Page 219 - Tata Chemical Annual Report_2022-2023

Integrated Annual Report 2022-23 01-83 84-192 193-365
Integrated Report Statutory Reports Financial Statements
Standalone

Standalone Statement of Profit and Loss • retains the contractual rights to receive the EIR method. The EIR is a method of calculating value at the end of each reporting period. The
in the period in which it arises. Interest the cash flows of the financial asset, but the amortised cost of a financial liability and of accounting for subsequent changes in fair value
income from these financial assets is assumes a contractual obligation to pay allocating interest expense over the relevant depends on whether the derivative is designated
included in other income. the cash flows to one or more recipients. period at effective interest rate. The effective as a hedging instrument, and if so, the nature of
interest rate is the rate that exactly discounts the item being hedged and the type of hedge
Equity instruments Where the Company transfers an asset, it evaluates estimated future cash payments through the relationship designated.
The Company subsequently measures all equity whether it has transferred substantially all risks expected life of the financial liability, or, where
investments at fair value, except investment and rewards of ownership of the financial asset. appropriate, a shorter period. Cash flow hedges that qualify for hedge
in subsidiaries and joint ventures which are Where the Company has transferred substantially accounting
measured at cost. Where the Company’s all risks and rewards of ownership, the financial Changes to the carrying amount of a financial The effective portion of changes in the fair value
management has elected to present fair value asset is derecognised. Where the Company has liability as a result of renegotiation or modification of derivatives that are designated and qualify
gains and losses on equity investments in not transferred substantially all risks and rewards of terms that do not result in derecognition of the as cash flow hedges, is recognised through OCI
OCI, there is no subsequent reclassification of of ownership of the financial asset, the financial financial liability, is recognised in the Standalone and as cash flow hedging reserve within equity,
fair value gains and losses to the Standalone asset is not derecognised. Where the Company Statement of Profit and Loss. limited to the cumulative change in fair value of
Statement of Profit and Loss. When the financial has neither transferred a financial asset nor the hedged item on a present value basis from
asset is derecognised, the cumulative gain or retained substantially all risks and rewards of Derecognition of financial liabilities the inception of the hedge. The gain or loss
loss previously recognised in OCI is reclassified ownership of the financial asset, the financial The Company derecognises financial liabilities relating to the ineffective portion is recognised
to equity. Dividends from such investments asset is derecognised if the Company has not when, and only when, its obligations are immediately in the Standalone Statement of
are recognised in the Standalone Statement retained control of the financial asset. Where discharged, cancelled or they expire. Profit and Loss.
of Profit and Loss within other income when the Company retains control of the financial
the Company’s right to receive payments is asset, the asset is continued to be recognised Presentation Amounts accumulated in equity are reclassified
established. Impairment losses (and reversal to the extent of continuing involvement in the Borrowings are classified as current liabilities to the Standalone Statement of Profit and
of impairment losses) on equity investments financial asset. unless the Company has an unconditional right Loss on settlement. When the hedged forecast
measured at FVTOCI are not reported separately to defer settlement of the liability for at least 12 transaction results in the recognition of a non-
from other changes in fair value. Effective interest method months after the reporting period. financial asset, the amounts accumulated in
The effective interest method is a method of equity with respect to gain or loss relating to
Cash and cash equivalents calculating the amortised cost of a financial Trade and other payables are presented as the effective portion of the spot component of
The Company considers all highly liquid instrument and of allocating interest income or current liabilities unless payment is not due forward contracts, both the deferred hedging
gains and losses and the deferred aligned
investments, which are readily convertible into expense over the relevant period. The effective within 12 months after the reporting period. forward points are included within the initial cost
known amounts of cash, that are subject to interest rate is the rate that exactly discounts of the asset. The deferred amounts are ultimately
an insignificant risk of change in value with a future cash receipts or payments through the 2.11.4 Derivatives and hedging activities recognised in the Standalone Statement of Profit
maturity within three months or less from the expected life of the financial instrument, or In the ordinary course of business, the Company and Loss as the hedged item affects profit or loss.
date of purchase, to be cash equivalents. Cash where appropriate, a shorter period. uses certain derivative financial instruments
and cash equivalents consist of balances with to reduce business risks which arise from its When a hedging instrument expires, is sold or
banks which are unrestricted for withdrawal 2.11.2 Debt and equity instruments exposure to foreign exchange and interest terminated, or when a hedge no longer meets
and usage. Debt and equity instruments are classified as either rate fluctuations associated with borrowings the criteria for hedge accounting, then hedge
financial liabilities or as equity in accordance with (cash flow hedges). When the Company opts accounting is discontinued prospectively and
Trade Receivables the substance of the contractual arrangement. to undertake hedge accounting, the Company any cumulative deferred gain or loss and deferred
Trade receivables that do not contain a documents, at the inception of the hedging costs of hedging in equity at that time remains in
significant financing component are measured An equity instrument is any contract that transaction, the economic relationship between equity until the forecast transaction occurs. When
at transaction price. evidences a residual interest in the assets of an hedging instruments and hedged items including the forecast transaction is no longer expected to
entity after deducting all of its liabilities. Equity whether the hedging instrument is expected occur, the cumulative gain or loss and deferred
Derecognition of financial assets instruments issued by the Company are recorded to offset changes in cash flows or fair values costs of hedging that were reported in equity
at the proceeds received, net of direct issue costs. of hedged items. The Company documents its
A financial asset is derecognised only when are immediately transferred to the Standalone
the Company risk management objective and strategy for Statement of Profit and Loss.
2.11.3 Financial liabilities undertaking various hedge transactions at the
• has transferred the rights to receive cash The Company’s financial liabilities comprise inception of each hedge relationship. Derivatives that are not designated as
flows from the financial asset; or borrowings, lease liabilities, trade payables and hedges
other liabilities. These are initially measured Derivatives are initially recognised at fair value on When derivative contracts to hedge risks are
at fair value, net of transaction costs, and are the date the derivative contract is entered into not designated as hedges, such contracts are
subsequently measured at amortised cost using and are subsequently remeasured to their fair accounted through FVTPL.

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