Page 177 - Tata_Chemicals_yearly-reports-2017-18

4 Categories of the fair value of total plan assets :
` in crore
Particulars As at As at
31 March, 2018 31 March, 2017
Gratuity Gratuity
Government of India Securities (Quoted) 8.27 14.45
Corporate Bonds (Quoted) 5.30 6.47
Fund Managed by Life Insurance Corporation of India (Unquoted) 73.94 72.57
Others 0.32 0.58
Total 87.83 94.07
Each year an Asset-Liability-Matching study is performed in which the consequences of the strategic investment policies are
analysed in terms of risk-and-return profiles. Investment and contribution policies are integrated within this study.
5 Risk Exposure : Integrated Report

Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below :
Investment risk If future investment returns on assets are lower than assumed in valuation, the scheme’s assets will
be lower, and the funding level higher, than expected.
Changes in bond yields A decrease in yields will increase plan liabilities, although this will be partially offset by an increase in
the value of the plans’ bond holdings.
Longevity risk If improvements in life expectancy are greater than assumed, the cost of benefits will increase
because pensions are paid for longer than expected. This will mean the funding level will be higher
than expected.
Inflation risk If inflation is greater than assumed, the cost of benefits will increase as pension increases and
deferred revaluations are linked to inflation.
6 Assumptions used in accounting for gratuity, post retirement medical benefits, directors’ retirement obligations
and family benefit scheme: Statutory Reports

Particulars Gratuity and Post retirement Directors’ Family Benefit
Compensated medical benefits retirement Scheme
absences obligations
Discount rate As at 31 March, 2018 7.75% 7.75% 7.75% 7.75%
As at 31 March, 2017 6.85% 6.85% 6.85% 6.85%
Increase in
Compensation cost As at 31 March, 2018 7.50% NA 7.50% 7.50%
As at 31 March, 2017 7.50% NA 7.50% 7.50%
Healthcare cost
increase rate As at 31 March, 2018 NA 10.00% 8.00% NA
As at 31 March, 2017 NA 10.00% 8.00% NA
Pension increase rate As at 31 March, 2018 NA NA 6.00% NA
As at 31 March, 2017 NA NA 6.00% NA Financial Statements
(a) Discount rate is based on the prevailing market yields of Indian Government securities as at the Balance Sheet date for the
estimated term of the obligations.
(b) The estimates of future salary increases, considered in actuarial valuation, take into account the inflation, seniority,
promotion and other relevant factors.

Standalone Financial Statements 175