Notes forming part of the Financial Statements for the year ended 31st March, 2015

1. Corporate Information:

NAGARJUNA AGRICHEM LTD, is a Public Limited Company listed with Bombay Stock Exchange. It is part of the Nagarjuna group based at Hyderabad. The Company is in the business of Crop Protection and manufactures both Technicals (Active Ingredient -AI) and Formulations. It manufactures all kinds of pesticides, insecticides, acaricides, herbicides, fungicides and other plant growth chemicals. The Company's Formulation Business is mainly in the Indian Market and sells through its large retail dealer network of nearly 11000 dealers, sbrad across India. The Company has an imbrssive range of branded formulations. It also exports Technicals and formulations and does Toll Manufacture for various Multinational Companies.

2. Significant Accounting Policies:

A. Accounting Convention:

The financial statements are brpared on the basis of going concern, under the historical cost convention, in accordance with the generally accepted principles and provisions of the Companies Act, 2013, with revenues recognised and expenses accounted on accrual basis unless otherwise stated.

B. Use of Estimates:

In brparing the financial statements in conformity with accounting principles generally accepted in India, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities as at the date of financial statements, the amounts of revenue and expenses during the reported period. Actual results could differ from those of estimates. Any revision to such estimates is recognized in the period the same is determined.

C. Fixed Assets:

a) Fixed assets are stated at historical cost (Net of Modvat / Cenvat Credit availed), less accumulated debrciation and impairment loss if any.

b) Capital Work-in-Progress is stated at amount expended upto the date of the Balance Sheet.

c) Expenditure during construction period other than those directly related to an asset is included under "Expenditure pending allocation" to be allocated to various fixed assets at the time of commencement of commercial production, as determined in accordance with the generally accepted accounting policies.

d) Expenditure incurred on Research & Development projects are considered as Intangible Assets on completion of the project and put into commercial use.

D. Debrciation:

Debrciation is provided based on useful life of the fixed assets as specified in Schedule II of the Companies Act,

2013.

E. Intangibles:

a) Goodwill is amortised over a period of Ten years.

b) SAP Upgrade License/ Implementation fees is amortised over a period of twenty four months.

c) Intangible assets on account of R&D Projects amortised over a period of 36 months.

F. Long Term Investments:

Investments are stated at cost less any diminution in their value, which is other than temporary.

G. Inventory:

Inventories are valued at lower of cost and net realizable value.

The method of valuation of various categories of Inventories is as follows:-

a) Raw materials - at lower of cost and net realizable value.

b) Work-in-Process - at cost.

c) Finished goods - at lower of cost and net realisable value. Cost includes cost of direct material, labour, factory overheads inclusive of excise duty.

d) Stores & Spares, Packing material - at lower of cost and net realizable value.

e) Traded goods - at lower of cost and net realizable value. Cost is ascertained on the "Weighted Average" basis.

H. Foreign Currency Transactions:

Transactions in foreign currency are recorded at the exchange rate brvailing at the dates of the transaction. Monetary items are translated at the year end foreign exchange rates. Resultant exchange differences arising

on payment or conversion of liabilities/ assets are recognized as income or expense in the year in which they arise.

I. Capital Subsidy:

Capital investment subsidy not specifically related to any fixed asset is credited to a specific reserve upon receipt and retained till the requisite conditions are fulfilled. On fulfillment of such conditions, the subsidy is transferred to Capital Reserve.

J. Revenue:

a) Revenue is recognized to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

b) Sales are recognized at the point of despatch of materials to customers from plant and/or stocking points.

c) Revenue from processing/ conversion services is recognized when the underlying goods are manufactured and ready for delivery i.e., on completion of service.

K. Employee benefits:

a) Provident Fund is administered through Regional Provident Fund Commissioner. Company's contributions to the above fund are charged to the Profit & Loss Account, on accrual.

b) Provision for Gratuity is made on the basis of an actuarial valuation at the Balance Sheet date carried out by an independent actuary. The Gratuity Fund is administered through a scheme of Life Insurance Corporation of India. The contribution to the said fund is charged to the Profit & Loss Account, on accrual.

c) Provision for Leave encashment cost is made on the basis of an actuarial valuation at the Balance Sheet date carried out by an independent actuary, and is charged to Profit & Loss Account, on accrual.

