The Financial Statements have been prepared in accordance with the generally accepted accounting principles in India under the the historical cost convention, on accrual basis, except for certain tangible assets which are being carried at revalued amounts. These financial statements have been prepared to comply in all material aspects with the accounting standards notified under Section 211 (3C) Companies Act' 1956 and on a going concern concept and the significant policies followed by the Company are stated hereunder:

(b) TANGIBLE ASSETS

Tangible Assets are Stated at Cost including pre-operative expenses allocated to respective assets in proportion to cost thereof.

(c) DEPRECIATION AND AMORTISATION

i) The full value of leasehold land is amortized over the period of lease.

ii) Depreciation on Tangible Assets has been provided under straight-line method on pro-rata basis at rates prescribed in Schedule XIV of the Companies Act, 1956 (As amended).

iii) The total value of Intangible Assets are amortized over the period of five Years.

(d) IMPAIRMENT OF ASSETS

An assets is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

(e) INVESTMENTS                        : At lower than the cost, after 
                                         writing down Permanent
                                         diminution in value.
(f) INVENTORIES
 
Basis of Valuation

Raw Material                          : At Cost

Stores & Spare parts                  : At Weighted Average Cost

Work in Process & Finished Goods      : At Cost or Market Value 
                                        whichever is lower, Cost for
                                        this to purpose is determined
                                        with reference to cost of 
                                        materials, labour and
                                        appropriate Overhead.

Waste Stock                           : At estimated realizable value.

Foreign Exchange Transactions during the year are accounted for at average rates of exchange of the month immediately preceding the month of transactions. Exchange Loss or Gain on settlement made at rates prevailing on the date of actual payments/realization is disclosed as such in the Accounts. Debt/ Liabilities in foreign currencies remaining unsettled at year end are converted at year end rates.

(h) BORROWING COSTS

Borrowing costs, if attributable to the acquisition and construction of a qualifying asset are capitalized as part of cost of the asset. Borrowing costs other than above nature are recognized as expenses in the period in which these are incurred.

(i) EMPLOYEES BENEFITS

a) Defined Benefit Scheme: For defined benefit scheme the cost of providing benefit is determined using the projected unit credit method with actuarial valuation being carried out at each balance sheet date. The retirement benefit obligation recognized in the balance sheet represents the value of defined benefit obligation as reduced by fair value of planned assets. Actuarial gain and losses are recognized obligation in full during the period in which they occur.

b) Leave Encashment is accounted for an accrual basis.

(j) REVENUE RECOGNITION

Items of Income & Expenditure are recognized on accrual basis.

(k) SALES

Sales includes inter unit transfers.

(l) TAXATION

Current Tax if any, determined on the basis of the amount of tax payable under the Income Tax Act, 1961.

Deferred Tax Liability/ Assets subject to consideration of prudence are recognized & carried forward only when there is reasonable certainty that sufficient taxable income will be available against which such Deferred Tax Liabilities/Assets can be adjusted.

(m) PROVISION AND CONTINGENT LIABILITES:

The company recognizes a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is possible obligation or a present obligation and the likelihood of outflow of resources is remote, no provision or disclosure for contingent liability is made. Contingent liabilities are generally not provided for in the accounts and are disclosed separately in Notes on Accounts.

(n) EARNING PER SHARE

Basic earning per share is calculated by dividing the net profit or loss for the period attributable to equity shareholders by weighted average number of equity shares outstanding during the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for the events, such as bonus share, other than conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources. For the purpose of calculating, diluted earning per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.