Page 280 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22
commencement date, plus any initial direct costs (i)
incurred and an estimate of costs to dismantle
and remove the underlying asset or to restore the
underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated
using the straight-line method from the
commencement date to the earlier of the end of
the useful life of the right-of-use asset or the end of
the lease term. The estimated useful lives of right-
of-use assets are determined on the same basis
as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain
remeasurements of the lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid
at the commencement date, discounted using
the interest. For leases with reasonably similar
characteristics, the Group, on a lease by lease basis,
may adopt either the incremental borrowing rate
specific to the lease or the incremental borrowing
rate for the portfolio as a whole.
Lease payments included in the measurement of
the lease liability comprise the fixed payments,
including in-substance fixed payments and
lease payments in an optional renewal period
if the Group is reasonably certain to exercise an
extension option;
The lease liability is measured at amortised cost
using the effective interest method.
The Group has elected not to recognise right-of-
use assets and lease liabilities for short-term leases
that have a lease term of 12 months or less and
leases of low-value assets. The Group recognises
the lease payments associated with these leases as
an expense on a straight-line basis over the lease
term. The Group applied a single discount rate
to a portfolio of leases of similar assets in similar
economic environment with a similar end date.
2.20 Employee benefits plans
2.20.1 In respect of the Company and domestic
subsidiaries
Employee benefits consist of provident fund,
superannuation fund, gratuity fund, compensated
absences, long service awards, post-retirement
medical benefits, directors’ retirement obligations
and family benefit scheme.
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Post-employment benefit plans
Defined contribution plans
Payments to a defined contribution
retirement benefit scheme for eligible
employees in the form of superannuation
fund are charged as an expense as they fall
due. Such benefits are classified as Defined
Contribution Schemes as the Group does
not carry any further obligations, apart
from the contributions made.
Defined benefit plans
Contributions to a Provident Fund are
made to Trusts administered by the Group/
Regional Provident Fund Commissioners
and are charged to the Consolidated
Statement of Profit and Loss as incurred.
The Group is liable for the contribution
and any shortfall in interest between
the amount of interest realised by the
investments and the interest payable
to members at the rate declared by the
Government of India in respect of the Trust
administered by the Group companies.
For defined benefit schemes in the form
of gratuity fund, provident fund, post-
retirement medical benefits, pension
liabilities (including directors) and family
benefit scheme, the cost of providing
benefits is actuarially determined using
the projected unit credit method, with
actuarial valuations being carried out at
each Balance Sheet date.
The retirement benefit obligation
recognised in the Consolidated Balance
Sheet represents the present value of the
defined benefit obligation as reduced by
the fair value of scheme assets.
The present value of the said obligation is
determined by discounting the estimated
future cash outflows, using market yields
of government bonds of equivalent term
and currency to the liability.
The interest income / (expense) are
calculated by applying the discount rate
to the net defined benefit liability or asset.
The net interest income / (expense) on the
net defined benefit liability is recognised
in the Consolidated Statement of Profit
and loss.