A. ACCOUNTING CONCEPTS
 
 The company follows mercantile system of accounting, recognising income
 and expenditure on accrual basis, unless otherwise stated herein
 after. The accounts are prepared on historical cost basis as a going
 concern and are consistent with generally accepted accounting
 principles.
 
 B. FIXED ASSETS & DEPRECIATION
 
 (i) Fixed Assets are stated at historical cost of acquisition or
 construction plus other incidental expenses less depreciation.
 
 (ii) Depreciation is provided on fixed assets on the Straight Line
 Method at the rates prescribed in Schedule XIV of the Companies Act,
 1956.
 
 (iii) On additions/deletions the depreciation is charged on pro-rata
 basis with reference to month of addition/deletions.
 
 (iv) The company has on the basis of technical opinion treated all the
 plant and machinery as continuous process plant.
 
 C. SALES
 
 Sale of SSP includes freight and subsidy, sale of Sulphuric Acid &
 Oleums is net of excise duty, sales tax, rebate etc.
 
 D. INVENTORIES
 
 (i) Finished goods are valued at lower of cost or net realisable value.
 
 (ii) Raw and packing materials are valued at cost.
 
 (iii) Value of stock of Sulphur in pipeline and work in process of all
 products is ignored for the purpose of inventory having regard to the
 concept of the materiality and difficulty of quantifying such stocks
 with exactitude.
 
 E. INVESTMENTS
 
 Investments are stated at cost.
 
 F. MISCELLANEOUS EXPENDITURE WRITTEN OFF
 
 (i) Preliminary expenses and public issue expenses are written off
 equally over ten years.
 
 (ii) The cost of catalysts is being amortised on the basis of their
 useful life as technically assessed.
 
 G. CONTINGENT LIABILITIES
 
 These are not provided for but are disclosed by way of notes on
 accounts.
 
 H. GRATUITY
 
 The Gratuity is payable on cash basis.
 
 I. FOREIGN CURRENCY TRANSACTION
 
 The Foreign Currency Loans from ICICI Ltd., was obtained under the
 Exchange Risk Administration Scheme (ERAS), the liability thereof is
 reflected at the exchange rates prevalent on the date of conversion
 made at the time of payment by ICICI Ltd.,