Tata Motors AR

Statutory Reports

Corporate Overview

Financial Statements

F-86

(Consolidated)

72nd Annual Report 2016-17

iii) Superannuation

Tata Motors Limited and some of its subsidiaries in India 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. Tata Motors Limited

and such subsidiaries account for superannuation benefits payable in future under the plan based on an 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.

During the year ended March 31, 2015, the employees covered by this plan were given a one-time option to exit from the plan prospectively.

Furthermore, the employees who opted for exit were given one- time option to withdraw accumulated balances from the superannuation plan.

Separate irrevocable trusts are maintained for employees covered and entitled to benefits. Tata Motors Limited and its subsidiaries contribute up to

15% or

150,000, whichever is lower, of the eligible employees’salary to the trust every year. Such contributions are recognized as an expense when

incurred. Tata Motors Limited and such subsidiaries have no further obligation beyond this contribution.

iv) Bhavishya Kalyan Yojana (BKY)

Bhavishya Kalyan Yojana is an unfunded defined benefit plan for employees of Tata Motors Limited and some of its subsidiaries. The benefits of the

plan include pension in certain cases, 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 greater. Tata Motors Limited and these subsidiaries account for the liability for BKY benefits payable in the future

based on an actuarial valuation.

v) Provident fund and family pension

In accordance with Indian law, eligible employees of Tata Motors Limited and some of its subsidiaries 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 an irrevocable trust by Tata Motors Limited and its subsidiaries or to respective Regional Provident Fund Commissioner and

the Central Provident Fund under the State Pension scheme.

vi) Severance indemnity

Tata Daewoo Commercial Vehicle Company Limited, or TDCV, a subsidiary company 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.

vii) Post-retirement medicare scheme

Under this unfunded scheme, employees of Tata Motors Limited and some of its subsidiaries receive medical benefits subject to certain limits on

amounts of benefits, 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 an Early Separation Scheme, on medical grounds or due to permanent disablement are also covered under

the scheme. Tata Motors Limited and such subsidiaries account for the liability for post-retirement medical scheme based on an actuarial valuation.

viii) Remeasurement gains and losses

Remeasurement comprising actuarial gains and losses, the effect of the asset ceiling and the return on assets (excluding interest) relating to

retirement benefit plans, are recognized directly in other comprehensive income in the period in which they arise. Remeasurement recorded in

other comprehensive income is not reclassified to statement of profit and loss.

Actuarial gains and losses relating to long-term employee benefits are recognized in the statement of profit and loss in the period in which they arise.

ix) Measurement date

The measurement date of retirement plans is March 31.

Dividends

Any dividend declared or paid by Tata Motors Limited for any financial year is based on the profits available for distribution as reported in the statutory

financial statements of Tata Motors Limited (standalone) prepared in accordance with Generally Accepted Accounting Principles in India or Indian

GAAP or Ind AS. Indian law permits the declaration and payment of dividend out of profits for the year or previous financial year(s) as stated in

the statutory financial statements of Tata Motors Limited (Standalone) prepared in accordance with Generally Accepted Accounting Principles in

India, or Indian GAAP or Ind AS after providing for depreciation in accordance with the provisions of Schedule II to the Companies Act. However,

in the absence or inadequacy of the said profits, it may declare dividend out of free reserves, subject to certain conditions as prescribed under the

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS