Page 152 - Tata_Chemicals_yearly-reports-2017-18

The entire fair value of a hedging derivative is classified recognised for an asset in prior accounting periods no
as a noncurrent asset or liability when the remaining longer exists or may have decreased, consequent to
maturity of the hedged item exceeds 12 months; which such reversal of impairment loss is recognised
it is classified as a current asset or liability when the in the Statement of Profit and Loss.
remaining maturity of the hedged item does not 2.13 Inventories
exceed 12 months.
Inventories are valued at lower of cost (on weighted
2.11.5 Financial guarantee contracts
average basis) and net realisable value after providing
Financial guarantee contracts are recognised as a for obsolescence and other losses, where considered
financial liability at the time of issuance of guarantee. necessary. Cost includes all charges in bringing
The liability is initially measured at fair value and are the goods to their present location and condition,
subsequently measured at the higher of the amount including other levies, transit insurance and receiving
of loss allowance determined, or the amount initially charges. Work-in-progress and finished goods include
recognised less, the cumulative amount of income appropriate proportion of overheads and, where
recognised. applicable, taxes and duties. Net realisable value is
the estimated selling price in the ordinary course of
2.11.6 Offsetting of financial instruments
business, less the estimated costs of completion and
Financial assets and financial liabilities are offset when the estimated costs necessary to make the sale.
the Company has a legally enforceable right (not
2.14 Revenue recognition
contingent on future events) to off-set the recognised
amounts either to settle on a net basis, or to realise the 2.14.1 Sale of goods
assets and settle the liabilities simultaneously.
Revenue from the sale of goods is recognised at the
2.11.7 Fair value of financial instruments fair value of the consideration received or receivable,
net of returns, including estimated returns where
In determining the fair value of its financial
applicable, and trade discounts, rebates and related
instruments, the Company uses a variety of methods
and assumptions that are based on market conditions taxes, when all significant risks and rewards of
and risks existing at each reporting date. The methods ownership of the goods have been passed to the
used to determine fair value include discounted cash buyer, either on despatch or delivery of goods, based
on the contracts.
flow analysis, available quoted market prices and
dealer quotes. All methods of assessing fair value result In respect of Urea, sales are recognised based on
in general approximation of value. concession rates as notified under the New Pricing
Scheme. Equated freight claims and escalation claims
2.12 Impairment
for Urea sales are estimated by Management based
Financial assets (other than at fair value) on the norms prescribed or notified under the said
The Company assesses on a forward looking basis Scheme. In case of Complex Fertilisers, sales include
the expected credit losses associated with its assets price concessions, as notified under the Nutrient Based
carried at amortised cost and debt instruments carried Subsidy policy, or as estimated by the Management
at FVTOCI. The impairment methodology applied based on the norms prescribed.
depends on whether there has been a significant 2.14.2 Interest income
increase in credit risk. In respect of trade receivables the
For all debt instruments measured either at amortised
Company applies the simplified approach permitted
by Ind AS 109 - Financial Instruments, which requires cost or at FVTOCI, interest income is recorded using
expected lifetime losses to be recognised upon initial the EIR method.
recognition of the receivables. 2.14.3 Dividend income
PPE, CWIP and intangible assets Dividend income is accounted for when Company’s
right to receive the income is established.
The carrying values of assets / cash generating units
(‘CGU’) at each Balance Sheet date are reviewed to 2.14.4 Insurance claims
determine whether there is any indication that an asset Insurance claims are accounted for on the basis of
may be impaired. If any indication of such impairment
claims admitted / expected to be admitted and to
exists, the recoverable amount of such assets / CGU
the extent that there is no uncertainty in receiving the
is estimated and in case the carrying amount of claims.
these assets exceeds their recoverable amount, an
impairment loss is recognised in the Statement of Profit 2.15 Leases
and Loss. The recoverable amount is the higher of the The determination of whether an agreement is, or
net selling price and their value in use. Value in use is contains, a lease is based on the substance of the
arrived at by discounting the future cash flows to their agreement at the date of inception.
present value based on an appropriate discount factor. Finance Leases:
Assessment is also done at each Balance Sheet date as
to whether there is indication that an impairment loss Lease arrangements in which substantially all risks and
rewards of ownership of the under-lying assets are
150 Annual Report 2017-18