(a) Accounting Basis:
 
 The financial statements are prepared under historical cost convention
 in accordance with generally accepted accounting principles in India
 and comply in all material aspects with the applicable accounting
 standards notified under section 211(3C) of the Companies Act, 1956 and
 the relevant provisions of the Companies Act, 1956.
 
 (b) Revenue Recognition:
 
 (i) Sale of goods is recognized on dispatch of goods to customers and
 is recorded net of claims, etc., as considered appropriate.  Revenue
 from Conversion, Sale of Scrap and obsolete stores is accounted for at
 the time of disposal.
 
 (ii) Export entitlements are recognized on realization.
 
 (iii) Revenue in respect of Interest, Insurance claims and Subsidy from
 Department of Fertilizers is recognized on the time proportion method.
 
 (c) Fixed Assets and Depreciation:
 
 (1) Fixed Assets
 
 Fixed Assets are stated at cost of acquisition (net of CENVAT/VAT )
 inclusive of all expenditure of capital nature such as, inward freight,
 duties & taxes, installation and commissioning expenses, appropriate
 borrowing costs and incidental expenses related to acquisition.
 
 (2) Depreciation
 
 (A) Depreciation is provided on Reducing Balance Method at the rate
 prescribed under Schedule XIV of the Companies Act, 1956, in respect of
 asset installed by the Company in one plant, taken on operating lease.
 
 (B) Leasehold Land is amortized over the period of lease.
 
 (C) Depreciation is provided on Straight Line Basis on following assets
 based on Management''s estimate at the rate mentioned below:
 
 (i) Building @ 5.28%
 
 (ii) Residential Quarters @ 3.34%
 
 (iii) Computers @ 40%
 
 (iv) Vehicles @ 15%
 
 (D) Depreciation on Fixed Assets other than Leasehold Land and those
 mentioned above are provided under Straight Line Method at the rates
 specified in Schedule XIV of the Companies Act, 1956.
 
 (E) Product/Process Development Expenses are amortized over the
 estimated useful life of the product.
 
 (3) Impairment loss, if any, is provided to the extent, the carrying
 amount of assets exceeds their recoverable amount.  Recoverable amount
 is higher of net selling price of an assets or its value in use. Value
 in use is present value of estimated future cash flows expected to
 arise from the continuing use of an asset and from its disposal at the
 end of its useful life.
 
 (d) Investments:
 
 (i) Current investments are stated at lower of cost or fair market
 value.
 
 (ii) Long term investments are stated at cost less provision for
 permanent diminution in value if any, of investments.
 
 (e) Valuation of Inventories:
 
 Inventories are valued at Cost or Net Realizable Value whichever is
 lower.
 
 Inventories have been valued on the following basis:
 
 i) Raw Materials, Packing Material, Stores and Spares - At cost on
 Weighted Average basis.
 
 ii) Work-in–Process - At cost plus appropriate allocation of overheads.
 
 iii) Finished Goods - At cost plus appropriate allocation of overheads
 or net realizable value, whichever is lower.
 
 (f) Retirement Benefits:
 
 Employee benefits are charged off in the year in which the employee has
 rendered services.
 
 (g) Foreign Currency Transactions:
 
 Foreign currency transactions are accounted at the rates prevailing on
 the date of the transaction. The exchange rate differences arising out
 of such transactions are dealt with in the Profit and Loss Account. The
 premium in case of future contracts is dealt with in the Profit and
 Loss Account proportionately over the period of the contracts.
 
 (h) Research and Development:
 
 Revenue Expenditure on Research and Development is charged to the
 Profit and Loss Account for the year. Capital Expenditure on Research
 and Development is included as part of fixed assets and depreciation is
 provided on the same basis as for other fixed assets.
 
 (i) Operating Lease:
 
 Operating Lease payments are recognized as an expense in the Profit &
 Loss Account of the year to which they relate.
 
 (j) Deferred Revenue Expenditure:
 
 Deferred Revenue Expenditure is amortized over the period of the
 agreement on pro rata basis.
 
 (k) Deferred Tax:
 
 Deferred Tax reflects the impact of timing differences between Taxable
 Income and Accounting Income for the year and reversal of timing
 differences of earlier years. Deferred Tax is measured on the basis of
 Tax Rates and Tax Laws enacted or substantively enacted at the Balance
 Sheet.
 
 Deferred Tax Assets are recognized only if there is reasonable
 certainty of their realization except in case of Deferred Tax Assets on
 unabsorbed depreciation and carried forward business losses, which are
 recognized only if there is virtual certainty of their realization.
 
 (l) Borrowing Costs:
 
 Borrowing cost directly related to the acquisition or construction of
 an asset is capitalized as part of the cost of that asset. Other
 borrowing costs are charged to the Profit and Loss Account.
 
 (m) Provisions and Contingent Liabilities:
 
 Provisions are recognized when the Company has a legal and constructive
 obligation as a result of a past event, for which it is probable that a
 Cash Outflow will be required and a reliable estimate can be made of
 the amount of the obligation.
 
 Contingent Liabilities are disclosed when the Company has a possible
 obligation or a present obligation and it is probable that a Cash
 Outflow will not be required to settle the obligation.