Its a form of compensation. All allowances ( INcluding LTC ) given to the employees about the feel good factor for working for the company. 

From the employer point of view, as a part of internal control the employee must go on leave.... so that his work will be carried out by other person may lead to discovery of fraud if any... And moreover it is incentive to encourage the employees in the organisation....

From the point of view of employee... can enjoy with his family members..... relax and refresh....gives more attachment with the employer..

It is given twice in a four years.....