Employee Benefits Accounting Policy disclosed by Bajaj Finance Limited
Retirement and other employee benefits Accounting policy disclosed in the Financial Statements for the year ended 31 March 2023:
(i) Defined benefit plans
Defined benefit plans may be unfunded, or they may be wholly or partly funded by contributions by the Company, into an entity, or fund from which the employee benefits are paid. The Company is liable to make differential payment for any shortfall between defined benefit payments and the contribution made by the Company.
Gratuity
Payment for present liability of future payment of gratuity is made to the approved gratuity fund viz. Bajaj Auto Ltd. gratuity fund trust, which covers the same under cash accumulation policy and debt fund of the Life Insurance Corporation of India (LIC) and Bajaj Allianz Life Insurance Company Ltd. (BALIC). However, any deficits in plan assets managed by LIC and BALIC as compared to actuarial liability determined by an appointed actuary using the projected unit credit method are recognised as a liability. Gains and losses through remeasurements of the net defined benefit liability/assets are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. The effect of any planned amendments are recognised in Statement of Profit and Loss. Remeasurements are not reclassified to profit or loss in subsequent periods.
(ii) Defined contribution plans
Defined contribution plans are post-employment benefit plans under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods. The Company contributes into following schemes under defined contribution plans:
Superannuation
Defined contribution to superannuation fund is made as per the scheme of the Company.
Provident fund
Each eligible employee and the Company make contribution at a percentage of the basic salary specified under the Employee Provident Funds and Miscellaneous Provisions Act, 1952. The Company recognises contributions payable to the Provident fund scheme as an expenditure when the employees render the related service. The Company has no further obligations under the plan beyond its periodic contributions.
Employees’ state insurance
The Company contributes to Employees State Insurance Scheme and recognises such contribution as an expense in the Statement of Profit and Loss in the period when services are rendered by the employees.
(iii) Compensated absences
Privilege leave entitlements are recognised as a liability as per the rules of the Company. The liability for accumulated leaves which can be availed and/or encashed at any time during the tenure of employment is recognised using the projected unit credit method at the actuarially determined value by an appointed actuary. The liability for accumulated leaves which is eligible for encashment within the same calendar year is provided for at prevailing salary rate for the entire unavailed leave balance as at the Balance Sheet date.
Remeasurements on defined benefit plans, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets, are recognised immediately in the Balance Sheet with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Analysis for Material Accounting Policy Information:
Primary condition – Accounting policy relates to material transaction, other event or condition:
The company has reported employee benefit expense as a separate line item in profit or loss. Therefore, the primary condition is met.
Secondary conditions – Any one of these need to be met:
1. The company changed its accounting policy during the reporting period and this change resulted in a material change to the information in the financial statements – No. The company cannot change its accounting policy on employee benefits as there has been no amendment to Ind AS 19 in this regard.
2. The company chose the accounting policy from one or more options permitted by Ind AS – Yes. Ind AS 19 does not permit any accounting policy choice. Division II and Division III of Schedule III to the Companies Act, 2013 provide a choice to present actuarial gains and losses either as a separate component of equity or aggregate the same within retained earnings. The choice selected is evident from the presentation in Statement of Changes in Equity. The company has disclosed that it aggregates within retained earnings.
3. Accounting policy was developed in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors – No. Ind AS 19 specifically applies to Employee Benefits. Therefore, in accordance with paragraph 7 of Ind AS 8, the company shall apply the requirements of Ind AS 19.
4. The accounting policy relates to an area for which an entity is required to make significant judgements or assumptions in applying an accounting policy, and the company discloses those judgements or assumptions in accordance with paragraph 122 and 125 of Ind AS 1. – No. The company has not disclosed employee benefits as an item in the note on estimates. The company has also not disclosed significant judgements made in applying accounting policy on employee benefits.
5. The accounting is complex such that the company applies more than one Ind AS to a class of material transactions – No. Employee benefits requires application of only Ind AS 19.
6. The disclosure of accounting policy is required by a standard. – No. Paragraph 149 of Ind AS 19 requires disclosure of the policy for determining the contribution to be paid by the entity for defined benefit plans that share risks between entities under common control. However, the company has not disclosed whether the same is applicable to it and also has not disclosed in its accounting policy. Accordingly, the same is considered as not material for the company and basis the requirements of paragraph 31 of Ind AS 1, the said policy shall not be disclosed.
Conclusion:
As both the primary condition and secondary condition is met, the company shall disclose the accounting policy on employee benefits. While disclosing the policy, the company shall –
Not duplicate standardised information
Emphasise on company specific information
Specify its presentation choice for actuarial gains and losses on post-employment defined benefit plans.
Retirement and other employee benefits Accounting policy disclosed in the Financial Statements for the year ended 31 March 2025:
The company has disclosed accounting policy on Employee benefit expenses – Share based payments under the heading of expenditures in Financial Statements for the year ended 31 March 2025. Thus, the company has rightly analysed its policies and stopped disclosing policies that were not considered material. However, the company has disclosed “Summary of Material Accounting Policies”. Ind AS 1 requires disclosure Material Accounting Policies and not Summary of Material Accounting Policies. The company may make the required changes in its financial statements for the year ended 31 March 2026.
Schedule III to the Companies Act, 2013 provides choice for presentation of accumulated remeasurement of defined benefit plans either as separate component of equity or aggregated with retained earnings in Statement of Changes in Equity. The company has opted to present the same as separate component of equity in Statement of Changes in Equity. The company must disclose the presentation choice selected in Material Accounting Policy.