Page 164 - FBL AR 2019-20

Fermenta Biotech Limited
Annual Report 2019-20

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

54 Segment information: (contd.)
Assets by geographical area – The following is the carrying amount of segment non-current assets by geographical area in which the
assets are located:
( H in Lakhs )
Non-Current assets*
March 31, 2020 March 31, 2019
India
Bulk Drug/Chemicals 17,871.56 10,594.30
Property 8,886.93 9,259.08
Total 26,758.49 19,853.38

* Non-current assets exclude investments, loans, share application money, other financial assets, tax assets and other non current assets.
The Company’s operating facilities are located in India.
The Company has generated revenue aggregating H6,529.96 Lakhs from two customers (March 31, 2019: H10,133.70 Lakhs from two
customers). Revenue from each of these customers is 10% or more of the Company’s total revenue.
55 Financial risk management objectives and policies
The Company is exposed to credit risk, liquidity risk and market risk. The Company’s financial risk management is an integral part of how
to plan and execute its business strategies. The Board of Directors review and agree policies for managing each of these risks, which are
summarised below.
a) Market risk
Market risk is the risk of loss of future earnings, fair values or future cash flows that may result from adverse changes in market rates and
prices (such as interest rates, foreign currency exchange rates, commodity prices and equity price risk). Market risk is attributable to all
market risk-sensitive financial instruments, all foreign currency receivables and payables and all short term and long-term borrowings.
The Company is exposed to market risks related to foreign exchange rate risk, commodity rate risk, interest rate risk and other price risks,
such as equity price risks. Thus, the Company’s exposure to market risk is a function of borrowing activities, revenue generating and
operating activities in foreign currencies.

i) Equity price risk
The Company’s unlisted equity securities are susceptible to market price risk arising from uncertainties about future values of the
investments in securities. The Company manages the equity price risk through diversification and by placing limits on individual
and total equity instruments. The Company’s Board of Directors review and approve, all investments in the equity instruments.
As at March 31, 2020, the Company had exposure to equity securities measured at fair value. The changes in fair values of the equity
investments were strongly positively co-related with changes in market index. As at March 31, 2020, the Company did not have
material investments in / exposure to quoted or unquoted securities.
ii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
interest rate. The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term
and short term borrowings obligations with floating interest rates.
The Company manages it’s interest rate risk by having a balanced portfolio of long term and short term borrowings.
For the years ended March 31, 2020 and March 31, 2019 every 50 basis point decrease in the floating interest rate component
applicable to its loan and borrowings would increase the Company’s profit by H110.09 Lakhs and H104.35 Lakhs respectively. A 50
basis point increase in floating interest rate would lead to an equal but opposite effect.
iii) Commodity rate risk
Exposure to market risk with respect to commodity prices primarily arises from the Company’s purchases and sales of active
pharmaceutical ingredients, including the raw material components for such active pharmaceutical ingredients. The prices of the
Company’s raw materials generally are stable. Cost of raw materials forms the largest portion of the Company’s cost of revenues.
A large portion of the Company’s sales are subject to commodity rate risk having a volatile pricing. The Company monitors overall
demand supply position and pricing movement to decide marketing strategies to overcome risk of changing prices of the products.

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