Risk exposure Through its defined benefit plans, the Company 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 reference to bond yields; if plan assets underperform this yield, a deficit will be created. Most of the plan asset investments are in fixed income securities with high grades and in Government securities. These are subject to interest rate risk. The Company has a Risk Management strategy where the aggregate amount of risk exposure on a portfolio level is maintained at a fixed range. Any deviation from the range are corrected by rebalancing the portfolio. The Company intends tomaintain the above investment mix in the continuing years. Changes in bond yields A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of other bond holdings. The Company actively monitors how the duration and the expected yield of the investments are matching the expected cash outflows arising from the employee benefit obligations. The Company has not changed the processes used to manage its risks from previous periods. Investments are well diversified, such that the failure of any single investment may not have a material impact on the overall level of assets. A large portion of assets consists of insurance funds. The plan asset mix is in compliance with the requirements of the respective local regulations. b) Defined contribution plans: The Company pays provident fund contributions to registered provident fund administered by the Government at the rate of 12% of basic salary as per regulations. The obligation of the Company is limited to the amount contributed and it has no further contractual nor any constructive obligation. The expense recognised during the period towards defined contribution plan is of `11.95 lakhs. c) The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market. Mortality rates are obtained from the relevant data. Unfunded Schemes Particulars March 31, 2018 March 31, 2017 i) Present value of unfunded obligations 16.81 12.84 ii) Expense recognised in the Statement 4.17 4.63 of Profit and Loss iii) Discount rate (per annum) 7.80% 7.00% iv) Salary escalation rate (per annum) 8.27% 7.00% Compensated absences 63
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