SENSEX NIFTY India | Notes to Account > Infrastructure - General > Notes to Account from Siemens - BSE: 500550, NSE: SIEMENS


BSE: 500550|NSE: SIEMENS|ISIN: INE003A01024|SECTOR: Infrastructure - General
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« Sep 14
Notes to Accounts Year End : Sep '15
a) Shares held by holding company and subsidiary of holding company:
 255,351,805 (2014: 255,351,805) Equity shares of Rs, 2 each, fully
 paid-up, are held by the Holding Company, Siemens AG, Germany;
 11,738,108 (2014: 11,738,108) Equity shares of Rs, 2 each, fully
 paid-up, are held by Siemens Metals Technologies Vermogensverwaltungs
 GmbH (formerly known as Siemens VAI Metals Technologies GmbH), a 100%
 subsidiary of Siemens AG, Germany
 As per records of the Company, including its register of shareholders /
 members and other declarations received from shareholders regarding
 beneficial interest, the above shareholding represents both legal and
 beneficial ownerships of shares.
 b) Terms / rights attached to equity shares
 The Company has only one class of equity shares having a par value of
 Rs, 2 per share. Each holder of equity shares is entitled to one vote
 per share. The Company declares and pays dividends in Indian rupees.
 During the year ended 30 September 201 5, the amount of per share
 dividend recognized for distribution to equity shareholders is Rs, 10
 (2014: Rs, 6)
 In the event of liquidation of the Company, the holder of equity shares
 will be entitled to receive remaining assets of the Company, after
 distribution of all preferential amounts (if any). The distribution
 will be in proportion to the number of equity shares held by the
 Raw materials consumed includes costs incurred for manufacturing of
 finished goods which have been internally used for the project
 1. Disclosure relating to Provisions
 Provision for warranty
 Warranty costs are provided based on a technical estimate of the costs
 required to be incurred for repairs, replacement, material cost,
 servicing and past experience in respect of warranty costs. It is
 expected that this expenditure will be incurred over the contractual
 warranty period.
 Provision for liquidated damages
 Liquidated damages are provided based on contractual terms when the
 delivery/ commissioning dates of an individual project have exceeded or
 are likely to exceed the delivery/ commissioning dates as per the
 respective contracts. This expenditure is expected to be incurred over
 the respective contractual terms up to closure of the contract
 (including warranty period).
 Provision for loss orders
 A provision for expected loss on construction contracts is recognized
 when it is probable that the contract costs will exceed total contract
 revenue. For all other contracts loss order provisions are made when
 the unavoidable costs of meeting the obligation under the contract
 exceed the currently estimated economic benefits.
 Provision for other matters
 The Company has made provisions for known contractual risks, litigation
 cases and pending assessments in respect of taxes, duties and other
 levies, the outflow of which would depend on the cessation of the
 respective events.
 Lease income recognized during the year in statement of profit and loss
 Rs, 4 (2014: Rs, Nil)
 There is no contingent rent recognized in the statement of profit and
 General description of the leasing arrangement:
 (i) The Company has entered into operating lease arrangements of its
 factory premises, office premises, storage locations, machinery and
 residential premises.
 (ii) The future lease rental income is determined on the basis of the
 monthly lease terms as per the agreements.
 (iii) At the expiry of the non cancellable lease period the option of
 renewal rests with both parties.
 (iv) The lease agreements have escalation clause of 5% pa. There are no
 exceptional / restrictive covenants in the lease agreements.
 Lease rent debited to the statement of profit and loss Rs, 676 (2014:
 Rs, 790)
 Sub-lease payments recognized in the statement of profit and loss Rs,
 32 (2014: Rs, 51)
 There is no contingent rent recognized in the statement of profit and
 General description of the leasing arrangement:
 (i) The Company has entered into operating lease arrangements for its
 office premises, storage locations, machinery, residential premises and
 motor cars for its employees.
 (ii) The future lease rental payments are determined on the basis of
 the monthly lease payment terms as per the agreements.
 (iii) At the expiry of the non cancellable lease period the option of
 renewal rests with the Company.
 (iv) Some of the lease agreements have escalation clause ranging from
 5% to 15%. There are no exceptional / restrictive covenants in the
 lease agreements.
 b) Where the Company is the less or:
 Lease income from non cancellable lease arrangement credited to the
 statement of profit and loss and the future lease income in respect of
 non cancellable operating lease are summarized below:
 2. Disclosure pursuant to Accounting Standard - 19 ''Leases'' :
 a) Where the Company is the lessee:
 Lease payments on non cancellable lease arrangement debited to the
 statement of profit and loss and the future lease payments in respect
 of non cancellable operating lease are summarized below:
 3. Related party transactions
 3.1 Parties where control exists
 Siemens AG Holding company
 3.2 Subsidiary where transactions have taken place during the year
 Siemens Rail Automation Pvt. Ltd.,India Subsidiary
 4. (iii) Other disclosures :
 Inter-segment prices are normally negotiated amongst the segments with
 reference to the costs, market price and business risks.
 Profits / losses on inter segment transfers are eliminated at the
 Company level.
 During the year, there has been a reorganization of certain businesses
 across segments and accordingly, the figures for the previous year have
 been regrouped to make them comparable.
 (iv) Segment information :
 The primary and secondary reportable segments are business segments and
 geographical segments respectively.
 Business Segments: The business of the Company is divided into eight
 segments. These segments are the basis for management control and
 hence, form the basis for reporting. The business of each segment
 comprises of:
 Power and Gas :- Provides products and solutions for generation of
 electricity from fossil and renewable fuels for utilities, independent
 power producers and engineering, procurement and construction (EPC)
 companies and the reliable transport of oil and natural gas.
