Page 295 - Tata Chemical Annual Report_2022-2023

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

cost of the asset. The deferred amounts are conditions and risks existing at each reporting to whether there is indication that an impairment loss 2.18 Revenue recognition
ultimately recognised in the Consolidated date. The methods used to determine fair value recognised for an asset in prior accounting periods no 2.18.1 Sale of goods
Statement of Profit and Loss as the hedged item include discounted cash flow analysis, available longer exists or may have decreased, consequent to
affects profit or loss. quoted market prices and dealer quotes. All which such reversal of impairment loss is recognised Revenue is recognised upon transfer of control
methods of assessing fair value result in general in the Consolidated Statement of Profit and Loss. of promised goods to customers in an amount
When a hedging instrument expires, is sold or approximation of value. that reflects the consideration which the Group
terminated, or when a hedge no longer meets Goodwill expects to receive in exchange for those goods.
the criteria for hedge accounting, then hedge 2.16 Impairment
accounting is discontinued prospectively Financial assets (other than at fair value) Goodwill is tested for impairment, at least annually Revenue from the sale of goods is recognised
and any cumulative deferred gain or loss and and whenever circumstances indicate that it may at the point in time when control is transferred
deferred costs of hedging in equity at that time The Group assesses on a forward looking basis the be impaired. For the purpose of impairment testing, to the customer which is usually on dispatch
remains in equity until the forecast transaction expected credit losses associated with its assets the Goodwill is allocated to a CGU or Group of CGUs, / delivery of goods, based on contracts with
occurs. When the forecast transaction is no carried at amortised cost and debt instruments carried which are expected to benefit from the synergies the customers.
longer expected to occur, the cumulative gain at FVTOCI. The impairment methodology applied arising from the business combination in which the
or loss and deferred costs of hedging that were depends on whether there has been a significant said Goodwill arose. Revenue is measured based on the transaction
reported in equity are immediately transferred increase in credit risk. In respect of trade receivables price, which is the consideration, adjusted for
to the Consolidated Statement of Profit and Loss. the Group applies the simplified approach permitted If the estimated recoverable amount of the CGU volume discounts, price concessions, incentives,
by Ind AS 109 - Financial Instruments, which requires including the Goodwill is less than its carrying amount, and returns, if any, as specified in the contracts
Derivatives that are not designated as hedges expected lifetime losses to be recognised upon the impairment loss is allocated first to reduce the with the customers. Revenue excludes taxes
When derivative contracts to hedge risks are initial recognition of the receivables. For all other carrying amount of any goodwill allocated to the CGU collected from customers on behalf of the
not designated as hedges, such contracts are financial assets, expected credit losses are measured and then to the other assets of the CGU on a pro-rata government. Accruals for discounts/incentives
accounted through FVTPL. at an amount equal to the 12-months expected credit basis of the carrying amount of each asset in the unit. and returns are estimated (using the most likely
losses or at an amount equal to the life time expected method) based on accumulated experience
The entire fair value of a hedging derivative is credit losses if the credit risk on the financial asset has An impairment loss in respect of goodwill is not and underlying schemes and agreements with
classified as a non-current asset or liability when increased significantly since initial recognition. subsequently reversed, In respect of other assets customers. Due to the short nature of credit
the remaining maturity of the hedged item for which impairment loss has been recognised in period given to customers, there is no financing
exceeds 12 months; it is classified as a current The gross carrying amount of a financial asset is prior periods, the Group reviews at each reporting component in the contract. Any amounts
asset or liability when the remaining maturity written off (either partially or in full) to the extent date whether there is any indication that the loss received where the performance obligation has
of the hedged item does not exceed 12 months. that there is no realistic prospect of recovery. Financial has decreased or no longer exists. An impairment not been met are held as deferred income.
assets that are written off could still be subject to loss is reversed if there has been a change in the
2.15.5 Financial guarantee contracts enforcement activities in order to comply with the estimated use to determine the recoverable amount. 2.18.2 Interest income
Financial guarantee contracts are recognised Group's procedures. Such a reversal is made only to the extent that the For all debt instruments measured either at
as a financial liability at the time of issuance asset’s carrying amount does not exceed the carrying amortised cost or at FVTOCI, interest income is
of guarantee. The liability is initially PPE, CWIP and intangible assets amount that would have been determined, net of recorded using the EIR Method.
measured at fair value and is subsequently For the purpose of assessing impairment, the smallest depreciation or amortisation, if no impairment loss
measured at the higher of the amount of loss identifiable Group of assets that generates cash inflows had been recognised. 2.18.3 Dividend income
allowance determined, or the amount initially from continuing use that are largely independent of Dividend income is accounted for when Group’s
recognised less, the cumulative amount of the cash inflows from other assets or Groups of assets 2.17 Inventories right to receive the income is established.
income recognised. is considered as a cash generating unit (“CGU”). The
carrying values of assets / CGUs at each Balance Inventories are valued at lower of cost (on weighted
2.15.6 Offsetting of financial instruments Sheet date are reviewed to determine whether there average basis) and net realisable value after providing 2.18.4 Insurance claims
Financial assets and financial liabilities are offset is any indication that an asset may be impaired. If any for obsolescence and other losses, where considered Insurance claims are accounted for on the basis
when the Group has a legally enforceable right indication of such impairment exists, the recoverable necessary on an item-by-item basis. Cost includes of claims admitted and to the extent that there
(not contingent on future events) to off-set amount of such assets / CGU is estimated and in case all charges in bringing the goods to their present is no uncertainty in receiving the claims.
the recognised amounts either to settle on a the carrying amount of these assets exceeds their location and condition, including other levies, transit
net basis, or to realise the assets and settle the recoverable amount, an impairment loss is recognised insurance and receiving charges. Work-in-progress 2.19 Leases
liabilities simultaneously. in the Consolidated Statement of Profit and Loss. The and finished goods include appropriate proportion The Group assesses whether a contract contains
recoverable amount is the higher of the net selling of overheads and, where applicable, taxes and duties. a lease, at inception of a contract. A contract is, or
2.15.7 Fair value of financial instruments price and their value in use. Value in use is arrived at Net realisable value is the estimated selling price in the contains, a lease if the contract conveys the right
In determining the fair value of its financial by discounting the future cash flows to their present ordinary course of business, less the estimated costs to control the use of an identified asset for a define
instruments, the Group uses a variety of methods value based on an appropriate discount factor. of completion and the estimated costs necessary to period of time in exchange for consideration. To
and assumptions that are based on market Assessment is also done at each Balance Sheet date as make the sale. assess whether a contract conveys the right to

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