Page 286 - Tata Chemical Annual Report_2022-2023

Integrated Annual Report 2022-23 01-83 84-192 193-365
Integrated Report
The amount of total deferred tax assets could change assets are not disclosed in the Consolidated Financial
if management estimates of projected future taxable Statements unless an inflow of economic benefits
income or if tax regulations undergo a change. is probable.
Similarly, the identification of temporary differences 2.4 Functional and presentation currency II
pertaining to subsidiaries that are expected to reverse Items included in the Consolidated Financial
in the foreseeable future and the determination of Statements of each of the Group’s entities are
the related deferred income tax liabilities, require measured using the currency of the primary economic
the Management to make significant judgments, environment in which the entity operates (the
estimates and assumptions. ‘Functional Currency’). The CFS are presented in Indian III
Rupees (`), which is the Group’s presentation currency.
2.3.3 Useful lives of property, plant and equipment (‘PPE’)
and intangible assets 2.5 Basis of Consolidation:
Management reviews the estimated useful lives and The CFS comprise the financial statements of the
residual value of PPE and Intangibles at the end of Company, its subsidiaries and the Group’s interest in
each reporting period. Factors such as changes in the joint ventures and associate as at the reporting date.
expected level of usage, technological developments,
units-of-production and product life-cycle, could Subsidiaries
significantly impact the economic useful lives and
the residual values of these assets. Consequently, the Subsidiaries include all the entities over which the
future depreciation and amortisation charge could be Group has control. The Group controls an entity when
revised and may have an impact on the profit of the the Group is exposed to, or has rights to, variable
future years. returns through its involvement in the entity and has
the ability to affect those returns through its power to
2.3.4 Employee Benefit obligations direct the relevant activities of the entity. Subsidiaries
are consolidated from the date control commences
Employee benefit obligations are determined using until the date control ceases.
actuarial valuations. An actuarial valuation involves
making various assumptions that may differ from Joint venture
actual developments. These include the estimation
of the appropriate discount rate, future salary A joint venture is a joint arrangement whereby the IV
increases and mortality rates. Due to the complexities parties that have joint control of the arrangement
involved in the valuation and its long-term nature, have rights to the net assets of the arrangement.
the employee benefit obligation is highly sensitive to Interests in joint venture are accounted for using the
changes in these assumptions. All assumptions are equity method of accounting (see (III) below). V Non-controlling interests (‘NCI’) in the net
reviewed at each reporting date.
Associate
2.3.5 Provisions and contingencies Associates are all entities over which the Group has
From time to time, the Group is subject to legal significant influence but not control or joint control.
proceedings, the ultimate outcome of each being Investments in an associate are accounted for using
subject to uncertainties inherent in litigation. A the equity method of accounting (see (III) below). VI
provision for litigation is made when it is considered
probable that a payment will be made and the amount The CFS have been prepared on the following basis:
can be reasonably estimated. Significant judgment is I The financial statements of the Company and its
required when evaluating the provision including, subsidiary companies have been consolidated
the probability of an unfavourable outcome and the on a line by- line basis by adding together of like
ability to make a reasonable estimate of the amount items of assets, liabilities, income and expenses,
of potential loss. Litigation provisions are reviewed after fully eliminating intra-group balances and
at each accounting period and revisions made for intra-group transactions and resulting unrealised
the changes in facts and circumstances. Contingent profit or losses, unless cost cannot be recovered,
liabilities are disclosed in the notes forming part of as per the applicable Accounting Standard.
the Consolidated Financial Statements. Contingent Accounting policies of the respective subsidiaries
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Statutory Reports Financial Statements
Consolidated
are aligned wherever necessary, so as to ensure 2.6 Foreign currency translation
consistency with the accounting policies that are (i) Foreign currency transactions and balances
adopted by the Group under Ind AS.
On initial recognition, all foreign currency transactions
The results of subsidiaries acquired or disposed are recorded at exchange rates prevailing on the date
of during the year are included in the CFS from of the transaction. Monetary assets and liabilities,
the effective date of acquisition and up to the denominated in a foreign currency, are translated
effective date of disposal, as appropriate. at the exchange rate prevailing on the Consolidated
Balance Sheet date and the resultant exchange gains
The CFS include the share of profit / loss of or losses are recognised in the Consolidated Statement
of Profit and Loss. Non-monetary items, which are
the joint ventures and an associate which are carried in terms of historical cost, denominated in a
accounted as per the ‘equity method’.
foreign currency are reported using the exchange rate
Under the equity method of accounting, the at the date of the transaction.
investments are initially recognised at cost and Foreign exchange differences regarded as an
adjusted thereafter to recognise the Group’s adjustment to the borrowing cost are presented in
share of the post-acquisition profits or losses the Consolidated Statement of Profit and Loss within
of the investee in profit or loss, and the Group’s finance cost. Exchange differences arising from
share of movements in OCI of the investee in the translation of equity investments at Fair value
OCI. Dividends received or receivable from through Other Comprehensive Income (‘FVTOCI’) are
joint ventures and an associate are recognised recognised in OCI. All other foreign exchange gains
as a reduction in the carrying amount of and losses are presented on a net basis within other
the investment. income or other expense.
When the Group’s share of losses in an equity (ii) Foreign operations
accounted investment equals or exceeds its
interest in the entity, the Group does not recognise Assets and liabilities of entities with functional
further losses, unless it has incurred obligations or currencies other than presentation currency have
made payments on behalf of the other entity. been translated to the presentation currency using
exchange rates prevailing on the Consolidated
The CFS are presented, to the extent applicable, Balance Sheet date. The Statement of Profit and Loss
in accordance with the requirements of Schedule has been translated using the average exchange rates.
III of the 2013 Act. The net impact of such translation are recognised in
OCI and held in foreign currency translation reserve
(‘FCTR’), a component of Equity.
assets of the subsidiaries that are consolidated
consists of the amount of equity attributable On the disposal of a foreign operation (i.e. a disposal
to non-controlling shareholders at the date of the Group’s entire interest in a foreign operation,
of acquisition. a disposal involving loss of control, over a subsidiary
that includes a foreign operation, or a partial
Goodwill on consolidation is measured as disposal of an interest in a joint arrangement that
the excess of the sum of the consideration includes a foreign operation of which the retained
transferred, the amount of NCI in the aquiree, interest becomes a financial asset), the exchange
and the fair value of acquirer’s previously held differences accumulated in equity in respect of that
equity instrument in the aquiree (if any) over the operation attributable to the owners of the Group are
net of acquisition date fair value of identifiable reclassified to the Consolidated Statement of Profit
assets acquired and liabilities assumed. and Loss as part of the gain or loss on disposal.
Profit or loss and each component of OCI are In case of a partial disposal of interests in a subsidiary
attributed to the equity holders of the parent that includes a foreign operation that does not result
and to the NCI, even if this results in the NCI in the Group losing control over the subsidiary,
having a deficit balance. the proportionate share of accumulated exchange
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