Provisions And Contigent liabilty

Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a
past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. When a provision is expected
to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is
virtually certain. The expense relating to a provision is presented in the Statement of Profit and Loss net of any
reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that
reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision
due to the passage of time is recognized as finance cost.

N) Contingencies

A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by
the occurrence or non-occurrence of one or more uncertain future events beyond the control of the company or a
present obligation that is not recognized because it is not probable that an outflow of resources will be required
to settle the obligation. A contingent liability also arises where a reliable estimate of the amount of the obligation
cannot be made. Contingent assets are not recognized but are disclosed where an inflow of economic benefits is
probable. The estimation of financial effect in respect of contingent liabilities and contingent assets wherever not
practicable, is not disclosed and such fact is accordingly stated.

O) Financial Instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
equity instrument of another entity.

a. Financial Assets

Initial Recognition and Measurement

All financial assets are recognized initially at fair value, plus in the case of financial assets not recorded at fair
value through profit or loss (FVTPL), transaction costs that are attributable to the acquisition of the financial
assets. However, trade receivables that do not contain a significant financing component are measured at
transaction price.

Subsequent Measurement

Financial assets presently held by the Company are classified as under:-

• Debt instruments at amortized cost

• Debt instruments, TDRs and derivatives at Fair Value Through Profit or Loss (FVTPL)

• Equity instruments measured at Fair Value Through Other Comprehensive Income (FVTOCI)

i. Debt Instruments at Amortized Cost

A ‘debt instrument’ is measured at the amortized cost if both of the following conditions are met:

(i) The asset is held within a business model whose objective is to hold assets for collecting contractual
cash flows, and

(ii) Contractual terms of the asset give rise on specified dates to cash flows that are solely payments of
principal and interest (SPPI) on the principal amount outstanding.

After initial measurement, such financial assets are subsequently measured at amortized cost using the
effective interest rate (EIR) method. Amortized cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is
included in finance income in the profit or loss. The losses arising from impairment are recognized in the
statement of profit or loss. This category generally applies to trade and other receivables.

ii. Debt Instrument at FVTPL

FVTPL is a residual category for debt instruments. Any debt instrument, which does not meet the criteria
for categorization as at amortized cost or as FVTOCI, is classified as at FVTPL.

Debt instruments included within the FVTPL category are measured at fair value with all changes
recognized in the Statement of profit or loss.

iii. Equity Investments

All equity investments in scope of Ind AS 109 - Financial Instruments are measured at fair value. Equity
instruments which are held for trading are classified as at FVTPL. For all other equity instruments, the
Company may decide to classify the same as at FVTOCI. The Company makes such election on an
instrument-by-instrument basis upon on initial recognition and same is irrevocable.

Upon classification of equity instruments as at FVTOCI, all fair value changes on the instrument, excluding
dividends, are recognized in the OCI. There is no recycling of the amounts from OCI to Statement of Profit
and Loss, even on sale of investments. The Company may transfer the cumulative gain or loss within
equity.

Equity instruments included within the FVTPL category are measured at fair value with all changes
recognized in the statement of profit or loss.

Investments in Joint ventures, subsidiaries and associates are recognized at cost.

iv. Derivative Financial Instruments

The Company enters into a variety of derivative financial instruments to manage its exposure to interest
and foreign exchange rate risks, like foreign exchange forward contracts, interest rate swaps and cross
currency swaps.

Derivatives are initially recognized at fair value on the date the derivative contracts are entered into and
are subsequently re-measured to their fair value (Mark to Market) at the end of each reporting period.
The resulting gain or loss is recognized in the Statement of profit and loss. Company does not designate
any of its derivative instruments as hedge instruments. Derivatives are carried as financial assets when
fair value is positive and as financial liabilities when the fair value is negative.

Transaction costs incurred for such derivative instruments are charged off to Statement of Profit and Loss
on initial recognition.

Derecognition

The Company derecognizes a financial asset only when the contractual rights to the cash flows from the asset
expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset.

When the Company has transferred its rights to receive cash flows from an asset or has entered into a pass¬
through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Company continues to recognize the transferred asset to the extent of
the Company’s continuing involvement. In that case, the Company also recognizes an associated liability. The
transferred asset and the associated liability are measured on a basis that reflects the rights and obligations
that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower
of the original carrying amount of the asset and the maximum amount of consideration that the Company
could be required to repay.

Impairment of Financial Assets

In accordance with Ind AS109 - Financial Instruments, the Company applies Expected Credit Loss (ECL) model
for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:

i. Financial assets that are debt instruments, and are measured at amortised cost e.g., loans, debt securities,
deposits, trade receivables and bank balance.

ii. Lease receivables

iii. Trade receivables or any contractual right to receive cash or another financial asset that result from
transactions that are within the scope of Ind AS 115 - Revenue From Contracts with Customers.

iv. Financial guarantee contracts which are not measured as at FVTPL

Expected credit losses are the weighted average of credit losses with the respective risks of default occurring
as the weights. Credit loss is the difference between all contractual cash flows that are due to the Company
in accordance with the contract and all the cash flows that the Company expects to receive (i.e. All cash
shortfalls) discounted at the original effective interest rate.

