Statutory Reports
Corporate Overview
69th Annual Report 2013-14
180
Financial Statements
(Consolidated)
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.
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 / monthly
moving weighted average basis, except for Jaguar and Land Rover which is on FIFO basis. 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)
Pension plans
One of the major subsidiary group, Jaguar Land Rover, operates several defined benefit pension plans, 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.
During the year ended and as at March 31, 2014,
R
1,343.67 crores (debit) (net of tax) and
R
7,568.38 crores (debit) (net of tax) respectively have been accounted,
to“Reserves and Surplus”, representing changes in actuarial valuation of pension plans of a subsidiary company in the UK, in accordance with IFRS principles
and as permitted by AS 21 in the consolidated financial statements.
A separate defined contribution plan is available to employees of a major subsidiary group, Jaguar Land Rover. Costs in respect of this plan are charged to the
Statement of Profit and Loss 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 subsidiaries make annual contributions to gratuity funds established as trusts or insurance companies. The Company and some of its subsidiaries account
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.
(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 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 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 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.
(v)
Severance indemnity
Tata Daewoo Commercial Vehicle Co. Ltd and Tata Daewoo Commercial Vehicle Sales and Distribution Co. Ltd, subsidiary companies incorporated in Korea
has an obligation towards severance indemnity, a defined benefit retirement plan, covering eligible employees. The plan provides for a lump sum payment
to all employees with more than one year of employment equivalent to 30 days’ salary payable for each completed year of service. In accordance with the
National Pension Law of Korea, a portion of the severance indemnities was transferred, in cash, to the National Pension Fund through March 1999, and such
amounts are presented as a deduction from accrued severance indemnities.
(vi) Post-retirement medicare scheme
Under this scheme, employees of the Company and some of its subsidiaries 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 Company and the said subsidiaries account for the
liability for post-retirement medical scheme based on an independent actuarial valuation.
NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS
