Tata Motors AR

F-17

Post-retirement medicare scheme

Under this unfunded scheme, employees of Tata Motors Limited receive medical benefits subject to certain limits on amounts of benefits, periods after

retirement and types of benefits, depending on their grade and location at the time of retirement. Employees separated from the Company as part of an

Early Separation Scheme, on medical grounds or due to permanent disablement are also covered under the scheme. Tata Motors Limited account for the

liability for post-retirement medical scheme based on an actuarial valuation.

vi)

Remeasurement gains and losses

Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling and the return on assets (excluding interest) relating to retirement

benefit plans, are recognized directly in other comprehensive income in the period in which they arise. Remeasurement recorded in other comprehensive

income is not reclassified to Statement of Profit and Loss.

Actuarial gains and losses relating to long-term employee benefits are recognized in the Statement of Profit and Loss in the period in which they arise.

vii)

Measurement date

The measurement date of retirement plans is March 31.

(q)

Dividends

Any dividend declared or paid by Tata Motors Limited for any financial year is based on the profits available for distribution as reported in the statutory

financial statements of Tata Motors Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in India, or Indian GAAP or

Ind AS. Indian law permits the declaration and payment of dividend out of profits for the year or previous financial year(s) as stated in the statutory financial

statements of Tata Motors Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in India, or Indian GAAP or Ind AS

after providing for depreciation in accordance with the provisions of Schedule II to the Companies Act. However, in the absence or inadequacy of the said

profits, it may declare dividend out of free reserves, subject to certain conditions as prescribed under the Companies (Declaration and payment of Dividend)

Rules, 2014. Accordingly, in certain years the net income reported in these financial statements may not be fully distributable. The amount available for

distribution is

Nil

as at March 31, 2017 (

198.19 crores as at March 31, 2016).

(r)

Segments

The Company is engaged mainly in the business of automobile products consisting of all types of commercial and passenger vehicles. These in the context

of Ind AS 108 - operating segments reporting are considered to constitute one reportable segment.

(s)

Investments in Subsidiaries, Joint Ventures and Associates

Investments in Subsidiaries, Joint Ventures and Associates are measured at cost as per Ind AS 27 – Separate Financial Statements.

(t)

Financial instruments

Classification, initial recognition and measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity. Financial

assets other than equity instruments are classified into categories: financial assets at fair value through profit or loss and at amortised cost. Financial assets

that are equity instruments are classified as fair value through profit or loss or fair value through other comprehensive income. Financial liabilities are

classified into financial liabilities at fair value through profit or loss and other financial liabilities.

Financial instruments are recognized on the balance sheet when the Company becomes a party to the contractual provisions of the instrument.

Initially, a financial instrument is recognized at its fair value. Transaction costs directly attributable to the acquisition or issue of financial instruments are

recognized in determining the carrying amount, if it is not classified as at fair value through profit or loss. Subsequently, financial instruments are measured

according to the category in which they are classified.

Financial assets at amortised cost:

Financial assets having contractual terms that give rise on specified dates to cash flows that are solely payments of

principal and interest on the principal outstanding and that are held within a business model whose objective is to hold such assets in order to collect

such contractual cash flows are classified in this category. Subsequently, these are measured at amortized cost using the effective interest method less any

impairment losses.

Equity investments at fair value through other comprehensive income:

These include financial assets that are equity instruments and are irrevocably

designated as such upon initial recognition. Subsequently, these are measured at fair value and changes therein are recognized directly in other

comprehensive income, net of applicable income taxes.

Dividends from these equity investments are recognized in the Statement of Profit and Loss when the right to receive payment has been established.

When the equity investment is derecognized, the cumulative gain or loss in equity is transferred to retained earnings.

Financial assets at fair value through profit or loss:

Financial assets are measured at fair value through profit or loss unless it is measured at amortised

cost or at fair value through other comprehensive income on initial recognition. The transaction costs directly attributable to the acquisition of financial

assets at fair value through profit or loss are immediately recognised in profit or loss.

Equity instruments:

An equity instrument is any contract that evidences residual interests in the assets of the Company after deducting all of its liabilities.

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

NOTES FORMING PART OF FINANCIAL STATEMENTS