While estimating cash flows, Company considers all contractual terms of financial instrument over the
expected life of the financial instrument including cash flows from the sale of collateral held that are integral
to contractual terms.

In case of Trade receivables, the Company has used a practical expedient as permitted under Ind AS 109 -
Financial Instruments. This expected credit loss allowance is computed based on a provision matrix which
takes in account historical credit loss experience with adjustments for collaterals available and forward
looking information, if required.

ECL allowance is not recognized on Subsidy receivables since they are due from Government of India and also
on other receivables which are largely due from Government agencies, as the Company does not perceive any
risk of default which would be material.

For recognition of impairment loss on other financial assets and risk exposure, the Company determines
that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has
not increased significantly, 12-month ECL is used to provide for impairment loss. However, if credit risk has
increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves
such that there is no longer a significant increase in credit risk since initial recognition, then the entity reverts
to recognising impairment loss allowance based on 12-month ECL.

ECL impairment loss allowance (or reversal) recognized during the period is recognized as income/ expense in
the Statement of Profit and Loss (P&L). This amount is reflected under the head ‘other expenses’ in the P&L.
The Balance Sheet presentation for various financial instruments is described below:

• Financial assets measured as at amortised cost, trade receivables and lease receivables.

• ECL is presented as an allowance, i.e., as an integral part of the measurement of those assets in the
balance sheet.

• The allowance reduces the net carrying amount, until the asset meets write-off criteria.

• Trade receivables, other receivables, loans and advances are also fully provided for as doubtful upon
review on case to case basis, to the extent of such loss considered as incurred.

b. Financial Liabilities

Initial Recognition and Measurement

Financial liabilities are classified, at initial recognition as loans and borrowings, payables, derivatives and
financial liabilities at fair value through profit or loss. The Company’s financial liability consists of trade and
other payables, loans and borrowings, bank overdrafts, financial guarantee contracts and derivative financial
instruments.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and
payables, net of directly attributable transaction costs, if any.

Subsequent Measurement

The subsequent measurement of financial liabilities of the Company depending on their classification is
described below:-

i. Loans and Borrowings Including Bank Overdrafts

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized
cost using the EIR method. Gains and losses are recognized in profit or loss when the liabilities are
derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortization is included as finance costs in the
statement of profit and loss.

This category generally applies to interest-bearing loans and borrowings.

ii. Financial Guarantee Contracts

Financial guarantee contracts issued by the Company are those contracts that require a payment to
be made to reimburse the holder of the guarantee for a loss it incurs because the specified debtor fails
to make a payment when due in accordance with the terms of a debt instrument. Financial guarantee
contracts are recognized initially as a liability at fair value, adjusted for transaction costs that are directly
attributable to the issuance of the guarantee. Subsequently, the liability is measured at the higher of
the amount of loss allowance determined as per impairment requirements of Ind AS 109- Financial
Instruments and the amount recognized less cumulative amortization.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as the derecognition of the original liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognized in the statement of profit and loss.

P) Cash and cash equivalents

Cash and cash equivalents comprise of cash at banks and on hand and short-term deposits with a maturity of
three months or less. For the purpose of the cash flow statement, cash and cash equivalents include cash on
hand, in banks, demand deposits with banks and other short term highly liquid investments, net of outstanding
overdrafts that are repayable on demand and are considered part of the Company’s cash management system.

Q) Non - Current Assets Held for Sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. Non-current assets (and disposal groups)
classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Also,
such assets are classified as held for sale only if the management expects to complete the sale within one year
from the date of classification.

R) Government Grants

Government grants are not recognized until there is reasonable assurance that the Company will comply with the
conditions attaching to them and that the grants will be received.

Government grants are recognized in statement of profit and loss on a systematic basis over the periods in which
the Company recognizes as expenses the related costs for which the grants are intended to compensate and are
presented within Other income.

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose
of giving immediate financial support to the Company with no future related costs are recognized in profit or loss
in the period in which they become receivable.

Government grants relating to purchase of property, plant and equipment are included in Other non-current
liabilities and are credited to profit or loss on a straight-line basis over the expected lives of the related assets.

In the event of such property, plant and equipment being disposed off before completion of its estimated useful life,
the outstanding amount of such capital grant is fully credited to profit or loss in the year of its disposal.

