a) Change in accounting policy Component Accounting The Company has adopted component accounting as required under Schedule II to the Companies Act, 2013 from 1 April 2015. The Company was brviously not identifying components of fixed assets separately for debrciation purposes; rather, a single useful life/ debrciation rate was used to debrciate each item of fixed assets. Due to application of Schedule II to the Companies Act, 2013 the Company has changed the manner of debrciation for its fixed assets. Now, the Company identifies and determines cost of each component/ part of the asset separately, if the component/ part have a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. These components are debrciated separately over their useful lives; the remaining components are debrciated over the life of the principal asset. There were no components whose lives were exhausted as on 1 April, 2015 and hence the transitional provisions of Schedule II are not applicable to the Company. The carrying amount of components is debrciated over their remaining useful lives. Had the Company continued to use the earlier policy of debrciating fixed assets, profit of the Company before income tax for the year would have been higher by ' 291.48 lacs.

Corporate information Paradeep Phosphates Limited (the Company) is a public company domiciled in India and incorporated under the provisions of Companies Act. The Company is primarily engaged in the manufacture of Di-Ammonium Phosphate (DAP), Complex Fertilizers of NPK grades, and Zypmite (Gypsum based product) having its manufacturing facility at the port town of Paradeep, District Jagatsinghpur, Odisha. The Company is involved in trading of fertilizers, ammonia, pesticides, water soluble fertilizers (WSF), seeds, urea, micronutrient and other materials. With its head office at Bhubaneswar and various regional offices across the country, the Company caters to the demands of farmers all over the country through its Navratna brand of fertilizers.

2. Basis of brparation The financial statements of the Company have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP). The financial statements have been brpared to comply in all material respects with the Accounting Standards under section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been brpared on an accrual basis under the historical cost convention. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year except for the change in accounting policy explained below. 2.1 Summary of significant accounting policies b) Basis of classification of Current and Non Current Assets and Liabilities in the Balance Sheet have been classified as either current or non-current based upon the requirements of Schedule III to the Companies Act, 2013. An asset has been classified as current if (a) it is expected to be realized in, or is intended for sale or consumption in the Company's normal operating cycle; or (b) it is held primarily for the purpose of being traded; or (c) it is expected to be realized within twelve months after the reporting date; or (d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting date. All other assets have been classified as non-current. A liability has been classified as current when (a) it is expected to be settled in the Company's normal operating cycle; or (b) it is held primarily for the purpose of being traded; or (c) it is due to be settled within twelve months after the reporting date; or (d) the Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. All other liabilities have been classified as non-current. An operating cycle is the time between the acquisition of assets for processing and their realization in cash or cash equivalents. c) Use of estimate The brparation of financial statements in conformity with Indian GAAP requires the management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities as at the date of the financial statements, reported amounts of revenues and expenses during the reporting period. Although these estimates are based upon management's best knowledge of current events and actions, the actual results could differ from these estimates. Any revision to the accounting estimates is recognized prospectively in current and future periods. d) Fixed Assets Tangible fixed assets i) Tangible fixed assets are stated at cost less accumulated debrciation and impairment losses, if any. Cost comprises purchase price, freight, duties, taxes and other directly attributable costs incurred to bring the asset to its working condition for its intended use. When significant parts of fixed assets are required to be replaced at intervals, the Company debrciates them separately based on their specific useful lives. ii) The Company identifies and determines cost of each component/ part of the asset separately, if the component/ part has a cost which is significant to the total cost of the asset and has useful life that is materially different from that of the remaining asset. iii) Expenditure on replacement of components of plant and equipments resulting in increase in their originally assessed standard of performance is capitalised. The replaced assets are discarded at their book value (net of accumulated debrciation). Replaced assets held for disposal are stated at lower of their net book value and net realisable value and shown under Other Assets. iv) The Company adjusts exchange differences arising on translation/ settlement of long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset to the cost of the asset and debrciates the same over the remaining life of the asset. In accordance with MCA circular dated 09th August 2012, exchange differences adjusted to the cost of fixed assets are total differences, arising on long-term foreign currency monetary items pertaining to the acquisition of a debrciable asset, for the period. In other words, the Company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference. v) Machinery spares (insurance spares) which are specific to a particular tangible assets and whose use is expected to be irregular, are capitalized as part of the mother assets. vi) Gains or losses arising from derecognition of tangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. vii) Expenditure on new projects and substantial expansion: Expenditure directly relating to construction activity is capitalized. Indirect expenditure incurred during construction period is capitalized as part of the indirect construction cost to the extent to which the expenditure is related to construction