Page 255 - Tata_Chemicals_yearly-reports-2021-22

01 INTEGRATED 73 STATUTORY 178 FINANCIAL
STATEMENTS
REPORTS
REPORT
Consolidated

Impairment evaluation of Property, Plant and Equipment (referred to as ‘PPE’), goodwill and mining rights (refer
notes 2.3.1, 2.16, 4(a), 7 and 8(a) to the Consolidated Financial Statements)
The Key Audit Matter How the matter was addressed in our audit
The Group periodically assesses if there are any triggers for Our audit procedures included the following:
recognising impairment loss in respect of Property, plant and • Analysing the indicators of impairment of PPE and Mining
equipment relating to its Cement, Silica and Nutraceutical rights including understanding of Group’s own assessment
Cash Generating Units (CGU) with respect to Tata Chemicals of those indicators;
India Limited and mining rights with respect to the Group’s US • Evaluating the design and implementation and testing the
Operations. In making this determination, the Group considers operating effectiveness of key controls over the impairment
both internal and external sources of information to determine assessment process. This included the estimation and
whether there is an indicator of impairment and, accordingly, approval of forecasts, determination of key assumptions and
whether the recoverable amount of the CGU needs to be valuation models and testing the arithmetical accuracy of
estimated.
the impairment models;
The Group tests goodwill for impairment annually, or more • Assessing the identification of relevant Cash Generating
frequently when there is an indication that the cash generating Units (CGU) to which goodwill is allocated and to which PPE
unit to which goodwill has been allocated may be impaired.
and mining rights belong that are being tested;
An impairment loss is recognised if the recoverable amount • Assessing the accuracy of prior period forecasts of the CGUs
is lower than the carrying value. The recoverable amount is with the actual financial performance of the CGUs;
determined based on the higher of value in use (VIU) and fair
value less costs to sell (FVLCS). • Challenging the assumptions used in impairment analysis,
such as growth rate, discount rate, forecasted gross margins
As at March 31, 2022, carrying Value of PPE of these CGUs was and forecasted revenue. This was based on our knowledge
` 543.19 crore, mining rights was ` 7,755.00 crore and Goodwill of the Group and the markets in which the CGU operates.
was ` 2,016.33 crore.
We took assistance of our valuation specialists for the above
We identified the impairment assessment of PPE, goodwill and testing;
mining rights as a key audit matter since the assessment process is • Performing sensitivity analysis of the key assumptions, such
complex and judgmental by nature and is based on assumptions as growth rates, discount rate, forecasted gross margins and
relating to:
forecast revenue used in determining the recoverable value;
- Identifying Cash Generating Unit (‘CGU’) for allocation of • Assessing the adequacy of the Group’s disclosures of key
goodwill;
assumptions, judgments and sensitivities in respect of
- projected future cash inflows; Goodwill impairment.
- expected growth rate and profitability;
- discount rate; and
- perpetuity value based on long term growth rate;

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