Page 220 - Tata Chemical Annual Report_2022-2023

Integrated Annual Report 2022-23 01-83 84-192 193-365
As at the year end, there were no designated Financial assets (other than at fair value)
accounting hedges. The Company assesses on a forward looking basis the
expected credit losses associated with its assets carried at
The entire fair value of a hedging derivative is amortised cost and debt instruments carried at FVTOCI.
classified as a Non-current asset or liability when The impairment methodology applied depends on
the remaining maturity of the hedged item whether there has been a significant increase in credit
exceeds 12 months; it is classified as a current risk. In respect of trade receivables the Company
asset or liability when the remaining maturity of applies the simplified approach permitted by Ind AS
the hedged item does not exceed 12 months. 109 - Financial Instruments, which requires expected
lifetime losses to be recognised upon initial recognition
2.11.5 Financial guarantee contracts
of the receivables. For all other financial assets, expected
Financial guarantee contracts are recognised credit losses are measured at an amount equal to the
as a financial liability at the time of issuance of 12-months expected credit losses or at an amount equal
guarantee. The liability is initially measured at fair to the life time expected credit losses if the credit risk
value and is subsequently measured at the higher on the financial asset has increased significantly since
of the amount of loss allowance determined, initial recognition. The gross carrying amount of a
or the amount initially recognised less, the financial asset is written off (either partially or in full) to
cumulative amount of income recognised. the extent that there is no realistic prospect of recovery.
Financial assets that are written off could still be subject
2.11.6 Offsetting of financial instruments to enforcement activities in order to comply with the
Financial assets and financial liabilities are offset Company's procedures.
when the Company has a legally enforceable
right (not contingent on future events) to off- PPE, CWIP, intangible assets and goodwill
set the recognised amounts either to settle on For the purpose of assessing impairment, the smallest
a net basis, or to realise the assets and settle the identifiable group of assets that generates cash inflows
liabilities simultaneously. from continuing use that are largely independent of
the cash inflows from other assets or groups of assets
2.11.7 Fair value of financial instruments is considered as a cash generating unit (“CGU”). The
In determining the fair value of its financial carrying values of assets / CGU at each balance sheet
instruments, the Company uses a variety of date are reviewed to determine whether there is
methods and assumptions that are based on any indication that an asset may be impaired. If any
market conditions and risks existing at each indication of such impairment exists, the recoverable
reporting date. The methods used to determine amount of such assets / CGU is estimated and in case
fair value include discounted cash flow analysis, the carrying amount of these assets exceeds their
available quoted market prices and dealer recoverable amount, an impairment loss is recognised
quotes. All methods of assessing fair value result in the Standalone Statement of Profit and Loss. The
in general approximation of value. recoverable amount is the higher of the net selling
price and their value in use. Value in use is arrived at by
2.12 Impairment discounting the future cash flows to their present value
Investments in subsidiaries and joint ventures based on an appropriate discount factor. Assessment
is also done at each balance sheet date as to whether
The Company reviews its carrying value of investment there is indication that an impairment loss recognised for
in subsidiaries and joint ventures carried at cost (net an asset in prior accounting periods no longer exists or
of impairment, if any) when there is indication for may have decreased, consequent to which such reversal
impairment. If the recoverable amount is less than its of impairment loss is recognised in the Standalone
carrying amount, the impairment loss is accounted for Statement of Profit and Loss.
in the Standalone Statement of Profit and Loss. The
recoverable amount requires estimates of operating The Company reviews its carrying value of goodwill
margin, discount rate, future growth rate, terminal annually, or more frequently when there is indication
values, etc. based on management’s best estimate.
for impairment. If the recoverable amount is less than
its carrying amount, the impairment loss is accounted
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Integrated Report Statutory Reports Financial Statements
Standalone
for in the Standalone Statement of Profit and Loss. An 2.14.3 Dividend income
impairment loss recognised for goodwill is not reversed Dividend income is accounted for when
in a subsequent period. Company’s right to receive the income
is established.
2.13 Inventories
Inventories are valued at lower of cost (on weighted 2.14.4 Insurance claims
average basis) and net realisable value after providing Insurance claims are accounted for on the basis
for obsolescence and other losses, where considered of claims admitted and to the extent that there
necessary on an item-by-item basis. Cost includes all is no uncertainty in receiving the claims.
charges in bringing the goods to their present location
and condition, including other levies, transit insurance 2.15 Leases
and receiving charges. Work-in-progress and finished The Company assesses whether a contract contains a
goods include appropriate proportion of overheads and, lease, at inception of a contract. A contract is, or contains,
where applicable, taxes and duties. Net realisable value a lease if the contract conveys the right to control the
is the estimated selling price in the ordinary course of use of an identified asset for a define period of time in
business, less the estimated costs of completion and the exchange for consideration. To assess whether a contract
estimated costs necessary to make the sale. conveys the right to control the use of an identified
assets, the Company assesses whether: (i) the contact
2.14 Revenue recognition involves the use of an identified asset (ii) the Company
2.14.1 Sale of goods has substantially all of the economic benefits from use
Revenue is recognised upon transfer of control of of the asset through the period of the lease and (iii) the
promised goods to customers in an amount that Company has the right to direct the use of the asset.
reflects the consideration which the Company
expects to receive in exchange for those goods. As a lessee, The Company recognises a right-of-use
asset and a lease liability at the lease commencement
Revenue from the sale of goods is recognised date. The right¬-of-use asset is initially measured at
at the point in time when control is transferred cost, which comprises the initial amount of the lease
to the customer which is usually on dispatch liability adjusted for any lease payments made at or
/ delivery of goods, based on contracts with before the commencement date, plus any initial direct
the customers. costs incurred and an estimate of costs to dismantle and
remove the underlying asset or to restore the underlying
Revenue towards satisfaction of performance asset or the site on which it is located, less any lease
obligation is measured based on the transaction incentives received.
price, which is the consideration, adjusted for
volume discounts, price concessions, incentives, The right-of-use asset is subsequently depreciated using
and returns, if any, as specified in the contracts the straight-line method from the commencement date
with the customers. Revenue excludes taxes to the earlier of the end of the useful life of the right-
collected from customers on behalf of the of-use asset or the end of the lease term. The estimated
government. Accruals for discounts/incentives useful lives of right-of-use assets are determined on
and returns are estimated (using the most likely the same basis as those of property and equipment. In
method) based on accumulated experience addition, the right-of-use asset is periodically reduced
and underlying schemes and agreements with by impairment losses, if any, and adjusted for certain
customers. Due to the short nature of credit remeasurements of the lease liability.
period given to customers, there is no financing The lease liability is initially measured at the present
component in the contract. value of the lease payments that are not paid at the
2.14.2 Interest income commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
For all debt instruments measured either at determined, the Company's incremental borrowing rate.
amortised cost or at FVTOCI, interest income is
recorded using the EIR method. For leases with reasonably similar characteristics, the
Company, on a lease by lease basis, may adopt either the
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