activity or are incidental thereto. Other indirect expenditure (including borrowing costs) incurred during the construction period which are not related to the construction activity nor are incidental thereto are charged to the statement of profit and loss. Income earned during construction period is deducted from the total of the indirect expenditure. All direct capital expenditure on expansion is capitalized. As regards indirect expenditure on expansion, only that portion is capitalized which rebrsents the marginal increase in such expenditure involved as a result of capital expansion. Both direct and indirect expenditure are capitalized only if they increase the value of the asset beyond its original standard of performance. Intangible fixed assets i. Intangible fixed assets are recognized when the asset is identifiable, is within the control of the Company, it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset can be reliably measured. ii. Acquired computer software and licenses are capitalized at the costs incurred to bring the assets to brsent working condition for its intended use. iii. Gains or losses arising from derecognition of intangible assets are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit and loss when the asset is derecognized. Research and Development Research and Development expenditure of revenue nature are charged to the statement of profit and loss account, while capital expenditure are added to the cost of fixed assets in the year in which the same is incurred. Debrciation and Amortization i. Debrciation on fixed assets is calculated on a straight-line basis using the rates arrived at based on the useful lives estimated by the Management. The identified components are debrciated separately over their useful lives; the remaining components are debrciated over the life of the principal asset. The Company has used the following rates to provide debrciation on its fixed assets. Class of Assets Useful Lives estimated by the management (Years) Buildings 30 to 60 Roads & Culverts 3 to 5 Plants & Equipments 5 to 25 Furniture & Fixtures 10 Vehicles 8 Office Equipments 3 to 6 Railway siding 15 The management has estimated, supported by independent assessment by professionals, the useful lives of identified components as part of certain plants & equipments, as 5 to 20 years. These lives are lower than those indicated in Schedule II. ii. Premium on land held on leasehold basis is amortized over the period of lease. iii. The classification of Plant and Machinery into continuous and non-continuous process is one as per technical certification by the Management and debrciation thereon is provided accordingly. iv. Debrciation on insurance spares is provided over the useful lives of the respective mother assets. v. Computer Software costs are amortized on a straight line basis over the three years useful life or actual period of license, whichever is lower. Impairment i. The carrying amounts of Tangible and Intangible fixed assets are reviewed at each balance sheet date. If there is any indication of impairment based on internal / external factors, an impairment loss is recognized wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets' net selling price and value in use. In assessing the value in use, the estimated future cash flows are discounted to their brsent value at the weighted average cost of capital. ii. After impairment, debrciation/amortization is provided on the revised carrying amount of the assets over its remaining useful life. e) Borrowing costs Borrowing cost includes interest, amortization of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalized to the extent they relate to the period till such assets are ready to be put to use. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. All other borrowing costs are recognized as finance costs in the period in which they are incurred. f) Inventories i. Inventories are valued at the lower of Cost and Net Realizable Value. ii. The cost is determined as follows: (a) Raw Materials, Stores, Spare Parts, Chemical, Fuel Oil and Packing Materials: Weighted average method (b) Intermediaries: Material cost on weighted average method and appropriate manufacturing overheads based on normal operating capacity (c) Finished goods (manufactured): Material cost on weighted average method and appropriate manufacturing overheads based on normal operating capacity including Excise Duty (d) Traded goods: Weighted average method iii. Inventory of waste (treated gypsum) product lying at various warehouses is valued at net realizable value. iv. Net realizable value is the estimated selling price including applicable subsidy in the ordinary course of business less estimated costs of completion and the estimated costs necessary to make the sale. v. Materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost. g) Foreign currency translation Foreign Currency transaction and balance i. Initial Recognition: Foreign currency transactions are recorded in the reporting currency by applying to the foreign currency amount, the exchange rate between the reporting currency and the foreign currency at the date of the transaction. ii. Conversion: Foreign currency monetary items are retranslated using the exchange rate brvailing at the reporting date. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. iii. Exchange Differences: The Ccompany accounts for exchange differences arising on translation/ settlement of foreign currency monetary items as below: 1. Exchange differences arising on long-term foreign currency monetary items related to acquisition of a fixed asset are capitalized and debrciated over the remaining useful life of the asset. 2. Exchange differences arising on other long-term foreign currency monetary items are accumulated in the Foreign Currency Monetary Item Translation Difference Account and amortized over the remaining life of the concerned monetary item. 3. All other exchange differences are recognized as income or as expenses in the period in which they arise. For the purpose of 1 and 2 above, the Company treats a foreign monetary item as long-term foreign currency monetary item, if it has a term of 12 months or more at the date of its origination. In accordance with MCA circular dated 09th August 2012, exchange differences for this purpose, are total differences arising on long-term foreign currency monetary items for the period. In other words, the Company does not differentiate between exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost and other exchange difference. iv. Forward exchange contracts entered into to hedge foreign currency risk of an existing asset/ liability The brmium or discount arising at the inception of forward exchange contract is amortized and recognized as an expense/ income over the life of the contract. Exchange differences on such contracts, except the contracts which are long-term foreign currency monetary items, are recognized in the statement of profit and loss in the period in which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward exchange contract is also recognized as income or as expense for the period. Any gain/ loss (including brmium or discount arising at the inception of foreign exchange contract till the date the concerned fixed asset is put to use) arising on forward contracts which are long-term foreign currency monetary items is recognized in accordance with paragraph (iii) (1) and (2). v. Derivatives Instruments: As per ICAI announcement, accounting for derivative contracts, other than those covered under AS-11, are marked to market on a portfolio basis, and the net loss after considering the offsetting effect on the underlying hedge item is charged to the statement of profit and loss. Net gains are ignored. h) Investments Investments that are readily realizable and intended to be held for not more than a year are classified as current investments. All other investments are classified as long-term investments. Current investments are carried at lower of cost and fair value determined on an individual investment basis. Long-term investments are carried at cost. However, provision for diminution in value is made to recognize a decline other than temporary in the value of the investments. i) Employees benefits i. Defined Contribution Plans: Retirement benefit in the form of Pension Scheme, Superannuation Fund, Employees Death Benevolent Fund and National Pension Scheme are defined contribution scheme. The Company has no obligation, other than the contribution payable to these schemes. The Company recognizes contribution payable to these fund schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the br payment will lead to, for example, a reduction in future payment or a cash refund. ii. Defined Benefit Plan: a) Liability for Gratuity, Post Employment Medical Benefits and Long Term Compensated Absences are provided for on the basis of actuarial valuation carried at the end of each financial year. The gratuity plan has been funded by policy taken from Life Insurance Corporation of India. Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term employee benefit for measurement purpose. b) Liability for Provident fund is provided for on the basis of actuarial valuation carried at the end of each financial year. The difference between the actuarial valuation of the provident fund of employees at the year end and the balance of own managed fund is provided for as liability in the books in terms of the provisions under Employee Provident Fund and Miscellaneous Provisions Act, 1952. c) The actuarial valuation is done on projected unit credit method. Actuarial gain / losses are recognized immediately as income/ expense in statement of the profit and loss and are not deferred. j) Leases Finance leases, which effectively transfer to the lessee substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and brsent value of the minimum lease payments at the inception of the lease term by credit to liability and disclosed as leased assets. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to the Statement of Profit and Loss. Leases where the lessor effectively retains substantially all the risks and benefits of ownership of the leased item, are classified as Operating leases. Operating lease payments are recognized as an expense in the Statement of Profit and Loss on a straight-line basis over the lease term. k) Taxation Tax expense comprises current and deferred tax. Current income tax is measured at the amount expected to be paid to the Tax Authorities in accordance with the Indian Income Tax Act, 1961. Deferred Income Tax reflects the impact of timing differences between taxable income and accounting income for the year and reversal of timing differences of earlier years. Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the Balance Sheet date. Deferred tax assets are recognized only to the extent there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized. Deferred Tax assets are recognized on carry forward of unabsorbed debrciation and tax losses only if there is virtual certainty supported by convincing evidence that such deferred tax assets can be realized against future taxable profits. Unrecognized deferred tax assets of earlier years are re-assessed at each Balance Sheet date and recognized to the extent that it has become reasonably certain or virtually certain that future taxable income will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets are reviewed at each Balance Sheet date. The Company writes-down the carrying amount of a deferred tax asset to the extent that it is no longer reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available against which deferred tax asset can be realized. Any such write-down is reversed to the extent that it becomes reasonably certain or virtually certain, as the case may be, that sufficient future taxable income will be available. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set-off current tax assets against current tax liabilities and the deferred tax assets and deferred taxes relate to the same taxable entity and the same taxation authority. Minimum Alternate Tax (MAT) paid in a year is charged to the statement of profit and loss as current tax. The Company recognizes MAT credit available as an asset only to the extent that there is convincing evidence that the Company will pay normal income tax during the specified period, i.e., the period for which MAT credit is allowed to the carried forward. In the year in which the Company recognizes MAT credit as an asset in accordance with the Guidance Note on Accounting for Credit Available in respect of Minimum Alternative Tax under the Income-Tax Act, 1961, the said asset is created by way of credit to the statement of profit and loss and shown as MAT Credit Entitlement. The Company reviews the MAT credit entitlement asset at each reporting and writes down the asset to the extent the Company does not have convincing evidence that it will pay normal tax during the specified period. l) Revenue