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Net gratuity cost for the year ended includes the following components:
Particulars 31 March 2011
Current service cost 51.30
Interest cost 13.99
Expected return on plan assets (11.69)
Net actuarial (gain)/loss recognised in the year (7.65)
Expenses recognised in the income statement 45.95
The movement of the net liability can be reconciled as follows:
Particulars 31 March 2011
Movements in the liability recognised
Opening net liability 66.74
Expense as above 45.95
Contribution paid (33.89)
Translation adjustment 7.47
Closing net liability 86.27
For determination of the liability, the following actuarial assumptions were used:
Particulars 31 March 2011
Discount rate 3.75% - 8.30%
Expected return on Plan Assets 2.50% - 9.00%
Current service cost and interest cost are included in employee costs. The Group has availed the exemption under
IFRS 1 for not presenting the experience adjustment on retirement benefits.
b) Defined contribution plan
Apart from being covered under the Gratuity Plan described earlier, employees of the Indian companies participate in a
provident fund plan; a defined contribution plan. The Group makes annual contributions based on a specified percentage
of salary of each covered employee to a government recognised provident fund. The Group does not have any further
obligation to the provident fund plan beyond making such contributions. Upon retirement or separation an employee
becomes entitled for this lump sum benefit, which is paid directly to the concerned employee by the fund. The Group
contributed approximately ` 103.52 to the provident fund plan during the year ended 31 March 2011.
c) Compensated absence plan (defined benefit plan)
The Group permits encashment of leave accumulated by their employees on retirement and separation. The liability
for encashment of privilege leave is determined and provided on the basis of actuarial valuation performed by an
independent actuary at date of statement of financial position.
The following table sets out the status of the Compensated absence plan of Group and the corresponding amounts
recognised in the Group’s consolidated financial statements:
Particulars 31 March 2011
Change in Benefit Obligation
Present Benefit Obligation (‘PBO’) at the beginning of the year 87.61
Interest cost 5.16
Service cost 20.96
Benefits paid (21.36)
Actuarial (gain)/loss on obligations 5.35
Translation adjustment -
PBO at the end of the year 97.72
Change in Fair Value of Assets
Opening fair value of plan assets 43.52
Expected return on plan assets 3.25
Actuarial gain/(loss) 0.84
Contributions by employer 26.33
Benefits paid (21.36)
Closing fair value of plan assets 52.58
Actual Return on Plan Assets
Expected return on plan assets 3.25
Actuarial gain/(loss) on Plan Assets 0.84
Actual Return on Plan Assets 4.09
Liability recognised
Present value of obligation 97.72
Fair value of plan assets (52.58)
Liability recognised in statement of financial position 45.14
100 GLENMARK PHARMACEUTICALS LIMITED