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Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined
by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect
to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of best estimate of the Management of the expenditure required to settle the
present obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase
in the provision due to the passage of time is recognised as interest expense.
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 present obligation that arises from past events where it is either not probable
that an outflow of resources will be required to settle the obligation or a reliable estimate of the amount cannot
be made.
v) Employee benefits:
Short-term employee benefits:
All employee benefits payable within 12 months of service such as salaries, wages, bonus, ex-gratia, medical benefits
etc. are recognised in the year in which the employees render the related service and are presented as current
employee benefit obligations within the Balance Sheet. Termination benefits are recognised as an expense as and when
incurred.
Short-term leave encashment is provided at undiscounted amount during the accounting period based on service rendered
by employees. Compensation payable under Voluntary Retirement Scheme is being charged to Statement of Profit and Loss
in the year of settlement.
Other long-term employee benefits:
The liabilities for earned leave and sick leave are not expected to be settled wholly within 12 months after the end
of the period in which the employees render the related service. They are therefore measured as the present value of
expected future payments to be made in respect of services provided by employees up to the end of the reporting period
using the projected unit credit method. The benefits are discounted using the market yields at the end of the reporting
period that have terms approximating to the terms of the related obligation. Remeasurements as a result of experience
adjustments and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the Balance Sheet if the entity does not have an unconditional right
to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected
to occur.
Defined contribution plan:
Contributions to defined contribution schemes such as contribution to Provident Fund, Superannuation Fund, Employees’
State Insurance Corporation, National Pension Scheme and Labours Welfare Fund are charged as an expense to the
Statement of Profit and Loss based on the amount of contribution required to be made as and when services are rendered
by the employees. The above benefits are classified as Defined Contribution Schemes as the Company has no further
defined obligations beyond the monthly contributions.
Provident Fund for certain eligible employees is managed by the Company through the ‘Atul Products Ltd - Ankleshwar
Division Employees Provident Fund Trust’ in line with Provident Fund and Miscellaneous Provisions Act, 1952. The plan
guarantees interest at the rate notified by the Provident Fund authorities. The contributions by the employer and employees
together with the interest accumulated thereon are payable to employees at the time of their retirement or separation from
the Company, whichever is earlier. The benefits vest immediately on rendering of the services by the employee. Any shortfall
in the value of assets over the defined benefit obligation is recognised as a liability, with a corresponding charge to the
Statement of Profit and Loss.
Defined benefit plan:
Gratuity:
Gratuity liability is a defined benefit obligation and is computed on the basis of an actuarial valuation by an actuary
appointed for the purpose as per projected unit credit method at the end of each financial year. The liability or asset
recognised in the Balance Sheet in respect of defined benefit pension and gratuity plans is the present value of the defined
benefit obligation at the end of the reporting period less the fair value of plan assets. The liability so provided is paid to a
Trust administered by the Company, which in turn invests in eligible securities to meet the liability as and when it accrues
for payment in future. Any shortfall in the value of assets over the defined benefit obligation is recognised as a liability with
a corresponding charge to the Statement of Profit and Loss.
Note 1 Significant Accounting Policies
(continued)
Notes
to the Financial Statements