recognition 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. (i) Revenue from sale of goods, including applicable subsidy, is recognized upon passage of risk and reward of ownership of the goods to the customers. Sales are net off returns, rebates and trade discounts. Sales exclude sales tax and value added tax (VAT) which are collected by the Company on behalf of the State Governments and deposited to the credit of the respective State Governments. Excise duty is deducted from gross sales as well as Revenue from operations in the statement of profit and loss. (ii) Subsidy for DAP, Muriate of Potash (MOP) and Complex Fertilizers are recognized as per rates notified by the Government of India in accordance with Nutrient Based Subsidy Policy and from other guidelines issued from time to time. No subsidy is recognized on export of fertilizers. (iii) Subsidy on freight charges for DAP, MOP and Complex Fertilizers is recognized based on rates notified by the Government of India with the known policy parameters in this regard and included in subsidy. (iv) Scrap / Waste (treated gypsum) products lying at the factory are accounted for in the year of sale. (v) Claims receivable on account of interest from dealers on delayed payments and insurance are accounted for to the extent the Company is reasonably certain of their ultimate collection. (vi) Dispatch money on shipment are accounted for based on realization or acceptance of claim and netted with demurrage expenses. (vii) Interest income is recognized on time proportion basis taking into account amount outstanding and rates applicable as per the terms of agreements. (viii) Dividend on investment in the units of mutual funds is recognized when right to receive such amount is established by the Balance Sheet date. m) Earnings per share Basic Earnings Per Share (EPS) is calculated by dividing the net profit or loss for the year attributable to the equity shareholders (after deducting attributable taxes) by the weighted average number of equity shares outstanding during the year. For the purpose of calculating Diluted EPS, net profit or loss for the year, attributable to equity shareholders and the weighted average number of shares outstanding during the year, are adjusted for the effects of all dilutive Potential Equity Shares. n) Provision A provision is recognized when the Company has a brsent obligation as a result of past event and it is probable that an 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 brsent value and are determined based on management 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 estimates. o) Contingent liabilities and commitments 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 brsent 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 in extremely rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. The Company does not recognize a contingent liability but discloses its existence in the financial statements. 'Capital commitments' are future liabilities for capital expenditure in respect of Capital Contracts yet to be executed. 'Other commitments' include all future liabilities for Contractual Commitments arising out of non cancelable contracts having penalty disproportionate to the benefits. p) 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 period of three months or less. q) Fertilizer Companies' Government of India Special Bonds Fertilizer Companies' Government of India Special Bonds issued by Government of India in lieu of subsidy receivables are intended to be kept for short term purposes and are valued at lower of cost and market value. These bonds are included in 'Other Assets'. r) Segment reporting The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole. s) Measurement of EBITDA As permitted by the Guidance Note on the Revised Schedule VI to the Companies Act, 1956, the Company has elected to brsent earnings before interest, tax, debrciation and amortization (EBITDA) as a separate line item on the face of the statement of profit and loss. The Company measures EBITDA on the basis of profit/ (loss) from continuing operations. In its measurement, the Company does not include debrciation and amortization expense, interest income, finance costs and tax expense.

Employees benefits i. Defined Contribution Plans: Retirement benefit in the form of Pension Scheme, Superannuation Fund, Employees Death Benevolent Fund and National Pension Scheme are defined contribution scheme. The Company has no obligation, other than the contribution payable to these schemes. The Company recognizes contribution payable to these fund schemes as an expenditure, when an employee renders the related service. If the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognized as a liability after deducting the contribution already paid. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognized as an asset to the extent that the br payment will lead to, for example, a reduction in future payment or a cash refund. ii. Defined Benefit Plan: a) Liability for Gratuity, Post Employment Medical Benefits and Long Term Compensated Absences are provided for on the basis of actuarial valuation carried at the end of each financial year. The gratuity plan has been funded by policy taken from Life Insurance Corporation of India. Accumulated leave, which is expected to be utilized within the next twelve months, is treated as short term employee benefit. The Company measures the expected cost of such absences as the additional amount that it expects to pay as a result of the unused entitlement that has accumulated at the reporting date. The Company treats accumulated leave expected to be carried forward beyond twelve months as long term employee benefit for measurement purpose. b) Liability for Provident fund is provided for on the basis of actuarial valuation carried at the end of each financial year. The difference between the actuarial valuation of the provident fund of employees at the year end and the balance of own managed fund is provided for as liability in the books in terms of the provisions under Employee Provident Fund and Miscellaneous Provisions Act, 1952. c) The actuarial valuation is done on projected unit credit method. Actuarial gain / losses are recognized immediately as income/ expense in statement of the profit and loss and are not deferred.

Segment reporting The Company brpares its segment information in conformity with the accounting policies adopted for brparing and brsenting the financial statements of the Company as a whole.