Basic HTML Version
178
Sixty-Seventh Annual Report 2011-2012
Gains or losses from the sale of loans are recognised in the period the sale occurs based on the relative fair value of the portion sold and the portion allocated
to retained interests, except for subsidiaries which are governed by prudential norms for income recognition issued by the Reserve Bank of India for Non
Banking Financial Companies (NBFC), where gains or losses on sale are accounted for as per these norms.
In case of a subsidiary, the estimated liability for servicing expenses in respect of assigned receivables is made based on the ratio between the cost incurred
for servicing current receivables and the collection made during the year.
(j)
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of rawmaterials and consumables are ascertained on a moving weighted average
/ monthlymovingweighted average basis, except for Jaguar and Land Rover which is on FIFObasis. Cost, including variable and fixed overheads, are allocated
to work-in-progress 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.
(k) Employee benefits
(i)
Pensionplans
One of the major subsidiary group, Jaguar Land Rover, operates several defined benefit pension plan, which are contracted out of the second state
pension scheme. The assets of the plan are held in separate trustee administered funds. The plans provide for monthly pension after retirement as per
salary drawn and service period as set out in rules of each fund.
Contributions to the plans by the subsidiary group take into consideration the results of actuarial valuations. The plans with a surplus position at the year
end have been limited to the maximum economic benefit available from unconditional rights to refund from the scheme or reduction in future
contributions. Where the subsidiary group is considered to have a contractual obligation to fund the pension plan above the accounting value of the
liabilities, an onerous obligation is recognised.
The actuarial losses (net) and movement in restriction of pension assets (net) of
`
128.12 crores (credit) (net of tax ) for the year ended March 31, 2012
and
`
3,870.58 crores (debit) (net of tax) as at March 31, 2012 of pension plans of Jaguar Cars Ltd and Land Rover,UK ,have been accounted in“Reserves
and surplus” in the consolidated financial statements in accordance with IFRS principles and permitted by AS21.
A separate defined contribution plan is available to employees of amajor subsidiary group, Jaguar Land Rover. Costs in respect of this plan are charged
to the Profit and Loss Statement as incurred.
(ii) Gratuity
The Company and some of its subsidiaries in India have 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 and the said subsidiariesmake annual contributions to gratuity funds established as trusts. Some subsidiaries have obtained insurance policies
with the Life Insurance Corporation of India. The Company and some of its subsidiaries account for the liability for gratuity benefits payable in future
based on an independent actuarial valuation.
(iii) Superannuation
The Company and some of its subsidiaries have 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 and the said
subsidiaries account for superannuation benefits payable in future under the plan based on an independent actuarial valuation.
With effect fromApril 1, 2003, this planwas 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 and some of its subsidiaries maintain separate irrevocable trusts for employees covered and entitled to benefits. The Company and its
subsidiaries contributes up to 15% of the eligible employees’ salary to the trust every year. Such contributions are recognised as an expense when
incurred. The Company and the said subsidiaries have no further obligation beyond this contribution.
(iv) Bhavishya KalyanYojana (BKY)
Bhavishya KalyanYojana 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.
NOTESFORMINGPARTOFCONSOLIDATEDFINANCIALSTATEMENTS