Page 239 - Tata_Chemicals_yearly-reports-2019-20
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Integrated report             Statutory reportS          Financial StatementS
                                                                                   Consolidated


            Impairment evaluation of goodwill and mining rights (refer notes 2.3.1, 2.16, 7 and 8 to the Consolidated Financial Statements)
             The Key Audit Matter                             How the matter was addressed in our audit
             the carrying amount of goodwill and mining rights represents   Our audit procedures included the following:
             36% of the group’s total assets.                 •     assessing the identification of relevant Cash generating units
             the  group tests goodwill for impairment annually, or more   (Cgu) to which goodwill is allocated and to which mining
             frequently when there is an indication that the cash generating   rights belong that are being tested;
             unit to which goodwill has been allocated may be impaired.   •     assessing the accuracy of prior period forecasts of the Cgu
             Mining rights are tested for impairment when there is an indication   with the actual financial performance of the Cgu;
             that these may be impaired.
                                                              •     Challenging the assumptions used in impairment analysis,
             With the spread of CoVId-19 in India and globally, demand   such as growth rate, discount rate, forecasted gross margins
             loss is expected for the products of the group. We consider the   and forecasted revenue. this was based on our knowledge
             impairment testing of goodwill and mining rights by the group to   of the group and the markets in which the Cgu operates.
             involve significant estimates and judgment.          We took assistance of our valuation specialists for the above
             We identified the impairment assessment of goodwill and mining   testing.
             rights as a key audit matter since the assessment process is   •     performing sensitivity analysis of the key assumptions, such
             complex and judgmental by nature and is based on assumptions   as growth rates, discount rate, forecasted gross margins and
             relating to:                                         forecast revenue used in determining the recoverable value;
             -     Identifying Cash  generating  unit (‘Cgu’) for allocation of   •     evaluating the adequacy of disclosures of key assumptions,
                 goodwill;                                        judgements and sensitivities in respect of goodwill and
             -   projected future cash inflows;                   mining rights.
             -   expected growth rate and profitability;
             -   discount rate;
             -   perpetuity value based on long term growth rate;
             -   sensitivity analyses; and macro-economic growth factors.
            Employee benefits provision (refer notes notes 2.20, 21 and 40 to the Consolidated Financial Statements)

             The Key Audit Matter                             How the matter was addressed in our audit
             the valuation of employee benefits by the  group’s  uK and  uS   our audit procedures included:
             subsidiaries is performed annually with the assistance of external   •     Involving our actuarial specialists to assist us in evaluating all
             independent actuaries.                               pension plans;

             this involves significant estimates and judgment.  there are  •     assessing and testing the valuation methodology used by
             inherent uncertainties involved in estimating salary increase,   the actuary;
             mortality rate, return on plan assets, discount rate and changes in   •     evaluating the competency of the experts appointed by the
             provisions of pension laws.                          group;
             these estimates of the group and our related skeptical judgements   •     Challenging assumptions used by the  group based on
             are considered to be significant to our overall audit strategy and   externally derived data in relation to key inputs such as
             planning.  accordingly, we have considered employee benefits   inflationary expectations, discount rates and mortality rates
             provision for certain components  of the  group as a key audit   with the assistance of our subject matter experts;
             matter.
                                                              •     Identifying  any  changes  in  actuarial  assumptions  resulting
                                                                  into actuarial gain or loss;
                                                              •     performing sensitivity analysis on the assumptions with the
                                                                  assistance of our subject matter experts;.
                                                              •     assessing and testing the adequacy of disclosures of key
                                                                  assumptions and sensitivities in respect of the employee
                                                                  benefits provision.




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