1.  Basis of Preparation of Financial Statements:
 
 1.1 Accounting Convention:
 
 The financial statements have been prepared in conformity with
 generally accepted accounting principles to comply in all material
 respects with the notified Accounting Standards (AS) under Companies
 (Accounting Standard) Rules 2006 and the relevant provisions of the
 Companies Act 1956 (the Act). The financial statements have been
 prepared under the historical cost convention, on an accrual basis. The
 accounting policies have been consistently applied by the Company and
 are .consistent with those used in the previous year.
 
 1.2 Use of Estimates:
 
 The preparation of the financial statements in conformity with the
 generally accepted accounting principles requires management to make
 estimates and assumptions that affect the reported amount of assets and
 liabilities and disclosure of contingent liabilities as at the date of
 the financial statements and the results of operations during the
 reporting period. Although these estimates are based upon management''s
 best knowledge of current events and actions, actual results could
 differ from these estimates. Any revisions to accounting estimates are
 recognized prospectively when revised, in current and future periods.
 
 2.  Fixed Assets
 
 2.1 Fixed assets comprise of tangible assets and intangible assets, and
 are stated at their original cost of acquisition (net of Cenvat and
 VAT) less accumulated depreciation/amortization and - impairment loss
 except in case of assets held for disposal, where cost is replaced by
 the lower of Written Down Value or estimated realizable value. Cost for
 this purpose includes all costs attributable for bringing the asset to,
 its present location and condition.
 
 2.2 The Government/Institutional grants of capital nature are adjusted
 to the gross block of relevant Fixed Assets.
 
 2.3 Depreciation/Amortization
 
 2.3.1 Depreciation on Fixed Assets other than on intangible assets
 (software applications) is provided for under STRAIGHT LINE METHOD
 (SLM) at the rates prescribed in Schedule XIV to the Companies Act,
 1956. Depreciation on additions/deductions to Gross Block is calculated
 on pro-rata basis from the date of such additions/and up to the date of
 such deductions.
 
 No depreciation is provided, on assets held for disposal/retired from
 active use.
 
 2.3.2 Intangible assets (software applications) are amortized over
 their respective individual estimated useful lives on a STRAIGHT-LINE
 BASIS, pro-rata from the date the asset is available to the Company for
 its use. Management estimates the useful life of software applications
 identified as intangible assets as three years. Any expenses incurred
 on intangible assets upto Rs.1 lakh in each case are being charged off
 in the year of incurrence.
 
 2.3.3 Leasehold land is amortized equally over the lease period
 pro-rata from the month the asset is available to the Company.
 
 2.3.4 Depreciation on Catalyst capitalized upon commissioning is
 provided on the estimated useful life as technically assessed.
 
 2.3.5 Depreciation on railway wagons purchased is provided on its
 estimated useful life.
 
 2.4 Impairment of Assets:
 
 The carrying amounts of assets are reviewed at each Balance Sheet date
 for identifying an impairment based on internal/external factors. Loss
 on impairment is provided to the extent the carrying amount of assets
 exceeds its recoverable amount.  Recoverable amount is the higher of an
 asset''s net selling price and its value in use. After recognition of
 impairment loss, the revised carrying amount less residual value of the
 impaired asset would be depreciated on systematic basis over its
 remaining useful life. A previously recognized loss on impairment is
 increased or reversed depending on the change in the circumstances.
 However, the carrying value after reversal is not increased beyond the
 carrying value that would have prevailed by charging usual depreciation
 if there was no impairment.
 
 3.  Expenditure During Construction (EDC)
 
 All pre-operative costs (net of income) incidental to new projects
 undertaken are accumulated as EDC and apportioned appropriately among
 the various plants/facilities during the year of capitalization.
 
 4.  Borrowing Costs:
 
 Interest and other costs in connection with the borrowing of the funds
 to the extent related/attributed to the acquisition/ construction of
 qualifying assets are accumulated and capitalized up to the date when
 such assets are ready for their intended use and other borrowing costs
 are charged to Profit and Loss Account.
 
 Exchange variation on foreign currency borrowing to the extent they are
 considered as borrowing costs are also treated in a similar way.
 
 5.  Foreign Currency Transactions
 
 5.1 Transactions in Foreign currency are recorded in the reporting
 currency by applying the currency rate as at the date of transaction.
 
 5.2 Monetary assets and liabilities denominated in foreign currency are
 translated at the rates of exchange prevalent on the Balance Sheet
 date.
 
 5.3 In respect of transactions covered by forward exchange contracts
 the difference between the contract rate and the spot rate on the date
 of the contract is recognized in the Profit & Loss Account over the
 period of the contract.
 
 5.4 All other exchange differences (gains or losses) are treated as
 revenue and are recognized in the Profit and Loss Account.
 
 6.  Investments
 
 Current Investments are valued at lower of cost or fair value.  Long
 Term investments are stated at cost and provision is made for any
 diminution in such value, which is not temporary in nature.
 
 7.  Inventories
 
 7.1 Assessment of Inventory
 
 7.1.1 Raw Materials, Intermediary Products, By- products and Finished
 Products inside factory premises are assessed by survey method on a
 date as close as possible to the Balance Sheet date and the shortages
 /excesses in the quantities as compared to book stocks are adjusted in
 the books. Finished goods and other inventory stored outside the
 factory premises are taken as per warehousing certificates and third
 party confirmation respectively.
 
 7.2 Mode of Valuation
 
 7.2.1 Inventories are valued at lower of cost and estimated net
 realizable value except in case of by-products, which are valued at,
 estimated net realizable value. Stocks in process at the close of the
 year are not valued as the same is not practicable.
 
 7.2.2 Basis of Cost:
 
 - The cost of manufactured finished goods, bought out products and
 intermediary products are arrived at based on weighted average cost.
 Bifurcation of cost of joint products is made on technical estimates.
 
 - Cost of raw materials, petroleum products, packing materials, stores
 and spares, and loose tools is determined on weighted average cost
 basis.
 
 7.2.3 Used loose tools are treated as consumed and hence not valued.
 
 7.2.4 Project surplus stores and spares of old plants not in use are
 brought in the books at nominal estimated value/technical estimate or
 carried in memorandum records.
 
 7.2.5 Provision is made in respect of raw materials, packing materials,
 stores and spares and petroleum products, wherever appropriate, based
 on technical estimates, to reflect the impact of obsolescence, damage
 or other diminution in value.
 
 7.3 Measurement of Cost / Realisable Value
 
 7.3.1 Cost of Purchases
 
 Cost of purchase includes duties, taxes (net of those recoverable)
 freight and other expenses net of trade discounts, rebates and price
 adjustments.
 
 7.3.2 Cost of Manufactured goods
 
 Cost of Manufactured Goods comprises of direct cost, variable
 production overheads and fixed production overheads on absorption
 costing method. Catalysts issued are charged off over their estimated
 useful lives as technically assessed. Variable production overheads are
 allocated based on actual production.  Variable overheads related to
 movement of finished products are allocated based on actual dispatches.
 Fixed overheads are allocated based on higher of the actual production
 level or normal production level. Average freight incurred is included
 in valuing stocks in field warehouses and in transit.
 
 7.3.3 Cost of Traded Fertilizers
 
 It comprises of Cost of Purchases as defined under 7.3.1 plus bagging,
 handling and transportation costs incurred to bring the material in its
 present location and condition.
 
 7.3.4 Net Realizable Value
 
 Price of urea is administered by the Government of India by which
 selling price is fixed for the buyer. The net realizable value for
 manufactured urea is taken at retention price (selling price net of
 dealers'' margin plus subsidy from Government of India) net of variable
 selling and distribution cost. Net realizable value of off-spec urea is
 taken at 40% of MRP excluding subsidy.
 
 The net realizable value of phosphatic and potassic fertilizers is
 taken at the applicable selling prices expected to be realized, net of
 dealers'' margin and variable selling and distribution costs plus the
 concession as fixed/ to be fixed by Government. Net realizable value of
 off-spec phosphatic and potassic fertilizers is taken at selling price
 net of dealers'' margin and estimated cost of re-processing including
 transportation cost to factory. The net realizable value of off spec
 bought out fertilizers is at 30% of MRP.
 
 The Net realizable value of imported Urea is the selling price and
 other entitled compensation as contracted with the Government net of
 variable selling and distribution cost.
 
 The net realizable value of off-spec imported Urea is taken at 40% of
 MRP.
 
 Average freight incurred on despatches from silo/ factory/ port to
 godown is reduced for arriving at the net realizable value in respect
 of stocks of fertilizers in silo/factory/port.
 
 The net realizable value of non-fertilizer products is taken at the
 year-end lowest selling prices net of variable selling and distribution
 cost.
 
 8.  Sundry Debtors
 
 Debts, receivables, loans and advances are provided for upon review on
 case to case basis.
 
 Subsidy receivable from Government overdue over 3 years are provided
 for.
 
 9.  Operating Leases
 
 Assets acquired on leases wherein a significant portion of the risks
 and rewards of ownership are retained by the lessors are classified as
 operating leases. Lease rentals paid for such leases are recognized as
 an expense as per the lease terms which is more representative of the
 time pattern of the benefit.
 
 Rental income on leases is accounted for an accrual basis in accordance
 with the terms of the contract. This is more representative of the time
 pattern in which benefit derived from the use of the leased asset is
 diminished.
 
 10.  Taxation
 
 Provision for Current Income Tax is made in accordance with the Income
 Tax Act 1961.
 
 Deferred Tax resulting from timing difference between book profit and
 taxable profit for the year is accounted for using the tax rates and
 laws that have been enacted or substantially enacted as on the balance
 sheet date. The deferred tax asset is recognized and carried forward
 only to the extent that there is a certainty that the assets will be
 adjusted in future.
 
 11.  Cash and Cash Equivalents
 
 Cash and cash equivalents in the cash flow statement comprises of cash
 in hand, cash at bank and short term investments with an original
 maturity of three months or less.
 
 12.  Employee Benefits
 
 12.1.1 Contribution to Provident Fund is accounted for on accrual
 basis. The Provident Fund contributions are made to a Trust
 administered by the Company. The interest rate payable to the members
 of the Trust shall not be lower than statutory rate of interest
 declared by the Central Government under the Employees Provident Funds
 and Miscellaneous'' Provisions Act, 1952 and shortfall, if any, shall be
 made good by the Company. Such shortfall on account of interest, if
 any, is recognized in the Profit and Loss account:
 
 12.1.2 Company''s defined Contribution made to Pension Fund of
 Government is charged off to Profit and Loss account on accrual basis.
 
 12.1.3 Employee benefits under Defined Benefit plans comprising of
 gratuity, leave encashment on retirement, Post retirement medical
 benefits and long term service award are recognized based on the
 present value of Defined Benefit Obligation based on actuarial
 valuation carried out as on the date of the Balance Sheet. The
 actuarial valuation is done as per Projected Unit Method.
 
 12.1.4 Actuarial gains and losses are recognized in full in the Profit
 and Loss account for the period in which they occur. Past service cost
 is recognized immediately to the extent that the benefits are already
 vested. The retirement benefit obligation recognized in the Balance
 Sheet represents the present value of the defined benefit obligation as
 adjusted for unrecognized past service cost, and as reduced by the fair
 value scheme of assets, wherever applicable.
 
 13.  Earnings per Share (EPS)
 
 Basic earning per share is calculated by dividing net profit or loss
 after tax for the year attributable to equity shareholders by Šthe
 weighted average number of equity shares outstanding during the year.
 
 For the purpose of calculating diluted EPS, net profit or loss after
 tax for the year attributable to equity shareholders are divided by the
 weighted average number of equity shares outstanding during the year
 and ate adjusted for the effects of all dilutive potential equity
 shares.
 
 14.  Research and Development Expenditure
 
 Revenue Expenditure on Research and Development activity is recognized
 separately and charged to Profit and Loss Account.
 
 15.  Revenue Recognition
 
 15.1 Sales are recognized on an accrual basis when all significant
 risks and rewards of ownership are transferred to the buyer and the
 Company retains no effective control of the goods transferred.
 
 15.2 Gross Sales (net of returns) include excise duty, wherever
 applicable.
 
 15.3 Subsidy income is accounted on the quantity sold during the year.
 
 15.4 Recognition of Subsidy is generally made on the basis of in
 principle recognition/approval/settlement of claims from Government of
 India/Fertilizer Industry Co-ordination Committee.
 
 15.5 Other Income is recognized on an accrual basis.
 
 15.6 Dividend income is recognized when right to receive dividend is
 established.
 
 15.7 Interest Income is recognized when no significant uncertainty as
 to its realization exists.
 
 15.8 Scrap, salvaged/waste materials and sweepings are accounted for on
 realization.
 
 15.9 Insurance and other miscellaneous claims are recognized on
 receipt/acceptance of claim. Contractual pass through incentives,
 benefits, etc. are recognized on receipt basis.
 
 15.10 Debits/Credits Relating to Prior period
 
 Income and expenditure pertaining to earlier period and upto Rs.
 1,00,000/- in each case, are not being classified as relating to prior
 period.
 
 15.11 Prepaid Expenses
 
 Individual expense up to Rs.25,000 is not considered in classifying
 prepaid expenses.
 
 16.  Contingent Liabilities and Provisions
 
 Claims against the Company not acknowledged as debts relating to normal
 business transactions and show cause notices and demands disputed by
 the Company are .treated as Contingent Liabilities after careful
 evaluation of facts.  Provision in respect of contingent liabilities if
 any, is made when it is probable that a liability may be incurred and
 the amount can be reasonably estimated.
 
 A provision is recognized when the Company has a present obligation as
 a result of past event; it is probable that outflow of resources will
 be required to settle the obligation, in respect of which a reliable
 estimate can be made.
 
 Provisions are not discounted to its present value and are determined
 based on best estimate required to settle the obligation at the Balance
 Sheet date. These are reviewed at each Balance Sheet date and adjusted
 to reflect the current best estimate.