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134
Sixty-Seventh Annual Report 2011-2012
(k)
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of raw materials and consumables are ascertained on a
moving weighted average / monthly moving weighted average basis. Cost, including variable and fixed overheads, are allocated to
work-in-progress, stock-in-trade and finished goods determined on full absorption cost basis. Net realisable value is estimated selling
price in the ordinary course of business less estimated cost of completion and selling expenses.
(l)
Employee benefits
(i)
Gratuity
The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides
for a lump sum payment to vested employees at retirement, death while in employment or on termination of employment of
an amount equivalent to 15 to 30 days salary payable for each completed year of service. Vesting occurs upon completion of
five years of service. The Company makes annual contributions to gratuity fund established as trust. The Company accounts for
the liability for gratuity benefits payable in future based on an independent actuarial valuation.
(ii)
Superannuation
The Company has two superannuation plans, a defined benefit plan and a defined contribution plan. An eligible employee on
April 1, 1996 could elect to be a member of either plan.
Employees who are members of the defined benefit superannuation plan are entitled to benefits depending on the years of
service and salary drawn. The monthly pension benefits after retirement range from 0.75% to 2% of the annual basic salary for
each year of service. The Company accounts for the liability for superannuation benefits payable in future under the plan based
on an independent actuarial valuation.
With effect from April 1, 2003, this plan was amended and benefits earned by covered employees have been protected as at
March 31, 2003. Employees covered by this plan are prospectively entitled to benefits computed on a basis that ensures that the
annual cost of providing the pension benefits would not exceed 15% of salary.
The Company maintains a separate irrevocable trust for employees covered and entitled to benefits. The Company contributes
up to 15% of the eligible employees’ salary to the trust every year. The Company recognizes such contributions as an expense
when incurred. The Company has no further obligation beyond this contribution.
(iii)
Bhavishya Kalyan Yojana (BKY)
Bhavishya Kalyan Yojana is an unfunded defined benefit plan. The benefits of the plan include pension in certain case, payable
upto the date of normal superannuation had the employee been in service, to an eligible employee at the time of death or
permanent disablement, while in service, either as a result of an injury or as certified by the Company’s Medical Board. The
monthly payment to dependents of the deceased / disabled employee under the plan equals 50% of the salary drawn at the
time of death or accident or a specified amount, whichever is higher. The Company accounts for the liability for BKY benefits
payable in future based on an independent actuarial valuation.
(iv)
Post-retirement medicare scheme
Under this scheme, employees get medical benefits subject to certain limits of amount, periods after retirement and types of
benefits, depending on their grade and location at the time of retirement. Employees separated from the Company as part of
Early Separation Scheme, on medical grounds or due to permanent disablement are also covered under the scheme. The
liability for post-retirement medical scheme is based on an independent actuarial valuation.
(v)
Provident fund
The eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan,
in which both employees and the Company make monthly contributions at a specified percentage of the covered employees’
salary (currently 12% of employees’ salary). The contributions as specified under the law are paid to the provident fund and
pension fund set up as irrevocable trust by the Company or to respective Regional Provident Fund Commissioner and the
Central Provident Fund under the State Pension scheme. The Company is generally liable for annual contributions and any
shortfall in the fund assets based on the Government specified minimum rates of return or pension and recognises such
contributions and shortfall, if any, as an expense in the year incurred.
NOTES FORMING PART OF FINANCIAL STATEMENTS