Page 271 - Tata Chemical Annual Report_2022-2023

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

Impairment evaluation of Impairment of Property, Plant and Equipment (referred to as ‘PPE’), goodwill and mining rights Employee benefits provision (See Note 2.20, 21 and 40 to Consolidated Financial Statements)
(See Note 2.3.1, 2.16, 4(a), 7(a), 7(b) and 8(a) to Consolidated Financial Statements)
The Key Audit Matter How the matter was addressed in our audit
The Key Audit Matter How the matter was addressed in our audit The valuation of employee benefits by the Group’s UK and Other auditors' audit procedures included :
The Group periodically assesses if there are any triggers for Our and other auditors' (referred hereafter as "We") audit US subsidiaries is performed annually with the assistance of
recognising impairment loss in respect of Property, plant procedures included: external independent actuaries. • Involving actuarial specialists to assist other auditors in
and equipment relating to its Silica and Nutraceutical Cash evaluating all pension plans;
Generating Units (CGU) with respect to Tata Chemicals India • Analysing the indicators of impairment of PPE and This involves significant estimates and judgment. There are
Limited, Property, plant and equipement with respect to Tata Mining rights including understanding of Group’s own inherent uncertainties involved in estimating salary increase, • Assessing and testing the valuation methodology used by
Chemicals Europe Limited and Winnington CHP Limited and assessment of those indicators; mortality rate, return on plan assets, discount rate and changes the actuary;
mining rights with respect to the Group’s US Operations. In in provisions of pension laws.
making this determination, the Group considers both internal • Evaluating the design and implementation and testing • Evaluating the competence and objectivity of the experts
and external sources of information to determine whether there the operating effectiveness of key controls over the These estimates of the Group and judgements are considered appointed by the Group;
is an indicator of impairment and, accordingly, whether the impairment assessment process. This included the to be significant to our overall audit strategy and planning.
recoverable amount of the CGU needs to be estimated. estimation and approval of forecasts, determination of Accordingly, we have considered employee benefits provision • Challenging assumptions used by the Group based
key assumptions and valuation models and testing the for the above components of the Group as a key audit matter. on externally derived data in relation to key inputs
The Group tests goodwill for impairment annually, or more arithmetical accuracy of the impairment models; such as inflationary expectations, discount rates and
frequently when there is an indication that the cash generating mortality rates with the assistance of other auditor’s
unit to which goodwill has been allocated may be impaired. • Assessing the identification of relevant Cash Generating actuarial specialists.
Units (CGU) to which goodwill is allocated and to which
An impairment loss is recognised if the recoverable amount PPE and mining rights belong that are being tested; • Identifying any changes in actuarial assumptions resulting
is lower than the carrying value. The recoverable amount is into actuarial gain or loss;
determined based on the higher of value in use (VIU) and fair • Evaluating the past performance of the CGUs with actual
value less costs to sell (FVLCS). performance where relevant and assessing historical • Performing sensitivity analysis on the assumptions with
accuracy of the forecast producted by the Group; the assistance of actuarial specialists.
As at March 31, 2023, carrying value of PPE of these CGUs was
` 1,557 crore, mining rights was ` 8,154 crore and Goodwill was • Challenging the assumptions used in impairment • Assessing and testing the adequacy of disclosures of key
` 2,155 crore. analysis, such as growth rate, discount rate, forecasted assumptions and sensitivities in respect of the employee
gross margins and forecasted revenue. This was based on benefits provision.
We identified the impairment assessment of PPE, goodwill our knowledge of the Group and the markets in which
and mining rights as a key audit matter since the assessment the CGU operates. We took assistance of our valuation
process is complex and judgmental by nature and is based on specialists for the above testing; Information Other than the Financial Statements appears to be materially misstated. If, based on the work we have
assumptions relating to: and Auditor’s Report Thereon performed and based on the work done/audit reports of other
• Performing sensitivity analysis of the key assumptions, auditors, we conclude that there is a material misstatement of
• Identifying Cash Generating Unit (‘CGU’) for allocation such as growth rates, discount rate, forecasted gross The Holding Company’s Management and Board of Directors this other information, we are required to report that fact. We
of goodwill; margins and forecast revenue used in determining the are responsible for the other information. The other information have nothing to report in this regard.
recoverable value; comprises the information included in the Holding Company’s
• projected future cash inflows; annual report, but does not include the financial statements and
• expected growth rate and profitability; • Assessing the adequacy of the Group’s disclosures of key auditor’s report thereon. Management's and Board of Directors'
Responsibilities for the Consolidated Financial
assumptions, judgments and sensitivities in respect of
• discount rate; and Statements
Goodwill impairment. Our opinion on the Consolidated Financial Statements does not
• perpetuity value based on long term growth rate; cover the other information and we do not express any form of The Holding Company’s Management and Board of Directors
assurance conclusion thereon. are responsible for the preparation and presentation of
these Consolidated Financial Statements in term of the
In connection with our audit of the Consolidated Financial requirements of the Act that give a true and fair view of the
Statements, our responsibility is to read the other information consolidated state of affairs, Consolidated Profit/Loss and
and, in doing so, consider whether the other information Other Comprehensive Income, Consolidated Statement of
is materially inconsistent with the Consolidated Financial Changes in Equity and Consolidated Cash Flows of the Group
Statements or our knowledge obtained in the audit or otherwise including its associate and joint ventures in accordance

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