A) Basis of Preparation of Financial Statements
 
 a) The Financial Statements have been prepared under the historical
 convention, in accordance with the generally accepted accounting
 policies and the provisions of the Companies Act, 1956 as adopted
 consistently by the Company.
 
 b) Accounting policies not specifically referred to otherwise are
 consistent with generally accepted accounting principles followed by
 the Company.
 
 B) Fixed Assets and Depreciation
 
 a) Fixed Assets are stated at cost of acquisition or construction less
 accumulated depreciation. All costs including financing costs till
 commencement of commercial production are capitalised.
 
 b) Depreciation on Fixed Assets, except Computers (Hardware &
 Software), is provided on the basis of Straight Line Method at the
 rates and in the manner prescribed in Schedule XIV to the Companies
 Act, 1956. During the year depreciation on Computers (Hardware &
 Software) is provided on the basis of Written Down Value method, at the
 rates and in the manner prescribed in Schedule XIV to the Companies
 Act, 1956 vis-a-vis Straight Line method adopted in the previous years
 
 c) The exceptional items represent depletion and arrears of
 depreciation in respect of Computers (Hardware & Software) resulting
 from change in the method of charging depreciation from Straight Line
 method to Written Down Value method.
 
 C) Foreign Exchange Transactions
 
 a) Transactions denominated in Foreign Currencies are normally recorded
 at the exchange rate prevailing at the time of the transactions.
 
 b) Gains and losses on Foreign Exchange Transactions other than those
 relating to fixed assets are charged to the Profit and Loss Account.
 
 c) The balances outstanding in the foreign currency denominated Current
 Assets and Current Liabilities are restated as per AS11 as at the
 Balance Sheet date at the then prevailing foreign exchange rate and are
 recognized in the accounts.
 
 D) Investments
 
 Investments are stated at cost.
 
 E) Inventories * Inventories are valued at cost
 
 F) Sales
 
 Sales are accounted net of trade discounts and returns.
 
 G) Employee Retirement Benefits
 
 a) Companys contributions to Provident fund, during the year, are
 charged to Profit and Loss Account.
 
 b) Gratuity is charged to Profit and Loss account on the basis of
 actuarial valuation as required by AS15 issued by ICAI.
 
 H) Research and Development Expenses
 
 Expenditure related to Capital items is debited to fixed assets and
 depreciated at applicable rates. Revenue expenditure is charged to
 Profit and Loss Account to the relevant heads of account.
 
 I) Taxation
 
 1.  No provision for Deferred Taxation under AS 22 issued by ICAI has
 been made in the annual accounts, due to the deduction available to the
 Company under Section 10A of the Income tax Act, 1961.
 
 2.  Appropriate provision for taxation for the current year has been
 made in the accounts.