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Siemens
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« Sep 12
Notes to Accounts Year End : Sep '13
Basis of preparation of financial statements
 
 The financial statements are prepared and presented under the
 historical cost convention, on the accrual basis of accounting except
 for certain derivative instruments which are measured at fair value in
 accordance with generally accepted accounting principles in India
 (Indian GAAP) and comply in all material respects with the accounting
 standards notified in the Companies (Accounting Standards) Rules 2006,
 (as amended) issued by the Central Government, in consultation with
 National Advisory Committee on Accounting Standards (''NACAS'') and
 relevant provisions of the Companies Act, 1956 (''the Act'').
 
 The accounting policies adopted in the preparation of financial
 statements are consistent with those of previous year.
 
 1.  Amalgamations
 
 1.1.  Amalgamation of Siemens Power Engineering Pvt. Ltd. (SPEL)
 
 Pursuant to the scheme of amalgamation (''the scheme'') of erstwhile SPEL
 with the Company under sections 391 to 394 of the Companies Act, 1956
 sanctioned by the Honorable High Court of Bombay and Punjab & Haryana
 on 2 November 2012 and 23 November 2012 respectively, the assets and
 liabilities of SPEL were transferred to and vested in the Company with
 effect from 1 October 2011. Accordingly, the scheme has been given
 effect to in these accounts.
 
 The operations of SPEL include drawings and designing for planning and
 setting up of power plant worldwide, by using standard and specifically
 customized software.
 
 The amalgamation has been accounted for under the pooling of
 interests method as prescribed by AS -14 ''Accounting for
 Amalgamations''. Accordingly, the accounting treatment has been given as
 under-
 
 i. The assets, liabilities and reserves of SPEL as at 1 October 2011
 have been incorporated at their book values in the financial statements
 of the Company.
 
 ii. 7,500,000 equity shares of Rs. 10 each fully paid up of SPEL stand
 cancelled and 3,461,538 equity shares of Rs. 2 each of the Company have
 been issued to the shareholders of SPEL on 5 February 2013. The excess
 amount of Rs. 68 of the share capital of SPEL over the face value of
 share capital issued has been credited to the Capital Reserve of the
 Company.
 
 iii. The profit (net of dividend) of SPEL for the year ended 30
 September 2012 amounting to Rs. 47 has been added to the General Reserve
 of the Company.
 
 The financial statements include the operations of SPEL for the year
 ended 30 September 2013 and are reflected in the Energy segment.
 
 1.2.  Amalgamation of Winergy Drive Systems India Pvt. Ltd. (Winergy)
 
 Pursuant to the scheme of amalgamation (''the scheme'') of Winergy with
 the Company under sections 391 to 394 of the Companies Act, 1956
 sanctioned by the Honorable High Court of Bombay and Madras on 22 March
 2013 and 18 February 2013 respectively, the assets and liabilities of
 Winergy were transferred to and vested in the Company with effect from
 1 October 2012. Accordingly, the scheme has been given effect to in
 these accounts.
 
 The operations of Winergy include manufacture of wind turbine gear
 unit, turbo gear unit and coupling assembly to cater to the wind mill
 and providing design and engineering services for manufacture of power
 transmission items.
 
 The amalgamation has been accounted for under the pooling of
 interests method as prescribed by AS - 14 Accounting for
 Amalgamations''. Accordingly, the accounting treatment has been given as
 under-
 
 i. The assets, liabilities, reserves and credit balance of profit and
 loss of Winergy as at 1 October 2012 have been incorporated at their
 book values in the financial statements of the Company.
 
 ii. 45,010,000 equity shares of Rs. 10 each fully paid up of Winergy
 stand cancelled and 625,139 equity shares of Rs. 2 each of the Company
 have been issued to the shareholders of Winergy on 24 May 2013. The
 excess amount of Rs. 449 of the share capital of Winergy over the face
 value of share capital issued has been credited to the Capital Reserve
 of the Company.
 
 iii. The Company has reassessed the useful lives of certain assets of
 Winergy as of the effective date of the amalgamation i.e. 1 October
 2012. Additional depreciation of Rs. 116 (Rs. 77 net of tax) has been
 adjusted to the opening balance of statement of profit and loss,
 transferred from Winergy.
 
 iv. The Company has recognised deferred tax assets of Rs. 201 relating to
 timing differences between accounting income and taxable income of
 Winergy, which was previously not recorded by Winergy owing to absence
 of virtual certainty. The same has been adjusted to the opening balance
 of statement of profit and loss of the Company.
 
