Annual Report 2011 - 2012 - United Breweries Limited

Notes to Financial Statements (contd.)
(All amounts in Rs.lacs, unless otherwise stated)
Gratuity: Liability towards gratuity is determined on actuarial valuation using the Projected Unit Credit
Method at the balance sheet date. Actuarial Gains and Losses are recognised immediately in the Statement of
Profit and Loss.
(iii) Other long term employee benefits:
Liability towards leave encashment and compensated absences is recognised at the present value based on
actuarial valuation at each balance sheet date.
(iv) Short term employee benefits:
Undiscounted amount of liability towards earned leave, compensated absences, performance incentives etc. is
recognised during the period when the employee renders the services.
2.11 Taxation:
Current tax is determined as per the provisions of the Income Tax Act, 1961.
(i) Provision for current tax is made, based on the tax payable under the Income Tax Act.1961. Minimum Alternative
Tax (MAT) credit, which is equal to the excess of MAT (calculated in accordance with the provisions of section
115JB of the Income Tax Act, 1961) over normal income-tax is recognized as an asset by crediting the Statement
of Profit and Loss only when and to the extent there is convincing evidence that the Company will be able to
avail the said credit against normal tax payable during the period of ten succeeding assessment years.
(ii) Deferred tax is recognised, on timing differences, being the difference between taxable income and accounting
income that originates in one period and is capable of reversal in one or more subsequent periods. Deferred tax
assets are not recognised unless there is virtual / reasonable certainty that sufficient future taxable income will
be available against which such deferred tax assets can be realised.
2.12 Earnings per share:
Annualised earnings / (loss) per equity share (basic and diluted) is arrived at based on ratio of profit /(loss) attributable
to equity shareholders to the weighted average number of equity shares.
2.13 Impairment of Assets:
At each Balance Sheet date, the Company assesses whether there is any indication that assets may be impaired.
If any such indication exists, the Company estimates the recoverable amount. If the carrying amount of the asset
exceeds its recoverable amount, an impairment loss is recognised in the accounts to the extent the carrying amount
exceeds the recoverable amount.
2.14 Provisions, Contingent Liabilities and Contingent Assets:
Provisions are recognised when the company has a present obligation as a result of past events, for which it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate of the amount can be made. Provisions are reviewed regularly and are adjusted where necessary
to reflect the current best estimates of the obligation. When the company expects a provision to be reimbursed,
the reimbursement is recognised as a separate asset, only when such reimbursement is virtually certain.
A disclosure for contingent liability is made where there is a possible obligation or present obligation that may
probably not require an outflow of resources.
2.15 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified
as operating leases. Payments made under operating leases are charged to the Statement of Profit and Loss on a
straight-line basis over the period of the lease.
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