1 RELATED PARTY TRANSACTIONS
(a) Names of companies where control exists:
Holding Company Koninklijke Philips Electronics N.V
Subsidiary Companies Alpha X-Ray Technologies (India) Private Limited
Meditronics Healthcare Private Limited (MHPL)*
* Ceased to be Subsidiary companies with effect from April 1, 2009.
(i) Fellow Subsidiary Companies As per list given below
Overseas Fellow Subsidiary Companies:
Feidong Lighting Company Limited
Feixin Lighting Co., Ltd.
Genlyte Thomas Group LLC
MASSIVE Hungaria Villamosipari Termelo Kft.
NARVA Speziallampen GmbH
Philips & Yarning Lighting Co., Ltd.
Philips (China) Investment Company, Ltd.
Philips Automotive Lighting Hubei Co., Ltd.
Philips Chilena SA
Philips Consumer Lifestyle BY
Philips Consumer Luminaires Shenzhen Co. Ltd.
Philips da Amazonia Industria Eletronica Ltda.
Philips Danmark A/S
Philips Domestic Appliances and Personal Care
Company of Zhuhai SE2, Ltd. Philips Electronics (Thailand) Ltd.
Philips Electronics and Lighting, Inc. Philips Electronics Hong Kong
Limited Philips Electronics Korea Ltd. Philips Electronics Middle East
& Africa BV Philips Electronics Nederland BV Philips Electronics North
America Corporation Philips Electronics Singapore Pte Ltd. Philips
Electronics UK Limited Philips Electronics Vietnam Limited Philips
Eletronica do Nordeste S.A.
Philips Export BY
Philips Holding USA Inc.
Philips Industries Hungary Electronical Mechanical Manufacturing
& Trading Limited Liability Company Philips Innovative Applications
Philips International BV Philips Lighting Bielsko Sp.z.o.o. Philips
Philips Lighting Electronics (Shanghai) Co., Ltd. Philips Lighting
Luminaires (Shanghai) Co., Ltd. Philips Lighting Malaysia Sdn. Bhd.
Philips Lighting Poland SA Philips Medical Systems (Cleveland), Inc.
Philips Medical Systems DMC GmbH Philips Medical Systems Nederland BV
Philips Medical Systems Technologies Ltd. Philips Medizin Systeme
Boblingen GmbH Philips South Africa (Proprietary) Limited Philips
Taiwan Ltd. Philips Technologie GmbH Philips Ultrasound, Inc. Philips
Warehouse & Services BV PT Philips Indonesia Respironics, Inc. Turk
Philips Ticaret Anonim Sirketi VMI Industria e Comercio Ltda.
(ii) Names of the Employee Trusts with whom transactions have taken
place during the year:
Philips Electronics India Ltd Management Staff Provident Fund Trust
Philips India Ltd Superannuation Fund.
(b) Names of Directors with whom transctions have taken place during
(1) Executive Directors:
(a) Mr Murali Sivaraman
(b) Mr. Cornells J.M.Reuvers
(c) Mr Alexius Collette
(2) Non-Executive Directors:
(a) Mr S.M.Datta
(b) Mr S.Venkataramani
(C) OTHER DISCLOSURES:
Inter segment revenue / result:
— Inter-segment revenue has been recognised at competitive prices.
— Allocation of corporate expenses to other segments is at cost
— All profits / losses on inter segment transfers are eliminated at
2 EXCEPTIONAL ITEMS INCLUDE:
(a) Rs.342 (2008 - Rs. 142) - Profit on sale of property.
(b) Pursuant to restructuring of Consumer Lifestyle segment
operations, the Company has provided for (i) Rs.46 (2008 - Rs.Nil) on
account of inventory write down to the realizable value and (ii) Rs.129
(2008 - Rs.Nil) being expenses in connection with restructuring.
(c) Rs.5 (2008 - Rs.Nil) - EmployeesVoluntary Retirement Scheme.
(d) Rs. Nil (2008 - Rs.47) Net surplus on divestment of business
relating to Set Top Boxes to PACE Micro Technology (India) Private
(e) Rs. Nil (2008 - Rs. 17) - Write back of provision created for
divestment of business relating to Financial Services in 2007.
3 The Company uses forward exchange contracts to hedge its exposure in
foreign currency. The information on forward contract is as follows:
(c) Exchange loss in respect of forward exchange contracts to be
recognised in subsequent accounting periods - Rs.Nil (2008 - loss - Rs.
(d) Pursuant to announcement of the Institute of Chartered Accountants
of India (ICAI) dated March 29, 2008 on accounting of derivatives, the
Company has recognised Mark-to-Market (MTM) losses - Rs.4 (2008 - Rs.
Nil) on forward contracts outstanding as at December 31, 2009.
4 EMPLOYEES SHARE-BASED PAYMENTS:
Certain employees of the company are eligible for stock options granted
by the Holding Company (KPENV). In conformity with the guidance note
on Accounting for Employee Share-based Payments notified in the
Companies (Accounting Standards) Rules. 2006 in respect of the grants
made on or after 01 April 2005, the following disclosures are made:
(a) Method adopted for valuation:
Stock compensation expenses under the Fair Value Method are
determined based on the Fair Value of the Options and amortised over
the vesting period. The Fair Value of the Options is determined using
Black-Scholes option pricing model.
