23.2.20. Provision for post-sales client support and warranties
The movement in the provision for post-sales client support and warranties is as follows :
in crore
Particulars |
Year ended March 31, |
|
2011 |
2010 |
|
Balance at the beginning |
73 |
75 |
Provision recognized / (reversed) |
5 |
(2) |
Provision utilized |
– |
– |
Exchange difference during the year |
– |
– |
Balance at the end |
78 |
73 |
Provision for post-sales client support is expected to be utilized over a period of 6 months to 1 year.
23.2.21. Gratuity Plan
The following table set out the status of the Gratuity Plan as required under AS 15.
Reconciliation of opening and closing balances of the present value of the defined benefit obligation and plan assets :
in crore
Particulars |
As at March 31, |
||||
2011 |
2010 |
2009 |
2008 |
2007 |
|
Obligations at year beginning |
308 |
256 |
217 |
221 |
180 |
Transfer of obligation |
– |
(2) |
– |
– |
– |
Service cost |
171 |
72 |
47 |
47 |
44 |
Interest cost |
24 |
19 |
15 |
16 |
14 |
Actuarial (gain) / loss |
15 |
(4) |
– |
(9) |
– |
Benefits paid |
(59) |
(33) |
(23) |
(21) |
(17) |
Amendment in benefit plans |
– |
– |
– |
(37) |
– |
Obligations at year end |
459 |
308 |
256 |
217 |
221 |
Defined benefit obligation liability as at the Balance Sheet date is fully funded by the Company |
|||||
Change in plan assets |
|||||
Plans assets at year beginning, at fair value |
310 |
256 |
229 |
221 |
167 |
Expected return on plan assets |
34 |
24 |
16 |
18 |
16 |
Actuarial gain / (loss) |
1 |
1 |
5 |
2 |
3 |
Contributions |
173 |
62 |
29 |
9 |
52 |
Benefits paid |
(59) |
(33) |
(23) |
(21) |
(17) |
Plans assets at year end, at fair value |
459 |
310 |
256 |
229 |
221 |
Reconciliation of present value of the obligation and the fair value of the plan assets : |
|||||
Fair value of plan assets at the end of the year |
459 |
310 |
256 |
229 |
221 |
Present value of the defined benefit obligations at the end of the year |
459 |
308 |
256 |
217 |
221 |
Asset recognized in the Balance Sheet |
– |
2 |
– |
12 |
– |
Assumptions |
|||||
Interest rate |
7.98% |
7.82% |
7.01% |
7.92% |
7.99% |
Estimated rate of return on plan assets |
9.36% |
9.00% |
7.01% |
7.92% |
7.99% |
Weighted expected rate of salary increase |
7.27% |
7.27% |
5.10% |
5.10% |
5.10% |
Net gratuity cost for the years ended March 31, 2011 and March 31, 2010 comprises of the following components :
Particulars |
Year ended March 31, |
|
2011 |
2010 |
|
Gratuity cost for the year |
||
Service cost |
171 |
72 |
Interest cost |
24 |
19 |
Expected return on plan assets |
(34) |
(24) |
Actuarial (gain) / loss |
14 |
(5) |
Plan amendment amortization |
(4) |
(3) |
Net gratuity cost |
171 |
59 |
Actual return on plan assets |
35 |
25 |
Gratuity cost, as disclosed above, is included under salaries and bonus and is segregated between software development expenses, selling and marketing expenses and general and administration expenses on the basis of number of employees.
During the year ended March 31, 2010, a reimbursement obligation of 2 crore has been recognized towards settlement of gratuity liability of Infosys Consulting India Limited.
As at March 31, 2011 and March 31, 2010, the plan assets have been primarily invested in government securities. 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 factors in the employment market. The Company expects to contribute approximately 100 crore to the gratuity trust during the fiscal 2012.
Effective July 1, 2007, the Company revised the employee death benefits provided under the gratuity plan, and included all eligible employees under a consolidated term insurance cover. Accordingly, the obligations under the Gratuity Plan reduced by 37 crore, which is being amortized on a straight line basis to the net Profit and Loss account over 10 years representing the average future service period of the employees. The unamortized liability as at March 31, 2011 and March 31, 2010 amounted to 22 crore and 26 crore, respectively and is disclosed under ‘Current Liabilities’.
23.2.22.a Provident fund
The Guidance on Implementing AS 15, Employee Benefits (revised 2005) issued by Accounting Standards Board (ASB) states that benefits involving employer established provident funds, which require interest shortfalls to be recompensed are to be considered as defined benefit plans. Pending the issuance of the final guidance note from the Actuarial Society of India, the Company’s actuary has expressed an inability to reliably measure provident fund liabilities. Accordingly the Company is unable to exhibit the related information.
The Company contributed 179 crore towards Provident Fund during the year ended March 31, 2011. (150 crore during the year ended March 31, 2010).
23.2.22.b Superannuation
The Company contributed 57 crore to the Superannuation Trust during the year ended March 31, 2011 (54 crore during the year ended March 31, 2010).
23.2.23 Cash Flow statement
23.2.23.a. Unclaimed dividend
The balance of cash and cash equivalents includes 3 crore as at March 31, 2011 (2 crore as at March 31, 2010) set aside for payment of dividends.
23.2.23.b. Restricted deposits
Deposits with financial institutions as at March 31, 2011 include 344 crore (281 crore as at March 31, 2010) deposited with Life Insurance Corporation of India to settle employee-related obligations as and when they arise during the normal course of business. This amount is considered as restricted cash and is hence not considered ‘cash and cash equivalents’.
23.2.24 Dues to micro and small enterprises
The Company has no dues to micro and small enterprises during the year ended March 31, 2011 and March 31, 2010 and as at March 31, 2011 and March 31, 2010.
23.2.25 Exceptional item
During the year ended March 31, 2010, the Company sold 32,31,151 shares of OnMobile Systems Inc., U.S. (OMSI) at a price of 166.58 per share amounting to a total consideration of 53 crore, net of taxes and transactions costs. The resultant income of 48 crore has been appropriated to capital reserve.