Page 153 - Tata_Chemicals_yearly-reports-2017-18

transferred to the Company, are classified as finance with actuarial valuations being carried out at each
lease. Balance Sheet date.
Assets held under finance leases are initially recognised The retirement benefit obligation recognised in the
at their fair value at the inception of the lease or, if lower, Balance Sheet represents the present value of the
at the present value of the minimum lease payments. defined benefit obligation as reduced by the fair value
The corresponding liability to the lessor is included in of scheme assets.
the Balance Sheet as a finance lease obligation. Lease
The present value of the said obligation is determined
payments are apportioned between finance expenses by discounting the estimated future cash outflows,
and reduction of the lease obligation so as to achieve using market yields of government bonds of
a constant rate of interest on the remaining balance of equivalent term and currency to the liability.
the liability.
The interest income/(expense) are calculated by
Operating leases:
applying the discount rate to the net defined benefit
The leases which are not classified as finance lease are liability or asset. The net interest income/(expense) on
operating leases. the net defined benefit liability is recognised in the Integrated Report
Statement of Profit and loss.
Lease arrangements where the risks and rewards of
ownership of an asset substantially vest with the lessor Remeasurements, comprising of actuarial gains
are recognised as operating leases. Lease rentals under and losses, the effect of the asset ceiling (if any), are
operating leases are recognised in the Statement of recognised immediately in the Balance Sheet with a
Profit and Loss on a straight-line basis over the lease corresponding charge or credit to retained earnings
term unless the payments are structured to increase in through OCI in the period in which they occur.
line with expected general inflation to compensate for Remeasurements are not reclassified to the Statement
the lessor’s expected inflationary cost increases. of Profit and Loss in subsequent periods.
2.16 Employee benefits plans Changes in the present value of the defined benefit
obligation resulting from plan amendments or
Employee benefits consist of provident fund,
superannuation fund, gratuity fund, compensated curtailments are recognised immediately in the
absences, long service awards, post-retirement Statement of Profit and Loss as past service cost.
medical benefits, directors’ retirement obligations and 2.16.2 Short-term employee benefits
family benefit scheme. Statutory Reports
The short-term employee benefits expected to
2.16.1 Post-employment benefit plans be paid in exchange for the services rendered by
employees is recognised during the period when the
Defined contribution plans
employee renders the service. These benefits include
Payments to a defined contribution retirement compensated absences such as paid annual leave and
benefit scheme for eligible employees in the form of performance incentives which are expected to occur
superannuation fund are charged as an expense as within twelve months after the end of the period in
they fall due. Such benefits are classified as Defined which the employee renders the related services.
Contribution Schemes as the Company does not carry
any further obligations, apart from the contributions The cost of compensated absences is accounted as
under:
made.
(a) In case of accumulating compensated absences,
Defined benefit plans
when employees render service that increase
Contributions to a Provident Fund are made to Tata their entitlement of future compensated
Chemicals Limited Employees’ Provident Fund Trust, absences; and
administered by the Company, and are charged to
(b) In case of non-accumulating compensated Financial Statements
the Statement of Profit and Loss as incurred. The Trust
absence, when the absences occur.
invests in specific designated instruments as permitted
by Indian law. The remaining portion is contributed 2.16.3 Other long-term employee benefits
to the government administered pension fund. The Compensated absences which are not expected to
Company is liable for the contribution and any shortfall
occur within twelve months after the end of the period
in interest between the amount of interest realised by
in which the employee renders the related services are
the investments and the interest payable to members recognised as a liability. The cost of providing benefits
at the rate declared by the Government of India in is actuarially determined using the projected unit
respect of the Trust administered by the Company.
credit method, with actuarial valuations being carried
For defined benefit schemes in the form of gratuity out at each Balance Sheet date. Long Service Awards
fund, post-retirement medical benefits, pension are recognised as a liability at the present value of the
liabilities (including directors’) and family benefit obligation at the Balance Sheet date. All gains/losses
scheme, the cost of providing benefits is actuarially due to actuarial valuations are immediately recognised
determined using the projected unit credit method, in the Statement of Profit and Loss.

Standalone Financial Statements 151