenditure is charged to Capital if it results in the creation of
 capital assets.
 
 (i) Employee Benefits:
 
 (i) Short Term Employee Benefits are recognized as an expense at the
 undiscounted amount in the Profit and Loss Account of the year in which
 the related service is rendered.
 
 (ii) Retirement Benefits:
 
 (a) Retirement benefits in the form of Provident Fund/ Family Pension
 Fund and Superannuation Fund, which are Defined Contribution Plans, are
 accounted on accrual basis and charged to the profit and loss account
 of the year.
 
 (b) Retirement benefits in the form of Gratuity, which is Defined
 Benefit Plan and the long term employee benefit in the form of Leave
 Encashment are determined and accrued on the basis of an independent
 actuarial valuation applying the Projected Unit Credit Method.
 
 (c) Actuarial gains/losses arising during the year are recognized in
 the Profit and Loss Account of the year.
 
 (j) Foreign Currency Transactions:
 
 Foreign Currency transactions are recorded at the rates of exchange
 prevailing on the date of transaction. Monetary foreign currency assets
 and liabilities outstanding at the close of financial year are
 revalorised at the exchange rates prevailing on the balance sheet date.
 Exchange differences arising on account of fluctuation in the rate of
 exchange is recognized in the Profit and Loss Account, except to the
 extent it relates to long term monetary items for acquisition of
 depreciable capital assets, which is adjusted to the acquisition cost
 of such assets and depreciated over remaining useful life.
 
 (k) Expenses on New Projects:
 
 Expenses incurred on new projects are carried in the Accounts under the
 head Loans and Advances, until such expenses are written off or charged
 to revenue in the year in which decision is taken to abandon the
 project.
 
 (l) Taxes on Income:
 
 Current tax is determined as the amount of tax payable in respect of
 taxable income for the period. Deferred tax is recognised on timing
 differences between taxable and accounting income that originates in
 one period and are capable of reversal in one or more subsequent
 period(s). Deferred Tax Assets arising mainly on account of brought
 forward losses and unabsorbed depreciation under tax laws are
 recognised if and only if there is a virtual certainty backed by
 convincing evidence of its realisation. Deferred tax assets on account
 of other timing differences are recognised on the basis of reasonable
 certainty about its realisation. At each Balance Sheet date the
 carrying amount of deferred tax assets are reviewed to reassure
 realization.
 
 (m) Impairment of Assets:
 
 The carrying amount of assets, other than inventories is reviewed at
 each balance sheet date to assess whether there is any indication of
 impairment in respect of such assets or group of assets (cash
 generating unit). If such indication exists, the recoverable amount of
 such asset or group of assets is estimated. If such recoverable amount
 of the assets or the group of assets is less than its carrying amount,
 an impairment loss is reckoned by reducing the carrying amount to its
 recoverable amount. If there is an indication at the balance sheet date
 that a previously assessed impairment loss no longer exists, the
 recoverable amount is reassessed and the asset is reflected at the
 recoverable amount, subject to a maximum of depreciable historical
 cost.
 
 (n) Provisions, Contingent Liabilities and Contingent Assets:
 
 The Company recognizes a provision when there is a present obligation
 as a result of a past event on which it is probable that there will be
 outflow of resources to settle the obligation in respect of which
 reliable estimates can be made. Contingent liabilities are disclosed by
 way of note to the Financial Statement after careful evaluation by the
 management of the facts and legal aspects of the matter involved.
 Contingent Assets are neither recognized nor disclosed.