Page 170 - Tata_Chemicals_yearly-reports-2020-2021

Integrated Annual Report 2020-21

to receive payments is established. Impairment instruments issued by the Company are recorded
losses (and reversal of impairment losses) on at the proceeds received, net of direct issue costs.
equity investments measured at FVTOCI are not
reported separately from other changes in fair 2.11.3 Financial liabilities
value. The Company’s financial liabilities comprise
borrowings, trade payables and other liabilities.
Cash and cash equivalents
These are initially measured at fair value, net of
The Company considers all highly liquid financial transaction costs, and are subsequently measured
instruments, which are readily convertible into at amortised cost using the EIR method. The EIR
known amounts of cash, that are subject to an is a method of calculating the amortised cost of a
insignificant risk of change in value with a maturity financial liability and of allocating interest expense
within three months or less from the date of over the relevant period at effective interest rate.
purchase, to be cash equivalents. Cash and cash The effective interest rate is the rate that exactly
equivalents consist of balances with banks which discounts estimated future cash payments
are unrestricted for withdrawal and usage. through the expected life of the financial liability,
Derecognition of financial assets or, where appropriate, a shorter period.
A financial asset is derecognised only when the Changes to the carrying amount of a financial
Company liability as a result of renegotiation or modification
of terms that do not result in derecognition of the
• has transferred the rights to receive cash financial liability, is recognised in the Standalone
flows from the financial asset; or Statement of Profit and Loss.
• retains the contractual rights to receive Derecognition of financial liabilities
the cash flows of the financial asset, but The Company derecognises financial liabilities
assumes a contractual obligation to pay when, and only when, its obligations are
the cash flows to one or more recipients.
discharged, cancelled or they expire.
Where the Company transfers an asset, it evaluates Presentation
whether it has transferred substantially all risks
and rewards of ownership of the financial asset. Borrowings are classified as current liabilities
Where the Company has transferred substantially unless the Company has an unconditional right
all risks and rewards of ownership, the financial to defer settlement of the liability for at least 12
asset is derecognised. Where the Company has months after the reporting period.
not transferred substantially all risks and rewards Trade and other payables are presented as current
of ownership of the financial asset, the financial liabilities unless payment is not due within 12
asset is not derecognised. Where the Company months after the reporting period.
has neither transferred a financial asset nor
retained substantially all risks and rewards of 2.11.4 Derivatives and hedging activities
ownership of the financial asset, the financial asset In the ordinary course of business, the Company
is derecognised if the Company has not retained uses certain derivative financial instruments
control of the financial asset. Where the Company to reduce business risks which arise from its
retains control of the financial asset, the asset exposure to foreign exchange and interest
is continued to be recognised to the extent of rate fluctuations associated with borrowings
continuing involvement in the financial asset. (cash flow hedges). When the Company opts
2.11.2 Debt and equity instruments to undertake hedge accounting, the Company
documents, at the inception of the hedging
Debt and equity instruments are classified as either transaction, the economic relationship between
financial liabilities or as equity in accordance with hedging instruments and hedged items including
the substance of the contractual arrangement.
whether the hedging instrument is expected
An equity instrument is any contract that to offset changes in cash flows or fair values of
evidences a residual interest in the assets of an hedged items. The Company documents its
entity after deducting all of its liabilities. Equity risk management objective and strategy for

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