NOTE 1: CORPORATE INFORMATION Tata Chemicals Limited (''the Company'') is a public limited company domiciled in India. Its shares are listed on two stock exchanges in India - the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Company is engaged in diversified businesses dealing in Inorganic Chemicals, Fertilisers, Other Agri inputs, Consumer and Nutritional solutions business. The Company has a global brsence with key subsidiaries in United Kingdom, Kenya and United States of America that are engaged in the manufacture and sale of soda ash, industrial salt and related products. NOTE 2: SIGNIFICANT ACCOUNTING POLICIES : (a) Basis of Accounting and Preparation of the Financial Statements The financial statements have been brpared in accordance with the Generally Accepted Accounting Principles in India ("Indian GAAP"), the Accounting Standards ("AS") as specified under section 133 of the Companies Act, 2013 ("the 2013 Act") read with Rule 7 of the Companies' (Accounts) Rules 2014. The financial statements are brpared on the basis of going concern under the historical cost convention using the accrual method of accounting. The accounting policies adopted in the brparation of financial statements are consistent with those of the brvious year. All assets and liabilities have been classified as current or non-current as per the Company's normal operating cycle and other criteria set out in Schedule III to the 2013 Act. (b) Use of Estimates The brparation of the financial statements, in conformity with Indian GAAP, requires the Management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent liabilities. Management believes that the estimates used in the brparation of the financial statements are prudent and reasonable. Actual results could differ from these estimates. Any revision to accounting estimates is recognised prospectively in the current and future periods. (c) Tangible Fixed Assets Tangible Fixed Assets are carried at cost net of taxes / duties, credits availed, if any, less accumulated debrciation and accumulated impairment losses, if any. The cost of fixed assets includes interest on borrowings (borrowing cost) directly attributable to acquisition, construction or production of qualifying assets. Borrowing cost and other incidental expenses are added to the cost of those assets until such time as the assets are substantially ready for their intended use which generally coincides with the commissioning date of those assets. Machinery spares whose use is expected to be irregular are capitalised and debrciated over the useful life of the principal item of asset. Fixed Assets acquired and put to use for projects are capitalised and debrciation thereon is included in the project cost till the project is ready for commissioning. Fixed Assets held for sale are stated at lower of their net book value and net realisable value and are disclosed separately in the financial statements. Any expected loss is recognised immediately in the Statement of Profit and Loss. Losses arising from the retirement of, and gains or losses arising from disposal of fixed assets are recognised in the Statement of Profit and Loss. (d) Intangible Assets Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. The estimated useful life is reviewed annually by the management. (e) Capital Work-in-progress and Intangible Assets under Development Projects under commissioning and other capital work-in-progress/intangible assets under development are carried at cost, comprising direct cost, related incidental expenses and attributable borrowing cost. (f) Debrciation and Amortisation (i) Debrciation has been provided using the straight line method ("SLM") over the useful lives as estimated by Management. Schedule II to the Companies Act 2013 ("Schedule") brscribes the useful lives for various class of assets. For certain class of assets, based on technical evaluation and assessment, management believes that, the useful lives adopted by it reflects the periods over which these assets are expected to be used. Accordingly for those assets, the useful lives estimated by the management are different from those brscribed in the Schedule. The management's estimates of the useful lives for various class of fixed assets are as given below: (g) Impairment of Fixed Assets The carrying values of assets / cash generating units at each Balance Sheet date are reviewed to determine whether there is any indication that an asset may be impaired. If any indication of such impairment exists, the recoverable amount of such assets / cash generating unit is estimated and in case the carrying amount of these assets exceeds their recoverable amount, an impairment is recognised. The recoverable amount is the higher of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their brsent value based on an appropriate discount factor. Assessment is also done at each Balance Sheet date as to whether there is indication that an impairment loss recognised for an asset in prior accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss. (h) Investments Long term investments are carried individually at cost. Provision for diminution is made to recognise a decline, other than temporary, in the value of such investments. Current investments are carried individually, at lower of cost and fair value. Cost of investments includes acquisition charges such as brokerage, fees and duties. Investments that are readily realisable and are intended to be held for not more than one year from the date, on which such investments are made, are classified as current investments. All other investments are classified as long term investments. On disposal of investment, the difference between its carrying amount and net disposal proceeds is charged or credited to the Statement of Profit and Loss. (i) Inventories Inventories are valued at lower of cost (on weighted average basis) and net realisable value after providing for obsolescence and other losses, where considered necessary. Cost includes all charges in bringing the goods to their brsent location and condition, including octroi and other levies, transit insurance and receiving charges. Work-in-progress and finished goods include appropriate proportion of overheads and, where applicable, excise duty. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. (j) Revenue Recognition Sale of Goods Revenue from Sale of Goods is recognised, net of returns including estimated returns where applicable, and trade discounts, rebates, sales tax and value added tax, when all significant risks and rewards of ownership of the goods have been passed to the buyer, usually on delivery of goods. In respect of Urea, sales are recognised based on concession rates as notified under the New Pricing Scheme. Equated freight claims and escalation claims for Urea sales are estimated by the Management based on the norms brscribed or notified under the said Scheme. In case of complex fertilisers, sales include price concession, as notified under the Nutrient Based Subsidy policy, or as estimated by the Management based on the norms brscribed. (k) Other Income Interest income is recognised on a time proportion basis taking into account the amount outstanding and the rate applicable. Dividend income is accounted for when the right to receive the dividend is established. (l) Insurance Claims Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims. (m) Research and Development Expenses Research expenditure is charged to the Statement of Profit and Loss. Development costs of products are also charged to the Statement of Profit and Loss unless a product's technical feasibility has been established, in which case such expenditure is capitalised. Expenditure on tangible fixed assets used in research and development is capitalised. (n) Leases Lease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessor are recognised as operating leases. Lease rentals under operating leases are recognised in the Statement of Profit and Loss on a straight-line basis. (o) Employee Benefits Employee benefits consist of provident fund, superannuation fund, gratuity fund, compensated absences, long service awards, post retirement medical benefits, directors' retirement obligations and family benefit scheme. (i) Post-employment benefit plans Payments to defined contribution retirement benefit scheme for eligible employees in the form of superannuation fund are charged as an expense as they fall due. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made. For defined benefit schemes in the form of gratuity fund, post retirement medical benefits, directors' pension liabilities and family benefit scheme, the cost of providing benefits is actuarially determined using the projected unit credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss for the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested, otherwise it is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet rebrsents the brsent value of the defined benefit obligation as adjusted for unrecognised past service cost and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost plus the brsent value of available refunds and reductions in future contributions to the schemes. The Company makes contribution towards provident fund, in substance a defined contribution retirement benefit plan. The provident fund is administered by the Trustees of the Tata Chemicals Limited Provident Fund. The rules of the Company's provident fund administered by the Trust, require that if the Board of Trustees are unable to pay interest at the rate declared by the Employees' Provident Fund by the Government under para 60 of the Employees' Provident Fund Scheme, 1952 for the reason that the return on investment is less or for any other reason, then the deficiency shall be made good by the Company. Having regard to the assets of the fund and the return on the investments, the Company does not expect any deficiency as at the year end (ii) Short-term employee benefits The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognised during the period when the employees render the service. These benefits include compensated absences such as paid annual leave and performance incentives which are expected to occur within twelve months after the end of the period in which the employee renders the related service The cost of compensated absences is accounted as under : (a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and (b) in case of non-accumulating compensated absences, when the absences occur. (iii) Long-term employee benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognised as a liability at the brsent value of the defined benefit obligation at the Balance Sheet date. Long Service Awards are recognised as a liability at the brsent value of the defined benefit obligation at the Balance Sheet date. (p) Employee Separation Compensation (i) Compensation payable to employees who have opted for retirement under "Early Separation Scheme" is amortised over the period for which benefit is expected. The liability has been calculated on the basis of net brsent value of the future payments