Page 270 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22

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

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