Top 100 listed cos’ employee benefit liabilities rise to Rs 4.22 lakh crore

Apr 01 2014, 23:44 IST
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SummaryThe amount of money spent by top 100 listed Indian companies towards employee benefits, for the year ended March 31, 2013

The amount of money spent by top 100 listed Indian companies towards employee benefits, for the year ended March 31, 2013, stood at R4.22 lakh crore, a 17% increase over the previous year, says a report.

The combined estimated employee benefits covering 94 of the BSE 100 companies rose from about R3.6 lakh crore in the previous year (which covered 99 companies), a study by professional services firm Towers Watson said.

The findings are part of the firm's Employee Benefits Accounting and Risk Study of the financial statements of BSE 100 companies.

“In the wake of an uncertain and dynamic macro-economic environment, Indian companies are increasingly becoming cautious and conscious about financial facets of employee benefits," Towers Watson India Actuary and Director, Client Account Management Kulin Patel said.

According to the report, companies today have greater clarity and understanding about valuation of employee benefits amid changing economic environment, evolving accounting standards and increased auditor scrutiny.

“Consequently, unfunded employee benefits liabilities have seen a marked decrease over last 6 years with corporate liability for long term employee benefits now being better funded, a trend that is likely to continue with more companies disclosing liabilities for benefit plans," Patel said.

The unfunded employee benefit liabilities have decreased from 32% to 12% in a span of just 6 years, the report said.

Further, the combined overall funding of the total defined benefits liabilities has steadily increased from 86% in 2011 to 88% in 2013, suggesting that a significant portion of the corporate liability is now better funded than what it was a year ago.

Moreover, defined benefits pension continues to be the biggest contributor to total liabilities at 47%.

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