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Atul Ltd | Annual Report 2017-18
Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed
below:
i)
Asset volatility
The plan liabilities are calculated using a discount rate set with reference to bond yields, if plan assets underperform
this yield, this will create a deficit. Most of the plan asset investments are in fixed income securities with high grades
and in Government securities. These are subject to interest rate risk. The Company has a Risk Management strategy
where the aggregate amount of risk exposure on a portfolio level is maintained at a fixed range. Any deviations
from the range are corrected by rebalancing the portfolio. The Company intends to maintain the above investment
mix in the continuing years.
ii)
Changes in bond yields
A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value
of other bond holdings.
The Company actively monitors how the duration and the expected yield of the investments are matching the
expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes
used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single
investment will not have a material impact on the overall level of assets.
A large portion of assets consists insurance funds, although the Company also invests in corporate
bonds and special deposit schemes. The plan asset mix is in compliance with the requirements of the respective
local regulations.
Expected contributions to post-employment benefit plans for the year ending March 31, 2019 are
`
2.53 cr.
The weighted average duration of the defined benefit obligation is 6 years (2016-17: 5 years). The expected
maturity analysis of gratuity is as follows:
(
`
cr)
Particulars
Less than a
year
Between
1 - 2 years
Between
2 - 5 years
Over
5 years
Total
Defined benefit obligation (gratuity)
As at March 31, 2018
9.65
6.25
19.51
44.45
79.86
As at March 31, 2017
7.45
5.75
20.50
51.22
84.92
Provident Fund:
The Company has established an Employee Provident Fund Trust administered by the Company to which both the
employee and the employer make monthly contribution equal to 12% of basic salary of employee respectively. The
Company's contribution to the Provident Fund for all employees is charged to the Statement of Profit and Loss. In case
of any liability arising due to short fall between the return from its investments and the administered interest rate, the
same is required to be provided for by the Company. The actuary has provided an actuarial valuation and indicated that
the interest shortfall liability is
`
Nil. The Company has contributed the following amounts towards Provident Fund during
the respective period ended:
(
`
cr)
Expenses recognised for the year ended on March 31, 2018
(included in Note 24)
As at
March 31, 2018
As at
March 31, 2017
i)
Defined benefit obligations
9.48
9.14
ii)
Funds
9.81
9.16
iii)
Net assets | (liabilities)
0.33
0.03
iv)
Charge to the Statement of Profit and Loss during the year
0.20
0.20
Notes
to the Financial Statements
Note 27.6 Employee benefit obligations
(continued)