Page 134 - FBL AR 2019-20

Fermenta Biotech Limited
Annual Report 2019-20

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

(v) Use of estimates and judgements
The preparation of the Company’s financial statements requires the management to make judgements, estimates and assumptions
that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure
of contingent liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an on-
going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods
affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting
policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes:

Fair value measurement of financial instruments:
When the fair values of financials assets and financial liabilities recorded in the financial statements cannot be measured based on quoted
prices in active markets, their fair value is measured using valuation techniques which involve various judgements and assumptions.
Useful lives of property, plant and equipment, investment property and intangible assets:
Property, plant and equipment, investment property and intangible assets represent a significant proportion of the asset base of the
Company. The charge in respect of periodic depreciation and amortisation is derived after determining an estimate of an asset’s expected
useful life and the expected residual value at the end of its life. The useful lives and residual values of Company’s assets are determined
by the management at the time when the asset is acquired and reviewed periodically, including at each financial year end. The lives are
based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes
in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of
the product or service output of the asset.
Assets and obligations relating to employee benefits:
The employment benefit obligations depend on a number of factors that are determined on an actuarial basis using a number of
assumptions. The assumptions used in determining the net cost/ (income) include the discount rate, inflation and mortality assumptions.
Any changes in these assumptions will impact upon the carrying amount of employment benefit obligations.
Tax expense: [refer note 2(g) and note 46]
The Company’s tax jurisdiction is India. Significant judgements are involved in determining the provision for income taxes, if any,
including amount expected to be paid/recovered for uncertain tax positions. Further, significant judgement is exercised to ascertain
amount of deferred tax asset (DTA) that could be recognised based on the probability that future taxable profits will be available against
which DTA can be utilized and amount of temporary difference in which DTA cannot be recognised on want of probable taxable profits.
Minimum Alternate Tax (‘MAT’) credit is recognised as deferred tax asset only when and to the extent there is convincing evidence
that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against
the normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the
aforesaid convincing evidence no longer exists
Valuation of investment property [refer note 57]

Impairment of tangible and intangible assets other than goodwill [refer note 2(i)]
Impairment of Goodwill [Refer note 2(m)]
Provisions: [refer note 2(q)]
Write down in value of inventories: (refer note 13)

Estimation of uncertainty relating to COVID-19 global health pandemic – (Refer note 63)

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