L. 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. Interest on Bank Borrowings and other short term and long term borrowings is recognised as an expense in the year in which they are incurred.

M. Income Taxes :

Tax expense comprises of current tax and deferred tax. Current tax is measured at the amount expected to be paid to the tax authorities, using the applicable tax rates. Deferred tax reflects the effect in the current period of timing differences originating and reversing between taxable income and accounting income for the period. Deferred tax assets are recognised only to the extent that there is a reasonable certainty that sufficient future income will be available, except that deferred tax assets in case of unabsorbed debrciation or losses, are recognised only if there is virtual certainty that sufficient future taxable income will be available to realise the same.

Deferred tax assets and liabilities are measured using the tax rates and tax law that have been enacted or substantively enacted by the Balance Sheet date.

N. Impairment of Assets:

Impairment of an asset is reviewed and recognized 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 recognized as impairment loss in the statement of profit and loss in the year of impairment.

O. Contingencies:

The Company recognizes provisions when there is a brsent obligation as a result of past event and it is probable that there will be an outflow of resources and reliable estimate can be made of the amount of obligation. A disclosure for Contingent Liabilities is made in the notes to accounts when there is a possible obligation or a brsent obligation that may, but probably will not, require an outflow of resources. Contingent assets are neither recognized nor disclosed in the financial statements.

P. Earnings per Share:

Earnings per Share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year.

Q. Segment Reporting:

Segments are identified in line with AS 17 "Segment Reporting" and segment information is disclosed if any required in accordance with the standard.

R. Research and Development:

Revenue expenditure on research and development is charged under respective heads of account in the year in which it is incurred. Capital expenditure on research and development is included as part of fixed assets.

2. During the year under review NACL entered into a marketing agreement for Solar Products in India with a foreign Company. Pending approvals from Government the said foreign Company unilaterally violated the contracted terms and dispatched three unauthorized consignments of unapproved solar products of a stated value of USD 2,803,625. NACL has refused to accept the said consignments and has been legally advised that there would not be any liability towards the same.

3. Based on the provisional insurance claim made by the Company in connection with the damages to the assets in the fire accident on 30.06.2012 at Srikakulam plant, the insurance Company has made an interim on-account payment of Rs. 10 crores. The Company has credited the same to the claims receivable account which, at the beginning of the year stood at Rs.  19.28 crores comprising Rs.  14.16 crores being the written down value of the damaged fixed assets, Rs. 5.12 crores being the estimated value of damaged inventories and others. The claim by the Company under the reinstatement value basis with the insurance Company continues to be under process as on 31.03.2015.

Pending final assessment of the damage to the partially damaged assets, the value if any to be de-capitalised therefrom, continues to be included in the gross block as on 31.03.2015.

Necessary adjustments in the accounts and the financial impact if any in respect of the aforesaid will be made on completion of final assessment.

4. Borrowing Cost

Borrowing cost capitalized during the year is nil (Previous year Rs.  254.51 Lacs

5. Minimum remuneration, in accordance with the provisions of Schedule V to the Companies Act, 2013, has been paid to the Managing Director, in the absence of profits for the year.

6. Exceptional Item during the year is NIL (brvious year amount Rs.  330.56 lakhs - Loss on Sale of Wind Mill Undertaking)

7. Provision has been made during the year for Minimum Alternate Tax (MAT) in accordance with the provisions of The Income Tax Act, 1961. As a prudent measure MAT Credit in respect of the said provision for the current year has not been recognized and will be reviewed and recognized at the appropriate time in subsequent years.

8. Balance of debtors, loans and advances and creditors are subject to reconciliation and confirmation.

9. Figures of the brvious year have been re-grouped/recast wherever necessary to conform to the current year's brsentation/classification.

10. Figures are rounded off to the nearest thousands.

Signatures to Notes 1 to 46

As per our report of even date attached

For M.BHASKARA RAO & CO.,

Chartered Accountants

V.Raghunandan

Partner

For and on behalf of the Board

K.S.Raju Chairman

(DIN:00008177)

R.K.S.Prasad Chief Financial Officer

V.Vijay Shankar Managing Director

(DIN:00015366)

Satish Kumar Subudhi Company Secretary & Head-Legal

(ACS 12211)

Place : Hyderabad

Dated : 30th May, 2015