Page 278 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22

costs of hedging in equity at that time remains in carried at amortised cost and debt instruments
equity until the forecast transaction occurs. When carried at FVTOCI. The impairment methodology
the forecast transaction is no longer expected to applied depends on whether there has been a
occur, the cumulative gain or loss and deferred significant increase in credit risk. In respect of
costs of hedging that were reported in equity trade receivables the Group applies the simplified
are immediately transferred to the Consolidated approach permitted by Ind AS 109 - Financial
Statement of Profit and Loss. Instruments, which requires expected lifetime
losses to be recognised upon initial recognition
Derivatives that are not designated as hedges of the receivables. For all other financial assets,
When derivative contracts to hedge risks are expected credit losses are measured at an amount
not designated as hedges, such contracts are equal to the 12-months expected credit losses or
accounted through FVTPL. at an amount equal to the life time expected credit
losses if the credit risk on the financial asset has
The entire fair value of a hedging derivative is
classified as a non-current asset or liability when increased significantly since initial recognition.
the remaining maturity of the hedged item The gross carrying amount of a financial asset is
exceeds 12 months; it is classified as a current written off (either partially or in full) to the extent
asset or liability when the remaining maturity of that there is no realistic prospect of recovery.
the hedged item does not exceed 12 months. Financial assets that are written off could still
be subject to enforcement activities in order to
2.15.5 Financial guarantee contracts comply with the Group’s procedures.
Financial guarantee contracts are recognised PPE, CWIP and intangible assets
as a financial liability at the time of issuance of
guarantee. The liability is initially measured at fair For the purpose of assessing impairment,
value and is subsequently measured at the higher the smallest identifiable Group of assets that
of the amount of loss allowance determined, or the generates cash inflows from continuing use that
amount initially recognised less, the cumulative are largely independent of the cash inflows from
amount of income recognised. other assets or Groups of assets is considered
as a cash generating unit (“CGU”). The carrying
2.15.6 Offsetting of financial instruments values of assets / CGUs at each Balance Sheet
Financial assets and financial liabilities are offset date are reviewed to determine whether there
when the Group has a legally enforceable right is any indication that an asset may be impaired.
(not contingent on future events) to off-set the If any indication of such impairment exists, the
recognised amounts either to settle on a net basis, recoverable amount of such assets / CGU is
or to realise the assets and settle the liabilities estimated and in case the carrying amount of
simultaneously. these assets exceeds their recoverable amount, an
impairment loss is recognised in the Consolidated
2.15.7 Fair value of financial instruments Statement of Profit and Loss. The recoverable
amount is the higher of the net selling price and
In determining the fair value of its financial their value in use. Value in use is arrived at by
instruments, the Group uses a variety of methods discounting the future cash flows to their present
and assumptions that are based on market value based on an appropriate discount factor.
conditions and risks existing at each reporting Assessment is also done at each Balance Sheet
date. The methods used to determine fair value date as to whether there is indication that an
include discounted cash flow analysis, available impairment loss recognised for an asset in prior
quoted market prices and dealer quotes. All accounting periods no longer exists or may have
methods of assessing fair value result in general decreased, consequent to which such reversal of
approximation of value.
impairment loss is recognised in the Consolidated
Statement of Profit and Loss.
2.16 Impairment
Financial assets (other than at fair value) Goodwill
The Group assesses on a forward looking basis the Goodwill is tested for impairment, at least annually
expected credit losses associated with its assets and whenever circumstances indicate that it

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