Page 284 - Tata_Chemicals_yearly-reports-2021-22

Integrated Annual Report 2021-22

allowances in excess of allowances held or 2.30 Dividend
purchased forward, the provision is based on Final dividends on shares are recorded as a liability,
market prices at the balance sheet date. on the date of approval by the shareholders and
Under UKETS, for each Calendar year the Group interim dividends are recorded as a liability on the
receives an allocation of free allowances which date of declaration by the Company’s Board of
are initially recorded at fair value under provisions Directors.
with a corresponding deferred income balance
that is released to the Consolidated Profit and Loss 3. Recent Indian Accounting Standard (Ind AS)
account on a straight line basis over the Calendar pronouncements which are not yet effective
year. On March 23, 2022, the Ministry of Corporate Affairs (“MCA”)
through notifications, amended the existing Ind AS. The
2.28 Asset Retirement Obligations same shall come into force from annual reporting period
The Group provides for the expected costs to beginning on or after April 1, 2022. Key Amendments
be incurred for the eventual reclamation of relating to the same where financial statements are
properties pursuant to local laws. The Group required to comply with Companies (Indian Accounting
accounts for its land reclamation liability as an Standards) Rules 2015 are:
asset retirement obligation, which requires that - Ind AS 16 Property, Plant and Equipment – For
obligations associated with the retirement of a items produced during testing/trial phase,
tangible long-lived asset be recorded as a liability clarification added that revenue generated
when those obligations are incurred, with the out of the same shall not be recognised in the
amount of the liability initially measured at fair Consolidated Statement of Profit and Loss and
considered as part of cost of PPE.
value. Upon recognizing a liability for an asset
retirement obligation, an entity also capitalizes - Ind AS 37 Provisions, Contingent Liabilities &
the cost of the reclamation by recognizing an Contingent Assets – Guidance on what constitutes
increase in the carrying amount of the related cost of fulfilling contracts (to determine whether
the contract is onerous or not) is included.
long-lived asset. Over time, the liability is
accreted to its future value each period, and the - Ind AS 41 Agriculture– This aligns the fair value
capitalized costs of the related long-lived assets measurement in Ind AS 41 with the requirements
are depreciated over their estimated useful lives. of Ind AS 113 Fair Value Measurement to use
internally consistent cash flows and discount rates
The Group ultimately either settles the obligation and enables preparers to determine whether to use
for its recorded amount or incurs a gain or loss pre-tax or post-tax cash flows and discount rates
upon settlement. for the most appropriate fair value measurement.
2.29 Reverse Forfaiting - Ind AS 101 – First time Adoption of Ind AS –
Measurement of Foreign Currency Translation
Reverse forfaiting is a financing mechanism Difference in case of subsidiary/associate/ JV’s
initiated by the Group under which a supplier date of transition to Ind AS is subsequent to that of
sells a receivable due from the Group to a third Parent – FCTR in the books of subsidiary/associate/
party, for immediate settlement. As part of JV can be measured based on Consolidated
the arrangement, the Group benefits from an Financial Statements.
extended credit period in return for a financing - Ind AS 103 – Business Combination – Reference
charge. Where this arrangement does not result to revised Conceptual Framework. For contingent
in payment terms significantly in excess of normal liabilities / levies, clarification is added on how to
credit terms, does not result in the Group paying apply the principles for recognition of contingent
signigicantly increased finance charges, does liabilities from Ind AS 37. Recognition of contingent
not require the Group to provide additional assets is not allowed.
collateral or a guarantee and does not result in the - Ind AS 109 Financial Instruments – The
cancellation of the original invoice, the base value amendment clarifies which fees an entity includes
of the Invoice continues to be recognised in trade when it applies the ‘10 per cent’ test in assessing
payables. Where purchase invoices which have whether to derecognise a financial liability.
been subject to reverse forfaiting are outstanding The amendments are extensive and the Group will
at the balance sheet date, an accrual is made for evaluate the same to give effect to them as required by
unpaid financing charges. law.

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