Page 257 - Tata Chemical Annual Report_2022-2023

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

(b) Fair value hierarchy (c) The following tables shows a reconciliation from the opening balance to the closing balance for level 3
All assets and liabilities for which fair value is measured or disclosed in the Standalone Financial Statements are categorised fair values.
within the fair value hierarchy, described as follows: ` in crore
FVTPL financial FVTOCI financial
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities Particulars
investments investments
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or Balance as at April 1, 2021 - 513
indirectly observable Addition / (deletion) during the year - (11)
Add / (less): fair value changes through Other Comprehensive Income - 115
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
Balance as at March 31, 2022 - 617
The following tables provides the fair value measurement hierarchy of the Company’s financial assets and liabilities that are Addition / (deletion) during the year 150 -
measured at fair value or where fair value disclosure is required. Add / (less): fair value changes through Other Comprehensive Income - (92)
` in crore Balance as at March 31, 2023 150 525
As at March 31, 2023
Fair value measurement using (d) Valuation technique to determine fair value
Particulars Quoted prices in Significant Significant The following methods and assumptions were used to estimate the fair values of financial instruments:
Total active markets observable unobservable (i) The management assessed that fair value of cash and cash equivalents, trade receivables, trade payables, bank overdrafts
(Level 1) inputs (Level 2) inputs (Level 3) and other current financial assets and liabilities approximate their carrying amounts largely due to the short-term maturities
Assets measured at fair value: of these instruments.
FVTOCI financial investments
Quoted equity instruments 4,364 4,364 - - (ii) The fair values of the equity investment which are quoted, are derived from quoted market prices in active
Unquoted equity instruments 525 - - 525 markets. The Investments measured at fair value (FVTOCI) and falling under fair value hierarchy Level 3
FVTPL financial investments are valued on the basis of valuation reports provided by external valuers with the exception of certain
Investment in mutual funds / Non 1,049 - 1,049 - investments, where cost has been considered as an appropriate estimate of fair value because of a wide range
convertible Debenture of possible fair value measurements and cost represents the best estimate of fair values within that range.
Investment in perpetual instruments 150 - - 150 The Company considers Comparable Companies Method (CCM) method and the illiquidity discount based on its assessment
of the judgement that market participants would apply for measurement of fair value of unquoted investments. In the CCM
Liabilities measured at fair value: method, the Company would find comparable listed entities in the market and use the same PE multiple (ranging from
Derivative financial liabilities 9.80 to 20.60) for determining the fair value of the investment.
Foreign exchange forward contracts 5 - 5 -
(iii) The fair values of investments in mutual fund units is based on the net asset value (‘NAV’) as stated by the issuers of these
There have been no transfers between levels during the period.
mutual fund units in the published statements as at Balance Sheet date. NAV represents the price at which the issuer will
issue further units of mutual fund and the price at which issuers will redeem such units from the investors.
` in crore
As at March 31, 2022 (iv) The Company enters into derivative financial instruments with various counterparties, principally banks. The fair value of
Fair value measurement using derivative financial instruments is based on observable market inputs including currency spot and forward rate, yield curves,
Particulars Quoted prices in Significant Significant currency volatility, credit quality of counterparties, interest rate and forward rate curves of the underlying instruments etc.
Total active markets observable unobservable and use of appropriate valuation models.
(Level 1) inputs (Level 2) inputs (Level 3) (v) The fair value of non-current borrowings carrying floating-rate of interest is not impacted due to interest rate changes, and
Assets measured at fair value: will not be significantly different from their carrying amounts as there is no significant change in the under-lying credit risk
FVTOCI financial investments of the Company (since the date of inception of the loans).
Quoted equity instruments 4,354 4,354 - -
Unquoted equity instruments 617 - - 617 (e) Financial risk management objectives
FVTPL financial investments The Company is exposed to market risk (including currency risk, interest rate risk and other price risk), credit risk and
Investment in mutual funds 1,113 - 1,113 - liquidity risk. The Company’s risk management strategies focus on the un-predictability of these elements and seek
Investments in non convertible debentures 150 150 - - to minimise the potential adverse effects on its financial performance. The Company’s senior management which is
Liabilities measured at fair value: supported by a Treasury Risk Management Group ('TRMG') manages these risks. TRMG advises on financial risks and
Derivative financial liabilities the appropriate financial risk governance framework for the Company and provides assurance to the Company’s senior
Foreign exchange forward contracts 4 - 4 - management that the Company’s financial risk activities are governed by appropriate policies and procedures and that
financial risks are identified, measured and managed in accordance with the Company’s policies and risk objectives.
There have been no transfers between levels during the period. All hedging activities are carried out by specialist teams that have the appropriate skills, experience and supervision. The
Company’s policy is not to trade in derivatives for speculative purposes.

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