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Atul Ltd | Annual Report 2011-12
b) Defined benefit plan:
Gratuity:
Gratuity liability is a defined benefit obligation and is provided for on the basis of an actuarial valuation
on projected unit credit method made at the end of each financial year. The liability so provided is
represented by creation of separate funds and is used to meet the liability as and when it accrues for
payment in future. Actuarial gains | losses are immediately taken to Statement of Profit and Loss.
Long-term leave encashment:
Long-term leave encashment is provided for on the basis of an actuarial valuation carried out at the
end of the year on the project unit credit method. Actuarial gains | losses are immediately taken to
Statement of Profit and Loss.
Provident fund:
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 contribution by the employer and employee together with the interest
accumulated thereon are payable to employees at the time of their separation from the Company or
retiremenet, whichever is earlier. The benefits vest immediately on rendering of the services by the
employee.
c) Short-term leave encashment:
Short-term leave encashment is provided at undiscounted amount during the accounting period
based on service rendered by employees.
d) Voluntary retirement scheme:
Compensation payable under the voluntary retirement scheme is being charged to Statement of Profit
and Loss in the year of settlement.
3.14 Taxation:
a) Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax
is made on the basis of the assessable income at the tax rate applicable to the relevant assessment
year.
b) MAT credit is recognised as an asset only when and to the extent there is convincing evidence that
the Company will pay normal income tax within the specified period.
c) Deferred tax asset and deferred tax liability are calculated by applying tax rate and tax laws that have
been enacted or substantively enacted by the Balance Sheet date. Deferred tax assets on account of
timing differences are recognised, only to the extent there is a reasonable certainty of its realisation.
Deferred tax assets are reviewed at each Balance Sheet date to reassure realisation.
3.15 Government Grants:
a) Government grants are recognised when there is reasonable assurance that the same will be received.
b) Revenue grants for expenses incurred are reduced from the respective expenses.
c) Capital grants relating to specific fixed assets are reduced from the cost of the respective fixed assets.
4
Significant Accounting Policies and Notes to these Consolidated Financial Statement are intended to serve
as a means of informative disclosure and a guide to better understanding the consolidated positions of the
Companies. Recognising the purpose, the Company has disclosed only such Policies and Notes from the
individual financial statements, which fairly present the required disclosures.
Notes
to Consolidated financial statements
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(contd)