S) Employee Benefits

a. Short Term Employee Benefits:

All employee benefits payable within twelve months of rendering the service are classified as short term
employee benefits and they are recognized in the period in which the employee renders the related service.
The Company recognizes the undiscounted amount of short term employee benefits expected to be paid in
exchange for services rendered as a liability (accrued expense) after deducting any amount already paid.

b. Retirement Benefit Costs and Termination Benefits and Other Long Term Employee Benefits
Defined Contribution Schemes

Payments to defined contribution retirement benefit plans are recognized as an expense when employees
have rendered service entitling them to the contributions.

Company’s defined Contribution made to its Superannuation scheme is charged off to Statement of Profit and
Loss on accrual basis.

Defined Benefit Plans

Provident Fund

Contribution to Provident Fund is accounted for on accrual basis as per actuarial valuation done on
deterministic basis. The Provident Fund contributions are made to a Trust administered by the Company by
both the employer as well as employee. The Trust invests in specific designated instruments as permitted by
Indian Law. The interest rate payable to the members of the Trust is being administered by the Government.
The Company has an obligation to make good the shortfall, if any between the return from the investments
of the Trust and the notified interest rate. Further in the event there is a deficit, owing to the fair valuation of
plan assets being lower than defined benefit obligation at the Balance Sheet date, Company has to fund the
shortfall. Such shortfall including shortfall in the interest is recognized in the Statement of Profit and Loss.

Gratuity and Post-retirement Medical Benefits

For Defined Benefit plans comprising of gratuity, post-retirement medical benefits the cost of providing
benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at
the end of each annual reporting period. Re-measurements, comprising actuarial gains and losses, the effect
of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is
reflected immediately in the balance sheet with a charge or credit recognized in other comprehensive income
in the period in which they occur. Re-measurements recognized in other comprehensive income is reflected
immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognized in
profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the
beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorized as
follows:

• Service cost (including current service cost, past service cost, as well as gains and losses on curtailments
and settlements);

• Net interest expenses or income; and

• Re-measurements

The Company presents the first two components of defined benefit costs in the Statement of profit and loss
in the line item ‘Employee Benefits Expense’. Curtailment gains and losses are accounted for as past service
costs.

The retirement benefit obligation recognized in the balance sheet represents the actual deficit or surplus in the
Company’s defined benefit plans. Any surplus resulting from this calculation is limited to the present value of
any economic benefits available in the form of refunds from the plans or reductions in future contributions to
the plans.

The cost of the defined benefit gratuity plan and other Post employment medical benefits and the present
value of gratuity obligation are determined using actuarial valuation techniques.

Termination Benefits

A liability for a termination benefit is recognized at the earlier of when the entity can no longer withdraw the
offer of the termination benefit and when the entity recognizes any related restructuring costs.

Other Long term benefits

Liabilities recognized in respect of other long term benefits like leave encashment and long term service
awards are measured at the present value of the estimated future cash outflows to be made by the Company
(based on actuarial valuation) in respect of services provided by employees upto the reporting date.

T) Segment Reporting

The Company has recognized the following operating segments, viz Fertilizers, Industrial Chemicals and Trading,
the business activities it is primarily engaged into. The same has been done based on the review of the operating
results, internal reporting, review of performance, decision making relating to future allocation of resources, policy
parameters influencing business etc. carried out by its Chief Operating Decision Maker i.e. Executive Management
Committee/Board of Directors.

U) Prepaid Expenses

Individual expenses up to '1,00,000 is not considered in classifying prepaid expenses.

V) Research and Developments expenses

Revenue expenditure on Research activity is recognized separately and charged to Statement of Profit and Loss.
Expenditure on development activities is capitalized when its future economic benefits can reasonably be regarded
as assured.

W) Earnings per Share (EPS)

Basic earnings per share is calculated by dividing net profit or loss after tax for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year.

Upon discontinuation of an operation the basic and diluted amount per share for the discontinued operation is
separately reported, as applicable.

X) Cash Dividend

The Company recognizes a liability to make cash distributions to shareholders when the distribution is authorized
and the same is no longer at the discretion of the Company. A corresponding amount is recognized directly in
equity.

IV) Exemptions applied

Ind AS101- First Time Adoption of Indian Accounting Standards, allows first-time adopters certain exemptions from the
retrospective application of certain requirements under Ind AS. The Company has applied the following exemptions.

Company has elected to continue with the carrying value for all of its property, plant and equipment as recognized in
the financial statements as at the date of transition measured as per Indian GAAP and use that as its deemed cost as
at date of transition. The same is applicable even for Investment property, intangible assets and its investments in Joint
venture, associates and subsidiaries.

Company has also reviewed the necessary adjustments required to be done in accordance with paragraph D21
this standard (i.e. adjustments arising on account of decommissioning or restoration liabilities) and has accordingly
considered the impact of the same wherever applicable.

The Company has designated unquoted equity instruments held at 1 April 2015 as fair value through OCI.