Atul Ltd 2015-16

137 Note 1 Significant Accounting Policies (continued) 4.12 Research and Development expenditure: Research and Development expenditure is charged to revenue under the natural heads of account in the year in which it is incurred. However development expenditure qualifying as an intangible asset, if any, is capitalised, to be amortised over the economic life of the product | patent. Research and Development expenditure on fixed assets is treated in the same way as expenditure on other fixed assets. 4.13 Employee benefits: a) Defined contribution plan: Contribution paid | payable by the Company during the period to Provident Fund, Superannuation Fund, Employees’ State Insurance Corporation, National Pension Scheme and Labour Welfare Fund are recognised in the Consolidated Statement of Profit and Loss. b) Defined benefit plan: Gratuity: Gratuity liability is a defined benefit obligation and is computed on the basis of an actuarial valuation by an actuary appointed for the purpose as per projected unit credit method at the end of each financial year. The liability so provided is paid to a Trust administered by the Company, which in turn invests in eligible securities to meet the liability as and when it accrues for payment in future. Actuarial gains | losses are immediately taken to the Statement of Profit and Loss. Any shortfall in the value of assets over the defined benefit obligation is recognised as a liability with a corresponding charge to the Statement of Profit and Loss. Long-term leave encashment: Long-term leave encashment is provided for on the basis of an actuarial valuation carried out at the end of the year on the projected unit credit method. Actuarial gains | losses are immediately taken to the Consolidated Statement of Profit and Loss. Provident Fund: Provident Fund for certain eligible employees is managed by the Company through the ‘Atul Products Ltd - Ankleshwar Division Employees Provident Fund Trust’ in line with Provident Fund and Miscellaneous Provisions Act, 1952. The plan guarantees interest at the rate notified by the Provident Fund authorities. The contributions by the employer and employees together with the interest accumulated thereon are payable to employees at the time of their retirement or separation from the Company, whichever is earlier. The benefits vest immediately on rendering of the services by the employee. Any shortfall in the value of assets over the defined benefit obligation is recognised as a liability, with a corresponding charge to the Consolidated Statement of Profit and Loss. c) Short-term leave encashment: Short-term leave encashment is provided at undiscounted amount during the accounting period based on service rendered by employees. d) Voluntary Retirement Scheme: Compensation payable under the Voluntary Retirement Scheme is being charged to the Consolidated Statement of Profit and Loss in the year of settlement. 4.14 Taxation: a) Income tax expense comprises current tax and deferred tax charge or credit. Provision for current tax is made on the basis of the assessable income at the tax rate applicable to the relevant assessment year. b) MAT credit is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax within the specified period. Notes to the Consolidated Financial Statements