UBHL annual report - United Spirits Limited

Notes to the financial statements for the year ended March 31, 2012 (Contd.)Provident Fund:Company’s Provident Funds administered by trusts set up by the Company where the Company’s obligation is toprovide the agreed benefit to the employees and the actuarial risk and investment risk fall, in substance, on theCompany are treated as a defined benefit plan. Liability with regard to such provident fund plans are accruedbased on actuarial valuation, based on Projected Unit Credit Method, carried out by an independent actuary at theBalance Sheet date. Actuarial Gains and Losses comprise experience adjustments and the effect of changes in theactuarial assumptions and are recognised immediately in the Statement of Profit and Loss as income or expense.Death Benefit:Death Benefit payable at the time of death is actuarially ascertained at the year-end and provided for in the accounts.(c) Other employee benefits:i) Compensated absences which are not expected to occur within twelve months after the end of the period inwhich the employee renders the related services are recognised as a liability at the present value of the definedbenefit obligation at the Balance Sheet date based on an actuarial valuation.ii) Undiscounted amount of short term employee benefits expected to be paid in exchange for the servicesrendered by employees is recognised during the period when the employee renders the services. These benefitsinclude compensated absences (e.g., paid annual leave), performance incentives, etc.1.12 Expenditure on account of Voluntary Retirement SchemeExpenditure on account of Voluntary Retirement Scheme of employees is expensed in the period in which it is incurred.1.13 Research and DevelopmentRevenue expenditure on research and development is charged to the Statement of Profit and Loss in the period inwhich it is incurred. Capital Expenditure is included as part of fixed assets and depreciated on the same basis as otherfixed assets.1.14 Taxes on IncomeTax expense comprises current taxes and deferred taxes. Current tax is determined as the amount of tax payable inrespect of taxable income for the period.Deferred tax is recognised on timing differences between the accounting income and the taxable income for the yearand quantified using the tax rates and laws enacted or substantively enacted as on the Balance Sheet date.Deferred tax assets are recognised and carried forward to the extent that there is a reasonable/ virtual certainty thatsufficient future taxable income will be available against which such deferred tax asset can be realised.1.15 Earnings per Share (EPS)Basic EPS is arrived at based on Net Profit after Taxation available to equity shareholders to the weighted averagenumber of equity shares outstanding during the year. The Diluted EPS is calculated on the same basis as Basic EPS, afteradjusting for the effects of potential dilutive equity shares unless impact is anti-dilutive.1.16 ProvisionsA provision is recognised when an enterprise has a present obligation as a result of a past event and it is probable thatan outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made.Provisions, other than employee benefits, are not discounted to their present value and are determined based onmanagement estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each BalanceSheet date and adjusted to reflect the current management estimates.35