Basis of Accounting
 
 The Company follows the accrual basis of accounting.
 
 Fixed Assets
 
 Fixed Assets are stated at cost of acquisition or construction,
 including attributable interest & financial costs till such assets are
 ready for its intended use, less accumulated depreciation, impairment
 losses and specific grants received, if any.
 
 Method of Depreciation
 
 Depreciation on all Fixed Assets acquired upto 31.12.1981 is provided
 on Written Down Value method. Depreciation on all Fixed Assets acquired
 after 31.12.1981 is provided on Straight Line method.
 
 From the year 1993-94, depreciation on all assets (except continuous
 process plant and machinery acquired between 01.01.1982 to 31.03.1993)
 has been provided at the rates specified in Schedule XIV to the
 Companies Act, 1956, as revised by the notification dated 16th
 December, 1993, issued by the Department of Company Affairs. In respect
 of continuous process plant and machinery acquired between 01.01.1982
 to 31.03.1993, the specified period (during which the Plant and
 Machinery is to be depreciated) has been recalculated considering the
 depreciation already provided upto 31.03.1993 and depreciation from the
 year 1993-94 has been provided at the reworked rates, which are lower
 than Schedule XIV rates as per the option given in Guidance Note issued
 by the Institute of Chartered Accountants of India.
 
 Depreciation on additions and deletions during the year is provided on
 pro-rata basis.
 
 Cost of leasehold land is amortised over the period of lease.
 
 Treatment of Expenditure during the Construction period
 
 The expenditure incurred during the period of construction (including
 cost of trial runs, stores issued, expenses on labour allocated for
 such purpose) is debited to capital work-in-progress and on completion,
 the costs are allocated to the respective fixed assets. Interest on
 specific borrowings relating to acquisition / construction of
 qualifying fixed assets is capitalised upto the date of commissioning.
 
 Valuation of Inventories
 
 Inventories and stores are valued at lower of cost and net realisable
 value. Cost of Raw materials is computed on an annual weighted average
 basis. In respect of finished goods / work-in-progress, cost is
 determined by taking into consideration all direct costs and systematic
 allocation of related fixed & variable overheads.
 
 Investments
 
 Long-term investments are carried at costs.However provision for
 diminution in value is made to recognise a decline other than temporary
 in the value of investments. Current investments are stated at costs or
 fair value whichever is lower.
 
 Sales
 
 Gross Sales include Turnkey Project sales (based on % completion
 method), Processing Charges, Excise Duty, Sales Tax / Value Added Tax,
 Freight on sale of finished goods, Subsidy receivable / received from
 the Central Government on sale of Single Super Phosphate (SSP).
 Domestic sales are recognised on despatch of products and are stated
 net of returns. Export sales are accounted on the basis of dates of
 Bill of Lading.
 
 Taxation
 
 income Tax expense comprises of Current Tax and Deferred Tax charge or
 credit.  
 
 i) Current Tax:
 
 A provision is made for the Current Tax based on Tax Liability computed
 in accordance with relevant provisions & tax rates as per the Income
 Tax Act, 1961.
 
 ii) Deferred Tax:
 
 The Deferred Tax charge or credit is recognised using prevailing
 enacted or substantively enacted tax rates. Where there are unabsorbed
 depreciation or cany forward losses, deferred tax assets are recognised
 only if there is virtual certainty of realisation of such assets. Other
 deferred tax assets are recognised only to the extent there is
 reasonable certainty of realisation in future. Deferred tax assets /
 liabilities are reviewed as at each Balance Sheet date based on
 developments during the year and available case laws, to reassess
 realisation/liabilities.
 
 Employees'' Benefits
 
 Contributions to the Company''s Provident Fund, Family Pension Fund,
 Superannuation Fund and Gratuity Fund (based on actuarial valuation)
 are being charged to revenue.
 
 The Company has the scheme which enables employees to encash the
 accumulated privilege leave (upto stipulated limits) on retirement. The
 ''Company''s liability in respect of this leave encashment scheme is
 determined on the basis of actuarial valuation and the same is charged
 to Profit & Loss Account.
 
 Foreign Currency Transactions
 
 (i) Monetary items of assets/liabilities denominated in foreign
 currency are translated at the exchange rate prevailing on the last day
 of the accounting year. In respect of items covered by forward exchange
 contracts, the premium or discount arising at the inception of such a
 forward exchange contract is amortised as expense or income over the
 life of the contract. Any profit or loss arising on cancellation or
 renewal of such a forward exchange contract is recognised as income or
 expense for the year. Foreign currency transactions are accounted at
 the rate prevailing on the date of transaction.
 
 (ii) Non Monetary items of assets/liabilities which are carried in
 terms of historical cost determined in a foreign currency are reported
 using the exchange rate at the date of transaction.
 
 (iii) Gain or Loss arising out of conversion is taken credit for or
 charged to the profit and loss account.
 
 Provisions / Contingencies
 
 Provision is recognised when the Company has a present obligation as a
 result of past event, and it is probable that an outflow of resources
 will be required to settle the obligation, in respect of which a
 reliable estimate can be made. Provisions are not discounted to its
 present value & are determined based on best estimate of the
 expenditure required to settle the obligation at the Balance Sheet
 date. These are reviewed at each Balance Sheet date and adjusted to
 reflect the current best estimate. A contingent liability is disclosed
 unless the possibility of an outflow of resources embodying the
 economic benefit is remote.
 
 Impairment of Assets
 
 The carrying amounts of assets are reviewed at each balance sheet date
 if there is any indication of impairment based on internal/ external
 factors. An impairment loss is recognised wherever the carrying amount
 of an asset exceeds its estimated recoverable amount. The recoverable
 amount is greater of the asset''s net selling price and its value in
 use. In assessing the value in use, the estimated future cash flows are
 discounted to the present value using the weighted average cost of
 capital.After impairment, depreciation is provided on the revised
 carrying amount of the assets over its remaining useful life.
 Previously recognised impairment loss is further provided or reversed,
 depending on changes in circumstances, if any.
 
 Lenders'' Sacrifice Amortisation
 
 The cost to the Company arising out of conversion of lenders'' sacrifice
 (by way of reduction in the interest rates) is amortised equally over
 the period of repayment of term loans to the lenders.