171 / 220
169
y) 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:
Provident Fund for certain eligible employees is managed by the Group 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
Group, 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
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 Group has no further defined
obligations beyond the monthly contributions.
Short-term employee benefits:
All employee benefits payable within twelve 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. Termination benefits are recognised as an expense as and when incurred.
Short-term employee benefits are provided at an undiscounted amount during the accounting period based on service
rendered by employees.
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 Company 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.
Note 1 Significant Accounting Policies
(continued)
Notes
to the Consolidated Financial Statements