2. SIGINIFICATE ACCOUNTING POLICIES

a) Basis of preparation of financial statements

i. The financial statements have been prepared on the basis of the Historical Cost Convention and in accordance with generally accepted accounting principles, provisions and Accounting standard notified under section 133 of the Companies Act, 2013 read with Rule 7 of Companies (Accounts) Rule, 2014.

ii. The company follows mercantile system of accounting and recognizes income and expenditure on accrual basis unless otherwise stated hereinafter

iii. All the assets and liabilities have been classified as current or noncurrent as per the Company's normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013.

iv. Use of Estimates:

The preparation of the financial statements is conformity with generally accounting principles accepted requires management to make estimates and assumptions that effect the reported amount of assets and liabilities and expenses during the reporting period. Actual results could differ from those estimates. Any revision to accounting estimates is recognized in the period in which such revisions are made.

b) Fixed assets:

i. Fixed Assets are stated at cost of acquisition including taxes, duties, freight and other incidental expenses related to acquisition and installation of the concerned assets and net off CENVAT

ii. Advances paid towards the acquisition of fixed assets, outstanding at each balance sheet date are disclosed under long term loans and advances.

iii. Capital work in progress comprises of cost of Fixed Assets that are not yet ready for their intended use at the reporting date.

c) Depreciation:

The depreciation on fixed assets is provided on straight line method in accordance with schedule II of the Companies Act, 2013 on a pro-rata basis commencing from the month of addition.

d) Revenue Recognition:

i. Revenue from sale transaction is recognized when property in the goods with all risk and rewards and effective control of goods usually associated with ownership are transferred to buyer at price and are net of returns, trade discount and taxes, it includes subsidy.

ii. Other income is also accounted on accrual basis.

e) Subsidy Receivables:

Subsidy receivable is accounted on the basis of actual sales and the deductions if any from the same, made by the Certifying Authority, are accounted as and when the same are communicated to the Company.

f) Inventories:

Inventories have been valued as under:

Raw Material : At cost on FIFO basis.

Finished Goods : At lower of cost or net realization value

Work in progress : At cost of material plus

conversion cost.

Packing material, stores and Spares : At cost on FIFO basis.

g) Investments:

Investments are stated at cost less any diminution in their value, which is other than temporary. It includes National Saving certificate which is stated including occurred interest.

h) Borrowing Cost:

Borrowing costs attributable to the acquisition or construction of fixed assets are capitalized as part of cost of the assets, up to the date the asset is put to use. Other Borrowing cost is charged to Statement of Profit & loss in the year in which they are incurred.

i) Taxes of income:

i. Tax expense consists of both current as well as deferred tax liability. Current tax represents amount of Income tax payable including the tax payable u/s 115JB, if any, in respect of taxable income for the year.

ii. Minimum alternate tax credit is recognized as an asset only when and to the extent there is convincing evidence that the Company will pay normal Income tax within the specified period.

iii. Deferred Tax is recognized on timing difference between the accounting income and the taxable income for the year that originates in one period and are capable of reversal in one or more subsequent period. Such Deferred Tax is quantified using the tax rates and laws enacted or subsequently enacted as on Balance sheet date.

j) Earning per share:

The Company reports basic & diluted earnings per share (EPS) in accordance with Accounting Standard 20 on earnings per share. Basic EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year. Diluted EPS is computed by dividing the net profit or loss for the year by the weighted average number of equity shares outstanding during the year as adjusted for the effects of all dilutive potential equity shares, except where the results are anti-dilutive

k) Transaction in foreign currency:

i. Foreign currency transactions are accounted for at the exchange rates prevailing on the date of such transactions where these are not covered by forward contracts.

ii. Liabilities in foreign currencies as on the date of balance sheet are converted at the exchange rate prevailing on that date and the difference is recognized

l) Impairment of Assets:

i. The carrying amount of assets is reviewed at each Balance sheet date if there is any indication of impairment based on internal / external factors.

ii. If the carrying amount of the asset exceeds its estimated recoverable amount, an impairment loss is recognized in the Statement of Profit &Loss to the extent the carrying amount exceeds recoverable amount.

iii. Reversal of impairment losses recognized in prior years is recorded when there is an indication that the impairment losses recognized for the assets, no longer exists or have decreased

m) Cash and cash Equivalents:

Cash and cash equivalents comprise cash balances on hand, balance with bank and fixed deposits with maturity period of less than 12 months.

n) Corporate Social Responsibility ("CSR") expenditure:

No CSR expenditure incurred by the company.

o) Employees benefits:

The company's obligation towards various employees' benefits has been recognized as follows:

i) Short term benefits:

All employee benefits payable/ available within twelve months or rendering the services are classified as short term employee's benefits.

Benefits such salaries, wages and bonus, short term compensated leave, etc. are recognized in the Statement of Profit and Loss in the period in which the employee renders the related service.

ii) Post-employment benefits:

Defined contribution plan

The employee's provident fund scheme and Employee's state insurance scheme of the company are defined contribution plan. The company's contribution paid/ payable under the scheme are recognized as an expense in the Statement of Profit and Loss during the year in which the employee renders the related service.

Defines benefits plan

Gratuity is a defined benefit plan, provided in respect of past services based on the actuarial valuation carried out by an independent actuary and corresponding contribution to the fund is expenses in the year such contribution .However co's is paying and enjoying gratuity on actual payment basis and not on valuation basis since 2014.

p) Segment Reporting:

As the Company's business falls with a single business segment, viz “Fertilizer product”, the disclosure requirements of Accounting Standards (As-17) on “Segment Reporting,” notified by the Companies (Accounting Standards) Rules, 2006 are not applicable.