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indication of such impairment exists, the recoverable In respect of Urea, sales are recognised based on
amount of such assets / CGU is estimated and in case concession rates as notified under the New Pricing
the carrying amount of these assets exceeds their Scheme. Equated freight claims and escalation claims
recoverable amount, an impairment loss is recognised for Urea sales are estimated by Management based
in the Consolidated Statement of Profit and Loss. The on the norms prescribed or notified under the said
recoverable amount is the higher of the net selling Scheme. In case of Complex Fertilisers, sales include
price and their value in use. Value in use is arrived at price concessions, as notified under the Nutrient Based
by discounting the future cash flows to their present Subsidy policy, or as estimated by the Management
value based on an appropriate discount factor. based on the norms prescribed.
Assessment is also done at each Balance Sheet date as
2.18.2 Interest income
to whether there is indication that an impairment loss
recognised for an asset in prior accounting periods no For all debt instruments measured either at amortised
longer exists or may have decreased, consequent to cost or at FVTOCI, interest income is recorded using
which such reversal of impairment loss is recognised the EIR Method.
in the Consolidated Statement of Profit and Loss. Integrated Report
2.18.3 Dividend income
Goodwill
Dividend income is accounted for when Group’s right
Goodwill is tested for impairment, at least annually to receive the income is established.
and whenever circumstances indicate that it may
2.18.4 Insurance claims
be impaired. For the purpose of impairment testing,
the Goodwill is allocated to a CGU or group of CGUs, Insurance claims are accounted for on the basis of
which are expected to benefit from the synergies claims admitted / expected to be admitted and to
arising from the business combination in which the the extent that there is no uncertainty in receiving the
said Goodwill arose. claims.
If the estimated recoverable amount of the CGU 2.19 Leases
including the Goodwill is less than its carrying amount,
the impairment loss is allocated first to reduce the The determination of whether an agreement is,
carrying amount of any goodwill allocated to the CGU or contains, a lease based on the substance of the
and then to the other assets of the CGU on a pro-rata agreement at the date of inception. Statutory Reports
basis of the carrying amount of each asset in the unit. Finance leases:
2.17 Inventories Lease arrangements in which substantially all risks and
Inventories are valued at lower of cost (on weighted rewards of ownership of the under-lying assets are
average basis) and net realisable value after providing transferred to the Group, are classified as finance lease.
for obsolescence and other losses, where considered Assets held under finance leases are initially recognised
necessary. Cost includes all charges in bringing at their fair value at the inception of the lease or, if lower,
the goods to their present location and condition, at the present value of the minimum lease payments.
including other levies, transit insurance and receiving The corresponding liability to the lessor is included
charges. Work-in-progress and finished goods include in the Consolidated Balance Sheet as a finance lease
appropriate proportion of overheads and, where obligation. Lease payments are apportioned between
applicable, taxes and duties. Net realisable value is finance expenses and reduction of the lease obligation
the estimated selling price in the ordinary course of so as to achieve a constant rate of interest on the
business, less the estimated costs of completion and remaining balance of the liability.
the estimated costs necessary to make the sale. Financial Statements
Operating leases:
2.18 Revenue recognition
The leases which are not classified as finance lease are
2.18.1 Sale of goods operating leases.
Revenue from the sale of goods is recognised at the Lease arrangements where the risks and rewards of
fair value of the consideration received or receivable, ownership of an asset substantially vest with the lessor
net of returns, including estimated returns where are recognised as operating leases. Lease rentals under
applicable, and trade discounts, rebates and related operating leases are recognised in the Consolidated
taxes, when all significant risks and rewards of Statement of Profit and Loss on a straight-line basis
ownership of the goods have been passed to the over the lease term unless the payments are structured
buyer, either on despatch or delivery of goods, based to increase in line with expected general inflation to
on the contracts. compensate for the lessor’s expected inflationary cost
increases.

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