Page 202 - Tata_Chemicals_yearly-reports-2017-18

2.3.4 Employee benefit obligations Interests in joint venture are accounted for using the
equity method of accounting (see (III) below).
Employee benefit obligations are determined using
actuarial valuations. An actuarial valuation involves The CFS have been prepared on the following
making various assumptions that may differ from basis:
actual developments. These include the estimation of
I The financial statements of the Company and its
the appropriate discount rate, future salary increases
subsidiary companies have been consolidated on
and mortality rates. Due to the complexities involved in
a line by- line basis by adding together of like items
the valuation and its long-term nature, the employee
of assets, liabilities, income and expenses, after
benefit obligation is highly sensitive to changes in
fully eliminating intra-group balances and intra-
these assumptions. All assumptions are reviewed at
group transactions and resulting unrealised profit
each reporting date.
or losses, unless cost cannot be recovered, as per
2.3.5 Provisions and contingencies the applicable Accounting Standard. Accounting
policies of the respective subsidiaries are aligned
From time to time, the Group is subject to legal
wherever necessary, so as to ensure consistency
proceedings, the ultimate outcome of each being
with the accounting policies that are adopted by
subject to uncertainties inherent in litigation. A
the Group under Ind AS.
provision for litigation is made when it is considered
probable that a payment will be made and the amount II The results of subsidiaries acquired or disposed of
can be reasonably estimated. Significant judgment during the year are included in the CFS from the
is required when evaluating the provision including, effective date of acquisition and up to the effective
the probability of an unfavorable outcome and the date of disposal, as appropriate.
ability to make a reasonable estimate of the amount
III The CFS include the share of profit / loss of the joint
of potential loss. Litigation provisions are reviewed
ventures which are accounted as per the ‘equity
at each accounting period and revisions made for
method’.
the changes in facts and circumstances. Contingent
liabilities are disclosed in the notes forming part of Under the equity method of accounting, the
the consolidated financial statements. Contingent investments are initially recognised at cost and
assets are not disclosed in the consolidated financial adjusted thereafter to recognise the Group’s share
statements unless an inflow of economic benefits is of the post-acquisition profits or losses of the
probable. investee in profit or loss, and the Group’s share of
movements in OCI of the investee in OCI. Dividends
2.4 Functional and presentation currency
received or receivable from joint ventures are
Items included in the financial statements of each of recognised as a reduction in the carrying amount
the Group’s entities are measured using the currency of the investment.
of the primary economic environment in which the
When the Group’s share of losses in an equity
entity operates (the ‘Functional Currency’). The CFS are
accounted investment equals or exceeds its
presented in Indian Rupees (`), which is the Group’s
interest in the entity, the Group does not recognise
presentation currency.
further losses, unless it has incurred obligations or
2.5 Basis of Consolidation made payments on behalf of the other entity.
The CFS comprise the financial statements of the IV The CFS are presented, to the extent applicable,
Company, its subsidiaries and the Group’s interest in in accordance with the requirements of Schedule
joint ventures as at the reporting date. III of the 2013 Act as applicable to the Company’s
separate financial statements.
Subsidiaries
V Non-controlling interests (‘NCI’) in the net assets
Subsidiaries include all the entities over which the
of the subsidiaries that are consolidated consists
Group has control. The Group controls an entity when
of the amount of equity attributable to non-
the Group is exposed to, or has rights to, variable
controlling shareholders at the date of acquisition.
returns through its involvement in the entity and has
the ability to affect those returns through its power to Profit or loss and each component of OCI are
direct the relevant activities of the entity. Subsidiaries attributed to the equity holders of the parent and
are consolidated from the date control commences to the NCI, even if this results in the NCI having a
until the date control ceases. deficit balance.
Joint venture 2.6 Foreign currency translation
A joint venture is a joint arrangement whereby the (i) Foreign currency transactions and balances
parties that have joint control of the arrangement
On initial recognition, all foreign currency
have rights to the net assets of the arrangement.
transactions are recorded at exchange rates
200 Annual Report 2017-18