Page 292 - Tata Chemical Annual Report_2022-2023

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

loss on a debt investment (unhedged) that is on equity investments measured at FVTOCI are not payments through the expected life of the financial 2.15.4 Derivatives and hedging activities
subsequently measured at amortised cost is reported separately from other changes in fair value. instrument, or where appropriate, a shorter period. In the ordinary course of business, the Group
recognised in the Consolidated Statement of uses certain derivative financial instruments
Profit and Loss when the asset is derecognised Cash and cash equivalents 2.15.2 Debt and equity instruments to reduce business risks which arise from its
or impaired. Interest income from these financial The Group considers all highly liquid investments, Debt and equity instruments are classified exposure to foreign exchange, fuel and interest
assets is included in other income using the which are readily convertible into known amounts of as either financial liabilities or as equity rate fluctuations associated with borrowings
effective interest rate (‘EIR’) method. cash, that are subject to an insignificant risk of change in accordance with the substance of the (cash flow hedges). When the Group opts
in value with a maturity within three months or less contractual arrangement. to undertake hedge accounting, the Group
• Fair value through Other Comprehensive from the date of purchase, to be cash equivalents. Cash documents, at the inception of the hedging
Income (‘FVTOCI’) An equity instrument is any contract that evidences
and cash equivalents consist of balances with banks transaction, the economic relationship between
Assets that are held for collection of contractual which are unrestricted for withdrawal and usage. a residual interest in the assets of an entity after hedging instruments and hedged items
cash flows and for selling the financial assets, deducting all of its liabilities. Equity instruments including whether the hedging instrument is
where the asset’s cash flows represent solely Trade Receivables issued by the Group are recorded at the proceeds expected to offset changes in cash flows or fair
payments of principal and interest, are Trade receivables that do not contain a received, net of direct issue costs. values of hedged items. The Group documents
measured at FVTOCI. Movements in the carrying significant financing component are measured at its risk management objective and strategy for
amount are recorded through OCI, except for transaction price. 2.15.3 Financial liabilities undertaking various hedge transactions at the
the recognition of impairment gains or losses, The Group’s financial liabilities comprise inception of each hedge relationship.
interest revenue and foreign exchange gains and Derecognition of financial assets borrowings, lease liabilities, trade payables and
losses which are recognised in the Consolidated other liabilities. These are initially measured Derivatives are initially recognised at fair value
Statement of Profit and Loss. When the financial A financial asset is derecognised only when the Group at fair value, net of transaction costs, and are on the date the derivative contract is entered
asset is derecognised, the cumulative gain or • has transferred the rights to receive cash flows subsequently measured at amortised cost using into and are subsequently remeasured to their
loss previously recognised in OCI is reclassified from the financial asset; or the EIR method. The EIR is a method of calculating fair value at the end of each reporting period.
from equity to the Consolidated Statement of the amortised cost of a financial liability and of The accounting for subsequent changes in fair
Profit and Loss. Interest income from these • retains the contractual rights to receive the allocating interest expense over the relevant value depends on whether the derivative is
financial assets is included in other income using cash flows of the financial asset, but assumes a period at effective interest rate. The effective designated as a hedging instrument, and if so,
the EIR. contractual obligation to pay the cash flows to interest rate is the rate that exactly discounts the nature of the item being hedged and the
one or more recipients. estimated future cash payments through the type of hedge relationship designated.
• Fair value through profit or loss (“FVTPL”) expected life of the financial liability, or, where
Where the Group transfers an asset, it evaluates
Assets that do not meet the criteria for amortised appropriate, a shorter period. Cash flow hedges that qualify for hedge
cost or FVTOCI are measured at FVTPL. A gain whether it has transferred substantially all risks and accounting
or loss on a debt investment (including current rewards of ownership of the financial asset. Where Changes to the carrying amount of a The effective portion of changes in the fair value
investments) that is subsequently measured the Group has transferred substantially all risks financial liability as a result of renegotiation of derivatives that are designated and qualify as
at FVTPL (unhedged) is recognised net in the and rewards of ownership, the financial asset is or modification of terms that do not result cash flow hedges, is recognised through OCI
Consolidated Statement of Profit and Loss in the derecognised. Where the Group has not transferred in derecognition of the financial liability, is and as cash flow hedging reserve within equity,
period in which it arises. Interest income from substantially all risks and rewards of ownership of the recognised in the Consolidated Statement of limited to the cumulative change in fair value of
these financial assets is included in other income. financial asset, the financial asset is not derecognised. Profit and Loss. the hedged item on a present value basis from
Where the Group has neither transferred a financial the inception of the hedge. The gain or loss
Equity instruments asset nor retained substantially all risks and rewards Derecognition of financial liabilities relating to the ineffective portion is recognised
of ownership of the financial asset, the financial asset
The Group subsequently measures all equity The Group derecognises financial liabilities immediately in the Consolidated Statement of
investments at fair value. Where the Group’s is derecognised if the Group has not retained control when, and only when, its obligations are Profit and Loss.
management has elected to present fair value gains of the financial asset. Where the Group retains control discharged, cancelled or they expire.
and losses on equity investments in OCI, there is of the financial asset, the asset is continued to be Amounts accumulated in equity are reclassified
no subsequent reclassification of fair value gains recognised to the extent of continuing involvement Presentation to the Consolidated Statement of Profit and
and losses to the Consolidated Statement of Profit in the financial asset. Borrowings are classified as current liabilities Loss on settlement. When the hedged forecast
and Loss. When the financial asset is derecognised, unless the Group has an unconditional right to transaction results in the recognition of a non-
the cumulative gain or loss previously recognised Effective interest method defer settlement of the liability for at least 12 financial asset, the amounts accumulated in
in OCI is reclassified to equity. Dividends from such The effective interest method is a method of months after the reporting period. equity with respect to gain or loss relating to
investments are recognised in the Consolidated calculating the amortised cost of a financial instrument the effective portion of the spot component of
Statement of Profit and Loss within other income when and of allocating interest income or expense over Trade and other payables are presented as forward contracts, both the deferred hedging
the Group’s right to receive payments is established. the relevant period. The effective interest rate is the current liabilities unless payment is not due gains and losses and the deferred aligned
Impairment losses (and reversal of impairment losses) rate that exactly discounts future cash receipts or within 12 months after the reporting period. forward points are included within the initial

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