Page 198 - FBL AR 2019-20

Fermenta Biotech Limited
Annual Report 2019-20

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

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 consolidated financial statements of the Group. 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 Group 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 Group does not recognize a contingent liability but discloses its
existence in the consolidated financial statements.
(u) Earnings per share

The Group presents basic and diluted earnings per share data for its equity shares.
Basic earnings per share is calculated by dividing the profit attributable to equity shareholders by the weighted average number of
equity shares outstanding during the financial year. Dilutive EPS 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.
(v) 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 as they are considered an integral part of the Group’s cash management.
(w) 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 Group and accordingly is identified as the chief operating decision maker.

(x) Cash dividends to equity holders
The Group 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.
(y) Use of estimates and judgements
The preparation of the Group’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 consolidated 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
Group. The charge in respect of periodic depreciation and amortisation is derived after determining an estimate of an asset’s expected

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