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Integrated Report Statutory Reports Financial Statements
1-59 60-146 Standalone

nature of credit period given to customers, there is The lease liability is initially measured at the
no financing component in the contract. present value of the lease payments that are not
paid at the commencement date, discounted
2.14.2 Interest income
using the interest rate implicit in the lease or, if that
For all debt instruments measured either at rate cannot be readily determined, the Company’s
amortised cost or at FVTOCI, interest income is incremental borrowing rate. For leases with
recorded using the EIR method. reasonably similar characteristics, the Company,
2.14.3 Dividend income on a lease by lease basis, may adopt either the
incremental borrowing rate specific to the lease or
Dividend income is accounted for when Company’s
right to receive the income is established. the incremental borrowing rate for the portfolio as
a whole.
2.14.4 Insurance claims
Lease payments included in the measurement of
Insurance claims are accounted for on the basis of the lease liability comprise the fixed payments,
claims admitted and to the extent that there is no including in-substance fixed payments and lease
uncertainty in receiving the claims. payments in an optional renewal period if the
2.15 Leases Company is reasonably certain to exercise an
extension option;
The Company assesses whether a contract
contains a lease, at inception of a contract. A The lease liability is measured at amortised cost
contract is, or contains, a lease if the contract using the effective interest method.
conveys the right to control the use of an The Company has elected not to recognise right-
identified asset for a define period of time in of-use assets and lease liabilities for short-term
exchange for consideration. To assess whether a leases that have a lease term of 12 months or
contract conveys the right to control the use of an less and leases of low-value assets. The Company
identified assets, the Company assesses whether: recognises the lease payments associated with
(i) the contact involves the use of an identified these leases as an expense on a straight-line basis
asset (ii) the Company has substantially all of the over the lease term. The Company applied a single
economic benefits from use of the asset through discount rate to a portfolio of leases of similar
the period of the lease and (iii) the Company has assets in similar economic environment with a
the right to direct the use of the asset.
similar end date.
As a lessee, The Company recognises a right-
of-use asset and a lease liability at the lease 2.16 Employee benefits plans
commencement date. The right-of-use asset Employee benefits consist of provident fund,
is initially measured at cost, which comprises superannuation fund, gratuity fund, compensated
the initial amount of the lease liability adjusted absences, long service awards, post-retirement
for any lease payments made at or before the medical benefits, directors’ retirement obligations
commencement date, plus any initial direct costs and family benefit scheme.
incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the 2.16.1 Post-employment benefit plans
underlying asset or the site on which it is located, Defined contribution plans
less any lease incentives received. Payments to a defined contribution retirement
The right-of-use asset is subsequently depreciated benefit scheme for eligible employees in the form
using the straight-line method from the of superannuation fund are charged as an expense
commencement date to the earlier of the end of as they fall due. Such benefits are classified as
the useful life of the right-of-use asset or the end of Defined Contribution Schemes as the Company
the lease term. The estimated useful lives of right- does not carry any further obligations, apart from
of-use assets are determined on the same basis the contributions made.
as those of property and equipment. In addition, Defined benefit plans
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain Contributions to a Provident Fund are made to
remeasurements of the lease liability. Tata Chemicals Limited Employees’ Provident

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