Page 204 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22

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

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