of pension. (ii) Compensation paid / payable to employees who have opted for retirement under a Voluntary Retirement Scheme including ex-gratia is charged to Statement of Profit and Loss in the year of separation. (q) Borrowing Costs Borrowing costs are interest and ancillary costs incurred in connection with the arrangement of borrowings. General and specific borrowing costs attributable to acquisition and construction of fixed assets which necessarily take a substantial period of time to get ready for their intended use is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted. Fees and other transaction costs incurred on origination of the loan are amortised over the tenure of the loan on a straight-line basis. All other borrowing costs are recognised in the Statement of Profit and Loss in the period in which they are incurred. (r) Foreign Currency Transactions and Translation (other than Derivative contracts) On initial recognition, all foreign currency transactions are converted and recorded at exchange rates brvailing on the date of the transaction. As at the reporting date, foreign currency monetary assets and liabilities are translated at the exchange rate brvailing on the Balance Sheet date and the exchange gains or losses are recognised in the Statement of Profit and Loss. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction. Exchange difference arising on a monetary item that, in substance, forms part of the Company's net investments in a non-integral foreign operation are accumulated in a Foreign Currency Translation Reserve until disposal / recovery of the net investment. (s) Derivative Contracts The Company enters into derivative contracts in the nature of full currency swaps, currency options, forward contracts with an intention to hedge firm commitments and highly probable transactions. Premium / discount on forward exchange contracts, related to monetary items which are not intended for trading or speculation purposes, are amortised over the period of the contract. In case of certain, derivative contracts with critical terms matching that of the underlying hedged item (foreign currency loan) are accounted as per the policy stated for foreign currency transaction and translation resulting in the foreign currency loan being treated as Indian rupee loan. All other contracts are marked-to-market and gains/losses are recognised in the Statement of Profit and Loss. Government Grants Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grant/subsidy will be received. Government grants whose primary condition is that the company should purchase, construct or otherwise acquire capital assets are brsented by deducting them from the carrying value of the assets. The grant is recognised over the life of the debrciable assets by way of a reduced debrciation charge. Other government grants and subsidies are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate on a systematic basis. (u) Segment Reporting The Company identifies primary segments based on the dominant source and nature of risks and returns and the internal organisation. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the Executive Management in deciding how to allocate resources and in assessing performance. The accounting policies adopted for segment reporting are in conformity with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities". (v) Taxes on Income Tax expense for the period, comprising current tax and deferred tax, are included in the determination of the net profit or loss for the period. Current tax is measured at the amount of tax expected to be payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act,1961. Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets in respect of unabsorbed debrciation and carry forward of losses are recognised if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Other deferred tax assets are recognised if there is reasonable certainty that there will be sufficient future taxable income to realise such assets. Deferred tax assets recognised are carried forward only to the extent that there is a reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities rebrsenting current tax and where the deferred tax assets and the deferred tax liabilities relate to taxes on income levied by the same governing taxation laws. (w) Provisions, Contingent Liabilities and Contingent Assets A provision is recognised when the Company has a brsent obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their brsent value and are determined based on best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company or a brsent obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made. A contingent asset is neither recognised nor disclosed in the financial statements. Cash Flow Statement Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information. (y) Cash and Cash Equivalents Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid time deposits that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value (xx) The figures in light print are for brvious year. (xxi) Asterisk () denotes figures below Rs. 50,000. (xxii) Previous year's figures have been regrouped / reclassified wherever necessary to make them comparable with the current year's figures. Cyrus P. Mistry Chairman Dr. Y. S. P. Thor Director Nusli N. Wadia Director Director John Mulhall Chief Financial Officer Nasser Munjee Director Bhaskar Bhat Director Rajiv Chandan General Counsel & Company Secretary Eknath A. Kshirsagar Director R. Mukundan Managing Director Place : Mumbai, date : 26th May, 2016 |