(b) Nature and extent of Employee Share-based Payment Plans:
As from 2003 onwards, the Holding Company (KPENV) issued restricted
share rights that vest in equal annual installments over a three-year
period. Restricted shares are KPENVs shares that the grantee will
receive in three successive years, provided the grantee is still with
the Company on the respective delivery dates. If the grantee still
holds the shares after three years from the delivery date, Philips will
grant 20% additional (premium) shares, provided the grantee is still
As from 2002, the Holding Company granted fixed stock options that
expire after 10 years. Generally, the options vest after 3 years;
however; a limited number of options granted to certain employees of
acquired businesses contain accelerated vesting. In prior years, fixed
and variable (performance) options were issued with terms of ten years,
vesting one to three years after grant.
5 Amalgamation of Alpha X-Ray Technologies (India) Private Limited
(AXTPL) and Meditronics Healthcare Private Limited (MHPL) with the
(a) Pursuant to the Scheme of Amalgamation of the erstwhile Alpha X-Ray
Technologies (India) Private Limited (AXTPL) and Meditronics Healthcare
Private Limited (MHPL) with the Company as sanctioned by the Honble
High Court Mumbai on February 26, 2010 and filed with the Registrar of
Companies on March 26, 2010, the undertakings of AXTPL and MHPL were
transferred to and vested in the Company on going concern basis from
appointed date April 1, 2009. Accordingly, the Scheme has been given
effect to in these accounts.
(b) AXTPL and MHPL are well established manufacturers and sellers of
Cardiovascular X-Ray systems and General X-Ray machines.
(c) The amalgamation has been accounted for under the Pooling of
Interests method as prescribed by Accounting Standard (AS) 14 on
Accounting for Amalgamations notified in the Companies (Accounting
Standards) Rules. 2006. Accordingly, the assets, liabilities and
reserves of erstwhile AXTPL and MHPL as at April 1, 2009 have been
taken over at their book values.
(d) As provided in the Scheme of Amalgamation, 957,600 and 5,000,000
equity shares of Rs.10/- each held in AXTPL and MHPL respectively stand
(e) Net deficit of Rs.888 between the Investments in AXTPL and MHPL
Rs.947 and Nominal value of Equity Share Capital in AXTPL and MHPL
Rs.59 has been debited to General Reserve.
(f) In view of the aforesaid amalgamation with effect from April 1,
2009, the figures for the current year are not comparable to those of
the prior year
6 Dividend remitted for January - December 2008 - Rs. 122 (January -
December 2007 - Rs. 136) on 61,094,012 equity shares to 2 non-resident
7 Fiscal year for the Company being the year ending March 31, 2010,
the ultimate tax liability will be determined on the basis of the
results for the period April 1, 2009 to March 3 1, 2010.
8 Prior years figures have been regrouped, recast and restated where
necessary to conform to the current years classification.
(2) Nature of provisions:
(i) Provision for replacement guarantee
The Company provides for the estimated liability on guarantees given on
sale of its products based on past performance of such products. The
provision represents the expected cost of replacement and free of
charge services and it is expected that the expenditure will be
incurred over the contractual guarantee period which usually ranges
from 6 months to 24 months.
(ii) Legal and regulatory
The Company has made provision for taxes and duties relating to cases
that are pending assessments before Adjudicating Authorities where
possible outflow of resources may arise in future which would depend on
the ultimate outcome on conclusion of the cases.
(iii) Personnel related
The Company has made provisions in respect of amounts payable to
certain employees based on their retention and performance, which are
payable over a three year and one year period respectively.
(iv) Other risks
This represents provisions created following the accounting concept of
conservatism towards possible outflow of resources in respect of:
a. Claims other than those included in (i) and (ii) above; and against
the Company amounting to Rs. 124;
b. Other obligations amounting to Rs. 129 arising through contractual
terms or otherwise in respect of anticipated costs arising from the
realignment of product portfolio within the Consumer Lifestyle business
* Refer Note 15 to Profit and Loss Account
9 Contingent liabilities
(a) Claims not acknowledged as debts by the Company - Rs.32 (31.12.2008
(b) In respect of disputed excise demands - Rs.162 (31.12.2008 -Rs.
162), income tax demands - Rs.518 (31.12.2008 - Rs.509) and service tax
demands Rs.328 (31.12.2008 - Rs. 16)
(c) In respect of suppliers / customers demands and certain tenancy /
customs / sales tax disputes for which the liability is not
The Company does not expect any reimbursements in respect of the above
contingent liabilities. It is not practicable to estimate the timing of
cash outflows, if any, in respect of (a) and (b) above pending
resolution of the legal proceedings.
10 There are no Micro, Small and Medium Enterprises to whom the Company
owes dues, which are outstanding for more than 45 days as at December
31, 2009 and the information given in Schedule 12 Liabilities as
required to be disclosed under the Micro, Small and Medium Enterprises
Development Act, 2006 has been determined to the extent such parties
have been identified on the basis of information available with the
11 Prior years figures have been regrouped, recast and restated where
necessary to conform to the current years classification.