 Energy Management :- Supplier of products, systems, solutions and
 services for transmission and distribution of electrical energy for
 power utilities and industrial companies. Portfolio ranges from systems
 for low-voltage grids and distribution grids to solutions for smart
 grids and energy automation systems to power supply systems for
 industrial plants and high-voltage transmission systems.
 Building Technologies :- Provider of safe, secure, energy-efficient and
 eco-friendly buildings and infrastructures. As a technology partner,
 consultant, service provider, systems integrator and product vendor,
 offerings range from fire safety, security, building automation,
 heating, ventilation, air conditioning and energy management.
 Mobility :- Supplier of solutions for passenger and freight
 transportation - including rail vehicles, rail automation systems, rail
 electrification systems, road traffic technology and IT solutions.
 Digital Factory :- Contains portfolio of leading edge software
 solutions and automation technologies covering the complete life cycle
 from product design and production execution to services for
 manufacturing companies.
 Process Industries and Drives :- Provides products, systems, solutions
 and services across entire life cycles for all industry sectors.
 Healthcare :- Provides technology for the healthcare industry - medical
 imaging, laboratory diagnostics and solutions for the healthcare IT.
 Metals Technologies :- Provides Metallurgical Plant Building Technology
 catering services, design & engineering, equipment supply and
 supervision of erection and commissioning of wire rods and bar mills.
 Others :- Services provided to other group companies and lease rentals
 have been classified as Others.
 Geographical Segments: The business is organized in two geographical
 segments i.e. within India and outside India.
 Allocation of common costs
 Common allocable costs are allocated to each segment according to the
 relative contribution of each segment to the total common costs.
 Unallocated corporate items
 Unallocated items include general corporate items which are not
 allocated to any business segment.
 b) The fund formed by the Company manages the investments of the
 Gratuity Fund. Expected rate of return on investments is determined
 based on the assessment made by the Company at the beginning of the
 year on the return expected on its existing portfolio, along with the
 estimated incremental investments to be made during the year. Yield on
 portfolio is calculated based on a suitable mark-up over the benchmark
 Government securities of similar maturities. The Company expects to
 contributeRs, 153 (2014:Rs, 150) to gratuity fund in 2015-16.
 5. Disclosure pursuant to Accounting Standard -15 ''Employee Benefits''
 c) The estimates of future salary increases, considered in actuarial
 valuation, take in to account inflation, seniority, promotion and other
 relevant factors, such as supply and demand in the employment market.
 d) The Company has contributed Rs, 493 (2014: Rs, 457) towards
 provident fund during the year ended 30 September 2015. The Guidance on
 Implementing AS 15, Employee Benefits (Revised 2005) issued by
 Accounting Standard Board (ASB) states that benefits involving employer
 established provident funds, which require interest shortfalls to be
 recompensed are to be considered as defined benefit plans. The Actuary
 has accordingly provided a valuation and based on the assumptions
 provided below there is no shortfall as at 30 September 201 5.
 (iii) General descriptions of significant defined plans
 I Gratuity Plan
 Gratuity is payable to all eligible employees of the Company on
 superannuation, death and permanent disablement, in terms of the
 provisions of the Payment of Gratuity Act, 1972 or as per the Company''s
 Scheme whichever is more beneficial.
 II Medical
 Post-Retirement Medical Benefit is paid to eligible employees in case
 of survival up to the retirement age and after death, benefits are
 available to the employee''s spouse. The Company reimburses the
 employees for expenses incurred over and above the claim accepted by
 the insurance company. The Company pays 80% of difference between
 liability incurred by employee and claim received from insurance
 company subject to ceiling based on the grade of employees.
 a) During the year, the Company has amended the gratuity plan to remove
 the ceiling for gratuity payout to employees.  Accordingly, the onetime
 impact of the increase in the gratuity obligation has been shown under
 exceptional items.
 b) The Company had recognized impairment loss on wind power
 manufacturing facility which was shown under capital work-in-progress.
 During the year, the Company has entered into leasing agreement for the
 said facility on an as is where is basis. Accordingly, the said
 facility has now been capitalized under fixed assets and investment
 property and impairment provision has been reassessed considering value
 in use and pre-tax discount rate of 11 %.  Consequently, an impairment
 loss of Rs, 1,032 and other consequential provisions of Rs, 35 have
 been reversed.
 c) In accordance with periodic impairment assessment, the Company has
 re-assessed the usability of certain assets and consequently recognized
 impairment loss of Rs, Nil (2014: Rs, 292).
 6. Discontinued operations
 The Board of Directors and the Committee of Directors at their meetings
 held on 5 November, 2014 and 8 November, 2014 respectively, approved
 sale and transfer of its Metals Technologies (MT) business which form
 part of Metals Technologies segment of the Company to VAI Metals
 Technologies Pvt. Ltd. (a subsidiary of Siemens VAI Metals Technologies
 GmbH, Germany) as a slump sale on a going concern basis for a
 consideration of Rs,10,233 with effect from the close of business hours
 on 31 December 2014 and recorded a profit of Rs, 7,120 on sale of MT
 business which is shown under exceptional items (Refer note 41).
 Corresponding tax expense on the said transaction amounts toRs, 1,785.
 7. Change in accounting policy
 During the year, the Company has changed its accounting policy for
 revenue recognition of its Healthcare business whereby the equipment
 sale are now recognized on installation and extended warranty is
 recognized over the warranty period as opposed to the earlier practice
 whereby the revenue for both equipment and extended warranty was
 recognized on dispatch.
 8. Prior year comparatives
 Pursuant to the transfer of Metals Technologies business (Refer note
 42), the current year figures are not strictly comparable with those of
 the previous year. Previous year''s figures have been regrouped /
 reclassified wherever necessary, to conform to current year''s
Source : Dion Global Solutions Limited
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