annual-report-FY2020

338 COMPANY OVERVIEW BOARD’S REPORT MANAGEMENT DISCUSSION AND ANALYSIS CORPORATE GOVERNANCE BUSINESS RESPONSIBILITY REPORT STANDALONE ACCOUNTS CONSOLIDATED ACCOUNTS Post retirement medical Few entities in the Group provide post retirement medical cover to select grade of employees to cover the retiring employee and their spouse upto a specified age through mediclaim policy on which the premiums are paid. The eligibility of the employee for the benefit as well as the amount of medical cover purchased is determined by the grade of the employee at the time of retirement. Post retirement housing allowance The Company operates a post retirement benefit scheme for a certain grade of employees in which a monthly allowance determined on the basis of the last drawn basic salary at the time of retirement, is paid to the retiring employee in lieu of housing. Risk exposure Through its defined benefit plans the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility The plan liabilities are calculated using a discount rate set with references to government bond yields; if plan assets underperform compared to this yield, this will create or increase a deficit. The defined benefit plans may hold equity type assets, which may carry volatility and associated risk. Changes in bond yields A decrease in government bond yields will increase plan liabilities, although this is expected to be partially offset by an increase in the value of the plan’s investment in debt instruments. Inflation risk The present value of some of the defined benefit plan obligations are calculated with reference to the future salaries of plan participants. As such, an increase in the salary of the plan participants will increase the plan’s liability. The post retirement medical benefit obligation is sensitive to medical inflation and accordingly, an increase in medical inflation rate would increase the plan’s liability. Life expectancy The present value of defined benefit plan obligation is calculated by reference to the best estimate of the mortality of plan participants, both during and after the employment. An increase in the life expectancy of the plan participants will increase the plan’s liability. Defined benefit plans - Actuarial valuation as on 31 st March, 2020 Rupees crores Funded Plan Unfunded Plans Gratuity Gratuity Post retirement medical benefits Post retirement housing allowance Particulars 2020 2019 2020 2019 2020 2019 2020 2019 1 Amounts recognised in profit or loss Current service cost........ 114.00 90.17 293.25 267.91 3.08 2.85 3.16 2.67 Past service cost.............. (10.91) — — — — — 12.52 — Net interest expense 10.03 21.33 57.68 62.19 3.46 3.38 4.77 4.29 Total amount included in employee benefits expense ........................... 113.12 111.50 350.93 330.10 6.54 6.23 20.45 6.96 2 Amounts recognised in other comprehensive income Remeasurement (gains)/ losses: a) Actuarial (gains)/ losses arising from changes in -............... – demographic assumptions............ (15.18) 0.68 4.23 19.06 (7.41) 0.11 — (0.67) 31. Employee Benefits (contd.)