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u) Provisions and contingent liabilities:
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events, it is
probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated.
These are reviewed at each year end and reflect the best current estimate. Provisions are not recognised for future
operating losses.
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 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:
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 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.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows with
reference to market yields at the end of the reporting period on Government bonds that have terms approximating to the
terms of the related obligation.
The net interest cost is calculated by applying the discount rate at the beginning of the period to the net balance of
the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the
Statement of Profit and Loss.
Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised
in the period in which they occur directly in Other Comprehensive Income. They are included in retained earnings in the
Statement of changes in equity and in the Balance Sheet.
Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are
recognised immediately in profit or loss as past service cost.
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 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
Note 1 Significant Accounting Policies
(continued)
Notes
to the Financial Statements