1.  Basis of Accounting
 
 The accounts have been prepared on accrual basis and on historical cost
 convention except for certain fixed assets, which have been revalued.
 The financial statements have been prepared in accordance with
 applicable mandatory Accounting Standards and relevant presentational
 requirements of the Companies Act, 1956.
 
 2.  Fixed Assets
 
 Fixed Assets are capitalised at cost, inclusive of finance charges on
 borrowed funds attributable to acquisition of fixed assets, for the
 period upto the date of commencement of commercial production.
 
 Expenditure that increases the future benefit of plant and machinery by
 improvement in performance and efficiency of the assets as well as
 increases their useful economic life is capitalised.  insurance spares
 are capitalised as part of respective groups of assets.
 
 3.  Borrowing Costs
 
 Borrowing costs that are directly attributable to the acquisition /
 construction of qualifying assets are capitalised while the other
 borrowing costs are expensed.
 
 4.  Investments
 
 Long term investments are valued at cost.
 
 5.  Valuation of Inventories
 
 Finished goods are valued at the lower of cost and net realisable
 value. The cost for this purpose is determined on weighted average cost
 of production, which comprises direct material costs, direct wages &
 appropriate overheads. Raw Materials, work-in-process, stores, spare
 parts and loose tools are valued at the lower of cost and net
 realisable value.  The cost for this purpose is determined on weighted
 average basis.
 
 6.  Revenue Recognition
 
 Sale is recognised on the despatch / delivery of goods to the customer.
 Sale is exclusive of excise duty, where applicable.
 
 Under the New Pricing Scheme for Urea, the Government of India
 reimburses in the form of subsidy to the Fertilizer Industry, the
 difference between the concession price based on the cost of production
 and the selling price realised from the farmers as fixed by the
 Government from time to time.  Changes in input and other costs as
 estimated by the Management, as per known policy parameters are
 recognised in the Profit and Loss Account for the year. This has been
 accounted on the basis of movement of Fertilizer from the factory as
 per the procedure prescribed by the Government and not on the basis of
 ultimate sales.
 
 Concession for DAP, MOP and Complex Fertilizers is recognised as per
 the final rates notified by the Government of India. In the absence of
 notified rates, the concession is accounted based on rates estimated by
 the Management in accordance with known policy parameters in this
 regard. This has been accounted on the basis of receipt of fertilizer
 in the district as per the procedure prescribed by the Government and
 not on the basis of ultimate sales.
 
 After the final rates are notified by the GOI, necessary adjustments
 are effected in the accounts of the relevant year.
 
 Insurance claims are accounted on acceptance / receipt basis.
 
 Revenue from services is recognised as per the terms and conditions of
 the Contract / Agreement.
 
 7.  Depreciation
 
 Depreciation on fixed assets is calculated on the straight- line method
 at rates prescribed under Schedule XIV of the Companies Act 1956, as
 amended. Fertilizer plant has been classified as ''Continuous Process
 Plant''. Incremental value of fixed assets arising out of revaluation is
 depreciated over their remaining useful lives.
 
 Written Down Value of insurance spares is charged off in the year of
 replacement of the existing part in the fixed asset.
 
 8.  Leases
 
 Finance Leases, which effectively transfer to the Company substantially
 all the risks and benefits incidental to ownership of the leased item,
 are capitalised at the lower of the fair value and present value of the
 minimum lease payments at the inception of the lease term and disclosed
 as leased assets.  Lease payments are apportioned between the finance
 charges and reduction of the lease liability so as to achieve a
 constant rate of interest on the remaining balance of the liability.
 Finance charges are charged to the Profit and Loss Account.
 
 9.  a.  Foreign Currency Transaction
 
 Revenue transactions in foreign currency are translated into Indian
 rupees at the exchange rate prevailing on the date of the transactions
 unless such transactions are covered by forward contracts.
 
 The exchange differences arising on foreign currency transactions are
 recognised as income or expense in the period in which they arise.
 
 All current assets and current liabilities in foreign currency
 outstanding on the date of the Balance Sheet are converted at the
 exchange rates prevailing on the date of the Balance Sheet. The
 resultant differences are recognised in Profit and Loss Account.
 
 b.  Forward Exchange Contracts
 
 In respect of Forward Exchange Contracts entered into by the Company,
 the difference between the contracted rate and the rate at the date of
 transaction is recognised as gain or loss over the period of contract.
 Any profit or loss arising on cancellation or renewal of forward
 exchange contract is recognised as income or as expense for the year.
 
 10. Retirement and other Benefits to Employees
 
 a.  Eligible employees receive benefits from Provident Fund, which is a
 defined contribution plan. Contribution made to Provident Fund is
 charged to Profit and Loss Account every month.
 
 b.  Gratuity, a defined benefit retirement plan, to the employees is
 covered under the appropriate schemes of the Life Insurance Corporation
 of India. Liability is charged to Profit and Loss Account based on an
 actuarial valuation carried out at the balance sheet date, by an
 independent Actuary.
 
 c.  Superannuation, which is a defined contribution scheme, is
 administered by Life Insurance Corporation of India. The contributions
 to the said scheme are charged to the Profit and Loss Account on an
 accrual basis.
 
 d.  Leave Encashment benefits payable to employees is unfunded,
 determined and recognised at the balance sheet date in the accounts as
 per the actuarial valuation.
 
 e.  Expenditure incurred on payment made to employees under Voluntary
 Retirement Scheme (VRS) is charged to Profit and Loss Account in the
 year of payment.
 
 11.  Earnings per Share
 
 Basic Earnings Per Share is calculated by dividing the net Profit or
 Loss for the year attributable to the equity shareholders (after
 deducting attributable taxes) by the weighted average number of equity
 shares outstanding during the year.
 
 For the purpose of calculating Diluted EPS, net Profit or Loss for the
 year, attributable to equity shareholders and the weighted average
 number of shares outstanding during the year, are adjusted for the
 effects of all dilutive Potential Equity Shares.
 
 12.  Income-tax
 
 Provision for income-tax comprises of current taxes as also deferred
 taxes. Provision for current tax is made based on the tax liability
 computed as per the provision of Income Tax Act 1961. Deferred tax
 liability is recognised for the future tax consequences of temporary
 differences between the tax basis and the carrying values of assets and
 liabilities. Deferred tax assets are recognised if there is reasonable
 certainty that they will be realised and are reviewed every year. The
 tax effect is calculated on the accumulated timing differences at the
 end of the year based on enacted or substantially enacted tax laws.
 
 13.  Impairment of Asset
 
 Impairment of asset is reviewed and recognised in the event of changes
 and circumstances indicating that the carrying amount of an asset is
 not recoverable. Difference between the carrying amount of an asset and
 the recoverable value, if any, is recognised as impairment loss in the
 statement of Profit and Loss in the year of impairment.
 
 14.  Intangible Asset (Software)
 
 Intangibles representing software are amortized over their estimated
 useful life.