 The financial statements include the operations of Winergy for the year
 ended 30 September 2013 and are reflected in the Industry segment.
 
 2 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 upto closure of the contract
 (including warranty period).
 
 Provision for loss orders
 
 A provision for expected loss on construction contracts is recognised
 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.
 
 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.
 
 3 (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.
 
 (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 four
 segments. These segments are the basis for management control and
 hence, form the basis for reporting. The business of each segment
 comprises of:
 
 Infrastructure and Cities:- Provides Electrical Installation
 Technologies, i.e. Products for Building, e.g.  Miniature Circuit
 Breakers, Distribution Boards, Residual Current Circuit Breakers etc.
 It also provides solutions for rail automation, railway
 electrification, light and heavy rail, locomotives, trains, turnkey
 projects and integrated services. Also provides solutions for the
 automation of power grids to products like medium- voltage switchgear
 and components.
 
 Industry:- Provides complete range of automation products & systems,
 industrial automation systems & low- voltage switchgears, complete
 range of large and standard drives and motors, special purpose motors,
 process and motion control systems. Also undertakes turnkey projects in
 the industrial and infrastructure sectors over the entire life cycle
 including concept, engineering, procurement, supplies, installation,
 commissioning and after sales services.
 
 Energy:- Offers highly efficient products and solutions for power
 generation based on fossil fuels. It ranges from individual gas and
 steam turbines and generators, to turnkey power plants. Also offers
 customers products and solutions used for the extraction, conversion
 and transport of oil and gas. Also provides solutions for power
 generation and distribution including products and solutions in the
 high-voltage field - such as High Voltage Direct Current (HVDC)
 transmission systems, substations, switchgear and transformers.
 
 Healthcare:-Provides diagnostic, therapeutic and life-saving products
 in computer tomography (CT), magnetic resonance imaging (MRI),
 ultrasonography, nuclear medicine, digital angiography, patient
 monitoring systems, digital radiography systems, radiology networking
 systems, lithotripsy and linear accelerators.
 
 Geographical Segments: The business is organised in two geographical
 segments i.e. within India and outside India.
 
 4 Disclosure pursuant to Accounting Standard -15 ''Employee Benefits'':
 
 (i) Defined Contribution Plans
 
 Amount of Rs. 240 (2012: Rs.216) is recognised as an expense and included
 in employee benefits expense (Refer note 23) in the statement of
 profit and loss.
 
 (ii) Defined Benefit Plans
 
 a) Amounts for the current period are as follows :
 
 5 Disclosure pursuant to Accounting Standard -15 ''Employee Benefits''
 (Continued) :
 
 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
 contribute Rs. 150 (2012: Rs. 100) to gratuity fund in 2013-14.
 
 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. 449 (2012: Rs. 396) towards provident
 fund during the year ended 30 September 2013. 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 2013 and 2012
 respectively.
 
 6 Prior period items
 
 Prior period items for the year ended 30 September 2012 relates to
 certain updates in projects relating to an earlier year.  The impact of
 the same in the statement of profit and loss is Rs. 799 (Decrease in
 revenue from construction contracts Rs. 572 and Increase in ''other costs''
 under the head project bought outs and other direct costs Rs. 227).
 
 7 Prior year comparatives
 
 Pursuant to the amalgamation of SPEL and Winergy (Refer note 2.1 and
 2.2), the figures of the current year are not strictly comparable to
 those of the previous year. Previous year''s figures have been regrouped
 / reclassified wherever necessary, to conform to current year''s
 classification.
Source : Dion Global Solutions Limited
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