UBHL annual report - United Spirits Limited

Consolidated Financial StatementsNotes to the financial statements for the year ended March 31, 2012 (Contd.)Exchange differences arising on reporting of long term foreign currency monetary items, with the exception of exchangedifferences arising on a monetary item that, in substance, forms part of an enterprise’s net investment in anon-integral foreign operation, at rates different from those at which they were initially recorded during the period orreported in previous financial statements, are accounted as below:(a)(b)In so far as they relate to the acquisition of depreciable capital assets, are added to or deducted from the cost ofthe asset and are depreciated over the balance life of the asset; andIn other cases, the said exchange differences are accumulated in a ‘Foreign Currency Monetary Items TranslationDifference Account’ and amortised over the balance period of such long term asset/liability but not beyond March31, 2011.Exchange differences in respect of all other monetary assets and liabilities denominated in foreign currency are restatedat the rates ruling at the year end and all exchange gains/ losses arising there from are adjusted to the Statementof Profit and Loss, except those covered by forward contracted rates where the premium or discount arising at theinception of such forward exchange contract is amortised as expense or income over the life of the contract.Exchange differences on forward contracts are recognised in the Statement of Profit and Loss in the reporting periodin which the exchange rates change. Any profit or loss arising on cancellation or renewal of such forward contracts isrecognised as income or expense for the year.For forward exchange contracts and other derivatives that are not covered by Accounting Standard (AS) -11 ‘The Effectsof Changes in Foreign Exchange Rates’, the Company follows the guidance in the announcement of the Institute ofChartered Accountants of India (ICAI) dated March 29, 2008, whereby for each category of derivatives, the Companyrecords any net mark-to-market losses. Net mark-to-market gains are not recorded for such derivatives.Foreign Company:In respect of overseas subsidiary companies, Income and Expenses are translated at average exchange rate for the year.Assets and Liabilities, both monetary and non-monetary, are translated at the year-end exchange rates. The differencesarising out of translation are included in the foreign currency translation reserve. Any Goodwill or Capital Reservearising on acquisition of non integral operation is translated at closing rate.1.13 Employee Benefits(a)(b)Defined-contribution plansThese are plans in which the Company pays pre-defined amounts to separate funds and does not have any legalor informal obligation to pay additional sums. These comprise of contributions to the employees’ provident fundwith the government, superannuation fund and certain state plans like Employees’ State Insurance and Employees’Pension Scheme. The Company’s payments to the defined contribution plans are recognised as expenses duringthe period in which the employees perform the services that the payment covers.Defined-benefit plansGratuity:The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to certain categories of employees.Liability with regard to gratuity plan is accrued based on actuarial valuation, based on Projected Unit CreditMethod at the Balance Sheet date, carried out by an independent actuary. Actuarial Gains and Losses compriseexperience adjustments and the effect of changes in the actuarial assumptions and are recognised immediatelyin the Statement of Profit and Loss as income or expense.77