Atul Ltd Annual Report 2016-17

Atul Ltd | Annual Report 2016-17

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 Group, 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 by

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 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 the Statement of Profit and Loss as past service cost.

z) Research and Development expenditure:

Research and Development expenditure is charged to revenue under the natural heads of account in the year in which

it is incurred. Research and Development expenditure on property, plant and equipment is treated in the same way as

expenditure on other property, plant and equipment.

aa) Earnings per share:

Basic earnings per share (EPS) is calculated by dividing the profit attributable to owners of the Company by the weighted

average number of Equity shares outstanding during the financial year, adjusted for bonus elements in Equity shares issued

during the year. For the purpose of calculating diluted EPS, the net profit or loss for the period attributable to Equity

Shareholders and the weighted average number of additional Equity shares that would have been outstanding assuming

the conversion of all dilutive potential Equity shares.

ab) Contributed equity:

Equity shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown

in equity as a deduction, net of tax, from the proceeds.

Critical estimates and judgements

Preparation of the Consolidated Financial Statements requires use of accounting estimates which, by definition, will seldom

equal the actual results. This Note provides an overview of the areas that involved a higher degree of judgement or complexity,

and of items which are more likely to be materially adjusted due to estimates and assumptions turning out to be different than

those originally assessed. Detailed information about each of these estimates and judgements is included in relevant notes

together with information about the basis of calculation for each affected line item in the Consolidated Financial Statements.

The areas involving critical estimates or judgements are:

Estimation of useful life of tangible assets: Note 2

ii) Estimation of defined benefit obligation: Note 29.6

iii) Estimated Goodwill impairment: Note 4(a)

iv) Consolidation decisions and classification of joint arrangements: Note 29.16

Estimates and judgements are continually evaluated. They are based on historical experience and other factors, including

expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the

circumstances.

Note 1 Significant Accounting Policies

(continued)

Notes

to the Consolidated Financial Statements