Statutory Reports
Corporate Overview
69th Annual Report 2013-14
136
Financial Statements
(Standalone)
net outstanding amount is accrued over the period of contract. The Company provides an allowance for hire purchase and loan receivables that are
in arrears for more than 11 months, to the extent of an amount equivalent to the outstanding principal and amounts due but unpaid, considering
probable inherent loss including estimated realisation based on past performance trends. In respect of loan contracts that are in arrears for more
than 6 months but not more than 11 months, allowance is provided to the extent of 10% of the outstanding and amount due but unpaid.
(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 carried out at each Balance Sheet date using the
projected unit credit method.
(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 as at Balance Sheet date.
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 for employees of the Company. The benefits of the plan include pension
in certain case, payable up to 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 appropriate authority. 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 as at Balance Sheet date.
(iv)
Post-retirement medicare scheme
Under this scheme, employees of the Company receive 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 as at Balance Sheet date.
(v)
Provident fund
The eligible employees of the Company are entitled to receive benefits in respect of 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 made to the provident fund and pension fund
set up as irrevocable trust by the Company . 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.
(vi)
Compensated absences
The Company provides for the encashment of leave or leave with pay subject to certain rules. The employees are entitled to
accumulate leave subject to certain limits, for future encashment. The liability is provided based on the number of days of unutilised
leave at each balance sheet date on the basis of an independent actuarial valuation.
(m)
Investments
Long term investments are stated at cost less other than temporary diminution in value, if any. Current investments are stated at lower of cost and
fair value. Fair value of investments in mutual funds is determined on a portfolio basis.
NOTES FORMING PART OF FINANCIAL STATEMENTS
