1.1 Basis of Preparation of Financial Statements
 
 The financial statements are prepared on accrual basis, as a going
 concern, under the historical cost convention in accordance with the
 generally accepted accounting principles in India (GAAP) and the
 provisions of the Companies Act, 1956.
 
 1.2 Use of Estimates
 
 The preparation of the financial statements in conformity with GAAP in
 India requires management to make estimates and assumptions, wherever
 necessary, that affect the reported amount of assets and liabilities
 and contingent liabilities as at the date of financial statements and
 the amounts of revenue and expenses during the period. Actual results
 could differ from those estimates. Any revision to such estimates is
 recognized in the period in which the results are known/materialized.
 
 1.3 Fixed Assets
 
 Fixed Assets are stated at cost of acquisition or construction
 (including expenses allocated wherever applicable) less accumulated
 depreciation and impairment loss, if any.
 
 Fixed Assets acquired out of capital grants are accounted for net of
 grants received.
 
 Expenditure during construction attributable to the fixed assets
 incurred upto the date of commercial production are capitalized.
 
 1.4 Borrowi ng Costs
 
 Borrowing costs directly attributable to the acquisition or
 construction of qualifying assets are capitalized. A qualifying asset
 is one, which necessarily takes a substantial period of time to get
 ready for intended use.  Other borrowing costs are charged to revenue
 in the period in which these are incurred.
 
 1.5 Depreciation/Amortization
 
 t Depreciation on fixed assets is provided at the rates specified under
 Schedule XIV of the Companies Act, 1956 on straight line method
 retaining residual value of five percent in respect of plant and
 machinery and , computer systems and rupee one in respect of capital
 spares and other fixed assets.
 
 Leasehold land and buildings are amortized over the lease period.
 Buildings constructed over leasehold land are depreciated at the rates
 specified under Schedule XIV of the Companies Act, 1956.
 
 License and process know-how fee having future economic benefits is
 amortized on straight line method over a period of ten years or licence
 period, whichever is less.
 
 Software which is not integral part of related hardware is treated as
 intangible asset and amortized on straight line method over a period of
 five years or its license period, whichever is less.
 
 1.6 Investments
 
 Long term investments are carried at cost, after providing for
 diminution in value if it is of a permanent nature.  Current
 investments are valued (individually) at lower of cost and quoted/fair
 value
 
 1.7 Inventories
 
 Raw Materials, packing materials and stores & spares, are valued at
 lower of weighted average cost and net realizable value.
 
 In case of stores and spares not moved for more than two years and upto
 five years, provision is made at five percent per annum (on straight
 line basis) and charged to revenue. In case of stores and spares not
 moved for more than five years/identified as surplus or obsolete, value
 is taken as certified by Valuers and diminution, if any is charged to
 revenue.
 
 Finished and semi-finished goods are valued at lower of cost and net
 realizable value based on the applicable Concession/Sale Price. The
 plant- wise finished stocks lying at warehouses are determined on
 first-in-first-out basis
 
 1.8 Foreign Currency Transactions
 
 Transactions in foreign currency are accounted at the exchange rate
 prevailing on the date of the transaction.
 
 The value of assets and liabilities in foreign currency are translated
 at the exchange rate prevailing at the end of the year.
 
 Exchange Gain/Loss on conversion of foreign currency transactions is
 recognized as income/expense.
 
 1.9 Employees Benefits
 
 Payments to defined contribution schemes are charged as expense as they
 fall due.
 
 Provision towards defined benefit schemes are made based on the
 actuarial valuation as at the end of the year and charged to Profit &
 Loss Account along with actuarial gains/losses.
 
 1.10 Adjustments pertaining to prior period and prepaid expenditure
 
 Income/Expenditure pertaining to prior period and prepaid upto Rupee
 one lakh in each case is considered as income/expenditure of the
 current year.
 
 1.11 Revenue Recognition
 
 Sales include excise duty wherever applicable and are net of rebates.
 
 Price and Freight Subsidy is recognized based on notifications received
 from Fertilizer Industry Coordination Committee (FICC) and taking into
 account the effect of guidelines, policies, instructions and
 clarifications given by the Government.
 
 Sale of scrap/ waste materials is recognized on disposal.
 
 1.12 Claims
 
 Pending settlement, claims on underwriters /railways /others as
 assessed by the Company are recognized at the time of lodgement.
 
 1.13 Leases
 
 Lease arrangements, where the risks and rewards incidental to ownership
 of the asset substantially vest with the lessor, are recognized as an
 operating lease. Lease payments/receipts under operating lease are
 recognized as an expense/income in the Profit and Loss Account on a
 straight-line method over the lease period.
 
 1.14 Deferred Tax
 
 The deferred tax resulting from timing differences between book profit
 and taxable profit for the year is accounted for applying the tax rates
 and laws that have been enacted or substantially enacted as on the
 Balance Sheet date.
 
 Deferred tax assets are recognized to the extent there is a virtual
 certainty that the assets can be realized in future and are reviewed
 for the appropriateness of their respective carrying values at each
 Balance Sheet date.