Page 234 - Tata_Chemicals_yearly-reports-2020-2021

Integrated Annual Report 2020-21

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

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