Page 183 - Tata_Chemicals_yearly-reports-2021-22

01 INTEGRATED 73 STATUTORY 178 FINANCIAL
REPORTS
REPORT
STATEMENTS
Standalone

Impairment evaluation of Property, Plant and Equipment (referred to as ‘PPE’) and goodwill (refer notes 2.3.5 and 2.12 and 4 to
the Standalone Financial Statements)
The Key Audit Matter How the matter was addressed in our audit
The Company periodically assesses if there are any triggers for Our audit procedures included:
recognising impairment loss in respect of Property, plant and • Analysing the indicators of impairment of PPE including
equipment relating to its Cement, Silica and Nutraceutical Cash understanding of Company’s own assessment of those
Generating Units (CGU). indicators;
In making this determination, the Company considers both • Evaluating the design and implementation and testing the
internal and external sources of information to determine whether operating effectiveness of key controls over the impairment
there is an indicator of impairment and, accordingly, whether the assessment process. This included the estimation and
recoverable amount of the CGU needs to be estimated. Further, approval of forecasts, determination of key assumptions and
Goodwill is required to be assessed for impairment annually. valuation models;
An impairment loss is recognised if the recoverable amount • Assessing the valuation methodology used for determining
is lower than the carrying value. The recoverable amount is recoverable amount and testing the arithmetical accuracy
determined based on the higher of value in use (VIU) and fair of the impairment models, with the assistance of valuations
value less costs to sell (FVLCS). specialists;
As at March 31, 2022, carrying Value of PPE of these CGUs was • Assessing the identification of relevant Cash Generating
` 543.19 crore and ` 45.53 crore for Goodwill. Units (CGU) to which goodwill is allocated and to which PPE
The assessment of indicators of impairment and recoverable belong that are being tested;
value is considered to be a key audit matter due to the significant • Understanding from the Company the basis of the
judgment required to assess the internal and external sources assumptions used for the projected future Cash Flows;
of information. The judgement, in particular, is with respect • Verifying the inputs used in projecting future Cash Flows.
to estimation of future discounted Cash Flows (DCF) of the We challenged the business assumptions used, such as
underlying CGUs due to the inherent uncertainty and subjectivity sales growth, EBIDTA and discount rate which included
involved in forecasting and discounting future Cash Flows. comparing these inputs with externally derived data as well
The DCF uses several key assumptions, including estimates of as our own assessment based on our knowledge of the
future sales prices, EBIDTA, terminal value growth rates and the client and the industry. In addition we performed sensitivity
weighted-average cost of capital (discount rate).
analysis, with the assistance of valuations specialists;
• Evaluating the past performance of the CGUs with actual
performance where relevant and assessing historical
accuracy of the forecast produced by the Company;
• Assessing the adequacy of the Company’s disclosures of
key assumptions, judgments and sensitivities in respect of
Goodwill impairment.

Information Other than the Standalone Financial inconsistent with the Standalone Financial Statements or our
Statements and Auditor’s Report Thereon knowledge obtained in the audit or otherwise appears to be
The Company’s Management and Board of Directors are materially misstated. If, based on the work we have performed,
responsible for the other information. The other information we conclude that there is a material misstatement of this other
comprises the information included in the Company’s annual information, we are required to report that fact. We have nothing
report, but does not include the Standalone Financial Statements to report in this regard.
and our auditor’s report thereon. Management’s and Board of Directors’
Our opinion on the Standalone Financial Statements does not Responsibilities for the Standalone Financial
cover the other information and we do not express any form of Statements
assurance conclusion thereon. The Company’s Management and Board of Directors are
In connection with our audit of the Standalone Financial responsible for the matters stated in Section 134(5) of the Act
Statements, our responsibility is to read the other information and, with respect to the preparation of these Standalone Financial
in doing so, consider whether the other information is materially Statements that give a true and fair view of the state of affairs,

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