Page 133 - FBL AR 2019-20

CORPORATE STATUTORY FINANCIAL
OVERVIEW STATEMENTS STATEMENTS

Notes to the Standalone financial statements for the year ended March 31, 2020

Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance expenses are recognised immediately in profit or loss, unless they are directly
attributable to qualifying assets, in which case they are capitalised in accordance with the Company’s general policy on borrowing costs
[see note 2(e) above]. Contingent rentals are recognised as expenses in the periods in which they are incurred.

Rental expense from operating leases is generally recognised on a straight-line basis over the term of the relevant lease. Where the
rentals are structured solely to increase in line with expected general inflation to compensate for the lessor’s expected inflationary cost
increases, such increases are recognised in the year in which such benefits accrue. Contingent rentals arising under operating leases are
recognised as an expense in the period in which they are incurred.
In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate
benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is
more representative of the time pattern in which economic benefits from the leased asset are consumed.
(q) Provisions, contingent liabilities and contingent assets
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that
the Company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of
the reporting period, taking into account the risks and uncertainties surrounding the obligation. When a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows when the effect of
the time value of money is material.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a receivable
is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured
reliably.
Contingent assets are not recognized in the financial statements of the Company. 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 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.
(r) Earnings per share
The Company presents basic and diluted earnings per share data for its equity shares.
Basic earnings per share are calculated by dividing the profit attributable to equity shareholders by the weighted average number of
equity shares outstanding during the financial year. Diluted earnings per share is determined by adjusting the profit or loss attributable
to equity shareholders and the weighted average number of equity shares outstanding for the effects of all dilutive potential ordinary
shares, which includes all stock options granted to employees.
(s) Cash and cash equivalents:
Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity
of three months or less, which are subject to an insignificant risk of changes in value.
For the purpose of the Statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, net
of cash credit balances and bank overdrafts as they are considered an integral part of the Company’s cash management.
(t) Operating segments:
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker
(CODM). The chief operating decision maker is responsible for allocating resources and assessing performance of the operating segments
of the Company and accordingly is identified as the chief operating decision maker.
(u) Cash dividends to equity holders
The Company recognises a liability to make cash distributions to equity holders when the distribution is authorised and the distribution
is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorised when it is approved by the
shareholders. A corresponding amount is recognised directly in equity.

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