Page 252 - Tata_Chemicals_yearly-reports-2019-20

2.3.2 Deferred income tax assets and liabilities and the amount can be reasonably estimated.
Significant management judgment is required to Significant judgment is required when evaluating
determine the amount of deferred tax assets that the provision including, the probability of an
can be recognised, based upon the likely timing unfavorable outcome and the ability to make a
and the level of future taxable profits. reasonable estimate of the amount of potential
loss. provisions for litigations are reviewed at each
the amount of total deferred tax assets could accounting period and revisions made for the
change if management estimates of projected changes in facts and circumstances. Contingent
future taxable income or if tax regulations undergo liabilities are disclosed in the notes forming part of
a change. the Consolidated Financial Statements. Contingent
assets are not disclosed in the Consolidated
Similarly, the identification of temporary Financial Statements unless an inflow of economic
differences pertaining to subsidiaries that are benefits is probable.
expected to reverse in the foreseeable future and
the determination of the related deferred income 2.4 Functional and presentation currency
tax liabilities, require the Management to make Items included in the Consolidated Financial Statements
significant judgments, estimates and assumptions. of each of the group’s entities are measured using the
currency of the primary economic environment in which
2.3.3 Useful lives of property, plant and equipment the entity operates (the ‘Functional Currency’). the CFS
(‘PPE’) and intangible assets are presented in Indian rupees (`), which is the group’s
Management reviews the estimated useful lives presentation currency.
and residual value of ppe and Intangibles at the end
of each reporting period. Factors such as changes 2.5 Basis of Consolidation:
in the expected level of usage, technological the CFS comprise the Financial Statements of the
developments, units-of-production and product Company, its subsidiaries and the group’s interest in joint
life-cycle, could significantly impact the economic ventures as at the reporting date.
useful lives and the residual values of these
assets. Consequently, the future depreciation and Subsidiaries
amortisation charge could be revised and may Subsidiaries include all the entities over which the group
have an impact on the profit of the future years. has control. the group controls an entity when the group
is exposed to, or has rights to, variable returns through its
2.3.4 Employee Benefit obligations involvement in the entity and has the ability to affect those
employee benefit obligations are determined returns through its power to direct the relevant activities
using actuarial valuations. an actuarial valuation of the entity. Subsidiaries are consolidated from the date
involves making various assumptions that may control commences until the date control ceases.
differ from actual developments. these include
the estimation of the appropriate discount rate, Joint venture
future salary increases and mortality rates. due a joint venture is a joint arrangement whereby the parties
to the complexities involved in the valuation that have joint control of the arrangement have rights to
and its long-term nature, the employee benefit the net assets of the arrangement. Interests in joint venture
obligation is highly sensitive to changes in these are accounted for using the equity method of accounting
assumptions. all assumptions are reviewed at each (see (III) below).
reporting date.
The CFS have been prepared on the following basis:
2.3.5 Provisions and contingencies
I the Financial Statements of the Company and its
From time to time, the group is subject to legal subsidiary companies have been consolidated on a line
proceedings, the ultimate outcome of each being by- line basis by adding together of like items of assets,
subject to uncertainties inherent in litigations. liabilities, income and expenses, after fully eliminating
a provision for litigation is made when it is intra-group balances and intra-group transactions
considered probable that a payment will be made and resulting unrealised profit or losses, unless cost

250 I Integrated annual report 2019-20