PGHH_AR_2020

Notes to Financial Statements for the year ended June 30, 2020 Annual Report 2019-20 113 Company Overview Board's Report MD&A CG Report Financial Statement Procter & Gamble Hygiene and Health Care Limited The employees are entitled to accumulate leave subject to certain limits for future encashment / availment. The Company makes provision for compensated absences based on an actuarial valuation carried out at the end of the year. These plans typically expose the Company to actuarial risks such as: Investment risk, interest rate risk, longevity r isk and salary risk. Investment risk The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. Interest risk A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan investments. Longevity risk The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality rate of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plans liability. Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. As such, an increase on the salary of plan participants will increase the plans liability. In respect of the plans, the most recent actuarial valuation of the plan assets and the present value of the defined benefit obligation were carried out as at June 30, 2020. The present value of the defined benefit obligation, and the related current service cost and past service cost, were measured using the projected unit credit method. A. The principal assumptions used for the purposes of the actuarial valuations were as follows: Valuations as at June 30, 2020 June 30, 2019 Discount rate Gratuity plan (funded) 6.50% 7.00% Compensated absence plan (unfunded) 6.50% 7.00% Post retirement medical benefit (PRMB) (unfunded) 6.50% 7.00% Expected rate of salary increase Gratuity plan (funded) 9.00% 9.00% Compensated absence plan (unfunded) 9.00% 9.00% Post retirement medical benefit (PRMB) (unfunded) NA NA Medical Inflation Rate Post retirement medical benefit (PRMB) (unfunded) 5.50% 5.50% Average longevity at retirement age for current beneficiaries of the plan (years) Post retirement medical benefit (PRMB) (unfunded) 11.22 11.85 Demographic Assumptions Mortality in Service: Indian Assured Lives Mortality (2006-08) Ultimate table Mortality in Retirement: LIC Annuity Rates (1996-98) Ultimate table