Page 207 - Tata_Chemicals_yearly-reports-2021-22

01 INTEGRATED 73 STATUTORY 178 FINANCIAL
REPORT
STATEMENTS
REPORTS
Standalone

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

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