165 Sensitivity analysis The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: Particulars Change in assumptions Impact on defined benefit obligation Increase in assumptions Decrease in assumptions As at March 31, 2022 As at March 31, 2021 As at March 31, 2022 As at March 31, 2021 As at March 31, 2022 As at March 31, 2021 Discount rate 1.00% 1.00% (5.62%) (7.45%) 6.27% 8.50% Attrition rate 1.00% 1.00% (2.03%) (1.38%) 2.19% 1.47% Salary escalation rate 1.00% 1.00% 5.92% 8.31% (5.46%) (7.43%) The above sensitivity analysis are based on a change in an assumption while holding all other assumptions constant. In practice, this is unlikely to occur and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions, the same method (present value of the defined benefit obligation calculated with the projected unit credit method at the end of the reporting period) has been applied while calculating the defined benefit liability recognised in the Consolidated Balance Sheet. The methods and types of assumptions used in preparing the sensitivity analysis did not change as compared to the previous year. Risk exposure Through its defined contribution plans, the Group is exposed to a number of risks, the most significant of which are detailed below: i) Interest rate risk A fall in the discount rate which is linked to the government securities rate will increase the present value of the liability requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on the duration of asset. ii) Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of members. As such, an increase in the salary of the members more than assumed level will increase the plan liability. iii) Investment risk The present value of the defined benefit plan liability is calculated using a discount rate, which is determined with reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government securities and other debt instruments. iv) Concentration risk Plan is having a concentration risk as all the assets are invested with the insurance company and a default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory guidelines. Note 26.5 Employee benefit obligations (continued)
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