Good Health Can’t Wait.

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Good Health Can’t Wait. Dr. Reddy’s Laboratories Limited NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All amounts in Indian Rupees millions, except share data and where otherwise stated) 2.35: EMPLOYEE BENEFIT PLANS (CONTINUED) Asset information CATEGORY OF ASSETS AS AT 31 MARCH 2015 AS AT 31 MARCH 2014 Corporate bonds 51% 51% Equity shares of listed companies 49% 49% Total 100% 100% Summary of actuarial assumptions PARTICULARS AS AT 31 MARCH 2015 AS AT 31 MARCH 2014 Discount rate 7.50% p.a. 8.00% p.a. Expected rate of return on plan assets 8.00% p.a. 8.00% p.a. Salary escalation rate 4.50% p.a. 4.50% p.a. Discount rate: The discount rate is based on the market yields prevailing in Mexico as at the balance sheet date for the estimated term of the obligations. Expected rate of return on plan assets: This is based on our expectation of the average long term rate of return expected on investments of the fund during the estimated term of the obligations. Salary escalation rate: The estimate of future salary increases considered takes into account the inflation, seniority, promotion and other relevant factors. Amounts recognized in current year and previous four years PARTICULARS AS AT / FOR THE YEAR ENDED 31 MARCH 2015 2014 2013 2012 2011 Defined benefit obligation 252 253 301 272 319 Plan assets 68 110 125 186 247 Surplus / (deficit) (184) (143) (176) (86) (72) Experience Adjustment on Plan Liabilities 25 (28) 29 (33) 16 Experience Adjustment on Plan Assets (2) (5) - (9) (23) 2.35.3 Other Benefits Provident fund benefits In India, certain categories of employees of the Company receive benefits from a provident fund, a defined contribution plan. Both the employee and employer each make monthly contributions to a government administered fund equal to 12% of the covered employee’s qualifying salary. The Company has no further obligations under the plan beyond its monthly contributions. The Company contributed ` 492 and ` 411 to the provident fund plan during the year ended 31 March 2015 and 2014, respectively. Superannuation benefits In India, certain categories of employees of the Company participate in superannuation, a defined contribution plan administered by the Life Insurance Corporation of India. The Company makes annual contributions based on a specified percentage of each covered employee’s salary. The Company has no further obligations under the plan beyond its annual contributions. The Company contributed ` 68 and ` 63 to the superannuation plan during the year ended 31 March 2015 and 2014, respectively. Other contribution plans In the United States, the Company sponsors a defined contribution 401(k) retirement savings plan for all eligible employees who meet minimum age and service requirements. The Company contributed ` 195 and `162 to the 401(k) retirement savings plan during the years ended 31 March 2015 and 2014, respectively. The Company has no further obligations under the plan beyond its annual matching contributions. In the United Kingdom, certain social security benefits (such as pension, unemployment and disability) are funded by employers and employees through mandatory National Insurance contributions. The contribution amounts are determined based upon the employee’s salary. The Company has no further obligations under the plan beyond its monthly contributions. The Company contributed ` 151 and ` 151 to the National Insurance during the years ended 31 March 2015 and 2014, respectively. 212
Consolidated Financial Statements Annual Report 2014 - 15 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (All amounts in Indian Rupees millions, except share data and where otherwise stated) 2.35: EMPLOYEE BENEFIT PLANS (CONTINUED) Compensated leave of absence The Company provides for accumulation of compensated absences by certain categories of its employees. These employees can carry forward a portion of the unutilized compensated absences and utilize it in future periods or receive cash in lieu thereof as per Company policy. The Company records an obligation for compensated absences in the period in which the employee renders the services that increases this entitlement. The total liability recorded by the Company towards this benefit was ` 616 and ` 463 as at 31 March 2015 and 2014, respectively. Long term incentive plan Certain senior management employees of the Company participate in a long term incentive plan which is aimed at rewarding the individual, based on performance of such individual, their business unit / function and the Company as a whole, with significantly higher rewards for superior performances. The total liability recorded by the Company towards this plan was ` 323 as of 31 March 2015. 2.36: HEDGES OF FOREIGN CURRENCY RISKS, INTEREST RATE RISKS AND DERIVATIVE FINANCIAL INSTRUMENTS The Company is exposed to exchange rate risk which arises from its foreign exchange revenues and expenses, primarily in U.S. dollars, British pounds sterling, Russian roubles, Venezuelan bolivar and Euros, and foreign currency debt in U.S. dollars, Russian roubles and Euros. The Company uses forward contracts, option contracts and swap contracts (derivatives) to mitigate its risk of changes in foreign currency exchange rates. Further, the Company also uses non-derivative financial instruments as part of its foreign currency exposure risk mitigation strategy. In respect of all of its foreign exchange derivative contracts, the Company has recorded, as part of foreign exchange gains and losses, a net gain of ` 2,235 and a net loss of ` 430 for the years ended 31 March 2015 and 2014, respectively. Hedges of highly probable forecasted transactions The Company classifies its derivative contracts that hedge foreign currency risk associated with highly probable forecasted transactions as cash flow hedges and measures them at fair value. The effective portion of such cash flow hedges is recorded as part of reserves and surplus within the Company’s “hedging reserve”, and re-classified in the statement of profit and loss as revenue in the period corresponding to the occurrence of the forecasted transactions. The ineffective portion is immediately recorded in the statement of profit and loss. The Company also designates certain non-derivative financial liabilities, such as foreign currency borrowings from banks, as hedging instruments for the hedge of foreign currency risk associated with highly probable forecasted transactions and, accordingly, applies cash flow hedge accounting for such relationships. Re-measurement gain / loss on such non-derivative financial liabilities is recorded as part of reserves and surplus within the Company’s “hedgingreserve”, and re-classified in the statement of profit and loss as revenue in the period corresponding to the occurrence of the forecasted transactions. In respect of the aforesaid hedges of highly probable forecasted transactions, the Company has recorded, in reserves and surplus, a net gain of ` 99 and a net loss of ` 1,651 for the years ended 31 March 2015 and 2014, respectively. The Company also recorded, as part of revenue, a net gain of ` 300 and a net loss of ` 1,093 during the years ended 31 March 2015 and 2014, respectively. The net carrying amount of the Company’s “hedging reserve” in reserves and surplus before adjusting for tax impact was a loss of ` 1,805 as at 31 March 2015, as compared to a loss of ` 1,904 as at 31 March 2014. The table below summarizes the periods when the forecasted cash flows associated with hedging instruments that are classified as cash flow hedges, are expected to occur: PARTICULARS AS AT 31 MARCH 2015 AS AT 31 MARCH 2014 Cash flows in U.S. Dollars (figures in equivalent rupee millions) Not later than one month 2,969 1,797 Later than one month and not later than three months 5,625 3,595 Later than three months and not later than six months 8,594 5,392 Later than six months and not later than one year 7,188 9,287 Later than one year 3,438 9,886 27,814 29,957 Cash flows in Roubles (figures in equivalent rupee millions) Not later than one month 27 - Later than one month and not later than three months 54 - Later than three months and not later than six months 81 - Later than six months and not later than one year 161 - 323 - 213
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ANNUAL REPORT 2014-15 Good Health C
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Our Brand We are in the business of
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Page 235 and 236: The future belongs, not to those wh
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