1.  General: The Company follows accrual system of accounting and
 recognises income and expenditure on accrual basis unless otherwise
 stated. The Accounts are prepared on historical cost convention, in
 accordance with Generally Accepted Accounting Principles in India and
 provisions of the Companies Act, 1956. The Financial statements include
 operations of branch at Kenya.
 
 2.  Use of Estimates:
 
 The preparation of financial statements requires the management of the
 Company to make estimates and assumptions that affect the reported
 amount of assets and liabilities on the date of the financial
 statements and the reported amount of revenues and expenses during the
 reporting period. Difference between the actual results and estimates
 are recognised in the period in which the results are known /
 materialised. Though the management believes that the estimates used
 are prudent and reasonable, actual results could differ from these
 estimates.
 
 3.  Fixed Assets:
 
 a.  Fixed assets are stated at cost, unless stated otherwise. Cost
 comprises the purchase price and other attributable expenses.
 
 b.  Revaluation: The net increase in the value of the assets is
 credited to the Revaluation Reserve.
 
 c.  Impairment of Assets: Impairment of an asset is reviewed and
 recognised in the event changes and circumstances indicate that the
 carrying amount of an asset is not recoverable. Difference between the
 carrying amount of an asset and the recoverable value is recognised as
 impairment loss in the statement of profit and loss in the year of
 impairment.
 
 4.  Depreciation on Fixed Assets:
 
 a) Depreciation on fixed assets other than the assets given on lease is
 provided on straight-line method at the rates and in the manner
 prescribed in Schedule XIV of the Companies Act, 1956.
 
 b) Depreciation on Computers, Mobile Phones, Vehicles, Electronic
 Equipments, Air-conditioners and Lab Equipment are provided at rate
 higher than the rate prescribed in Schedule XIV of the Companies Act,
 1956, based on technical evaluation of the useful life (three years) of
 the assets.
 
 c) Depreciation charge for each year is net of additional depreciation
 on incremental values arising out of revaluation met out of revaluation
 reserve.
 
 5.  Investments:
 
 Investments are classified as long term and current investments. Long
 term investments are carried at cost less provision for other than
 temporary diminution, if any, in value of such investments. Current
 investments are carried at lower of cost and fair value.
 
 6.  Foreign currency transactions:
 
 Foreign currency transactions are accounted at the exchange rates
 prevailing on the date of transactions. Gains and losses resulting from
 settlement of such transactions are recognised in the profit and loss
 account.
 
 Monetary assets and liabilities related to foreign currency
 transactions remaining unsettled at the end of the year are translated
 at year end rates. The difference in translation of monetary assets and
 liabilities and realized gains and loss on foreign exchange
 transactions are recognised in the profit and loss account.
 
 Foreign branches are classified as integral foreign operations. Assets
 and liabilities (both monetary and non monetary) are translated at the
 closing rate at the year end. Income and expenses are translated at the
 monthly average rate at the end of the respective month.
 
 Premium or discount arising on forward exchange contracts entered into
 for the purpose of mitigating currency risk, are recognized in the
 Profit and Loss account.
 
 7.  Borrowing Costs
 
 Borrowing costs that are attributable to the acquisition or
 construction of qualifying assets are capitalised as part of the cost
 of such assets. A qualifying asset is one that necessarily takes
 substantial period of time to get ready for intended use. All other
 borrowing costs are charged to revenue.
 
 8.  Revenue recognition:
 
 Group Concession Price under Group Concession Scheme (GCS) and Equated
 Freight are considered in accordance with the norms prescribed by the
 Government of India - Fertiliser Industry Co-ordination Committee.
 
 9.  Grants in Aid:
 
 Grants in Aid received in respect of revenue expenditure are treated as
 other income in the profit and loss account relevant to the financial
 year. Grants received in respect of capital assets are deducted from
 the gross value of the specified assets in arriving at their book
 value.
 
 10.  Inventories:
 
 The method of valuation of inventories:
 
 a.  Manufactured Products:
 
 i.  Finished goods - at lower of cost and net realisable value.
 
 ii.  Work in process - at cost.
 
 Cost - includes material cost, labour, factory overheads and
 depreciation but excludes interest on borrowings.
 
 Net realisable value in the case of Urea - the Group Concession Price
 notified by the Govt, of India in respect of finished goods lying at
 the factory, and the net sale price in respect of finished goods lying
 in the warehouses outside the factory.
 
 b.  Traded products - at lower of-cost and net realisable value.
 
 c.  Other finished goods, work-in-process, raw materials, stores,
 spares, packing material and loose tools - at weighted average cost,
 less provision for depletion in value, if any.
 
 11.  Retirement Benefits:
 
 The Companys liability towards gratuity and superannuation benefits of
 eligible employees is covered by a policy with LIC and the annual
 contributions are paid/provided in accordance with this scheme. Leave
 encashment is provided on the basis of valuation by independent
 actuaries, as at the date of the Balance Sheet. The Companys
 contribution towards provident fund is administered and managed by an
 approved trust and is charged to revenue.
 
 12.  Research and Development:
 
 Expenditure relating to capital items is debited to fixed assets and
 depreciated at applicable rates. Revenue expenditure is charged to
 Profit and loss account of the year in which they are incurred.
 
 13.  Taxes:
 
 I.  Current tax: Provision for current tax is made based on the taxable
 income for the year computed under the Income Tax Act, 1961.
 
 II.  Deferred Taxes: Deferred tax is accounted for by computing the tax
 effect of timing differences which arise during the year and reverse in
 subsequent periods. Deferred tax assets are recognised and carried
 forward only to the extend that there is a certainty that sufficient
 future taxable income will be available against which such Deferred Tax
 Assets can be realized.
 
 14.  Contingencies:
 
 Obligations arising from claims, litigation, assessments, fines,
 penalties, after sales warranties etc., are recognised for when it is
 probable that a liability may be incurred, and the amount can be
 reasonably estimated.