1.  CONTINGENT LIABILITIES
 
 a.  In respect of matters under dispute:
 
                                                  (Rs. in lakhs)
                                             31.03.2007     31.03.2006
 
 (i) Income tax                                932.17          952.47 
 (ii) Sales tax                                329.27           88.68 
 (iii) Other matters                           789.21          818.98
                                              2050.65         1860.13
 
 b.  Counter guarantees given to Bankers Rs. 465.45 lakhs (Previous year
 Rs. 254.90 lakhs) include Rs. 136.27 lakhs (Previous year Rs. 114.00
 lakhs) in favour of Railways for credit note facility.
 
 c.  Land: Liability for additional compensation payable in respect of
 land purchased from M/s.  Nagarjuna Fertilizers and Chemicals Limited
 has not been provided for, pending court orders and determination of
 the amount payable.
 
 2.  CAPITAL COMMITMENTS
 
 Estimated amount of contracts remaining to be executed on Capital
 Account and not provided for (net of advance) Rs. 83.33 lakhs (previous
 year Rs. 1513.62 lakhs).
 
 3.  SECURED LOANS (i) Term Loans
 
 a.  Banks:
 
 i) Term loan of Rs.2000 lakhs from IDBI Bank Ltd., is secured by first
 charge by way of pledge / assignment of 13.40 lakhs shares of Andhra
 Pradesh Gas Power Corporation Ltd. and second charge on the current
 assets of the company.
 
 ii) Other term loan from IDBI Bank Ltd., is secured by first charge on
 current assets of the company ranking pari-passu with other working
 capital lending banks and second charge on fixed assets of the company.
 
 iii) Corporate loan of Rs. 7500 lakhs from State Bank of India is
 secured by way of first charge on fixed assets and current assets
 ranking pari-passu with other lending institutions and banks holding
 first and second charge on the assets of the company.
 
 iv) Term loan of Rs. 1500 lakhs from State Bank of Mysore is secured by
 charge on movable machineries and current assets, both present and
 future, ranking pari-passu with existing term lenders in case of
 movable machineries and working capital lenders in case of current
 assets.
 
 b.  Others:
 
 (i) Loan from Indian Renewable Energy Development Agency Ltd.(IREDA) is
 secured by hypothecation of the properties pertaining to 120000 LPD
 Solar Water Heating System with exclusive first charge.
 
 (ii) Loan from HDFC Bank Limited of Rs. 3200 lakhs is secured by
 hypothecation by way of first pari-passu charge on all stock in trade
 both present and future, all book debts, outstanding monies receivable,
 claims and bills now due or in future and by hypothecation by way of
 second pari-passu charge on all the movable Plant and Machinery both
 present and future.
 
 (ii) Working Capital Loans:
 
 Demand loans/ Cash Credit / Buyers Credit are secured by way of
 hypothecation of stocks of raw materials, finished and semi-finished
 goods, consumable stores, book debts and other receivables both present
 and future in favour of banks and short-term lenders ranking pari-passu
 among the working capital lenders. Working capital facilities are
 further secured by second mortgage charge of the companys immovable
 and movable properties, both present and future, ranking pari-passu
 among financing banks and institutions except short-term lender.
 
 4.  LEASES:
 
 Company entered into a supplemental lease agreement with State Bank of
 India. Consequently, future rentals are paid in advance at discounted
 value and charged to revenue on pro-rata basis.
 
 5.  The Government of India grants price concession on sale of DAP and
 other Phosphatic Fertilisers.  Pending announcement of final rates of
 concession for DAP and other Phosphatic Fertilisers for certain
 quarters of year ended 31st March, 2007, additional subsidy income of
 Rs.5503.79 lakhs has been recognized taking into consideration various
 aspects of existing concession scheme and management estimates of final
 concession receivable.
 
