Page 172 - Tata_Chemicals_yearly-reports-2020-2021

Integrated Annual Report 2020-21

Profit and Loss. The recoverable amount requires accounting periods no longer exists or may have
estimates of operating margin, discount rate, decreased, consequent to which such reversal of
future growth rate, terminal values, etc. based on impairment loss is recognised in the Standalone
management’s best estimate. Statement of Profit and Loss.
Other financial assets (other than at fair value) The Company reviews its carrying value of
The Company assesses on a forward looking basis goodwill annually, or more frequently when there
the expected credit losses associated with its assets is indication for impairment. If the recoverable
carried at amortised cost and debt instruments amount is less than its carrying amount, the
carried at FVTOCI. The impairment methodology impairment loss is accounted for in the Standalone
applied depends on whether there has been a Statement of Profit and Loss. An impairment
significant increase in credit risk. In respect of trade loss recognised for goodwill is not reversed in a
receivables the Company applies the simplified subsequent period.
approach permitted by Ind AS 109 - Financial
Instruments, which requires expected lifetime 2.13 Inventories
losses to be recognised upon initial recognition Inventories are valued at lower of cost (on
of the receivables. For all other financial assets, weighted average basis) and net realisable
expected credit losses are measured at an amount value after providing for obsolescence and
equal to the 12-months expected credit losses or other losses, where considered necessary on an
at an amount equal to the life time expected credit item-by-item basis. Cost includes all charges in
losses if the credit risk on the financial asset has bringing the goods to their present location and
increased significantly since initial recognition. The condition, including other levies, transit insurance
gross carrying amount of a financial asset is written and receiving charges. Work-in-progress and
off (either partially or in full) to the extent that finished goods include appropriate proportion
there is no realistic prospect of recovery. Financial of overheads and, where applicable, taxes and
assets that are written off could still be subject to duties. Net realisable value is the estimated selling
enforcement activities in order to comply with the price in the ordinary course of business, less the
Company’s procedures. estimated costs of completion and the estimated
costs necessary to make the sale.
PPE, CWIP, intangible assets and goodwill
For the purpose of assessing impairment, 2.14 Revenue recognition
the smallest identifiable group of assets that
generates cash inflows from continuing use that 2.14.1 Sale of goods
are largely independent of the cash inflows from Revenue is recognised upon transfer of control of
other assets or groups of assets is considered promised goods to customers in an amount that
as a cash generating unit (“CGU”). The carrying reflects the consideration which the Company
values of assets / CGU at each Balance Sheet expects to receive in exchange for those goods.
date are reviewed to determine whether there
is any indication that an asset may be impaired. Revenue from the sale of goods is recognised at
If any indication of such impairment exists, the the point in time when control is transferred to the
recoverable amount of such assets / CGU is customer which is usually on dispatch / delivery of
estimated and in case the carrying amount of goods, based on contracts with the customers.
these assets exceeds their recoverable amount, an Revenue is measured based on the transaction
impairment loss is recognised in the Standalone price, which is the consideration, adjusted for
Statement of Profit and Loss. The recoverable volume discounts, price concessions, incentives,
amount is the higher of the net selling price and and returns, if any, as specified in the contracts with
their value in use. Value in use is arrived at by the customers. Revenue excludes taxes collected
discounting the future cash flows to their present from customers on behalf of the government.
value based on an appropriate discount factor. Accruals for discounts/incentives and returns are
Assessment is also done at each Balance Sheet estimated (using the most likely method) based on
date as to whether there is indication that an accumulated experience and underlying schemes
impairment loss recognised for an asset in prior and agreements with customers. Due to the short

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