 6.  The Company in the current year has adopted the Accounting
 Standard 15 (Revised) Employee Benefits (AS-15) issued by the Institute
 of Chartered Accountants of India and consequently revised the
 provision for retirement and other benefits as at 31st March, 2006. An
 additional liability (including unrecognized past service cost) of
 Rs.71.98 lakhs arising out of such revision has been adjusted from the
 opening revenue reserves as at 1st April, 2006 in accordance with the
 transitional provisions of AS-15.
 
 The employee benefits are as under: i.  Provident Fund
 
 Eligible employees of the Company receive benefits under the Provident
 Fund which are defined contribution plans wherein both the employees
 and the Company make monthly contributions equal to a specified
 percentage of the covered employee salary. The contributions are made
 to the Companys Employees Provident Fund Trust and are charged to the
 Profit and Loss Account in the period they are incurred. The Company is
 of the view that as Provident Fund obligation is defined contribution
 no adjustment arising out of AS-15 need be done in the accounts,
 however, the Company is in the process of ascertaining the fair
 valuation of the assets of the Trust as on 31st March, 2007.
 
 ii.  Superannuation/Pension Fund
 
 The Company has a defined contribution pension scheme to provide
 pension to the eligible employees. Company makes contributions equal to
 a specified percentage of the covered employees salary. These
 contributions in case of certain employees are administered by a Trust
 which has subscribed to a Group Pension Scheme of Life Insurance
 Corporation of India. In addition to above, the Company has funded for
 its employees in the workmen category, contributions to the Regional
 Provident Fund Commissioner. In the above cases contributions are
 charged to the Profit and Loss Account in the period they are incurred.
 
 iii.  Gratuity
 
 In accordance with the Payment of Gratuity Act, 1972 the Company
 provides for gratuity, a defined benefit plan (the Gratuity Plan)
 covering eligible employees.
 
 Liabilities with regard to such gratuity plan are determined by
 actuarial valuation and are charged to Profit and Loss Account in the
 period determined. The Gratuity Plan is a funded Plan administered by
 Companys own Trust which has subscribed to Group Gratuity Scheme of
 Life Insurance Corporation of India.
 
 7.  OTHERS
 
 a (i) Sales are net of discounts other than usual trade discounts of
 Rs. 406.09 lakhs (previous year Rs. 398.22 lakhs).
 
 (ii) Income from Government subsidy and Government Subsidy receivable
 are net of unrealized subsidy relating to earlier years amounting to
 Rs. 62.68 lakhs (previous year Rs. 169.02 lakhs).
 
 b.  Income from Current Investments (Schedule-1 3-Other Income)
 represents income earned on investments of temporary cash surpluses in
 units of mutual funds -growth and dividend schemes.
 
 c.  Sundry Creditors (Schedule 11 - Current liabilities and provision)
 includes dues to Small Scale Industrial Undertaking Rs.0.14 lakhs
 (previous year Rs.  1.09 lakhs). The identification of suppliers as
 Small Scale Industrial Undertakings (SSIs) has been done on the basis
 of information to the extent provided by the suppliers to the company.
 On this basis, following are the names of Small Scale Industrial
 Undertakings which have as on March 31, 2007 dues for more than 30
 days: Sri Aditya Venkateshwara Engg. Works.
 
 d.  The company has called for confirmations from suppliers under the
 Micro, Small and Medium Enterprise Development Act, 2006. As the
 company
 
 has not received any confirmations, information under the said Act has
 not been compiled.
 
 e.  (i) The net difference in foreign exchange variance
 
 credited to Profit and Loss Account is Rs.374.84 lakhs (previous year
 debit to Profit and loss account Rs. 1022.35 lakhs).
 
 (ii) Exchange difference in respect of forward exchange contracts to be
 recognized in the Profit and Loss account in the subsequent accounting
 period is Rs. 110.97 lakhs (previous year Rs.Nil lakhs).
 
 f.  Land - Lease deed in respect of land admeasuring 9.80 acres taken
 on lease from Visakhapatnam Port Trust is pending execution.
 
 8. Figures of the previous year have been regrouped wherever necessary
 to compare with current years classification.